USA v. Kevin Ring: Duty to Disclose

Related Posts:

Kevin Ring Retrial Prognostication
Kevin Ring's Motion for Judgment of Acquittal

USA v. Kevin Ring: Get Ready for a Retrial!
Government's Opposition to Ring's Motion for Judgment of Acquittal

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Kevin Ring has been indicted on six counts of Honest Services Fraud (HSF) and another count of conspiracy to commit HSF¹. Prosecutors must show an element of material misrepresentation and/or intentional concealment in order to convict Mr. Ring of HSF. Justice Department lawyers alleged several instances of intentional concealment in their Opposition to Ring's Motion for Judgment of Acquittal (MJOA).

On Monday, Mr. Ring's attorneys replied to the DoJ's opposition to his MJOA. Mr. Ring's basic argument is that Mr. Ring had no duty to disclose the information that the DoJ says he intentionally concealed. If there was no duty to disclose, Ring's attorneys say, the concealment can not support an HSF conviction.

There are two ways to successfully prove HSF: (1) The Bribery Theory; and (2) The Failure-to-Disclose a Conflict of Interest Theory. Case law is clear on this. Here is how the Third Circuit described HSF in United States v. Chartock, a case actually cited by the defense:

Honest services fraud can be proven in two ways: "(1) bribery, where a legislator was paid for a particular decision or action; or (2) failure to disclose a conflict of interest resulting in personal gain." The Government concedes that "to convict a private citizen, such as Chartock, of the failure to disclose a conflict of interest theory of honest services fraud, the government must introduce sufficient evidence to prove that the private citizen was aware that the public official was required to disclose their relationship and that the private citizen knowingly assisted the public official in the failure to disclose." [Citations omitted, emphasis added]

Notice that the government needa to show a duty to disclose only in the Failure-to-Disclose Theory of HSF. Mr. Ring is charged with HSF under the Bribery Theory. The defense is conflating two theories and reaches a conclusion that is not supported by case law. Similar case law exists in United States v. Kemp also decided by the Third Circuit. The Justice Department cited Kemp to support its position, and we've previously examined how Kemp is damaging to Mr. Ring's defense because it doesn't require the government to show that a specific item of value is connected to a specific official act. Kemp also distinguishes between the Bribery Theory of HSF and the Failure-to-Disclose Theory of HSF:

Honest services fraud, in turn, typically occurs in either of two situations: “(1) bribery, where a [public official] was paid for a particular decision or action; or (2) failure to disclose a conflict of interest resulting in personal gain.”

Prosecutors in Kemp alleged both types of HSF. And the Court indeed examined whether there was a duty to disclose -- but only with respect to the Failure-to-Disclose Theory. The Court did not apply the duty to disclose to the Bribery Theory part of the case.

The ACR Blog is usually shy about delving too deeply into case law. It simply isn't one of our strengths. But Ring's argument that there must be a duty to disclose an intentional omission in a Bribery Theory of HSF does not accurately reflect the law. The defense should not be able to conflate the two theories of HSF in order to raise the bar for the DoJ.

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¹ Count II of Mr. Ring's indictment is an illegal gratuity charge that is not addressed in the MJOA.

Financial / Travel Disclosures for Dan Flynn

Daniel P. Flynn is a former high-level staffer in Tom DeLay's old Congressional office. Mr. Flynn originally came to the attention of the ACR Blog due to his service in Mr. DeLay's so-called "War Room". Mr. Flynn was a potential witness in Corwin Teltschik's ARMPAC-related civil suit. Beyond that, Mr. Flynn has escaped our scrutiny.

Recently, though, the ACR Blog has received some abstruse intimations that perhaps we should investigate Mr. Flynn's financial and travel disclosures submitted when he worked in the House of Representatives. Dutifully, we reviewed Legistorm.

TRAVEL

According to Legistorm, Mr. Flynn submitted disclosure forms for 11 privately funded trips. Ten of the trips were sponsored by the Congressional Institute, Inc., whatever that is. The 11th was a February 2005 trip to Las Vegas sponsored by an outfit called the Congressional Economic Leadership Institute (CELI). We don't know much about this trip except that The Hill reported on it in an article entitled "Las Vegas: Junket or 'study trip'". Also, we know that former Bob Ney staffer and Scotland vacationer Paul Vinovich was on the same trip. This may or may not be relevant. Over the years, CELI has sponsored scores and scores of trips for Hill staffers, including Elizabeth Megginson (Don Young), Fraser Verrusio (Don Young) (2), Jonathan Grella (Tom DeLay), Justin Sprinzen (Don Young), Carl Thorsen (Tom DeLay), Levon Boyagian (Don Young) (3), and Lloyd Jones (Don Young). With a diverse set of travelers, we're not sure it is worthwhile to investigate the CELI any further. It doesn't appear that CELI has funded any trips since 2006 anyway. Our vague hint remains elusive.

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FINANCIAL DISCLOSURES

Legistorm helpfully provides us with two of Mr. Flynn's financial disclosures:

2006 Annual Disclosure

2006 Termination

We're not sure what we're supposed to see in the financial disclosures, either. It might be helpful to review pre-2006 disclosures, but those aren't on Legistorm. Ultimately, this is a dead-end for us, too. All we can do is pass along the tip to you, our readers, and hope that one of your can help us out. Feel free to email us at gregintx22-at-yahoo-dot-com. Discretion assured.

Merry Christmas

Christmas Address
Ronald Reagan
December 23, 1981

We here at the ACR Blog hope that everyone has had safe travels and has arrived home in time for Christmas.

The author of the ACR Blog has learned a lot from the blog's readers. Throughout the year, many of you have generously given me tips and other information, and that has helped in my understanding of the subject matter of this blog. For that, I am extremely grateful.

So from the Anti-Corruption Family to yours, have a very Merry Christmas.

U.S. v. Fraser Verrusio: Motion Orders

Last Friday, U.S. District Judge Richard W. Roberts issued rulings on motions filed by the defense in U.S. v. Fraser Verrusio as well as one non-controversial joint scheduling motion. We'll only address the three contested defense motions.

Motion for Bill of Particulars: Heard and DENIED.

Our understanding of a Bill of Particulars is that it is a document detailing the alleged criminal activity in very specific terms. The Defense had asked for a Bill of Particulars; apparently Judge Roberts determined that the case as outlined in the indictment is sufficient.

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Motion to Dismiss Count One of the Indictment OR, in the Alternative, for a Pre-Trial Hearing to Determine the Admissibility of Co-Conspirator Statements: Heard and DENIED as to the Pretrial Portion only.

We interpret Judge Roberts' silence on the Dismissal portion to mean that he is reserving judgment on that part. Mr. Verrusio's basic argument in asking for a dismissal of Count 1 (Conspiracy to Obtain Illegal Gratuities) of the indictment is that the alleged receipt of a single thing of value (the World Series trip) can not support a conspiracy charge.

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Motion to Dismiss Case: The court reserves on counts 1 & 2 and as to Count 3; heard and DENIED.

Count 3 is a false statement charge related to an alleged omission on a financial disclosure form submitted by Mr. Verrusio. Mr. Verrusio allegedly failed to list receipt of a trip to New York for the 2003 World Series as a gift. That count remains intact.

Judge Roberts reserved judgment on Count 1 (Conspiracy to Obtain Illegal Gratuities) and Count 2 (Illegal Gratuity). Mr. Verrusio observes that an illegal gratuity must be accompanied by an official action. He claims that he did not perform an official act in exchange for the alleged World Series trip. Here are the acts the indictment alleges Mr. Verrusio performed:

19. On October 22, 2003, Hirni emailed to defendant VERRUSIO information about the three amendments that Equipment Rental Company was seeking to insert in the Federal Highway Bill.

20. On October 27, 2003, defendant VERRUSIO emailed Himi, apologizing for not responding sooner to Himi's October 22 email about the three amendments sought by Equipment Rental Company, telling him that the amendments needed more work "for anyone to be able to help with progress...," and informing Hirni that defendant VERRUSIO was "around this week." ....

22. In January 2004, defendant VERRUSIO, Blackann, Boulanger, Hirni, and Person #1 took steps to protect the Equipment Rental Amendment, which by that time had been inserted into the Senate version of Federal Highway Bill, from a challenge being mounted by small business owners and companies which sold and distributed - rather than rented - construction equipment (the "Equipment Distributors"). The steps taken to protect the Equipment Rental Amendment included, among other things, the following:

c. In January 2004, defendant VERRUSIO met with Boulanger in his Congressional office and suggested that Boulanger organize a letter writing campaign from the owners and operators of individual Equipment Rental Company facilities to Congressional members, in order to counter the Equipment Distributors' efforts to oppose the Equipment Rental Amendment.

d. In January 2004, defendant VERRUSIO suggested to Hirni that Hirni organize a letter writing campaign from the owners and operators of individual Equipment Rental Company facilities to Congressional members, in order to counter the Equipment Distributors' efforts to oppose the Equipment Rental Amendment.

You make the call. Do those acts rise to the level of an "official act"?

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Somewhat amusingly perhaps, attorneys for Mr. Verrusio appear to see an alleged "official act" in the Illegal Gratuity charge in Kevin Ring's indictment. From Mr. Verrusio's Motion to Dismiss:

[I]n United States v. Ring, the defendant Kevin Ring allegedly violated the antigratuity statute by giving a gratuity to a public official because the official had attempted to expedite an INS review. There ... the court catalogued the many specific official acts that the public official had allegedly taken in connection with the gratuity charge.

In contrast to ... Ring, the Indictment in this case fails to allege that Mr. Verrusio engaged or planned to engage in any official acts.

Heh-heh.

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***UPDATE***
December 25, 2009

Occasionally commenters will chide the ACR Blog for its overt bias toward the Department of Justice with respect to the Abramoff scandal. Well, it seems that we haven't fully portrayed the DoJ's position in U.S. v. Fraser Verrusio. There obviously was a response to Mr. Verrusio's Motion to Dismiss. In it, the DoJ offers the most persuasive of the alleged "official acts" performed by Mr. Verrusio:

As specified in the discovery previously provided to the defendant, the government will offer another specific example of the assistance to be provided by Verrusio, namely that Verrusio agreed to insert the amendments at the conference committee stage for the Federal Highway Bill.

The insertion of amendments at the conference committee stage is undeniably an official act. As to why the DoJ merely "specified" this in discovery materials and didn't specify it in the indictment is unknown. Judge Roberts will have to decide whether this is sufficient notice to Mr. Verrusio.

USA v. Kevin Ring: Get Ready for a Retrial!

Kevin Ring borrows a red cup while
visiting Todd Boulanger's home

On Friday, the Justice Department filed its response (.pdf) to Kevin Ring's Motion for Judgment of Acquittal (MJOA). We've been eagerly waiting for this document for two basic reasons. First, we believed that the "vigor" of the Government's Response would tell us whether the DoJ was serious in pursuing a retrial against Mr. Ring. The second reason was that we also had some concerns as to whether the the DoJ might have lost confidence in the Honest Services Fraud (HSF) law.

It would appear that our fears were misplaced. The Justice Department filed a strong response to Mr. Ring's MJOA and robustly defended the HSF law.

In our opinion, the most significant point raised by Mr. Ring's attorneys in the MJOA was that the Justice Department had failed to prove the required element of material misrepresentation / intentional concealment during his September trial. While we have expressed some concerns about aspects of the prosecutorial strategy of the DoJ, we've always been confident that the DoJ had met the burden of showing a material misrepresentation. The Government's Response makes a strong case that there were multiple material misrepresentations by Mr. Ring and his alleged co-conspirators:

1. Disguising Description of Things of Value. According to the DoJ, Mr. Ring disguised the description of things of value when he referred to event tickets as "fruit" when communicating with Jennifer Farley. This first example provided by the government in its response has long been one of our favorites. We specifically mentioned this misrepresentation in our material misrepresentation post. (Govt Response, pp. 7-8)

2. Concealment of Conversations with Co-conspirators. Specifically, the government shows that Mr. Ring asked David Mielke, a lawyer for the Sandia Pueblo, to delete an email recounting a conversation with co-conspirator John Albaugh, an aide to U.S. Representative Ernest Istook (R-Okla.). Mr. Ring also told Jack Abramoff that sending emails to official White House officials "might actually limit what they can do to help us." (Govt Response, pp. 8-9)

3. Disguising the Recipients of Things of Value. According to the DoJ, Mr. Ring would not identify the names of public officials receiving things of value, often using vague terms such as "conservative activist" on expense reports. While Judge Huvelle didn't seem convinced that concealing this information on expense reports would meet the standard of "intentional concealment", we have stated our belief that it does (of course her opinion is far more important than ours). According to the testimony of Team Abramoff member Neil Volz, Mr. Ring would not identify staffers he took to games because he didn't want to put the public officials "in a bad spot". Mr. Ring's motivation seemed to be to protect the public officials, not to protect Greenberg Traurig. A reasonable person could conclude that the "bad spot" the public official might be placed in was having to explain an incomplete disclosure form. (Govt Response, pp. 9-11)

4. Concealment of Real Motivations. In our opinion, the weakest of the government's arguments is that Mr. Ring helped public officials hide the true motive for taking public actions. The example provided by the DoJ involves Mr. Ring's efforts to get Rep. John Doolittle (R-Calif.) to introduce a bill to make Puerto Rico the 51st state. In order to show that Mr. Doolittle had an interest in Puerto Rico statehood, Mr. Ring proposed sending Mr. Doolittle and/or his staffers on a trip¹ to the island. The author of the ACR Blog believes that when people make decisions, there are often multiple motivations responsible for whatever the final decision may be. Isolating a single motivation may not be possible. However, viewing this matter in a light most favorable to the prosecution, it is possible that a reasonable juror might conclude that the "real motivation" of Mr. Doolittle's interest in Puerto Rico may have been the trip provided by Greenberg Traurig.

Overall, we believe the Justice Department provided a strong case showing several material misrepresentations / intentional concealments. More importantly, Judge Huvelle needs to be persuaded on only one of the theories advanced by the DoJ to deny Mr. Ring's MJOA. The ACR Blog finds 3.5 of the 4 material misrepresentations offered by the DoJ to be convincing. (Sorry, DoJ, we just couldn't give full credit to #4.)

Therefore, we predict that Judge Huvelle will find that the government has met its burden to show material misrepresentation, and that she will deny the MJOA.

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¹ The only public official to actually travel to Puerto Rico was David Lopez, a staffer for Mr. Doolittle. Kathy Lopez, Mr. Lopez's wife, accompanied him. Mr. Ring didn't want Mr. and Mrs. Lopez to have too many scheduled visits or activities on the trip. Mr. Abramoff said they didn't have to have any scheduled activities. (Ring Indictment; Paragraph 95). This sounds like a vacation to the ACR Blog.

USA v. Kevin Ring: Govt Response due Today

Earlier this month, we discussed a Motion for Judgment of Acquittal (MJOA) filed by former Greenberg Traurig lobbyist and Team Abramoff "COO" Kevin Ring in his on-going criminal case. Mr. Ring's basic point was that the Justice Department had failed to prove the required element of a material misrepresentation or concealment of fact necessary to sustain a conviction for Honest Services Fraud (HSF). A poor response today by the DoJ could derail the seven HSF-related counts on Mr. Ring's ten-count indictment. (Two counts related to alleged false statements have previously been severed and are still outstanding.)

The DoJ seems to have lost a little confidence in the HSF law due to pending HSF-related cases before the Supreme Court. On December 7, the DoJ amended the indictment of former Illinios Governor Rod Blagojevich to remove HSF counts. Even though Mr. Blagojevich's case is totally unrelated to Mr. Ring's case, the amended indictment may provide insight into the DoJ's strategy related to all HSF cases. The ACR Blog will post the Government's Response when it is available.

... more ...

Recall that back in October, National Journal's Beth Sussman reported that U.S. District Judge Huvelle "suggested the government could try Ring on charges of bribery instead of honest services wire fraud."

This is not a law blog and we don't pretend to know with certainty whether this is permissible. The ACR Blog acknowledges that Judge Huvelle is far more knowledgeable than we are. If she says the DoJ has the option to amend Kevin Ring's indictment at this late date and remove the HSF charges, we believe that this is legally permissible.

The DoJ's response to Mr. Ring's MJOA is certainly not be the proper venue to amend the indictment, but that option seems to be available to the DoJ and the Government's Response may show us what the government's strategy is going forward.

... more ...

March 11, 2010: Jim Hirni Status Hearing

On Monday, the following notice related to U.S. v. James Hirni appeared on PACER:

Joint Status Report due by 3/11/2010., Signed by Judge Richard W. Roberts on 12/7/09.

We're not sure why it took a week for this notice to show up on PACER, but the fact that Judge Roberts deferred the status report until March supports the ACR Blog's position that the DoJ is still investigating the Abramoff scandal. Last week, we noted that Josh Bresnahan of Politico thought the imminent sentencing of Michael Scanlon could signal the end of the investigation into the Abramoff scandal. The ACR Blog believes that Justice intends to ask for sentencing dates only for those defendants whose cases are in the courtroom of U.S. District Judge Ellen S. Huvelle.

We hope Justice doesn't disappoint.

Michael Scanlon's Status

Back in October, we discussed the fact that U.S. District Judge Ellen S. Huvelle had urged prosecutors to sentence individuals connected to the Jack Abramoff scandal. Judge Huvelle reasoned that if witnesses were sentenced, they would be able to testify in the retrial of Abramoff lieutenant Kevin Ring. The purpose of Judge Huvelle's entreaty was not clear to the ACR Blog. No evidence exists to suggest that some witnesses were not available because they had not yet been sentenced. In fact, several witnesses in Mr. Ring's trial fall into the category of convicted yet not sentenced including John Albaugh, Ann Copland and Todd Boulanger.

Today, John Bresnahan of Politico reports that the Justice Department has taken a step toward sentencing Abramoff partner Michael Scanlon:

Michael Scanlon, the former political operative whose 2005 guilty plea helped cause the downfall of former House Majority Leader Tom DeLay (R-Texas) and GOP lobbying superstar Jack Abramoff, is likely to be sentenced to a federal prison term early next year, according to new court documents.

The move could signal the end of the Justice Department’s long-running investigation into Abramoff’s activities and associates, although cases against some individuals involved in the scandal remain open.

We believe that Mr. Bresnahan's suggesting that this move "could signal the end of the Justice Department’s long-running investigation into Abramoff’s activities and associates" is a bit of a leap. The Justice Department has asked the D.C. District Court to defer status hearings for several Abramoff scandal felons since Judge Huvelle's October 18 statement urging sentencing:

Trevor Blackann
Deferred: November 18, 2009

Todd Boulanger
Deferred: October 28, 2009

Ann Copland
Deferred: December 3, 2009

Jim Hirni
Request for deferral¹: December 6, 2009

Mr. Scanlon's case differs from the above cases in one notable way. U.S. v. Scanlon is in Judge Huvelle's courtroom while all of the above cases are being handled by U.S. District Judge Richard W. Roberts.

It appears to the ACR Blog that the Justice Department is being deferential to Judge Huvelle's request to sentence defendants in the cases before her. In other cases, the DoJ is deferring sentencing as has been its practice in the past. Based on these fact that the DoJ successfully deferred sentencing on these defendants as recently as a week ago, the ACR Blog can not conclude that the Justice Department's actions are signaling an end to the Abramoff investigations.

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¹ In U.S. v. James Hirni, the defense and DoJ filed a joint motion to reschedule a status conference earlier this week. Judge Roberts has yet to issue an order on the joint motion.

Status Conference

A reader recently asked for a quick update on all the Abramoff-linked defendants with on-going court cases:

Cooper, Horace (RWR)
Status: Pled not guilty
Last action date: November 30, 2009
Next action date: January 25, 2010
Next action item: Govt exhibit list due
Trial date set: May 10, 2010
Linked to: Rep. Don Young; Rep. Tom DeLay

Verrusio, Fraser (RWR)
Status: Pled not guilty
Last action date: November 24, 2009
Next action date: December 17, 2009
Next action item: Motion hearings
Linked to: Rep. Don Young

Albaugh, John (ESH)
Status: Guilty
Last action date: October 13, 2009
Next action date: January 7, 2010
Next action item: Status Conference
Linked to: Rep. John Doolittle

Blackann, Trevor (RWR)
Status: Guilty
Last action date: November 18, 2009
Next action date: February 18, 2010
Next action item: Status Conference
Linked to: Rep. Don Young

Boulanger, Todd (RWR)
Status: Guilty
Last action date: October 28, 2009
Next action date: February 1, 2010
Next action item: Status Conference
Linked to: Rep. Don Young; Rep. John Doolittle

Copland, Ann (RWR)
Status: Guilty
Last action date: December 4, 2009
Next action date: March 8, 2010
Next action item: Status Conference
Linked to: Rep. John Doolittle

Hirni, James (RWR)
Status: Guilty
Last action date: September 11, 2009
Next action date: December 11, 2009
Next action item: Status Conference
Linked to: Rep. Don Young; Rep. John Doolittle

Rudy, Tony (ESH)
Status: Guilty
Last action date: October 13, 2009
Next action date: January 26, 2010
Next action item: Status Conference
Linked to: Rep. Tom DeLay

Scanlon, Michael (ESH)
Status: Guilty
Last action date: September 1, 2009
Next action date: December 10, 2009
Next action item: Status Conference
Linked to: Rep. Tom DeLay

Zachares, Mark (ESH)
Status: Guilty
Last action date: October 8, 2009
Next action date: January 8, 2010
Next action item: Status Conference
Linked to: Rep. Don Young

Key:

Initials after defendant's name indicate the judge handling the case. ESH is U.S. District Judge Ellen S. Huvelle. RWR is U.S. District Judge Richard W. Robertson.

The author of the blog included a quick reference to the U.S. Congressmen each defendant is closely associated with. This item is highly subjective and reasonable people may disagree with the author.

Kevin Ring Retrial Prognostication

We all know that Kevin Ring's trial for corruption-related charges ended in a mistrial, causing U.S. District Judge Ellen S. Huvelle to schedule a June 2010 retrial.

On November 18, attorneys for Mr. Ring filed a renewed Motion for Judgment of Acquittal (MJOA). The MJOA asks Judge Huvelle to "enter a judgment of acquittal as to each of the eight counts of the indictment." This indeed would be a favorable outcome for Mr. Ring since a judgment of acquittal has jeopardy attached to it, giving Mr. Ring double jeopardy protections.

The MJOA is very heavy on law and essentially devoid of the kind of non-legal facts about this case that my brain finds more palatable. Accordingly, we haven't addressed the MJOA prior to this point, and even now will do so only in a limited manner.

One noticeable aspect of the MJOA is that it only addresses the Honest Services Fraud (HSF) counts; it doesn't mention Count II, the Illegal Gratuity allegedly paid to Robert Coughlin¹. Unless this was addressed in a previous motion, the ACR Blog can't see, even in the most favorable light for the defense, that Judge Huvelle can enter a judgement of acquittal for Count II.

The defense's basic argument in the MJOA is that the evidence presented at trial did not satisfy the government's burden to prove an element of material misrepresentation / intentional concealment as part of HSF. Judge Huvelle does not seem to be convinced of the DoJ's theory on material misrepresentation / intentional concealment. If Justice does not convince Judge Huvelle that such a misrepresentation exists, it will be fatal to their HSF counts. It is imperative that the DoJ clearly articulate its position on this matter, and it won't be easy.

Most importantly from our perspective, Judge Huvelle has given the government until December 18, 2009 to respond to the MJOA. Up until this point, the Justice Department has not had to expend much in the way of resources to pursue a retrial. The vigor of their response may well provide us with some clues as to just how seriously they intend to pursue Mr. Ring moving forward.

December 18, 2009. This is the first significant date on the path toward a retrial of Kevin Ring. Let's see what the government does. We're hoping they don't give up - we're hoping for an articulate, convincing and vigorous response.

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¹ Bob Coughlin pleaded guilty to a conflict of interest charge. Although Mr. Ring has been indicted for paying an illegal gratuity to Mr. Coughlin, Mr. Coughlin was not held criminally liable for receiving a gratuity.