08-3759. v. Riley
| Decision Date | 21 October 2010 |
| Docket Number | Nos. 08-3361, 08-3413, 08-3758, 08-3759.,s. 08-3361, 08-3413, 08-3758, 08-3759. |
| Citation | 621 F.3d 312 |
| Parties | UNITED STATES of America, Appellant in 08-3758 & 08-3759. v. Tamika RILEY and Sharpe James, Tamika Riley, Appellant in 08-3361, Sharpe James, Appellant in 08-3413. |
| Court | U.S. Court of Appeals — Third Circuit |
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Gerald Krovatin, Argued, Krovatin Klingeman, Alan D. Bowman, Argued, Newark, NJ, Attorneys for Appellants.
Norman Gross, Argued, Office of United States Attorney, Camden, NJ, Paul J. Fishman, Ralph J. Marra, Jr., George S. Leone, Office of United States Attorney, Newark, NJ, Attorneys for Appellee.
Before SLOVITER and NYGAARD, Circuit Judges, and RESTANI, * Judge.
Defendant-Appellants and Cross-Appellees (“Appellants”) Sharpe James (“James”) and Tamika Riley (“Riley”) were convicted in the United States District Court for the District of New Jersey of three counts of mail fraud (Counts 1-3) as part of a scheme to convey City-owned property in violation of 18 U.S.C. § 1341 and 2, one count of fraud (Count 4) involving a local government receiving federal funds in connection with the fraudulent sale of City-owned properties in violation of 18 U.S.C. § 666(a)(1)(A) and 2, and one count of conspiracy (Count 5) to defraud the public of James's honest services contrary to 18 U.S.C. §§ 1341 and 1346, in violation of 18 U.S.C. § 371. These five counts are collectively called the “Land Fraud Counts.” Additionally, Riley was convicted of three counts of housing assistance mail fraud in violation of 18 U.S.C. § 1341 and 2, and three counts of tax fraud for her failure to report income in violation of 26 U.S.C. § 7206(1). Appellants appeal the Land Fraud Counts. For the following reasons we will reverse the convictions on Count 5 and affirm the convictions on Counts 1-4.
I. Factual Background and Procedural HistoryA. Facts
The jury convicted Sharpe James and Tamika Riley of the Land Fraud Counts for engaging in a fraudulent scheme to assist Riley's purchase of City-owned parcels of real property under the South Ward Redevelopment Plan (“SWRP”). Sharpe James was the Mayor of Newark, New Jersey for twenty years between July 1986 and June 2006. James was also a New Jersey State Senator representing the 29th Legislative District from 1999 until 2008. Tamika Riley, who had an intimate relationship with James, was the owner and chief executive officer (“CEO”) of Tamika Riley, Inc. (“TRI”), a public relations firm specializing in the entertainment industry.
In the aftermath of the 1967 Newark riots, many residents abandoned the city, and the market for properties substantially eroded. During this time, home ownership was extremely low and lenders often would not provide financing to acquire property in Newark. In 1998, in order to address these problems, Newark adopted the SWRP, which was designed to sell parcels of distressed, City-owned real property at low prices to pre-approved developers, without advertisement and public bidding. In exchange, the purchaser contracted to construct new or renovated housing on those parcels, 1 which would then be sold, occupied, and returned to the City's tax rolls, in order to revitalize the residential real estate market and redevelop Newark.
The New Jersey Department of Economic and Housing Development (“DEHD”) managed the SWRP process. Initially, the DEHD conducted a pre-qualification process that screened applicants to ensure they had experience in the construction of residential property and the ability to finance the projects. Once DEHD approved an application, department officials drafted a resolution and the contracts, which were then reviewed by the attorneys in the Newark Corporate Counsel's Office (“Corporate Counsel”), 2 the City Clerks office, and the Municipal Council. 3 After the resolutions were approved by the Municipal Council, the DEHD was responsible for enforcing the contractual provisions to renovate the distressed properties.
The SWRP proved successful and profitable to participants early on. By 2001-2002, the market for Newark real estate surged and applicants for SWRP property flooded the DEHD with requests. This success prompted the Municipal Council to pressure the program to accommodate “local entrepreneurs” and minorities with little or no development experience. Thus, the DEHD abandoned the pre-qualification process and no longer required applicants to have development experience so long as an applicant had “the right team” to fulfill the obligations under the contract.
James was very involved in the SWRP process as were his subordinates. Basil Franklin (“Franklin”) served as Chief of Housing Production under the James Administration and reported directly to James's Deputy Mayor who was also the Director of the DEHD. James met frequently with his Deputy Mayor to discuss the availability and allocation of properties under the SWRP. 4 The Deputy Mayor would then direct Franklin to approve the SWRP application of those who had been recommended by James.
During the time period at issue, James and the Municipal Council disagreed as to who had the power to select eligible persons to receive City property under the SWRP. After the Municipal Council prevailed in litigation against the Mayor regarding this issue, James successfully sponsored legislation in 2004, Senate Bill 967, that authorized the Mayor alone to select persons eligible for SWRP property.
In 1999, Riley introduced the Mayor to a Newark-born professional basketball player, Eric Williams (“Williams”). Williams had recently signed a contract with the Boston Celtics and was interested in investing in his home town of Newark. Shortly after the Williams introduction, James's Deputy Mayor brought Riley and her friend to Franklin's office and told Franklin that James wanted him to “help these ladies acquire some property.” SA 229:172. Franklin knew that Riley had no experience as a real estate developer, but at the time Riley applied for property the pre-qualification process had been abandoned.
Both James and Riley contest the duration of their intimate relationship. Nonetheless, James was aware that the City transferred real estate parcels to Riley because in his official capacity as Mayor, James signed each of the contracts transferring the properties to TRI. Riley maintained calendars and daily “agenda” lists containing innumerable notations regarding her communications with James about the status of her acquisitions of City-owned property from 2001 through 2006. James was also copied on a letter “advising” Riley that certain City-owned properties were set aside for acquisition by her company. Further, in April 2000, Riley wrote a letter to James, thanking him for his assistance in helping her to obtain City-owned properties.
Riley acquired City-owned property in three phases. Phase I consisted of four properties and Phase II consisted of three properties. Although the Municipal Council approved the sale of five other Phase III parcels to Riley in 2002, she was unable to close on the properties because James informed Franklin that the City “will not do any more business with Tamika Riley until further notice.” SA 235:196. In 2004, Riley resumed her pursuit of the SWRP properties (amended Phase III) and the Municipal Council authorized the sale of four other properties to Riley.
Riley developed only two of all the parcels she purchased under the SWRP. As to those properties that she did not develop, Riley quickly turned around and sold them for a profit. 5 Riley's access to SWRP property ended in 2006, however, when a new mayoral administration instituted legal proceedings to block the sale of the properties to her.
B. The Indictment, Trial, and Sentencing
In July 2007, a federal grand jury sitting in Newark returned a 33-count indictment. The District Court severed the first twenty counts and the Government submitted a redacted and renumbered indictment (hereinafter, “Indictment”). 6 Counts 1-5 of the Indictment, the Land Fraud Counts, include Counts 1-3, which charged James and Riley with mail fraud as part of the scheme to convey City-owned property to Riley between 2002 and 2005, in violation of 18 U.S.C. §§ 1341 and 2. 7 Count 4 charged James and Riley with fraud involving a local government receiving federal funds, in connection with the fraudulent sale of City-owned properties to Riley in 2005, in violation of 18 U.S.C. §§ 666(a)(1)(A) and 2. Count 5 charged James and Riley with conspiracy to defraud the public of James's honest services between 1999 and 2006, contrary to 18 U.S.C. §§ 1341 and 1346, in violation of 18 U.S.C. § 371. Counts 6-9 (collectively, the “Housing Fraud Counts”) charged Riley with housing assistance fraud in violation of 18 U.S.C. §§ 1341 and 2. Finally, Counts 10-13 (collectively, the “Tax Fraud Counts”) charged Riley with tax evasion in violation of 26 U.S.C. § 7206(1).
Trial began on February 26, 2008. On April 16, 2008, following five weeks of testimony, the jury convicted James and Riley on all five Land Fraud Counts and Riley on Counts 6-13. On July 23, 2008, the District Court denied Appellants' post-trial motions. The District Court sentenced James and Riley to a custodial sentence of twenty-seven months and fifteen-months respectively. James and Riley appealed the Land Fraud convictions and the Government cross-appealed the sentences. 8
II. Discussion
This Court has jurisdiction to hear the instant appeal pursuant to 28 U.S.C. § 1291. The appeal is limited to the Land Fraud Counts (Counts 1-5). In light of the recent United States Supreme Court decision in Skilling v. United States, --- U.S. ----, 130 S.Ct. 2896, 177 L.Ed.2d 619 (2010), Appellants seek a...
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