Fairbanks--
From Mark Regan:
No. The issue Judge John Sedwick was deciding at Bill Allen’s sentencing yesterday morning was whether, for purposes of the Federal Sentencing Guidelines, the payments to Ben Stevens were more like bribes, or like gratuities. There’s no dispute that a lot of money was involved. Bill Allen’s plea agreement addendum says that while Ben Stevens was in the State Senate, VECO paid him a total of almost $250,000. However, there’s also no dispute that the monthly payments began well before Ben Stevens went into the State Senate and continued for more than 10 years. The payments didn’t seem to be payments for anything in particular: they didn’t go up or down when Ben Stevens did something in the Legislature that helped Bill Allen. Nor were the payments particularly secret: they eventually appeared on Ben Stevens’ financial disclosure forms.
Under the Federal Sentencing Guidelines, bribes are worse than gratuities. If at sentencing prosecutors show that a particular payment was a bribe instead of a gratuity, the sentence the defendant gets goes up. But the fact that Judge Sedwick decided that Bill Allen’s payments to Ben Stevens were only gratuities doesn’t mean the payments were legal. They could still have been part of a scheme to defraud Alaskans of Ben Stevens’ honest services, or of wire fraud, or of extortion. Or they could have been perfectly innocent. Judge Sedwick didn’t decide that issue, one way or the other.
--Mark Regan
Thursday, October 29, 2009
Bill Allen and Rick Smith Face the Music and Are Rewarded for Playing Along with the Feds
Anchorage—
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.
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.
Tuesday, October 27, 2009
Rick Smith Misses 40th High School Reunion Because "Bill Owned Rick"
Fairbanks--
From Mark Regan:
According to a letter Rick Smith's high school classmate submitted for Judge John Sedwick's consideration late Wednesday afternoon, Rick Smith missed his 40th high school reunion in 2003 because Bill Allen called Rick Smith to make him work that weekend. "To me, by that time, Bill owned Rick," said the classmate, Foster Dyer.
--Mark Regan
From Mark Regan:
According to a letter Rick Smith's high school classmate submitted for Judge John Sedwick's consideration late Wednesday afternoon, Rick Smith missed his 40th high school reunion in 2003 because Bill Allen called Rick Smith to make him work that weekend. "To me, by that time, Bill owned Rick," said the classmate, Foster Dyer.
--Mark Regan
Monday, October 26, 2009
Bill Allen Seeks Leniency Because He Didn't Try to Pay Off Every Legislator
Anchorage--
On page 19 of the 56-page text of Bill Allen's sentencing memorandum is a statement that encapsulates just how far Alaska has come in these public corruption scandals:
"Mr. Allen did not give money to all legislators whom he approached regarding certain positions on legislative matters."
And there's a footnote: Allen's lawyers say that they have asked federal prosecutors to provide defense counsel information "[i]n an attempt to determine the exact number of legislators to whom Mr. Allen did not make illegal payments...."
Big Crashes Looming at Wednesday's Hearing on Bill Allen's Sentence
Anchorage--
There are at least two big collisions coming up on Wednesday morning at the Bill Allen sentencing hearing:
1. The federal government's new attorneys running into the high-priced Washington lawyers with their flashy records in high-profile cases.
2. The view of many Alaskans that Bill Allen is one of the worst sleazebags the Last Frontier has ever seen smashing into the reality that the government has often given breaks to a devil to get his help in putting away even bigger devils--as well as the long history the federal government has of seeing the public officials who take bribes as worse wrongdoers than the private citizens who pay them.
As to the first conflict, long-time VECO CEO Bill Allen has gone Outside for help. Previously relying on former U.S. Attorney--and long-time Alaska lawyer--Bob Bundy as his chief counsel, Allen has now added at least three heavy hitters from the Washington, D.C. office of the international law firm of White & Case. With 37 offices in 25 countries, White & Case has more than 2,000 lawyers and reported more annual revenues than even VECO ever boasted--almost $1.5 billion at last count.
Allen's best-known new lawyer is George Terwilliger, the global head of White & Case's White Collar Practice Group, but probably more famous to you as one of the key lawyers for George W. Bush in the Florida recount following the 2000 presidential election. Terwilliger also served as Deputy Attorney General--the Justice Department's No. 2 job--in President George H.W. Bush's administration, and has also prosecuted the infamous BCCI and defended the Bank of America.
Terwilliger and Bundy are aided by two other D.C. lawyers with fancy resumes. Robert Bittman was Deputy Independent Counsel in the investigation of President Bill Clinton headed by Ken Starr, and was Chief Prosecutor in charge of the Monica Lewinsky investigation. Daniel Levin has held a number of important jobs in the federal government, including Senior Associate Counsel to the President and Chief of Staff to both the Attorney General and the FBI Director.
Up against these luminaries are three lesser-known lawyers for the Department of Justice who may well hope to gain greater financial rewards in Big D.C. law if they can show well in this case. The names of these prosecutors are James Trusty (really), Kevin Gingras, and Peter Koski.
So far the government attorneys have been doing better in the pre-sentencing fencing in front of Judge John Sedwick. The court has denied some big last-minute motions filed by the defense, and Judge Sedwick appears strongly inclined to hold this sentencing on Wednesday morning and come down hard on the defendant.
The court may not slam Allen as hard as some Alaskans would want. Allen is going to get credit for helping to bring some public officials to book, and this cooperation will serve to reduce his sentence--just not as much as Allen's high-powered lawyers want.
And however titanic this struggle plays out in the abstract and in the hundreds of pages of legal filings in the last week and a half, the actual sentencing hearing is still supposed to fit into the 90 minutes allotted for it. The lawyers from Washington might want to talk a lot, the famously inarticulate Allen has a right to make his own statement in open court, and it’s safe to assume the judge will have prepared some forceful and pithy remarks for this historic occasion. It promises to be a jam-packed hour and a half.
There are at least two big collisions coming up on Wednesday morning at the Bill Allen sentencing hearing:
1. The federal government's new attorneys running into the high-priced Washington lawyers with their flashy records in high-profile cases.
2. The view of many Alaskans that Bill Allen is one of the worst sleazebags the Last Frontier has ever seen smashing into the reality that the government has often given breaks to a devil to get his help in putting away even bigger devils--as well as the long history the federal government has of seeing the public officials who take bribes as worse wrongdoers than the private citizens who pay them.
As to the first conflict, long-time VECO CEO Bill Allen has gone Outside for help. Previously relying on former U.S. Attorney--and long-time Alaska lawyer--Bob Bundy as his chief counsel, Allen has now added at least three heavy hitters from the Washington, D.C. office of the international law firm of White & Case. With 37 offices in 25 countries, White & Case has more than 2,000 lawyers and reported more annual revenues than even VECO ever boasted--almost $1.5 billion at last count.
Allen's best-known new lawyer is George Terwilliger, the global head of White & Case's White Collar Practice Group, but probably more famous to you as one of the key lawyers for George W. Bush in the Florida recount following the 2000 presidential election. Terwilliger also served as Deputy Attorney General--the Justice Department's No. 2 job--in President George H.W. Bush's administration, and has also prosecuted the infamous BCCI and defended the Bank of America.
Terwilliger and Bundy are aided by two other D.C. lawyers with fancy resumes. Robert Bittman was Deputy Independent Counsel in the investigation of President Bill Clinton headed by Ken Starr, and was Chief Prosecutor in charge of the Monica Lewinsky investigation. Daniel Levin has held a number of important jobs in the federal government, including Senior Associate Counsel to the President and Chief of Staff to both the Attorney General and the FBI Director.
Up against these luminaries are three lesser-known lawyers for the Department of Justice who may well hope to gain greater financial rewards in Big D.C. law if they can show well in this case. The names of these prosecutors are James Trusty (really), Kevin Gingras, and Peter Koski.
So far the government attorneys have been doing better in the pre-sentencing fencing in front of Judge John Sedwick. The court has denied some big last-minute motions filed by the defense, and Judge Sedwick appears strongly inclined to hold this sentencing on Wednesday morning and come down hard on the defendant.
The court may not slam Allen as hard as some Alaskans would want. Allen is going to get credit for helping to bring some public officials to book, and this cooperation will serve to reduce his sentence--just not as much as Allen's high-powered lawyers want.
And however titanic this struggle plays out in the abstract and in the hundreds of pages of legal filings in the last week and a half, the actual sentencing hearing is still supposed to fit into the 90 minutes allotted for it. The lawyers from Washington might want to talk a lot, the famously inarticulate Allen has a right to make his own statement in open court, and it’s safe to assume the judge will have prepared some forceful and pithy remarks for this historic occasion. It promises to be a jam-packed hour and a half.
Rick Smith Seeks Lenient Treatment Because He's a Mere "Errand Boy"
Anchorage—
Notwithstanding the apparent success Beverly Masek’s lawyer had in getting the court to reduce her sentence for taking bribes because of her alcohol problem, former VECO executive and admitted briber Rick Smith is going a different route in asking for leniency.
It’s well-known that Smith has had an alcohol problem for years. But the 20-page sentencing memorandum submitted by his lawyers steers clear of any blame of demon booze for his crimes and instead focuses on Smith’s relative lack of power as compared to his boss, long-time VECO CEO Bill Allen.
In the document filed in advance of his sentencing Wednesday morning, the defendant comes across as a humble salaryman under the thumb of Allen the corporate titan. Smith’s title of VECO’s Vice President of Corporate and Government Affairs was a vast overstatement of his actual power: His actual signing authority to buy anything for the company was limited to $1,000. Instead of a dangerous and powerful co-conspirator, Smith’s lawyers portray him as only an “errand boy” for Allen.
Smith’s lead attorney John Murtagh seems to have calculated that U.S. District Judge John Sedwick is not likely to give Smith a break for his drinking problem, just like Judge Sedwick did not go easy on ex-State Rep. Pete Kott because of that defendant’s well-known excessive fondness for the bottle.
Disclosure: As a prosecutor, I have been up against John Murtagh in his capacity as an Anchorage criminal defense attorney. (Anchorage attorney Mike Keenan also represents Smith.)
P.S. For another discussion of the drinking problems of Pete Kott and Rick Smith by a former legislative colleague of Kott’s, see Andrew Halcro’s commentary at http://www.andrewhalcro.com/sunday_comment_kott_caught_telling_lies on the Internet.
Notwithstanding the apparent success Beverly Masek’s lawyer had in getting the court to reduce her sentence for taking bribes because of her alcohol problem, former VECO executive and admitted briber Rick Smith is going a different route in asking for leniency.
It’s well-known that Smith has had an alcohol problem for years. But the 20-page sentencing memorandum submitted by his lawyers steers clear of any blame of demon booze for his crimes and instead focuses on Smith’s relative lack of power as compared to his boss, long-time VECO CEO Bill Allen.
In the document filed in advance of his sentencing Wednesday morning, the defendant comes across as a humble salaryman under the thumb of Allen the corporate titan. Smith’s title of VECO’s Vice President of Corporate and Government Affairs was a vast overstatement of his actual power: His actual signing authority to buy anything for the company was limited to $1,000. Instead of a dangerous and powerful co-conspirator, Smith’s lawyers portray him as only an “errand boy” for Allen.
Smith’s lead attorney John Murtagh seems to have calculated that U.S. District Judge John Sedwick is not likely to give Smith a break for his drinking problem, just like Judge Sedwick did not go easy on ex-State Rep. Pete Kott because of that defendant’s well-known excessive fondness for the bottle.
Disclosure: As a prosecutor, I have been up against John Murtagh in his capacity as an Anchorage criminal defense attorney. (Anchorage attorney Mike Keenan also represents Smith.)
P.S. For another discussion of the drinking problems of Pete Kott and Rick Smith by a former legislative colleague of Kott’s, see Andrew Halcro’s commentary at http://www.andrewhalcro.com/sunday_comment_kott_caught_telling_lies on the Internet.
Sunday, October 25, 2009
William Welch Resigns Post of Chief of Public Integrity Section
Anchorage—
The head of the Washington, D.C.-based team that investigated and prosecuted public corruption in Alaska for more than six years has announced that he will leave his job.
Since March of 2007, William M. Welch II has been chief of the U.S. Department of Justice's Public Integrity Section, an elite unit of about 30 federal prosecutors who combat public corruption around the country. In that capacity, he supervised the “POLAR PEN” investigation, a probe of public corruption in Alaska that started in the summer of 2003. That investigation has produced criminal charges against 12 people—eight public officials and four lobbyists and power brokers.
The Public Integrity Section has not lost any of those cases in front of a jury, but did have the highest-profile case—against U.S. Sen. Ted Stevens—thrown out on the basis of prosecutorial misconduct after the jury rendered guilty verdicts. Two other defendants—former State Reps. Pete Kott (R.-Eagle River) and Vic Kohring (R.-Wasilla)—have been released from prison while a judge sorts out allegations of government wrongdoing in the trials which led to their convictions.
Welch is one of six prosecutors under investigation themselves as a result of the bungled handling of the Ted Stevens case. There are actually two probes of those prosecutors: an internal investigation by the Department of Justice’s Office of Professional Responsibility and a highly unusual probe by a special prosecutor looking at whether the prosecutors committed criminal contempt of court.
The departure of Welch means that most of those six prosecutors have now left the jobs they held during the Ted Stevens trial.
Welch said that he would be returning to his native Massachusetts, where he will remain an employee of the Department of Justice’s Criminal Division.
Lanny A. Breuer, Assistant Attorney General for the Criminal Division, told the Washington Post that Welch is "a dedicated public servant who's devoted his entire professional life to serving the American people." Breuer said that he and Welch had come to a "mutual decision" about what was best for the prosecutor and the division.
Welch’s lawyer issued a prepared statement that said “While the ultimate result in the Stevens case has been highly disappointing professionally and personally, Bill knows that his management decisions, where permitted, comported with his own and the department's highest ethical standards."
The Washington Post, which broke this story late last week, said that Raymond Hulser would be the acting chief of the Public Integrity Section upon Welch’s departure on October 30. The newspaper said that a nationwide search would be launched to find a new chief for the section.
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