U.S. v. Shelton, 83-1805

• Decision Date: 11 June 1984
• Docket Number: No. 83-1805,83-1805
• Citation: 736 F.2d 1397
• Court: U.S. Court of Appeals — Tenth Circuit
• Parties: UNITED STATES of America, Plaintiff-Appellee, v. Fred A. SHELTON, Defendant-Appellant.

Page 1397

736 F.2d 1397

UNITED STATES of America, Plaintiff-Appellee, v. Fred A. SHELTON, Defendant-Appellant.

No. 83-1805.

United States Court of Appeals Tenth Circuit.

June 11, 1984.

Donn F. Baker, Asst. U.S. Atty., Muskogee, Okl. (Gary L. Richardson, U.S. Atty., Muskogee, Okl., with him on brief), for plaintiff-appellee.

Jon Tom Staton, Muskogee, Okl. (Mike Norman and Don Pearson, Muskogee, Okl., with him on brief), for defendant-appellant.

Before SETH, Chief Judge, BARRETT, Circuit Judge, and SAFFELS ^*, District Judge.

BARRETT, Circuit Judge.

Fred A. Shelton (Shelton) appeals his jury conviction on thirty-seven (37) counts of mail fraud under 18 U.S.C. Secs. 1341 and 2 and three (3) counts of extortion under 18 U.S.C. Sec. 1951. The charges were brought against Shelton while he served as a county commissioner of Muskogee County, Oklahoma. He was charged under Secs. 1341 and 2 with a scheme to defraud the citizens of the county by mail. The Sec. 1951 charges accused Shelton of interference with interstate commerce by extortion. All of the acts charged were alleged to have occurred between 1978 and 1981. The Government was limited by the five-year limitation period contained in 18 U.S.C. Sec. 3282.

This is one of approximately two hundred prosecutions of Oklahoma county commissioners which resulted from extensive investigations pursued over a three-year period by the Federal Bureau of Investigation, the Internal Revenue Service, and the United States Attorneys for Oklahoma.

Shelton was charged with defrauding the citizens of Muskogee County, Oklahoma, in two ways. The 18 U.S.C. Secs. 1341 and 2 charges accused Shelton, in his capacity as county commissioner, of purchasing various materials and supplies for Muskogee County in exchange for "kickbacks" of ten percent from the vendors. The 18 U.S.C. Sec. 1951 charges accused Shelton of causing vendor invoices to be paid for materials and supplies which were never in fact delivered to Muskogee County, whereby Shelton "split" the payment proceeds fifty-fifty with the vendors. These charges "fit the mold" of similar cases previously appealed to this Court. ¹

Shelton, age sixty-one at time of trial, had served twenty years as a Muskogee county commissioner. He was a good family man and had a good reputation in his community of Fort Gibson, Oklahoma, and in Muskogee County. He was a four-year combat veteran of World War II, having served in Europe with the 45th Division. He was a likable person. He served as one of three commissioners for Muskogee County whose main responsibility was to oversee the maintenance of county roads and bridges. These roads consist of both gravel and asphalt surfaces, totaling approximately 430 miles, maintained by motor patrols, graders, grader blades, loaders, trucks, distributors to shoot and spread oil, pneumatic rollers, sheep foot rollers, and a variety of materials, including culvert pipe, bridge timbers and road signs. (R., Vol. II at 722-24.) Shelton's duties included negotiating for the county's purchase of various materials and supplies in the maintenance of the county's roads and bridges. In the five-year period prior to trial, Shelton was alleged to have been part of a fraudulent scheme whereby county funds were expended for purported purchases of materials, supplies, and equipment effected by (1) actual purchases in exchange for "kickbacks" of ten percent from the vendors/sellers, or (2) placement of orders for items not to be delivered, whereby the payment by the county was split "fifty-fifty" between Shelton and the vendors.

The principal witnesses for the government were three vendors involved with Shelton in the alleged scheme. Joe Swank (Swank) was the operator of Port City Road Supplies from 1977 to 1979. Prior to Shelton's trial, Swank had been similarly charged and had entered into a plea-bargain agreement with the United States Attorney. He was the first vendor to appear before the federal grand jury investigating the statewide "kickback" scandal. About a week before the Shelton trial, Swank had entered a plea of guilty to one count of conspiracy to commit mail fraud with Shelton. He testified that he had engaged in forty-one "kickback" transactions with Shelton involving Muskogee County funds whereby, after he received payment by county warrant, he in turn secretly remitted ten percent as a cash "kickback" to Shelton. Swank also testified that on one or two occasions he engaged in "split deals" with Shelton whereby Swank submitted vouchers, approved by Shelton, to Muskogee County for merchandise not delivered. When Swank cashed the warrant, he secretly delivered half of the money in cash to Shelton.

Swank, too, had a good reputation. He was a college graduate and former basketball coach at the University of Tulsa and at Sentinary College. A resident of Muskogee, Swank had served in the United States Air Force from 1943 to 1946. After coaching, he engaged in the grocery business at Fort Gibson and then entered the road supply business in north Muskogee under the partnership name of Port City Road Supplies. Swank did "kickback" business with county commissioners in six counties. (R., Vol. I at 172.) Swank had known Shelton for approximately thirty or thirty-five years. He testified that Shelton's reputation for truth and veracity was honorable and stated that they were friends. On redirect examination, Swank stated that if he had not paid Shelton the "kickback" monies, he would not have obtained any business from the county. (Id. at 213.) On recross-examination, Swank testified that he had dealt similarly with at least twelve commissioners in six counties, to whom he paid "kickbacks" of ten percent. (Id. at 214.)

James Joseph Skipper (Skipper) of Ada, Oklahoma, testified that as owner of a company located at Tupelo, Oklahoma, known as S & S Supply, he sold all types of bridge materials to Oklahoma county commissioners from 1975 until 1981, including culvert pipe, lumber, nails, grader blades and signs. (Id. at 230-31.) He stated that during this period, he paid "kickbacks" of ten percent on sales to about twenty county commissioners and participated in some fifty-fifty "splits" involving Muskogee, Cherokee and Pittsburg Counties. (Id. at 231-33.) Skipper specifically recalled doing business with Shelton in Muskogee County (District I). During the period in which Skipper was doing business as S & S Supply, he made a number of "kickback" payments to Shelton and also engaged with Shelton in the fifty-fifty splits. The "kick-backs" consisted of some thirty-six (36) transactions with Shelton, alleged in Counts 42 through 78 of the indictment, upon which Shelton was found guilty by the jury. Significantly, the record shows that in each instance Skipper was paid by county warrant received through the United States mail. (Id. at 252.) On the other hand, there was evidence that in many, if not most, instances of payment to vendors Joe Swank and Henry Peak (Peak), they or their representatives took possession of the county warrants in the office of the County Clerk and the mails were not used.

It is also significant, from an evidentiary standpoint, that Skipper's testimony was enhanced by the testimony of Dorothy June Griffin of Farris, Oklahoma, who, from 1963 until February, 1980, operated the Griffin Lumber Company. She testified that since the latter part of 1973, she had made "phony" invoices for a number of material suppliers in Oklahoma, in return for which she would receive five to ten percent of the gross amount of the invoice. (Id. at 379-84.) She testified about several phony invoices she had prepared at Skipper's request. On cross-examination, Mrs. Griffin testified that in either 1977 or 1978, in a motel room in Oklahoma City in the presence of her daughter-in-law, she spoke to Shelton about "kick-backs." (Id. at 403-04.) Skipper, on direct examination, had identified two "phony" invoices he received from Mrs. Griffin. One was dated June 16, 1977, for lumber in the amount of $844.80; Fred Shelton's signature appeared on the delivery ticket. (Id. at 248.) Skipper testified that he split the money from this "phoney" invoice with Shelton. (Id. at 249.) Prior thereto, on March 18, 1977, Skipper submitted a "phony" invoice for some culvert pipe purportedly purchased from Mrs. Griffin, representing a purchase price of $528.00 and showing delivery to Shelton. Shelton's signature appears on the delivery ticket. Skipper testified that he split the proceeds from this "phony" invoice fifty-fifty with Shelton in cash. (Id. at 239-243.)

Henry Peak, owner of Muskogee Supply and Equipment Company, had sold road supplies to Muskogee County since 1966. Peak testified that from that date until 1981, he paid Shelton ten percent kickbacks on some one-hundred transactions, corresponding to Counts 77 through 177 of the indictment. (Id. at 329-35.) Peak also testified to some three or four "splits" (fifty-fifty transactions) he participated in with Shelton. Peak and Shelton were close friends. They attended high school together and entered the service together during World War II. Peak encouraged Shelton to run for county commissioner and supported him throughout his terms.

At the time of Shelton's trial, Swank, Skipper, and Peak had been indicted in the identical transactions charged to Shelton (and others). Each had entered guilty pleas under plea-bargain agreements with the United States Attorney which were not binding upon the district court in relation to sentencing proceedings.

Shelton testified that he had never received any "kick-backs" or taken any "splits." He presented four character witnesses who testified to his reputation for truth, honesty, and character in the community. Six witnesses appeared on behalf of Shelton to refute the government's evidence relative to mailings of county warrants in payment to vendors. We observe, however, that none of those witnesses refuted the evidence that all of...