U.S. v. Hively

• Decision Date: 10 February 2006
• Docket Number: No. 04-3349.,No. 04-3352.,04-3349.,04-3352.
• Citation: 437 F.3d 752
• Parties: UNITED STATES of America, Appellee, v. Thomas James HIVELY, also known as T.J. Hively, Appellant. United States of America, Appellee, v. Wesley John Ketz, Appellant.
• Court: U.S. Court of Appeals — Eighth Circuit

437 F.3d 752

UNITED STATES of America, Appellee, v. Thomas James HIVELY, also known as T.J. Hively, Appellant.

United States of America, Appellee, v. Wesley John Ketz, Appellant.

No. 04-3349.

No. 04-3352.

United States Court of Appeals, Eighth Circuit.

Submitted: October 10, 2005.

Filed: February 10, 2006.

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Timothy O. Dudley, argued, Little Rock, AR, for appellant Hively.

Dennis Owens, argued, Kansas City, MO, for appellant Ketz.

Todd L Newton, argued, Asst. U.S. Attorney, Little Rock, AR (Angela S. Jegley, Asst. U.S. Attorney, Little Rock, AR, on the brief), for appellee.

Before ARNOLD, BOWMAN, and MURPHY, Circuit Judges.

MURPHY, Circuit Judge.

Thomas James "T.J." Hively, the elected prosecuting attorney for the Sixteenth Judicial District of Arkansas, and his law partner and deputy prosecuting attorney Wesley John Ketz were convicted of mail fraud and racketeering after a jury trial. They appeal, both arguing that there was insufficient evidence of their guilt. Hively also contends that the district court¹ erred in not holding an evidentiary hearing on his claim of double jeopardy and in its forfeiture order. Ketz makes two additional claims of error by the district court: rejoining his case to Hively's and excusing a juror during deliberations without seating an alternate. We affirm.

I.

In 2000 Hively, Ketz, and bail bondsman Gary Wayne Edwards were indicted on sixty four counts charging crimes related to the prosecuting attorney's office, which Hively held from 1993 until 1998. Count 1 alleged a pattern of racketeering activity in violation of 18 U.S.C. § 1951 (RICO); fourteen of the alleged predicate acts were connected to two schemes to obtain federal and state grant money for special legal work related to drug and child support enforcement. Under the grant programs the individual prosecutors who did the work were to receive the supplemental funds furnished to the office. Hively himself was not eligible for any grant money, but he nevertheless arranged to receive some $429,391.47 of the funds between 1995 and 1998. These two grant funding schemes were also the basis for the mail fraud and money laundering charges in Counts 2-34 of the indictment.

The first program grant came from the United States Department of Justice and was administered by the Arkansas Office of Intergovernmental Services. It was intended to pay a part time deputy prosecutor to process drug cases for the Sixteenth Drug Task Force (DTF). As an elected prosecuting attorney, Hively was disqualified from receiving DTF grant money, but he appointed Ketz as his deputy and represented through several grant applications and subgrant award letters mailed to the state that Ketz was primarily responsible for the DTF cases. Although Hively prosecuted all the felony drug cases, reviewed all related search warrants, and generally handled most of the important legal issues related to drug enforcement, it was Ketz who signed his name to the monthly contractor reports detailing the DTF work. Ketz then received monthly checks from the state which he would first deposit in his professional account and subsequently write Hively a check for the same amount. The government's evidence indicated that Ketz funneled approximately $88,361 in DTF grant money to Hively in this way. When Ketz learned in November 1997 that a search warrant had been executed on their law firm, he attempted to refund to the state the last amount he had received and passed on to Hively. The DTF program was also the basis for Counts 14 and 15 which charged Hively and Ketz with mail fraud, in violation of 18 U.S.C. § 1341, and Counts 16-34 which alleged twenty acts of money laundering, in violation of 18 U.S.C. § 1956(c)(4)(B).

The second grant program involved the Sixteenth Child Support Enforcement Unit (CSEU) which was funded under a cooperative agreement with the Arkansas Office of Child Support Enforcement. Under this program the state agreed to reimburse the prosecuting attorney's office for legal child support enforcement work. As with the DTF grant money, the office was to pass the funds directly on to the attorney working on the cases. Hively appointed Vickie Warner, an associate in his and Ketz's law practice, as the deputy prosecuting attorney in charge of CSEU matters. Although it was Warner who did virtually all of the CSEU legal work, Hively put his own name or that of the firm on the reimbursement forms mailed to the state, and he kept almost all of the money. There was evidence that most CSEU matters involved relatively little legal work and that administrative work could not be reimbursed, and the indictment also alleged that Hively pocketed funds for work that was never done or that he knew was not covered by the agreement. There was evidence that he took approximately $332,000 in supplemental CSEU funds between 1995 and 1998. Counts 2-13 of the indictment alleged eleven acts of mail fraud by Hively involving reimbursement forms submitted as part of the CSEU scheme.

Some of the other RICO predicate acts charged against Hively and Ketz alleged mail fraud involving a payback from the salary of another deputy prosecuting attorney, David Miller, a scheme that was also the basis for mail fraud Counts 35-62. The remaining predicate acts involved three separate attempts at extortion by Hively and Edwards who allegedly conspired to extort real property from John Milton Northrup, a man charged with molestation, and from Kathy Sampson Clark, whose husband was charged with murder, as well as approximately $3000 from Troy Gibson, who had been charged with drunk driving. The extortion allegations in respect to Northrup and Clark were also the basis for Counts 63 and 64 of the indictment which charged Hively and Edwards with conspiring to affect interstate commerce through extortion, in violation of 18 U.S.C. § 1951(a).

The case was initially assigned to the Honorable James M. Moody. All three defendants moved for severance, and the motions of Ketz and Edwards were granted on the grounds that a joint trial could prejudice them since there were more charges and evidence against Hively and because Hively and Ketz had a close association as law partners. Judge Moody subsequently decided to try Hively's case first. At the close of the government's evidence, Hively successfully moved for acquittal on the grounds of insufficient evidence on Count 13 (CSEU mail fraud) and Counts 35-62 (Miller salary mail fraud). At the close of the defense case, Judge Moody also dismissed Counts 16-34 (DTF money laundering). This left only Count 1 (RICO), Counts 2-12 (CSEU mail fraud), Counts 14 and 15 (DTF mail fraud), and Counts 63 and 64 (conspiring to extort real property) for submission to the jury. The jury was unable to reach a verdict on any of the counts after approximately three days of deliberations, and the court declared a mistrial on March 15, 2002. Hively then moved for a judgment of acquittal on all remaining counts, and the court took the motion under advisement.

Some six weeks later on May 2, 2002, counsel were informed that a signed order on Hively's motion for acquittal would be available at the clerk's office the next day. Without the order having been filed or either side knowing its contents, the United States Attorney for the Eastern District of Arkansas sent Judge Moody a letter bringing a potential conflict to his attention. The letter pointed out that before going on the bench in 1995, the judge had defended Hively in a malpractice action brought in March 1992 by a brother of defendant Edwards. Judge Moody immediately recused himself from the severed cases which were then reassigned to the late Judge Stephen Reasoner. After Judge Reasoner had to withdraw because of illness, they were reassigned to Judge George Howard, Jr.

II.

After the case was transferred to Judge Howard, the government moved to rejoin the charges against Ketz and Edwards with the sixteen counts remaining against Hively. Judge Howard found that the circumstances had changed significantly since the original severance decision. Most of the charges in the original indictment had been dismissed by the former presiding judge, and the only remaining charges against Ketz were racketeering and DTF mail fraud. The court concluded that at this point separate trials were not needed, and it granted the rejoinder motion. Hively moved for an evidentiary hearing to disclose the contents of Judge Moody's unfiled order and to dismiss on double jeopardy grounds if he had decided to grant the motion for acquittal. Judge Howard denied the motion for an evidentiary hearing; Hively attempted two interlocutory appeals, both of which were summarily dismissed by this court. See United States v. Hively, No. 02-2292 (8th Cir. July 2, 2002) (order dismissing interlocutory appeal), cert. denied, 537 U.S. 1073, 123 S.Ct. 678, 154 L.Ed.2d 567 (2002); United States. v. Hively, No. 03-3022 (8th Cir. Oct. 1, 2003) (order dismissing interlocutory appeal).

The case proceeded to a joint trial on the remaining charges against all these defendants. The trial lasted from February 2 to March 5, 2004. The government called thirty five witnesses and offered several hundred exhibits. Both Hively and Edwards testified, and the defendants called four other witnesses and offered over one hundred exhibits. The government witnesses included members of Hively's office staff who were familiar with the workings of both the DTF and CSEU grant programs, government officials who had dealt with Hively and Ketz in relation to both programs, and victims of the extortion attempts by Hively and Edwards. Exhibits included copies of the grant applications, subgrant award letters, and reimbursement forms used to perpetrate the DTF and CSEU schemes; records of cash transfers between Ketz and Hively; and lewd images of Northrup used by Hively and Edwards in their extortion...