327 F.3d 1081 (10th Cir. 2003), 01-4170, United States v. Welch
|Docket Nº:||01-4170, 01-4241.|
|Citation:||327 F.3d 1081|
|Party Name:||UNITED STATES of America, Plaintiff-Appellant, v. Thomas K. WELCH and David R. Johnson, Defendants-Appellees.|
|Case Date:||April 22, 2003|
|Court:||United States Courts of Appeals, Court of Appeals for the Tenth Circuit|
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Richard A. Friedman, Attorney, Appellate Section (John C. Keeney, Acting Assistant Attorney General, Richard N. Wiedis, Senior Trial Attorney, Fraud Section, and John W. Scott, Senior Trial Attorney, Public Integrity Section, with him on the brief), Criminal Division, United States Department of Justice, Washington, DC, for Plaintiff-Appellant.
William W. Taylor III, Zuckerman Spaeder LLP, (Blair G. Brown, Elizabeth Taylor, and Amit P. Mehta, Zuckerman Spaeder LLP, Washington, DC, and Michael Goldsmith, Park City, UT, for Defendant-Appellee Thomas K. Welch, and Max D. Wheeler, Camille N. Johnson, and Robert J. Shelby, Snow, Christensen & Martineau, Salt Lake City, UT, for Defendant-Appellee David R. Johnson, with him on the brief), Washington, DC, for Defendants-Appellees.
Before KELLY, BALDOCK, and HENRY, Circuit Judges.
BALDOCK, Circuit Judge.
Defendants Thomas K. Welch and David R. Johnson were the President and Senior Vice President, respectively, of the Salt Lake City Bid Committee for the 2002 Olympic Winter Games (SLBC). Community leaders organized the SLBC in the late 1980's as an I.R.C. § 501(c)(3) not-for-profit corporation under the direction of a board of trustees. The SLBC's primary purpose was to secure, in cooperation with the United States Olympic Committee (USOC), the right from the International Olympic Committee (IOC) to host the quadrennial Winter Games in Utah. 1 The IOC is an "international non-governmental non-profit organization" based in Lausanne, Switzerland. One of the primary duties of individual IOC members from participating countries is to cast votes to elect the host city for the Olympic Games. 2 In June 1995, the IOC awarded the 2002 Olympic Winter Games to Salt Lake City, Utah. 3
In July 2000, a federal grand jury indicted Defendants Welch and Johnson on fifteen bribery-related counts of criminal misconduct in connection with the SLBC's activities in procuring the 2002 Games. Count I of the indictment charged Defendants with conspiracy to defraud the United States by committing numerous bribery-related offenses in violation of 18 U.S.C. § 371.
Counts II through V charged Defendants with use of communications in interstate and foreign commerce to facilitate unlawful activity in violation of 18 U.S.C. § 1952(a)(3). Counts VI through X charged Defendants with mail fraud in violation of 18 U.S.C. § 1341. Lastly, Counts XI through XV charged Defendants with wire fraud in violation of 18 U.S.C. § 1343. Upon Defendants' motion and over a magistrate judge's contrary recommendations, the district court dismissed the indictment in its entirety. The Government appeals. We exercise jurisdiction pursuant to 18 U.S.C. § 3731. We reverse and remand.
According to the indictment, Salt Lake City began competing for the Olympic Winter Games around 1988. In 1994, the SLBC and USOC jointly executed and filed with the IOC an "Undertaking" in which they agreed to abide by the provisions of the International Olympic Charter and to act in accord with the IOC's instructions to candidate cities bidding on the 2002 Winter Games. As part of the 2002 bidding process, the IOC distributed a series of instructions to candidate cities and IOC members. IOC members similarly are bound by the Charter and take an oath to remain free from commercial influence. As stated in the indictment, the instructions "limited certain expenditures by candidate cities, created rules concerning visits by IOC members to candidate cities, and placed limitations on the value of gifts and other benefits which could be given to IOC members by and on behalf of candidate cities."
Meanwhile, between February 1988 and July 1999, Defendants purportedly utilized interstate facilities, contrary to federal law, to engage in a bribery scheme to "misappropriate and misapply the monies and funds of the SLBC[ ] by diverting SLBC income and by giving ... money and other material benefits to influence IOC members to vote for Salt Lake City to host the Olympic Winter Games[.]" Among other things, the indictment alleges Defendants instructed an SLBC "sponsor" "to make a series of payments to the defendants in cash so that the payments would not appear on the SLBC's books and records and could be diverted by the defendants for their own personal purposes."
The indictment alleges Defendants (1) made direct and indirect payments of money and other things of substantial value to IOC members; (2) paid for tuition, living expenses, and spending money for the children and relatives of IOC members; (3) paid for medical expenses of IOC members and their relatives; and (4) paid for personal and vacation travel expenses of IOC members and their relatives. Defendants also purportedly obtained lawful permanent resident alien status for an IOC member's son through submission of false and misleading documents to immigration authorities. Defendants allegedly conferred valuable benefits upon amenable IOC members totaling approximately $1,000,000 in value. 4
According to the indictment, neither the SLBC, its board of trustees, nor its contributors were aware of Defendants' scheme. Similarly, neither the USOC, IOC, Salt Lake City, State of Utah, nor the United States had any knowledge of Defendants' activities. The indictment alleges Defendants secretly retained and paid Alfredo La Mont, the USOC's Director of International Relations, to assist them "in influencing the conduct of IOC members in connection with the IOC's election" of Salt Lake City to host the Winter Games. To further conceal their illicit activities, Defendants allegedly (1) made payments to IOC members in cash; (2) created and funded a sham program known as the National Olympic Committee Program ostensibly to provide athletes in underprivileged countries with training and equipment; (3) entered into sham contracts and consulting agreements on behalf of the SLBC; (4) recorded payments and benefits which the SLBC provided to IOC members inaccurately in corporate books and records; (5) placed false, fraudulent, and misleading information in SLBC financial records and statements, and (6) failed to disclose material information in public documents.
Based on the foregoing, Count I of the indictment alleges ninety-eight overt acts by one or both Defendants in furtherance of a conspiracy to defraud in violation of 18 U.S.C. § 371. The conspiracy count is based upon four substantive offenses--the three substantive offenses alleged in the remaining counts of the indictment, and fraud in procuring an alien registration receipt card by false claims and statements in violation of 18 U.S.C. § 1546. Counts II through V of the indictment each allege one specific instance of Defendants' use of "a facility in interstate or foreign commerce" with the intent to carry on an "unlawful activity" in violation of 18 U.S.C. § 1952(a)(3). The unlawful activity or predicate offense on which Counts II through V rely is "bribery of various IOC members" in violation of Utah Code Ann. § 76-6-508(1)(a). 5 Counts VI through X each allege one instance of Defendants' use of the United States mail to further their unlawful scheme in violation of 18 U.S.C. § 1341. 6 Finally, Counts XI through XV each allege one instance of Defendants' use of "wire communications in interstate and foreign commerce" to further their unlawful scheme in violation of 18 U.S.C. § 1343. 7
Defendants filed a motion to dismiss the indictment in its entirety pursuant to Fed.R.Crim.P. 12 for failure to state a criminal offense. The district court referred Defendants' motion to a magistrate judge, who after briefing and oral argument, issued two reports and recommendations. See 28 U.S.C. § 636(b)(1). The first report recommended the district court deny Defendants' motion to dismiss Counts II through V. The second report recommended the court deny Defendants' motion to dismiss Counts VI through XV. 8 Defendants lodged timely objections to both reports. See id. Upon de novo review, the district court rejected the magistrate judge's recommendations and dismissed the indictment in two stages.
Like the magistrate judge's first report, the district court's first order focused exclusively on Counts II through V of the indictment, or the Travel Act counts. Commonly referred to as the Travel Act, 18 U.S.C. § 1952 provides in relevant part:
(a) Whoever ... uses the mail or any facility in interstate or foreign commerce, with intent to--
* * *
(3) ... promote, manage, establish, carry on, or facilitate the promotion, management, establishment, or carrying on, of any unlawful activity,
and thereafter performs or attempts to perform--
(A) an act described in paragraph ... (3) shall be fined under this title, imprisoned not more than 5 years, or both[.]
Id. § 1952(a)(3)(A). Subsection (b) defines "unlawful activity" as, among other things, "bribery ... in violation of the laws of the State in which committed[.]" Id. § 1952(b)(i)(2). In this case, the "unlawful activity" on which the Travel Act counts rely is bribery as defined by Utah Code Ann. § 76-6-508(1)(a). Entitled "Bribery of or receiving bribe by person in the business of selection, appraisal, or criticism of goods or services," § 76-6-508(1)(a) provides in relevant part:
(1) A person is guilty of a class A misdemeanor when, without the consent of the ... principal, contrary to the interests of the ... principal:
(a) he confers...
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