Confessed Briber Rick Smith to Get Off Probation Two Years Early

Anchorage--


Former VECO Vice President Rick Smith is scheduled to get off probation after only one year despite being ordered to serve three years of probation as part of his sentencing for his role in Alaska's biggest public corruption scandal.   Anchorage Daily News reporter Richard Mauer reports that Smith's probation officer has labeled him "a low risk to re-offend."

Mark Allen's Ex-Wife Accused of Murder

Anchorage--

If you have extra time over the Thanksgiving holiday, you might want to check out this racy tale in the Seattle Weekly about how the former wife of Mark Allen--Bill Allen's son--is facing a murder charge in Washington state.  

The story contains details of Mark Allen's life after his horse  won the 2009 Kentucky Derby.   A former 50 to 1 longshot, Mine That Bird now has its own website and is "the subject of a new series of graphic novels for kids and a soon-to-be animated movie."  

The article--dated November 16--does get at least one detail wrong about Bill Allen, the former CEO of the now-defunct multinational oil-services giant VECO.   The piece says that Bill Allen "still faces prison time, but hasn't been sentenced."    In fact, Bill Allen was scheduled to be released yesterday following a period in custody that included time in federal prison and a stay in a halfway house in his home state of New Mexico.      

This Seattle Weekly piece joins other media coverage in giving you a feeling that Mark Allen has lived a more, um, colorful life than most.   He met his ex-wife--variously described in the article as "leggy" and "formerly drop-dead-gorgeous"--in 2006.   This was the same year his father became a federal informant and apparently began negotiating a plea agreement that spared Mark from facing prosecution for bribery, and the year before the sale of VECO apparently netted Mark Allen $30 million.   Mark Allen met his wife when she chauffeured him in a limousine in Las Vegas she started driving after competing as Miss Washington in a beauty contest held in that gambling metropolis.    

Happy Thanksgiving.   As another holiday gift for you, I'll repeat what I told a reporter this morning.   The odds are higher that it will hit 85 degrees in Alaska tomorrow than there will be any prosecutions of the prosecutors for any acts committed in the investigations of the "POLAR PEN" public corruption scandals.   Despite today's editorial in the Anchorage Daily News calling for either for a prosecution of Bill Allen for child abuse charges or an explanation of his non-prosecution, the multimillionaire former tycoon and powerbroker will not be charged for any crimes involving underaged girls that allegedly occurred before August 30, 2006, the day he started cooperating with the federal government in its probe of Alaska public corruption.

Bill Allen Reportedly to Be Released from Federal Custody

Anchorage--

The Associated Press reports that Federal Bureau of Prisons show that convicted briber Bill Allen is scheduled to be released from custody today.    The long-time CEO of the now-defunct oil-services multinational corporation VECO and Alaska powerbroker had been in a halfway house in New Mexico, the state in which he was born and his son has a ranch.

Sex, Death, and Fingerpointing: Why the Probes into the Original Alaska Corruption Prosecutors Are Taking So Long

Anchorage—

More than two years have passed since two investigations began into the conduct of prosecutors and investigators who worked on the federal government’s investigation of Alaska public corruption. These probes of the probers arose in the wake of the botched prosecution of U.S. Sen. Ted Stevens, which ended in April of 2010 with the overturning of a jury’s guilty verdicts on seven felony counts and the dismissal of the case against the longtime lawmaker.

The Department of Justice’s internal watchdog unit—the Office of Professional Responsibility (OPR)—is conducting one of the two satellite investigations into the prosecutors and the investigators; the other investigation is a highly unusual criminal probe run by a special counsel selected by the trial judge in the Ted Stevens case.

Why have these two investigations gone on so long?

As I have said before regarding these matters, I don’t know for sure, and unless you are one of this blog’s readers on the inside in Washington, D.C., neither do you. Having said that, here are several factors that may be contributing to this delay of more than two years:

1. Sex. Issues surrounding the federal government’s handling of Bill Allen’s dealings with underage girls threaten to overwhelm the public’s recollection of the entire “POLAR PEN” federal probe into Alaska public corruption. Bill Allen is the multimillionaire former CEO of VECO, the defunct oil-services corporation, who became a key government witness against public officials he used to pal around with. (Allen is also my neighbor, although Bill and I don’t run into each other now that he’s in federal prison following his convictions for bribery and other crimes related to public corruption.)

The Department of Justice did not turn over to the lawyers for the defendants in the “POLAR PEN” probe the information federal officials possessed about Allen’s exposure to prosecution for various crimes associated with sexual abuse of minors and attempts to cover up that abuse, and those failures to share that evidence has raised some thorny issues. The natural human interest in sex—and the natural human outrage at sexual exploitation of minors—has apparently made particularly sensitive the question of who within the Department of Justice was responsible for not turning over that information.

Another hot potato is the question of what federal officials told Bill Allen about any relationship between the corrupt tycoon’s decision to cooperate with the feds and his potential prosecution for offenses related to sex with underage girls. Despite considerable evidence tending to show Allen’s guilt, no government has ever charged Allen with sexual abuse of minors or transportation of a person under 18 across state lines for purposes of prostitution (or for solicitation of perjury or obstruction of justice in covering up the sex crimes).

2. Death. The tragic suicide of Nicholas Marsh, one of the former prosecutors who played a critical role in the POLAR PEN probe, appears to have both reflected the length of the probes into the prosecutors and further extended them. His friends cited Marsh’s anguish over how long the investigations had run on as a factor in the attorney’s decision to take his life last September. Now that he is dead, there may be a substantial temptation for various other prosecutors involved in the Ted Stevens case in particular to try to dump it all on the dead guy.

3. Fingerpointing. Attempts to blame Marsh now that he can no longer defend himself appear to be a subset of substantial efforts among the lawyers involved in the POLAR PEN probe to deflect responsibility for the failures to share evidence to defendants in the cases that arose from that probe. When the fingerpointing runs out, there may even be negotiations going on regarding the possibility of one or more lawyers accepting certain punishments to escape the possibility of more serious penalties.

4. The extensive facts in the POLAR PEN cases and the new court rulings. Now we get to the reasons that the Justice Department would give itself if that famously tightlipped agency ever offered an official comment about OPR’s long-running internal ethics probe, and special counsel Henry Schuelke would probably tell the press the same thing about the criminal investigation if he ever talked. The POLAR PEN cases—particularly the case against Ted Stevens—generated many, many boxes of evidence, and it takes a while to go through all them and question the prosecutors and FBI and IRS agents who worked on the original federal investigation into Alaska public corruption.

There were also also three court decisions issued last month that the feds might say that they were reviewing to assess any effects those decisions should have on the investigations, the findings, and any decision by the special counsel to prosecute anyone. Those first two of those three are the Ninth Circuit Court of Appeals decisions reversing the convictions of former State Reps. Vic Kohring (R.-Wasilla) and Pete Kott (R.-Eagle River) based on prosecutorial misconduct. The third is the U.S. Supreme Court decision in a case arising in New Orleans in which the high court restricted the ability of criminal defendants to sue prosecutors for civil rights violations based on the government’s failure to provide (or “discover”) evidence to a criminal defendant. (Hat tip to Anchorage attorney Mark Regan for the thought on the U.S. Supreme Court case, plus additional sharpening of my thinking on this post.)


(Notice: I’ll be out of town for a week, so reactions may come more slowly to new developments in the subjects covered by this blog.)

Judge Orders Bruce Weyhrauch's Trial Moved to Juneau

Anchorage—

The court has granted former State Rep. Bruce Weyhrauch’s request to move his trial from Anchorage to Juneau. The trial of the ex-lawmaker is now scheduled to start on Monday morning, May 9, in Alaska’s capital city.

Weyhrauch has lived in Juneau for more than 20 years, and he represented a State House district in the Juneau suburbs for four years. Weyhrauch was elected as a Republican in 2002 and 2004, and he chose not to seek re-election in 2006.

Weyhrauch is charged with bribery, extortion, honest-services fraud, and conspiracy to commit the other crimes listed. The indictment alleges that Weyhrauch took actions as a legislator favorable to the defunct oil-services corporation VECO regarding oil-tax legislation on the understanding that VECO would in the future give him contract legal work. Weyhrauch’s case is the last still left hanging of the 12 brought by the federal government in the “POLAR PEN” probe into Alaska public corruption.

I must say I was surprised by the decision by U.S. District Court Judge John Sedwick. The judge had already denied this motion back in 2007 when the case was first supposed to go to trial back in 2007. As a practical matter, it’s not so fun for the judge to travel more than 500 miles to Juneau for a week for a trial when he has the discretion to decide to leave the trial in his hometown. The defense did a good job, however, on the renewed motion to move the trial (a change of venue, in legal lingo). Continuing the recent retreat into passivity shown by the feds in POLAR PEN, the prosecution did not even respond to the motion.

I add my standard disclosure that I have known Bruce Weyhrauch for about 20 years and have spent more time with him than any of the POLAR PEN defendants. We have not spoken since before his indictment, however, and he has never discussed this case with me.

Next up: What does the defense’s 16-page change of venue motion tell us about the upcoming trial?

Bruce Weyhrauch Gets Good News as the Honest Services Fraud Statute Gets Cut Back

Anchorage--

Mark Regan writes:

The Supreme Court has called into question the federal “honest services fraud” charges against Bruce Weyhrauch. Weyhrauch has been charged under a federal mail fraud statute, 18 U.S.C. secs. 1341 and 1346, with depriving Alaska citizens of the intangible right to his honest services. As with Pete Kott and Vic Kohring, the charges against Bruce Weyhrauch came out of the 2006 legislative session, when Bill Allen and VECO orchestrated legislative resistance to higher oil taxes. The Court has remanded Weyhrauch's case to the Ninth Circuit for further consideration in light of its decision in Skilling v. U.S., which held that the honest services fraud statute covered only bribes and kickbacks, not undisclosed self-dealing.

A reason it was difficult to make charges such as bribery and extortion stick against Bruce Weyhrauch was that the facts of his case differed significantly from the facts of Pete Kott’s and Vic Kohring’s cases. They got money, allegedly in return for voting VECO’s way on oil tax issues, and the exchange of money for votes looks like bribery and extortion. Weyhrauch did not get any money. He allegedly got the promise that VECO would talk with him about giving him some legal work at a date after the legislative session. He might have disclosed that he was negotiating with VECO about employment at the same time he was voting on various bills, but he didn’t disclose this. Just before trial, Judge John Sedwick ruled that Weyhrauch’s failure to disclose his ongoing discussions with VECO could not by itself be grounds for convicting him of honest services fraud. So, given that ruling and the facts of Weyhrauch’s case, the Federal Government decided to appeal Judge Sedwick’s ruling instead of going to trial.

Judge Sedwick didn't rule that the honest services fraud statute was unconstitutional. He ruled that it couldn’t be used to convict a public official of performing official acts while failing to disclose a conflict of interest, unless the public official’s failing to disclose that conflict of interest was illegal under state law -- which Bruce Weyhrauch’s failure-to-disclose wasn’t. The Ninth Circuit reversed this ruling about the honest services fraud statute, and the Supreme Court then granted Weyhrauch’s petition for certiorari.

Weyhrauch’s case was one of three honest services fraud cases pending before the Supreme Court. The other two involved a media financier, Conrad Black, who had allegedly gotten extra compensation from his company, and an Enron executive, Jeffrey Skilling, who had allegedly made false statements while trying to talk up the company’s share price. The issue principally raised in the Black case was whether the Government had to prove that Black’s conduct caused economic harm to the company. The issues principally raised in the Skilling case were whether the statements in question had to have led to economic gain for the person making the statements, and whether the honest services fraud statute is unconstitutionally vague.

The Supreme Court’s main discussion of the honest services fraud statute appears in its Skilling decision. Justice Ginsburg's conclusion for six members of the Court (herself, Chief Justice Roberts, and Justices Stevens, Breyer, Alito, and Sotomayor) is that the statute is not unconstitutionally vague, but only when it's limited to its "core" cases -- bribes and kickbacks. The opinion rejects the idea that the statute ought to be read to cover undisclosed self-dealing. Justice Scalia, for himself and Justices Thomas and Kennedy, would have struck down the honest services fraud statute as unconstitutionally vague in all its possible applications.

The honest services fraud statute is a Congressional response to a 1987 U.S. Supreme Court decision, McNally v. U.S. In the McNally case, a Kentucky public official (and his co-conspirators) had failed to disclose their financial interest in a company that had gotten a share of state insurance commissions. The company they owned had gotten a share of those commissions because the official and his associates had required a second company, which actually provided the insurance to the state, to turn a share of the commissions over to the company they owned. There was no allegation that the Kentucky state government itself had lost any money in the deal. The Supreme Court decided in the McNally case that the federal mail/wire fraud statute did not cover depriving state citizens of their intangible rights to honest and impartial government, so the official’s and cohorts’ convictions were reversed.

Congress responded to the McNally decision by amending the mail/wire fraud statutes to say that “the term ‘scheme or artifice to defraud’ includes a scheme or artifice to deprive another of the intangible right of honest services.“

The Supreme Court has now said in the Skilling decision that the amended statute properly covers the conduct at issue in the McNally case (a classic kickback) but not undisclosed self-dealing, which is what it says Skilling himself was accused of. It has noted that Black's honest services fraud case did not involve any bribes or kickbacks, and sent that case back to the Seventh Circuit for further consideration. And, finally, it has sent Bruce Weyhrauch's case back to the Ninth Circuit for further consideration. At oral argument, there was some discussion of whether Weyhrauch could properly be tried on a bribery/extortion/quid pro quo theory, and one would expect that question to be the focus of the Ninth Circuit's inquiry. Trying him for undisclosed self-dealing would appear to be contrary to the Skilling decision.

Last December, Cliff pointed out that only six of the 12 people charged in the Alaska public corruption cases were charged with honest services fraud, and that Pete Kott was acquitted of that charge, while Bill Allen, Rick Smith, Jim Clark, and Bill Weimar all pled guilty to that charge, or to a conspiracy charge. So the only person getting immediate benefit from today’s decision is Bruce Weyhrauch.

--Mark Regan

Addendum from Mark Regan--

The oral argument in the Weyhrauch case can be found at http://www.supremecourt.gov/oral_argument/argument%20transcripts/08-1196.pdf on the Internet. The points in the transcript where there are questions about whether the Government could prove a case under something other than a nondisclosure theory, for example, under what Bruce Weyhrauch's attorney called "a traditional, simple allegation of bribery," are at pages 8-11, 26, 29-33, 38-39, 53-57, 58-59, and 61.

--Mark Regan

Another Delay, and More Juicy Stuff on Life in Stir

Anchorage—

Beverly Masek’s lawyer has asked for another delay of her sentencing, currently scheduled for next week. Her attorney says that she needs time to go through psychiatric evaluation and substance abuse treatment.

Masek, formerly a Republican State Representative representing Willow and environs, has agreed to plead guilty to conspiring to take bribes from long-time VECO CEO Bill Allen and a relative of Allen's (apparently Bill Allen's son Mark Allen, co-owner of Kentucky Derby champion Mine That Bird). Masek's quid pro quo for the bribes was her willingness to pull back an oil tax bill she had introduced that was disliked by VECO’s clients in the oil industry.

The prosecution is not opposing the request for a delay, which might put the sentencing off until September. At this point—after the embarrassing revelations about evidence-sharing failures by prosecutors that wiped out Ted Stevens’ convictions and led to the interim release of former State Reps. Pete Kott and Vic Kohring—the government lawyers are probably just happy that the defense is not seeking to withdraw former State Rep. Masek’s plea based on allegations that the prosecution has committed discovery violations.

Speaking of Kohring, the Anchorage Daily News continues to cover his release like the morning dew covers the ground. The latest installment was headlined “Despite his lockup, Kohring still supports private prisons,” and the story in yesterday’s edition carried a subhead that is either cheering or scary: “REFORM: If the freed ex-legislator ever gets re-elected, he says he would work to improve conditions.” That article was by Richard Mauer, and he and his colleagues Lisa Demer and Sean Cockerham have done a solid job chronicling all this tale’s shocking twists and funny angles. (Well-known as a big eater, Kohring said he lost 47 pounds in prison and made a Kentucky Fried Chicken outlet his first stop when he got on the ground in Alaska.)

I'll Bet My Money on the Bob-Tail Nag, Somebody Bet on the Bay

Anchorage—


I’m still thinking about Mine That Bird’s amazing victory at the Kentucky Derby this weekend.

This small and previously undistinguished horse apparently bought with money from the sale of VECO went from last to first on a sloppy track at America’s premier race. A 50-1 longshot, Mine That Bird won by the largest margin seen at the Derby in 63 years. Now the little thoroughbred out of the West is apparently going to go on to the Preakness, the second leg of the Triple Crown. Are there parallels to the whole story of Alaska public corruption?

Two corrections: In my excitement yesterday I slightly misspelled the horse’s name—it’s “Mine That Bird,” not “Mine that Bird.” And the mud on the Derby track helped cover up the horse’s true color, which is not brown but reddish-brown—“bay” in the equine world.

(The title of this post comes from Stephen Foster’s song “Camptown Races”; the spelling is modernized.)