Thursday, October 29, 2009

Bill Allen and Rick Smith Face the Music and Are Rewarded for Playing Along with the Feds


Convicted briber and former VECO CEO Bill Allen got sentenced to three years in prison and his former subordinate Rick Smith got one year and nine months.

Many Alaskans were surprised and outraged by the apparent leniency of the sentences—particularly the one imposed on Allen—comparing them to the longer prison sentences given to two of the state legislators they bribed.

The same judge who yesterday morning sentenced Allen and Smith had previously sentenced ex-State Reps. Pete Kott (R.-Eagle River) and Vic Kohring (R.-Wasilla) to six years and three-and-a-half years, respectively.

U.S. District Judge John Sedwick cited three factors in giving what he tacitly conceded would be seen as a light sentence on Allen: the extensive cooperation the long-time oil-services tycoon had provided to the federal government regarding other wrongdoers; Allen’s bad health; and the difficulties Allen will face in prison.

The second and third factors seem to overlap substantially—unless the judge was referring to Allen’s status as a “snitch”—and almost like makeweights, given how many people who are ill and cooperating witnesses are sent away for long periods for such serious crimes.

Cooperation with the feds was the key in lopping years off the sentences of both Allen and Smith. The judge was making a statement that what somebody does after they’re caught—what experts call “post-offense behavior”—can make a big difference in the punishment that person gets.

Judge Sedwick stressed how much time and effort the two former VECO executives spent with federal investigators and prosecutors getting debriefed on their crimes with others and participating in monitored conversations with other suspects. The judge said that the only way that Allen could given more in cooperating was to risk the life of himself or his family. (Although Allen’s lawyer Bob Bundy said that he was unaware of any threats to Allen, the attorney suggested that the ferocity of the reaction to the VECO chieftain’s testimony against former U.S. Ted Stevens could lead a deranged fan of the long-time Republican lawmaker to try to kill Allen in the future.)

To justify the lighter sentence for Allen compared to what Kott and Kohring got, the judge contrasted the corporate tycoon’s cooperation with those former state legislators’ refusal to cooperate or to accept responsibility for their crimes. Kott even went so far, Judge Sedwick noted, to give testimony at his trial that the jury found to be false.

Assuming—as Judge Sedwick announced that he would—that Allen’s statements to the Department of Justice and to the court were “forthright and truthful,” there is an oddity in the court rewarding Allen for the extent of his cooperation. It’s odd because the sheer amount of crimes Allen had committed was the reason the corrupt businessman could cooperate so much. Allen was “the fellow at the top of the pyramid,” in the words of the judge, and being at the top gave him a good view of a lot of people he could roll over on. To put this point in the context of a more common crime, if you only do one drug deal, you can’t spend more than two years cooperating in giving information against other conspirators. If you do a lot of drug deals with a lot of different people, on the other hand, you have a lot of dirt on a bunch of potential defendants to sell to the government.

Surprisingly, Judge Sedwick did not offer what is arguably a more persuasive justification for going harder on the legislators who took the bribes than the man who paid them: Pete Kott and Vic Kohring took oaths to uphold the laws of Alaska, while Allen never did. It’s widely understood that being a public official carries a special trust and responsibility that would support greater punishment for violations.

Given that the judge never mentioned the higher standard for public officials in justifying the three-year sentence for Allen, the court is left hanging its hat on the cooperation peg. In doing this, the judge has a fundamentally different picture of Allen in his head than does the Alaska public, and this helps explain the relatively light sentence. When Alaskans think of Bill Allen, they usually see pictures of the baron of bribery in Suite 604 telling Rep. Kott “I own your ass” or handing Rep. Kohring hundreds of dollars in cash. When Alaskans don’t picture Allen in that “Animal House” hotel room, they see him in a hot tub committing illegal acts with an underage minor.

When Judge Sedwick thinks of Allen, by contrast, he seems to exclude the image of the pervert, as Allen has never been charged with—much less convicted of—any of the alleged crimes involving minors that have been covered prominently in the press. The judge does see the man in Suite 604, but he balances that with the pictures of the man sitting in a chair at FBI headquarters spilling his guts as well as the sad figure on
the witness stand testifying against former friends.

I’ll end this post with two big-picture points that the judge got absolutely right. The judge imposed the maximum fine of $750,000 on Allen, and said he would have fined him more if the law allowed. In doing so, Judge Sedwick pointed out that the Petroleum Profits Tax (PPT) legislation that was the subject of the two VECO executives’ bribery carried high stakes. The outcome of that fight over oil tax legislation meant hundreds of millions—if not billions—of dollars that would either go to the State of Alaska in taxes or stay with the major oil producers. The stakes were big for the people of Alaska, the oil companies, and for Allen personally, who made a great deal of money from VECO’s contracts with those oil companies.

The judge also observed in both sentencings that Allen and Smith’s bribery threatened the foundation of our democracy. If their corruption had succeeded, the judge said, Alaska would have become like a “Third World imitation of democracy” in which who you know and who you pay off controls your life.

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