Leonardo Angiulo: A Good Day for FBI, A Bad Day for Politicians
Monday, March 31, 2014
The three cases involve local politicians in North Carolina, California, and Rhode Island. Each one made national news for a minute, but considering the significance of federal agents raiding statehouses and legislators allegedly trafficking firearms, a more involved review may be warranted. To be certain, none of the parties involved have been convicted so any accounts in the public realm at this point are mere accusations. That being said, they are some pretty heavy allegations.
Similar cases making headlines
Take State Senator Leland Lin Yee of California for example. According to a press release issued by the San Francisco FBI office on March 26, 2014 that gentleman is accused of conspiracy to traffic in firearms without a license and to illegally import firearms as well as involvement in a scheme to defraud citizens of honest services. According to the same FBI press release, some of the allegations in that case include Senator Yee offering to make phone calls and write a letter of support for an undercover officer's state contract bid in exchange for campaign donations.
Similarly, the case of Charlotte, North Carolina Mayor Patrick DeAngelo Cannon involves allegations of theft and bribery concerning programs receiving federal funds, honest services wire fraud, and extortion under color of official right. According to the March 26, 2014 press release of the FBI's Charlotte Division that city's mayor is accused of an American Hustle-ish set of circumstances. Namely, the mayor allegedly accepted cash and other things of value and, in return, used his official position to benefit a commercial developer to do business in Charlotte. The developer, however, turned out to be an undercover federal agent.
Interestingly, federal agents and state police also stormed the Rhode Island State House on Friday March 21, 2014 and, according to GoLocal reports, seized records after entering the office of the speaker of the state house of representatives. When asked, the Federal Prosecutors' limited explanation for their actions include the service of federal search warrants. As of the time of this writing, neither the United States Attorney's Office for Rhode Island nor the Boston office of the FBI had issued any press releases on the topic.
Honest services fraud
Honest services violations under Federal Law are specifically implicated in two of the three circumstances discussed above and the press release about Senator Yee cites two specific statutes in alleging “Scheme to Defraud Citizens of Honest Services.” The first is 18 USC §1343 and the language of that code section criminalizes the transmission of any interstate or foreign communication to execute a “scheme or artifice to defraud.” The second statute is http://www.gpo.gov/fdsys/pkg/USCODE-2010-title18/pdf/USCODE-2010-title18-partI-chap63-sec1346.pdf " target="_blank">18 USC §1346 that defines “scheme or artifice to defraud” as any “scheme or artifice to deprive another of the intangible right of honest services.” One logical interpretation of these statutes is that using the powers of a public office to secure personal financial benefit, through actions like kickbacks or bribes, is criminalized by these laws.
The scope of this honest services fraud statute, along with other issues, was tested in 2010 by the U.S. Supreme Court case of Skilling v. United States. In that case, the “honest services” language had been used to prosecute Mr. Jeffrey Skilling for his involvement in the failure of the Enron Corporation. Specifically, as quoted on page 3 of that case, the indictment contended Mr. Skilling and his co-conspirators “enriched themselves . . . through salary, bonuses . . . other profits, and prestige” while making false public statements about the vitality of the corporation resulting in shareholders and members of the public from being denied honest services. To roughly break that down, they charged him with puffing up the value of corporate stock and pocketing the benefit.
When the Supreme Court reviewed the case, they declined to extend the statute to cover the described behavior. In doing so, the Supreme Court also gave an interesting explanation for how the statute came to be including an examination of mail fraud during the 1800's. In the end, the Court chose to focus the term “honest services” to mean at least those circumstances involving bribery and kickback schemes. Since Mr. Skilling was not alleged to have accepted or solicited side payments in exchange for making misrepresentations the court decided he did not commit honest services fraud. In short, it's not the lie or the fraud that is the problem. It's the making money on the side that does it.
Returning to the recent national events, the broad scope of action focused on elected officials within a short period of time raises some big picture questions about the health and sovereignty of our local, state and Federal Governments. I'll leave that for someone else to answer. For the purposes of this column, the limited question of what may have prompted federal action in North Carolina and California is answered with an evaluation of relevant statutes and precedent. What happened in Providence, on the other hand, is yet to be seen.
Related Slideshow: Rhode Island’s History of Political Corruption
Vincent A. "Buddy" Cianci resigned as Providence Mayor in 1984 after pleading nolo contendere to charges of assaulting a Bristol man with a lit cigarette, ashtray, and fireplace log. Cianci believed the man to be involved in an affair with his wife.
Cianci did not serve time in prison, but received a 5-year suspended sentence. He was replaced by Joseph R. Paolino, Jr. in a special election.
Joseph Bevilacqua was RI Speaker of the House from 1969 to 1975, and was appointed as Chief Justice of the State Supreme Court in 1976. It was alleged that Bevilacqua had connections to organized crime throughout his political career.
According to a 1989 article that appeared in The New York Times at the time of his death:
The series of events that finally brought Mr. Bevilacqua down began at the end of 1984... stating that reporters and state police officers had observed Mr. Bevilacqua repeatedly visiting the homes of underworld figures.
The state police alleged that Mr. Bevilacqua had also visited a Smithfield motel, owned by men linked to gambling and drugs...
Thomas Fay, the successor to Bevilacqua as Chief Justice of the Supreme Court, resigned in 1993, and was later found guilty on three misdemeanor counts of directing arbitration work to a partner in his real estate firm, Lincoln Center Properties.
Fay was also alleged to use court employees, offices, and other resources for the purposes of the real estate firm. Fay, along with court administrator and former Speaker of the House, Matthew "Mattie" Smith were alleged to have used court secretaries to conduct business for Lincoln, for which Fay and Smith were business partners.
Fay was fined $3,000 and placed on one year probation. He could have been sentenced for up to three years in prison.
Brian J. Sarault
Former Pawtucket Mayor Brian J. Sarault was sentenced in 1992 to more than 5 years in prison, after pleading guilty to a charge of racketeering.
Sarault was arrested by state police and FBI agents at Pawtucket City Hall in 1991, who alleged that the mayor had attempted to extort $3,000 from former RI State Rep. Robert Weygand as a kickback from awarding city contracts.
Weygand, after alerting federal authorities to the extortion attempt, wore a concealed recording device to a meeting where he delivered $1,750 to Sarault.
Edward DiPrete became the first Rhode Island Governor to be serve time in prison after pleading guilty in 1998 to multiple charges of corruption.
He admitted to accepting bribes and extorting money from contractors, and accepted a plea bargain which included a one-year prison sentence.
DiPrete served as Governor from 1985-1991, losing his 1990 re-election campaign to Bruce Sundlun.
Cianci was forced to resign from the Mayor’s office a second time in 2002 after being convicted on one several charges levied against him in the scandal popularly known as “Operation Plunder Dome.”
The one guilty charge—racketeering conspiracy--led to a five-year sentence in federal prison. Cianci was acquitted on all other charges, which included bribery, extortion, and mail fraud.
While it was alleged that City Hall had been soliciting bribes since Cianci’s 1991 return to office, much of the case revolved around a video showing a Cianci aide, Frank Corrente, accepting a $1,000 bribe from businessman Antonio Freitas. Freitas had also recorded more than 100 conversations with city officials.
Operation Plunder Dome began in 1998, and became public when the FBI executed a search warrant of City Hall in April 1999.
Cianci Aide Frank Corrente, Tax Board Chairman Joseph Pannone, Tax Board Vice Chairman David C. Ead, Deputy tax assessor Rosemary Glancy were among the nine individuals convicted in the scandal.
N. Providence Councilmen
Three North Providence City Councilmen were convicted in 2011 on charges relating to a scheme to extort bribes in exchange for favorable council votes. In all, the councilmen sought more than $100,000 in bribes.
Councilmen Raimond A. Zambarano, Joseph Burchfield, and Raymond L. Douglas III were sentenced to prison terms of 71 months, 64 months, and 78 months, respectively.
Central Falls Mayor Charles Moreau resigned in 2012 before pleading guilty to federal corruption charges.
Moreau admitted that he had give contractor Michael Bouthillette a no-bid contract to board up vacant homes in exchange for having a boiler installed in his home.
He was freed from prison in February 2014, less than one year into a 24 month prison term, after his original sentence was vacated in exchange for a guilty plea on a bribery charge. He was credited with tim served, placed on three years probation, and given 300 hours of community service.
The Rhode Island State Police and FBI raided and sealed off the State House office of Speaker of the House Gordon Fox on March 21--marking the first time an office in the building has ever been raided.
The details are still emerging, but the United States Attorney's Office for the District of Rhode Island has confirmed the IRS is involved in an ongoing investigation in Rhode Island.
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