U.S. v. Siegelman

• Decision Date: 10 May 2011
• Docket Number: No. 07–13163.,07–13163.
• Citation: 22 Fla. L. Weekly Fed. C 2026,640 F.3d 1159
• Parties: UNITED STATES of America, Plaintiff–Appellee,v.Don Eugene SIEGELMAN, Richard Scrushy, Defendants–Appellants.
• Court: U.S. Court of Appeals — Eleventh Circuit

640 F.3d 1159

22 Fla. L. Weekly Fed. C 2026

UNITED STATES of America, Plaintiff–Appellee,

v.Don Eugene SIEGELMAN, Richard Scrushy, Defendants–Appellants.

No. 07–13163.

United States Court of Appeals, Eleventh Circuit.

May 10, 2011.

David Allen McDonald, Kilborn, Roebuck & McDonald, Vincent F. Kilborn, III, Mobile, AL, Arthur W. Leach, Alpharetta, GA, Hiram Chester Eastland, Jr., Eastland Law Offices, PLLC, Greenwood, MS, G. Robert Blakey, Notre Dame Law Sch., Notre Dame, IN, James K. Jenkins, Maloy Jenkins Parker, Atlanta, GA, Leslie V. Moore, Moore & Associates, Birmingham, AL, Bruce Rogow, Cynthia E. Gunther, Bruce S. Rogow, P.A., Ft. Lauderdale, FL, Sam Heldman, The Gardner Firm, Washington, DC, for Defendants–Appellants.John Alex Romano, U.S. Dept. of Justice, Crim. Div., App. Section, Washington, DC, Louis V. Franklin, Sr. and Stephen P. Feaga, Asst. U.S. Attys., James B. Perrine, Montgomery, AL, for Plaintiff–Appellee.David A. Sifre, Stroock & Stroock & Lavan, LLP, New York City, for Amicus Curiae.Appeals from the United States District Court for the Middle District of Alabama.ON REMAND FROM THE UNITED STATES SUPREME COURT.Before TJOFLAT, EDMONDSON and HILL, Circuit Judges.PER CURIAM:

This case is before us on remand from the Supreme Court of the United States for reconsideration in light of Skilling v. United States, 561 U.S. ––––, 130 S.Ct. 2896, 177 L.Ed.2d 619 (2010). The parties were ordered to re-brief the case; oral argument was heard.

I.

Don Eugene Siegelman is the former Governor of Alabama. Richard Scrushy is the founder and former Chief Executive Officer of HealthSouth Corporation (“HealthSouth”), a major hospital corporation with operations throughout Alabama. The defendants were convicted of federal funds bribery, in violation of 18 U.S.C. § 666(a)(1)(B), and five counts of honest services mail fraud and conspiracy, in violation of 18 U.S.C. §§ 1341, 1346, and 18 U.S.C. § 371. Siegelman was also convicted of obstruction of justice, in violation of 18 U.S.C. § 1512(b)(3).

The bribery convictions were based on allegations that the defendants made and executed a corrupt agreement whereby Scrushy gave Siegelman $500,000 in exchange for Siegelman's appointing him to Alabama's Certificate of Need Review Board (the “CON” Board). The honest services mail fraud convictions were also based in part upon these bribery allegations, but two of the counts also alleged that Scrushy used the CON Board seat to obtain favorable treatment for HealthSouth's applications. The conspiracy count alleged that Scrushy and Siegelman conspired to violate the honest services statute. Siegelman's obstruction of justice conviction is based on allegations that he corruptly influenced another to create a series of sham check transactions to cover up a separate “pay-to-play” payment to him.¹

This is an extraordinary case. It involves allegations of corruption at the highest levels of Alabama state government. Its resolution has strained the resources of both Alabama and the federal government.

But it has arrived in this court with the “sword and buckler” of a jury verdict. The yeoman's work of our judicial system is done by a single judge and a jury. Twelve ordinary citizens of Alabama were asked to sit through long days of often tedious and obscure testimony and pour over countless documents to decide what happened, and, having done so, to apply to these facts the law as the judge has explained it to them. And they do. Often at great personal sacrifice. Though the popular culture sometimes asserts otherwise, the virtue of our jury system is that it most often gets it right. This is the great achievement of our system of justice. The jury's verdict commands the respect of this court, and that verdict must be sustained if there is substantial evidence to support it. Glasser v. United States, 315 U.S. 60, 80, 62 S.Ct. 457, 86 L.Ed. 680 (1942).

Furthermore, to the extent that the verdict rests upon the jury's evaluations of the credibility of individual witnesses, and the reasonable inferences to be drawn from that testimony, we owe deference to those decisions. In our system, the jury decides what the facts are, by listening to the witnesses and making judgments about whom to believe. This they have done, and, though invited to do so,² we shall not substitute our judgment for theirs.

This is not to say that the judgment below is inviolable. Having determined what the facts are, a jury applies the law as the judge instructs them. The defendants' lawyers assert that there were errors in those instructions. They also contend that the court committed other legal mistakes during the course of the trial. Our duty as an appellate court is to answer properly presented questions from the parties in the case as to whether the law was correctly interpreted by the district court. With this in mind, we have reviewed the claims of legal error in the proceedings below, and our opinion as to their merit follows. First, however, we recount the facts as the jury found them.³

II.

Don Siegelman was elected Governor of Alabama in 1998 on a campaign platform that advocated the establishment of a state lottery to help fund education in Alabama. After his election, he established the Alabama Education Lottery Foundation (the “Foundation”) to raise money to campaign for voter approval of a ballot initiative to establish a state lottery. Darren Cline, the Foundation's fundraising director, testified that Siegelman “called the shots” on the lottery campaign. The lottery initiative was eventually defeated in a referendum held in October of 1999.

On March 9, 2000, the Foundation borrowed $730,789.29 from an Alabama bank in order to pay down debt incurred by the Alabama Democratic Party for get-out-the-vote expenses during the lottery campaign. This note was personally and unconditionally guaranteed by Siegelman.⁴

Richard Scrushy, the CEO of HealthSouth had served on the CON Board under three previous governors of Alabama. The CON Board is an arm of the State Health Planning and Development Agency and exists to prevent unnecessary duplication of healthcare services in Alabama. The Board determines the number of healthcare facilities in Alabama through a process that requires healthcare providers to apply for and obtain a certificate of a healthcare need before opening a new facility or offering a special healthcare service. The CON Board decides which healthcare applications will be approved for an announced healthcare need, choosing between competing applications and ruling on objections filed by an applicant's competitor. The Governor of Alabama has sole discretion to appoint the members of the CON Board, who serve at his pleasure.⁵ Scrushy had supported Siegelman's opponent in the just prior election.

Nick Bailey was one of Siegelman's closest associates and had worked on Siegelman's campaign for governor. Cline testified that “whatever [Bailey] told me that the Governor wanted was what the Governor said.” Cline also testified that “if the Governor wanted to get something done, then [Bailey] went ahead—blindly went ahead and did it.”

Bailey testified that, after Siegelman's election in 1998, Siegelman met with Eric Hanson, an outside lobbyist for HealthSouth, and told Hanson that because Scrushy had contributed at least $350,000 to Siegelman's opponent in the election, Scrushy needed to “do” at least $500,000 in order to “make it right” with the Siegelman campaign. Bailey testified that Siegelman was referring to the campaign for the lottery initiative, and that Hanson was to relay this conversation to Scrushy. Bailey also testified that, in another conversation, Hanson told Bailey that Scrushy wanted control of the CON Board.

Mike Martin is the former Chief Financial Officer of HealthSouth. He testified that having influence over the CON Board was important to Scrushy and HealthSouth because it determined the number of healthcare facilities in the state, thereby affecting HealthSouth's ability to grow. He testified that Scrushy told him that to “have some influence or a spot on the CON Board,” they had to help Siegelman raise money for the lottery campaign. Scrushy said that if they did so, “[they] would be assured a seat on the CON Board.” Martin testified, “[W]e were making a contribution ... in exchange for a spot on the CON Board.”

Bailey testified that lobbyist Hanson “made it clear to him that if Mr. Scrushy gave the $500,000 to the lottery campaign that we could not let him down” with respect to the CON Board seat. Bailey also testified that he “reminded the Governor periodically of the conversations that [Bailey] had with Eric Hanson and the conversations that the Governor had with Eric Hanson about what Mr. Scrushy wanted for his contributions, and that was the CON Board.”

Martin also testified that Scrushy told him that HealthSouth could not make the payment to the lottery campaign, nor could he do it personally because “we [HealthSouth] had not supported that and that his wife, Leslie, was against the lottery, and it would just look bad if HealthSouth made a direct contribution to the lottery, so we needed to ask—he instructed me in particular to ask our investment banker, Bill McGahan, from [the Swiss bank] UBS, to make the contribution.”

Bill McGahan did not want to make such an “out of the norm” donation and hoped the matter would “go away.” Over the next two weeks, Martin called McGahan at least once a day to ask him about the status of the UBS donation, and told McGahan that Scrushy was going to fire UBS if it did not make the contribution. Finally, Martin testified, Scrushy himself called McGahan to “put more pressure” on him to make the contribution.

McGahan testified that he did not want UBS to make such a large contribution directly, so he told Martin that he would get Integrated Health Services (“IHS”) of Maryland to make the donation to the lottery campaign in exchange for UBS reducing an outstanding fee...