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UNITED STATES v. SCHAFFER

May 29, 1998

UNITED STATES OF AMERICA,
v.
JACK L. WILLIAMS and ARCHIBALD R. SCHAFFER III, Defendants.



The opinion of the court was delivered by: ROBERTSON

MEMORANDUM

 Defendants are charged together as co-conspirators in an alleged scheme to buy favored treatment from the United States Department of Agriculture. Defendant Jack L. Williams was a principal lobbyist for Tyson Foods, Inc. Defendant Archibald R. Schaffer, III was Tyson Foods' vice-president in charge of media, public, and governmental affairs. Indictment PP 2(c)&(d). The charges are made in a second superseding indictment; the first two indictments charged Williams alone.

 The indictment describes various interests of Tyson Foods that were pending before USDA while Secretary Alphonso Michael ("Mike") Espy was Secretary of Agriculture, PP 12-16, and charges that gifts and perquisites worth $ 12,218 were given to or for the benefit of the Secretary, his girlfriend, and the then-Acting Assistant Secretary of Agriculture over a 13-month period from January 1993 to February 1994. The gifts and perquisites -- seats to the 1993 Presidential inaugural gala, travel and lodging connected with a Tyson birthday party in Russellville, Arkansas, travel, lodging and tickets to a National Football Conference playoff game in Dallas, a Tyson foundation scholarship for the Secretary's girlfriend, and, for the Acting Assistant Secretary of Agriculture, a $ 13 basketball ticket and a first-class upgrade coupon for an airplane flight from Memphis to Washington National Airport -- are the factual bases for one count of conspiracy, five counts of mail and wire fraud, three counts of Meat Inspection Act violations, and four counts of illegal gratuities. Defendant Williams is also accused of making false statements to investigators who were looking into these allegations in the spring of 1994. Id., PP 34-42.

 Defendants filed a number of motions to dismiss the indictment in various ways. Rulings on the motions were issued on May 22, 1998. The motion to dismiss Counts IX and XIII for improper venue was granted. The rest were denied. The reasons for those rulings are set forth below.

 I. Motions to dismiss Counts II - VI (mail and wire fraud) and Count I (conspiracy) for failure to state an offense

 The denial of defendant's motions attacking the mail and wire fraud and conspiracy counts was without prejudice to presentation of the supporting arguments at the close of the Independent Counsel's case-in-chief. Defendants are correct, of course, that it is not a crime to give money to a public official openly and with no intent to win anything more than good graces. Unless the IC adduces proof of the deceit necessary to sustain a conviction for the "honest services" variety of mail and wire fraud, or that the things of value given to Secretary Espy and others were given "for or because of" some action favorable to Tyson Foods' interests or to influence official action, these charges will be dismissed at that time. They will not, however, be dismissed for defects in the indictment.

 Motion to dismiss Counts II - VI

 The elements of mail and wire fraud are: (1) a scheme to defraud and (2) the use of interstate wires or mail to further that scheme. See United States v. Lemire, 232 U.S. App. D.C. 100, 720 F.2d 1327 (D.C. Cir. 1983), cert. denied, 467 U.S. 1226, 81 L. Ed. 2d 874, 104 S. Ct. 2678 (1984). Counts II - VI of the indictment charge the defendants with devising or attempting to devise a scheme or artifice to defraud the United States of its right to the Secretary of Agriculture's honest services, see 18 U.S.C. §§ 1342, 1343 & 1346, and set forth the necessary elements in the language of the statutes, describing the five communications that allegedly constitute mail or wire fraud. In addition, Counts II - VI incorporate the first 17 paragraphs of the indictment, which outline defendants' alleged gift-giving, and paragraph 25, which lists 21 overt acts the defendants are alleged to have committed in furtherance of a conspiracy.

 Defendants say that these counts should be dismissed because, although they recite the language of the statute, they do not specify the conduct in which defendants engaged that is supposed to have constituted bribery-like behavior. The IC responds that the necessary elements of mail and wire fraud are included in the indictment, and that defendants' demand for more specificity goes to the proof required at trial and not the sufficiency of the indictment.

 Certainly, the mail and wire fraud charges would fail if they did not set forth what the "scheme or artifice to defraud" is alleged to be. See United States v. Curtis, 506 F.2d 985, 992 (10th Cir. 1974), quoted in United States v. Nance, 174 U.S. App. D.C. 472, 533 F.2d 699, 702 (D.C. Cir. 1976). It is not necessary, however, to charge that the defendants had in mind bribery or a specific quid pro quo.1 It is sufficient to charge behavior with an element of deceit -- behavior that would prove the defendants had the specific intent to defraud. See United States v. DeFries, 327 U.S. App. D.C. 181, 129 F.3d 1293, 1306 (D.C. Cir. 1997). Thus, an attempt to induce undisclosed biased decisionmaking for personal gain could sustain a charge of intent to defraud, see United States v. Sawyer, 85 F.3d 713, 724 (1st Cir. 1996) (lobbyist convicted of giving gifts to state lawmaker with regulatory authority over lobbyist's client), but an allegation that the defendant violated an anti-gift-giving regulation or gratuity statute would not be enough without more, see, e.g., id.; United States v. Czubinski, 106 F.3d 1069 (1st Cir. 1997); United States v. Rabbitt, 583 F.2d 1014 (8th Cir. 1978), cert. denied, 439 U.S. 1116, 59 L. Ed. 2d 75, 99 S. Ct. 1022 (1979).

 Besides reciting the elements of the statutes, Counts II-VI incorporate two allegations of behavior that, if proven, would add the necessary element of deceit. In P 25(b), the indictment alleges that the defendants engaged in subterfuge with respect to Secretary Espy's travel to Arkansas for what turned out to be a Tyson birthday party. And, in P 25(f), it alleges that Williams and Schaffer made materially false statements to law enforcement officials about their gifts to Secretary Espy.

 Motion to dismiss Count I

 Count I charges defendants with conspiracy to violate the gratuities statute, 18 U.S.C. § 201(c)(1)(A), the mail and wire fraud statutes, 18 U.S.C. §§ 1342, 1343 & 1346, the Meat Inspection Act, 21 U.S.C. § 622, and the false statements statute, 18 U.S.C. § 1001. A charge of conspiracy under 18 U.S.C. § 371 must contain the following elements: that there was an agreement; that the purpose of the agreement was to break the law; that there was an overt act; that the purpose of the act was to further the conspiracy; and that the defendants entered the conspiracy willfully. See, e.g., United States v. Daily, 921 F.2d 994 (10th Cir.), cert. denied, 502 U.S. 952, 116 L. Ed. 2d 354, 112 S. Ct. 405 (1991). Defendants argue that the indictment fails to charge the necessary agreement to break the law. Each basis for charging a conspiracy, except for violation of the Meat Inspection Act, *fn2" is addressed in turn.

 Gratuities offenses : One of the purposes of the alleged conspiracy, according to the indictment, was to violate 18 U.S.C. § 201(c)(1)(A) (gratuities to public officials). PP 19 & 19(b). Count I does not recite the elements of a gratuities violation, nor is it necessary that an indictment for conspiracy describe the underlying offense with the specificity that would be necessary to charge that offense: "In a charge of conspiracy, the conspiracy is the gist of the crime, and certainty, to a common intent, sufficient to identify the offense which defendants conspired to commit, is all that is requisite in stating the object of the conspiracy." Williamson v. United States, 207 U.S. 425, 447, 52 L. Ed. 278, 28 S. Ct. 163 (1908); see also Wong Tai v. United States, 273 U.S. 77, 71 L. Ed. 545, 47 S. Ct. 300 (1927).

 It is well established, however, that each count in an indictment, unless it expressly incorporates other counts, must be sufficient to stand alone. See United States v. Fulcher, 200 U.S. App. D.C. 121, 626 F.2d 985 (D.C. Cir.), cert. denied, 449 U.S. 839, 66 L. Ed. 2d 46, 101 S. Ct. 116 (1980); see also Fed. R. Crim. P. 7(c)(1). Mere citation to the statute for the underlying offense is insufficient by itself to put the defendant on notice as to the nature of the crime he is charged with agreeing to accomplish. See Williamson, 207 U.S. at 449 (citation alone is not enough to "import, ... susceptible of no other construction, [] that the unlawful agreement contemplated a future [crime]"); see also United States v. Werme, 939 F.2d 108, 112 & n.1 (10th Cir. 1991), cert. denied, 502 U.S. 1092, 117 L. Ed. 2d 412, 112 S. Ct. 1165 (1992); but cf. United States v. Offutt, 75 U.S. App. D.C. 344, 127 F.2d 336 (D.C. Cir. 1942).

 Count I goes beyond mere citation of the gratuities statute. It recites Tyson Foods' interests before the Department of Agriculture, and it provides detail about the things of value that defendants allegedly gave to Secretary Espy and others. But Count I survives defendants' challenge only if it also alleges that these things of value were given "for or because of" some action that was taken or was to be taken regarding Tysons' interests.

 Paragraphs 10 and 19(b), read together, provide the necessary allegation of intent. Paragraph 10 states that the Meat Inspection Act prohibits giving things of value "with intent to influence [an] . . . officer or employee of the United States in the discharge of any duty." Paragraph 19(b) states that defendants violated the Meat Inspection Act. Charging defendants with the "intent to influence" USDA officials satisfies the intent element of the gratuities statute, and in fact, it is more than that statute requires. See United States v. Sun-Diamond Growers, 138 F.3d 961, 966 (D.C. Cir. 1998) (intent to reward sufficient for proving gratuities violation). Count I thus sets forth the elements of illegal gratuities with sufficient specificity.

 Mail and wire fraud : The IC's failure to cite to the mail and wire fraud statutes in Count I is not fatal to the charge. See Fed. R. Crim. P. 7(c). Defendants' alleged scheme to commit mail and wire fraud is described with enough specificity to state the object of the conspiracy. Paragraph 19 sets forth the necessary scheme to defraud, *fn3" and eleven of the overt acts described in P 25 involve the use of mails or wire to further the alleged conspiracy. *fn4" This suffices to show "certainty, to a common intent, sufficient to identify the [mail and wire fraud] offense which defendants conspired to commit." Williamson, 207 U.S. at 447.

 False statements : Defendants argue that violation of 18 U.S.C. § 1001 cannot be charged as the object of the conspiracy here because the central purpose of the alleged conspiracy, to curry favor with Secretary Espy, was ended by newspaper exposure before the statements were allegedly made, and "acts committed after the central purpose of a conspiracy has been achieved or abandoned, and intended solely to cover up and conceal the completed conspiracy or escape detection and punishment, are not acts in furtherance of the conspiracy." Def. Mot. to Dismiss Count I at 9. That argument hyperextends the rule of Grunewald v. United States, 353 U.S. 391, 1 L. Ed. 2d 931, 77 S. Ct. 963 (1957), which dealt with the question whether attempts at concealment could be regarded as overt acts in furtherance of the conspiracy in order to extend the statute of limitations.

 So, too, does the IC's theory -- that the objective to buy Secretary Espy's services continued as long as he was in office -- overstate the rule of United States v. Maloney, 71 F.3d 645 (7th Cir. 1995), cert. denied, 136 L. Ed. 2d 214, 117 S. Ct. 295 (1996). The correct rule is the narrower one, articulated in United States v. Marcus Schloss & Co., Inc., 710 F. Supp. 944 (S.D.N.Y. 1989), and faithful to the core of Grunewald, that acts of concealment may indeed be in furtherance of a conspiracy, if concealment was an express purpose of the conspiracy in the first place. The false statements allegedly made by Williams and Schaffer are charged in Count I as an agreed-upon "Objective[] of the Conspiracy." See PP 21-22. That is the proper charging language. It remains to be seen whether the IC has evidence to support the charge. To sustain his case, the IC must show either that there was an express agreement between the defendants to conceal their gift giving or that the false statements occurred while the conspiracy was in full swing. See Marcus Schloss, 710 F. Supp. at 950. The latter will be an uphill battle at trial, given that the alleged gifts and gratuities were exposed in the Wall Street Journal before either defendant was interviewed for the first time.

 II. Defendant Williams' motion to dismiss Count I (conspiracy), Counts V - VI (wire fraud), and Counts XII - XIII (gratuities) for prosecutorial vindictiveness

 Defendant Williams was originally charged with two counts of false statements, stood trial on those charges, prevailed on his post-conviction motion for a new trial, and was then charged in two superseding indictments, not only with the false statements, but also with conspiracy, wire fraud, and violation of the Meat Inspection Act. Under controlling precedent, these facts give rise to a ...


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