New Judge, New Trial Dates Coming Up, but Still No Guarantee of Trials for Kott and Kohring

Anchorage--

I'm engaged in pressing personal business that will limit my blogging for a few more days. Today's news is that the move of U.S. District Judge John Sedwick to senior status (semi-retirement) later this year has resulted in the transfer of the cases of former State Reps. Pete Kott (R.-Eagle River) and Vic Kohring (R.-Wasilla) to Judge Ralph Beistline.

None of the recent developments have shaken my belief that neither of those former lawmakers will be retried on the federal corruption charges which put them in prison before discovery problems produced the reversals of their convictions.

I'm been lax lately on the posting. To compensate, here's a copy of my column in this month's edition of the Alaska Bar Rag, the quarterly publication for the Last Frontier's lawyers:

What Does the Federal Probe into Public Corruption Mean for Alaska?

by Cliff Groh

(First of several installments)

Born in the Territory of Alaska in 1954, I grew up in a skinny Anchorage media environment in which there was no live TV until the first moon walk occurred when I was 15.

Reading newspapers and magazines as a boy in the 1960s, I noticed occasional stories of public corruption—of police on the take, government officials who accepted bribes—in states like Massachusetts, New Jersey, and Illinois. I really didn’t see that in Alaska, so I asked my father about it. He was a former President of the Alaska Bar Association who had served as both a prosecutor and criminal defense attorney; he had also been on the City Council, the Borough Assembly, and the School Board.

My father said “Well, son, there’s not enough money to steal.”

Back in the mid-1960s, Alaska was a young state with a thin economy. Although people on the Last Frontier felt poor, there was still some of that aura of idealism and optimism that remained from the excitement of achieving statehood in the late 1950s.

The announcement in 1968 of the discovery of a super-giant oilfield at Prudhoe Bay on the North Slope brought billions and billions of dollars to Alaska, both to the private economy in paychecks and to the state government’s coffers in taxes and royalties on oil development.

The long-running federal investigation into Alaska public corruption has underscored some of the changes seen in the 49th State, and that probe has also caused some. Most of the cases produced by the federal investigation involved alleged efforts to influence public officials regarding the state’s taxes on oil development.

This probe electrified Alaskans. Think back to the wild days between the late summer of 2006 and the fall of 2008. In those 27 months, 11 people got charged with federal felonies. Those 11 included:

Ø legendary U.S. Senator Ted Stevens (R.-Alaska);
Ø five state legislators (some of whom had left office)—State Sen. John Cowdery (R.-Anchorage) and State Reps. Tom Anderson (R.-Anchorage), Bruce Weyhrauch (R.-Juneau), Pete Kott (R.-Eagle River and a former Speaker of the Alaska House of Representatives), and Vic Kohring (R.-Wasilla);
Ø Jim Clark, the chief of staff to former Alaska Governor Frank Murkowski;
Ø Bill Allen, a political kingmaker who was the long-time CEO of the multinational oil-services giant VECO, a billion-dollar company;
Ø Bill Weimar, the multimillionaire former head of the private corrections corporation Allvest;
Ø Rick Smith, a VECO vice president who served as Allen’s chief political lieutenant; and
Ø Bill Bobrick, a prominent lobbyist working on municipal issues in the Municipality of Anchorage.

At the end of 2008, 10 of those 11 people had pleaded guilty or heard juries deliver guilty verdicts on all or almost all counts they faced. FBI surveillance tapes—many made at the VECO-rented Suite 604 in Juneau’s Baranof Hotel—greatly aided the prosecutors in their cases at trial. Alaskans were mesmerized by iconic images of Allen telling Kott “I own your ass” and Allen handing cash to Kohring, and many citizens were stunned by how little it seemed to take to get some public officials to sell their offices.

Long accustomed to serving either as a sugar daddy or a political punching bag on the Last Frontier, between late 2006 and late 2008 the feds seemed to be on a roll straightening out a mess in Alaska.

Back in 2008, those 11 defendants seemed very likely to increase by a lot. Multiple sources told Alaska journalist Bill McAllister that 26 people would be indicted in the federal investigation into public corruption in the state. Speculation on potential additional defendants centered on U.S. Rep. Don Young (R.-Alaska) (identified in media reports as being under investigation for alleged campaign fund-raising violations, among other things) and former State Senate President Ben Stevens (R.-Anchorage) (whom federal prosecutors got Bill Allen and Rick Smith to say that they had bribed).

Code-named “POLAR PEN” (apparently for its origins in an examination into corruption regarding private prisons), this federal investigation has had big effects, both for people and for policy.

Eight defendants ultimately went to prison, and one served a sentence of home confinement. The executions of the search warrants on the offices of six state legislators beginning in August of 2006 helped fuel the gubernatorial campaign of insurgent Republican candidate Sarah Palin, already running on a platform of “I’m not one of the good old boys.” The oil tax legislation in 2006 that sent some lawmakers to prison was amended the next year to increase taxes substantially on the oil companies after the first indictments frightened some legislators into avoiding even the appearance of being in the pocket of the petroleum industry.

And after almost 40 years in the U.S. Senate, Ted Stevens got defeated for re-election in November of 2008 eight days after a jury returned guilty verdicts on seven felony counts of failing to disclose gifts on U.S. Senate forms. At the Senator’s insistence, the trial started only 55 days after the indictment instead of eight months or so later as would normally have occurred in this kind of case. Given the small margin in the voting, it’s clear that Stevens would have been re-elected if the trial had either not started or still been in progress on election day.

But now—about eight years after the investigation started—it’s all different. The POLAR PEN probe has fizzled out in ways that are both surprising and disappointing.

The case against Ted Stevens collapsed in the wake of revelations of prosecutors’ substantial failures to share evidence with the defense; the seven guilty verdicts got overturned, and Attorney General Eric Holder elected not to seek a retrial. The meltdown of the Ted Stevens case led to the federal government finding discovery failures in the cases against former Reps. Kott and Kohring, and the Ninth Circuit Court of Appeals has reversed their convictions. (Although as of this writing the federal government could retry Kott and Kohring, I predict that this will never happen. Note that this forecast comes from the same analyst who confidently predicted that Ted Stevens would never testify in his own defense.)

Following a U.S. Supreme Court decision that substantially narrowed the scope of the honest-services fraud statute—a law that provided a favorite arrow in the quiver of federal prosecutors—the Department of Justice dismissed the federal felony charges against Weyhrauch and let him plead guilty to a unique state misdemeanor that resulted in no jail time. (Weyhrauch’s lawyers have also gotten permission from the U.S. District Court to forward to the Alaska Bar Association evidence that they allege shows “serious misconduct by government prosecutors appearing before the grand jury,” including the suborning of perjury.) Clark was also allowed to withdraw his guilty plea in the wake of that Supreme Court decision.

The prosecutors charged a 12th defendant in 2009—former State Rep. Beverly Masek (R.-Willow)—who pleaded guilty and served a prison sentence, but she is clearly the last defendant in the POLAR PEN probe.

It is the probers who are now on the griddle. The federal government is conducting two probes of the conduct of the prosecutors and investigators who worked on the federal government’s investigation of Alaska public corruption. The Justice Department’s internal watchdog unit—the Office of Professional Responsibility (OPR)—is holding one of the two satellite probes; the other investigation is a highly unusual criminal probe run by a special counsel selected by the trial judge in the Ted Stevens case. Fingerpointing among various prosecutors over the discovery and handling of allegations against Bill Allen involving sexual abuse of minors appears to have contributed to the delays in wrapping up the two probes, which have each gone on for more than two years.

A story that seemed to start out with white hats and black hats has picked up a lot of shades of gray. The arc of some Alaskans’ feelings went from the bumper stickers of “We don’t give a damn how they do it Outside” to “Thanks FBI for cleaning up Alaska”—now it’s more like “How could the feds foul this up?”

This is the first in a series of columns to examine the causes, effects, and significance of the federal investigation into Alaska public corruption. It will rely on my extensive experience in Alaska, which brings both knowledge of how the state works and a number of other associations that might be seen as conflicts of interest when writing about this subject. (The full list of disclosures can be found at my blog at http://alaskacorruption.blogspot.com/2011/05/even-more-updated-biography-with-still.html on the Internet.) There are some lessons here and some elemental human stories, and this series of columns will have some of both.


Cliff Groh is a lifelong Alaskan who has worked as a prosecutor and represented some criminal defendants in his private practice. He maintains a blog on the federal investigation into Alaska public corruption at www.alaskacorruption.blogspot.com on the Internet. He is a lawyer and writer in Anchorage whose law practice focuses on the writing and revision of briefs and motions.

The Bare Record of the Federal Probe into Alaska Public Corruption

Anchorage--


With the substantial misinformation on this topic floating around the Internet, it seems useful to lay out the record on the federal investigation into public corruption in Alaska. Twelve people have been charged--nine for crimes associated with the defunct multinational oilfield-services corporation VECO, and three for crimes associated with efforts regarding private corrections facilities.


Of the nine people charged with crimes associated with VECO, six people stand convicted today while three other cases ran off the rails. The convictions against one of those six--ex-State Rep. Pete Kott (R.-Eagle River)--looks shaky on appeal, however, and the conviction of another of the six--ex-State Rep. Bruce Weyhrauch (R.-Juneau)--was for a unique state misdemeanor instead of the four felony charges that the federal government originally laid against him.


Of the three people charged with crimes associated with private prisons, all three cases resulted in federal felony convictions that will stay in place.


Here's a graphic showing the current status of the cases, in this blog's characteristically unflashy style:



Individual / Role / Crimes charged / Sentence of custody after resolution of case / Legal status as of 19 March 2011



Ted Stevens / U.S. Sen. / Deliberate failure to report on Senate disclosure forms gifts and/or liabilities, primarily associated with VECO and/or its long-time CEO Bill Allen / Never sentenced after jury verdicts of guilty set aside following revelations of prosecutorial misconduct / Free until death in August of 2010


Pete Kott / State Rep. / Crimes associated with corruption regarding Petroleum Profits Tax (PPT) oil tax legislation in 2006 / Six years after jury verdicts of guilty / Free while courts sort out allegations of prosecutorial misconduct (case currently in Ninth Circuit Court of Appeals)


Vic Kohring / State Rep. / Crimes associated with corruption regarding Petroleum Profits Tax (PPT) oil tax legislation in 2006 / 3.5 years after jury verdicts of guilty / Convictions overturned by Ninth Circuit based on prosecutors' failures to turn over evidence to the defense; no decision announced by Department of Justice on re-trial


Tom Anderson / State Rep. / Crimes associated with corruption regarding private prisons / Five years after jury verdicts of guilty / Released from prison to halfway house in February of 2011

Beverly Masek / State Rep. / Conspiracy to take bribes from Bill Allen and a relative regarding oil tax legislation / Six months in prison after guilty plea / Out of prison


Bruce Weyhrauch / State Rep. / Crimes associated with corruption regarding Petroleum Profits Tax (PPT) oil tax legislation in 2006 / Three-month suspended sentence following guilty plea to state misdemeanor of knowingly dealing with unregistered lobbyists in return for dismissal of felony charges / Free on probation


John Cowdery / State Sen. / Conspiracy with Bill Allen to bribe another legislator regarding PPT oil tax legislation / Six months of home confinement pursuant to guilty plea / Free after end of sentence


Jim Clark / Chief of Staff to Governor Frank Murkowski / Conspiracy to commit honest services fraud by taking illegal campaign contribution from VECO for Frank Murkowski’s gubernatorial re-election campaign / Allowed to withdraw guilty plea to charge after U.S. Supreme Court cut back on scope of statute making honest services fraud a crime / Free


Bill Allen / Chairman (former CEO) of VECO and Power Broker / Crimes associated with corruption regarding Petroleum Profits Tax (PPT) oil tax legislation in 2006 as well as tax violations / Three years after guilty pleas / In prison


Rick Smith / Vice President of VECO and Political Lieutenant of Bill Allen / Crimes associated with corruption regarding Petroleum Profits Tax (PPT) oil tax legislation in 2006 as well as tax violations / 21 months after guilty pleas / In prison


Bill Weimar / Power Broker and Private Corrections Magnate / Conspiracy to commit honest services fraud and structuring transactions regarding campaign contribution to legislative candidate whom Weimar believed would support Weimar's efforts regarding private prisons / Six months in prison and six months of home confinement after guilty pleas / Discharged from this sentence, but now charged with felony child sexual abuse in Florida



Bill Bobrick / Lobbyist / Conspiracy to commit extortion, bribery, and money laundering in conjunction with efforts regarding private corrections facilities / Five months in prison and five months in home confinement after guilty pleas / Free after serving sentence

Feds Used "Honest Services Fraud" Statute in Half of the "POLAR PEN" Cases

Washington—


Readers have asked what effect an elimination or trimming back of the “honest services fraud” statute at issue in Bruce Weyhrauch’s appeal on which the U.S. Supreme Court heard oral argument last week would have on the prosecutions in the Alaska investigation into public corruption.

Twelve people have been charged criminally in this investigation. Of those 12, six have been charged under the statute being challenged. In addition to former State Rep. Weyhrauch (R.-Juneau), those six are: former State Rep. Pete Kott (R.-Eagle River), who was acquitted of that charge at trial; Jim Clark, former Chief of Staff to Gov. Frank Murkowski; Bill Weimar, former private prisons magnate; former VECO CEO Bill Allen; and former VECO Vice President Rick Smith. By the same token, former U.S. Sen. Ted Stevens, former State Rep. Vic Kohring (R.-Wasilla), former State Rep. Beverly Masek (R.-Willow), former State Sen. John Cowdery (R.-Anchorage), former State Rep. Tom Anderson (R.-Anchorage), and former lobbyist Bill Bobrick never faced an honest services fraud charge.

Of those six, only Weyhrauch has neither pleaded guilty or been tried already. The jury convicted Kott of other crimes while acquitting him of the charge of honest services fraud; whatever else happens while U.S. District Judge John Sedwick sorts out the allegations of prosecutorial misconduct in the trial, the acquittal means that Kott can’t be retried on that count. Allen and Smith pleaded guilty to multiple counts along with a single count each of conspiracy to commit honest services fraud as well as other crimes, and for a variety of reasons are unlikely to appeal based on a favorable U.S. Supreme Court ruling. Weimar has served the prison portion of his sentence, and also seems an unlikely candidate to try to rely on such a ruling. Clark has pleaded guilty to a single count of conspiracy to commit honest services fraud, and depending on the U.S. Supreme Court’s decision on the statute he might have a defense.


The uncertainty over the legal standing of the honest services fraud statute might also be affecting the Alaska corruption investigation by causing the Department of Justice to hold off on adding to the number of defendants. A reader has pointed out that this uncertainty may have helped block the prosecution against former State Sen. Jerry Ward (R.-Anchorage), whose unsuccessful 2004 legislative campaign has been identified in media accounts as the recipient of illegal campaign contributions from Weimar. The questions hanging over the future of the honest services fraud statute may also contribute to the reluctance of the feds to prosecute former State Senate President Ben Stevens (R.-Anchorage) and U.S. Rep. Don Young.

Beverly Masek Goes to Prison

Anchorage--

Former State Rep. Beverly Masek (R.-Willow) has started serving her six-month prison term.

The Anchorage Daily News reported this morning that the ex-legislator went this week into a minimum-security federal prison camp for women in the California desert.

Masek joins ex-State Rep. Tom Anderson (R.-Anchorage) as the only persons in prison as a result of the long-running federal investigation into Alaska public corruption.

The roundup of the other 10 defendants charged in that investigation is as follows:

Former State Reps. Pete Kott (R.-Eagle River) and Vic Kohring (R.-Wasilla) began serving multi-year prison terms, but both were released earlier this year and remain free while a judge sorts out allegations of prosecutorial misconduct in their trials.

A pre-trial appeal sidetracked the case of former State Rep. Bruce Weyhrauch (R.-Juneau), and the U.S. Supreme Court is set to hear oral argument next month in that appeal. Depending on the Supreme Court's decision and the Department of Justice's evaluation of that decision, Weyhrauch could be tried in Anchorage next September.

Bill Allen and Rick Smith, former executives of the now-defunct oil-services company VECO, have not yet been assigned spaces in prison and so have not yet begun serving time, according to the Anchorage Daily News.

Jim Clark, former Chief of Staff to Gov. Frank Murkowski, has pleaded guilty and his sentencing has been delayed to next fall.

Former municipal lobbyist Bill Bobrick and former private prisons magnate and powerbroker Bill Weimar have served the prison portions of their sentences.

Former State Sen. John Cowdery (R.-Anchorage) escaped a prison sentence due to the sentencing judge's concerns for his poor health.

The guilty verdicts rendered by a jury against former U.S. Sen. Ted Stevens (R.-Alaska) were set aside due to prosecutorial misconduct.