U.S. v. Triumph Capital Group, Inc., Docket No. 06-4970-cr.

Citation544 F.3d 149
Decision Date25 September 2008
Docket NumberDocket No. 06-4970-cr.
PartiesUNITED STATES of America, Appellee, v. TRIUMPH CAPITAL GROUP, INC., Frederick W. McCarthy, Lisa A. Thiesfield, Ben F. Andrews, Defendants, Charles B. Spadoni, Defendant-Appellant.
CourtUnited States Courts of Appeals. United States Court of Appeals (2nd Circuit)

John H. Durham, Deputy United States Attorney for the District of Connecticut (William J. Nardini, Nora R. Dannehy, Assistant United States Attorneys, Of Counsel, on the Brief), for Appellee.

Richard M. Asche, Litman, Asche & Gioiella, LLP (Russell M. Gioiella, Litman, Asche & Gioiella, LLP, on the Brief), New York, NY, for Defendant-Appellant.

Before: POOLER, HALL, Circuit Judges, and GLEESON, District Judge.1

JOHN GLEESON, United States District Judge:

Charles B. Spadoni appeals from a judgment of the United States District Court for the District of Connecticut convicting him of racketeering, racketeering conspiracy, bribery, wire fraud and obstruction of justice and sentencing him principally to a 36-month term of imprisonment in connection with a political bribery scheme. Spadoni challenges the sufficiency of the evidence of his intent to offer a bribe, and argues that the government unconstitutionally suppressed material exculpatory and impeaching evidence. He also claims that the evidence was insufficient to establish the intent element of his obstruction of justice charge, and that the jury was improperly instructed on that element. While we find the evidence sufficient to sustain the jury's verdicts, we reverse and remand for a new trial on the racketeering, racketeering conspiracy, bribery and wire fraud counts because we conclude that the government suppressed material exculpatory and impeaching evidence. However, because we conclude that the district court properly instructed the jury on the obstruction of justice charge, we affirm Spadoni's conviction on that count, but we vacate the sentence and remand for resentencing on that count.

BACKGROUND
A. The Trial Evidence

In July of 1997, Paul J. Silvester, who was at the time the Deputy Treasurer of the State of Connecticut, was appointed Treasurer to fill a midterm vacancy. The Connecticut Treasurer's Office manages billions of dollars in state pension funds, and the Treasurer has the authority to make investment decisions for these funds. At the time Silvester joined the Treasurer's Office, a Boston-based private equity firm, Triumph Capital Group, Inc. ("Triumph"), was managing some of the state pension fund's investments.

Silvester was friends with Spadoni, a politically active lawyer in Connecticut. In 1997, Silvester helped Spadoni get hired as Triumph's general counsel.

1. The Campaign Contribution Bribe

In 1998, Silvester, who had been an interim appointment as Treasurer, decided to run for a full term and needed to raise funds for his campaign. As state law prohibited investment firms doing business with the Treasurer's Office from contributing to the race for Treasurer, Silvester instead attempted to raise money for the Connecticut Republican Party, which agreed to contribute 70% of the amount Silvester raised to Silvester's campaign.

Silvester told Spadoni that it would be "helpful" to his campaign if Triumph could raise money for the Connecticut Republican Party, Trial Tr. vol. 5, 115, June 19, 2003, and Triumph accordingly made a $100,000 commitment to the party. Additionally, Silvester told Spadoni that he would like to have one of his employees, Lisa Thiesfield, serve as his full-time campaign manager, but she was not permitted to perform campaign activities during her work hours at the Treasurer's Office. Spadoni subsequently informed Silvester that Triumph hired Thiesfield for an assignment unrelated to state business, paying her a $20,000 to $25,000 fee. This allowed Thiesfield to quit her Treasurer's Office job and work as a full-time campaign manager.

Silvester lost the election, and Spadoni promptly approached him to propose an investment deal with Triumph. Silvester decided to invest $150 million of state pension funds with Triumph before he left office, an amount comparable to the size of Triumph's previous contracts with the state. Silvester thought the deal made good business sense, but would "probably not" have agreed to this deal if Triumph had not donated $100,000 to the Connecticut Republican Party and hired Thiesfield. Trial Tr. vol. 5, 156.

2. The Consulting Contracts Bribe

Before the $150 million investment agreement was finalized, Silvester asked Spadoni to pay Thiesfield and Christopher Stack, a close associate of Silvester, a 1% finder's fee even though they had not in fact acted as finders in connection with the deal.

Thiesfield was unemployed due to her resignation from the Treasurer's Office to serve as Silvester's campaign manager, and Silvester was concerned about finding employment for her and for his other staffers. Stack was not an employee of the Treasurer's Office, but he had acted as a finder on previous investment opportunities with the state in the past.2 Silvester told Spadoni that Stack's company, Collegiate Capital, was in trouble, and that he wanted to help Stack out of his financial difficulty.

Spadoni told Silvester that he would discuss the proposed finder's fee arrangement with Triumph's owner, Frederick McCarthy. At trial, Silvester testified that Spadoni subsequently informed him that McCarthy "did not want to pay the fee as a finder's fee," but wanted to wait until Silvester was out of office and then "work it out at that point," which Silvester understood to mean that he and Triumph would later devise some arrangement that would be economically identical to the finder's fee he had proposed. Trial Tr. vol. 5, 161-62.3 Silvester testified that this influenced him to increase the amount of funds being invested from $150 million to $200 million in order to increase the amount that Stack and Thiesfield would receive, but he did not discuss with Spadoni this decision to increase the value of the contract.

On November 12, 1998, Silvester executed a $200 million investment contract with Triumph-Connecticut II, L.P., a partnership that Triumph created to invest these funds. At some point Stack and Thiesfield, each using a wholly-owned LLC, executed a consulting contract with Triumph which would pay each $1,000,000 over three years. The government claimed at trial that these were sham contracts under which Stack and Thiesfield assumed virtually no duties and were paid regardless of any results, contrary to industry practice.

At trial, the date on which Stack's contract was signed was the subject of dispute. Stack testified that his contract was signed on November 11, 1998, a day before the investment contract was executed, and that his contract was postdated to appear that it was executed after Silvester left office in January of 1999. Stack testified that he remembered that this was the date his contract was signed because he found tickets to a matinee he had attended on that date, and he remembered that he signed the contract on the same day that he attended the matinee. Visitor logs from the law firm offices where Stack testified that he signed the contract confirmed that a meeting involving Stack, Spadoni and McCarthy took place on that date. Stack also testified that he received a draft contract by fax shortly before the signing, and Triumph's records reflect that Triumph sent a fax to Stack on November 9, 1998.

However, on several occasions during the course of his cooperation with the government, Stack told prosecutors that his consulting contract was signed at the end of December in 1998, between Christmas and New Year's Day. When he was first interviewed by the government, Stack made no mention of the November 11, 1998 meeting at the law firm and instead stated that he first learned of a possible consulting contract while vacationing in Tortola after Triumph's investment contract with Connecticut was signed. According to Stack, Silvester and Thiesfield were also vacationing with him in Tortola, and Silvester told him that he would later get a consulting contract.4 Stack also told the government that by the time the consulting contract was eventually signed, the Triumph-Connecticut investment contract had already been fully funded, which did not happen until December 4, 1998.

Although Silvester was not present for the signing of Stack's consulting contract, his trial testimony indicated that the consulting contract was signed after the investment contract between Triumph and Connecticut. Specifically, Silvester testified that after he and Stack returned from Tortola, which was after the investment contract was signed, Spadoni told him that McCarthy was "favorably inclined" to enter into a contract with Stack. Trial Tr. vol. 6, 59, June 20, 2003. He also testified that he and Stack discussed Stack's arrangements to sign the contract in mid-December 1998 or later, and that it was his understanding that Stack's consulting contract was signed in December 1998 or in January 1999.5

3. Obstruction of Justice

Shortly after Silvester left office, the investments he made late in his term came under scrutiny. On May 25, 1999, a grand jury subpoena was served on Triumph-Connecticut II, L.P. calling for the production of records related to the investment contract. Triumph-Connecticut II, L.P. complied with this subpoena.

Shortly after the subpoena was served, Spadoni told Silvester about it. He said that Triumph did not believe its consulting contracts with Stack and Thiesfield were covered by the subpoena, but that Triumph's lawyers anticipated more subpoenas in the future. Spadoni spoke to Silvester again and told him that an attorney had advised him to destroy documents not called for by subpoena in anticipation of further subpoenas, and had recommended specialized deletion software to remove them from his computer. He also asked Silvester to destroy any copies h...

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