U.S. v. Conover, s. 84-3431

• Decision Date: 30 September 1985
• Docket Number: 84-3876,Nos. 84-3431,s. 84-3431
• Citation: 772 F.2d 765
• Parties: 19 Fed. R. Evid. Serv. 879 UNITED STATES of America, Plaintiff-Appellee, v. William M. CONOVER and Anthony R. Tanner, Defendants-Appellants.
• Court: U.S. Court of Appeals — Eleventh Circuit

Page 765

772 F.2d 765

19 Fed. R. Evid. Serv. 879

UNITED STATES of America, Plaintiff-Appellee, v. William M. CONOVER and Anthony R. Tanner, Defendants-Appellants.

Nos. 84-3431, 84-3876.

United States Court of Appeals Eleventh Circuit.

Sept. 30, 1985.

Richard A. Lazzara, Tampa, Fla., for W. Conover.

Stephen D. Milbrath, David R. Best, Orlando, Fla., John DeVault, III, Jacksonville, Fla., for A. Tanner.

Terry Zitek, Asst. U.S. Atty., Tampa, Fla., for plaintiff-appellee.

Appeals from the United States District Court for the Middle District of Florida.

Before HILL and ANDERSON, Circuit Judges, and GARZA ^*, Senior Circuit Judge.

GARZA, Senior Circuit Judge:

A jury convicted William M. Conover and Anthony R. Tanner of conspiring to defraud the United States in violation of 18 U.S.C. Sec. 371, and committing various acts of mail fraud in connection with the conspiracy in violation of 18 U.S.C. Sec. 1341. Conover and Tanner have appealed, arguing that the district court abused its discretion in refusing to investigate allegations of juror misconduct; that the conspiracy count of the indictment failed to charge a crime against the United States; that the evidence is insufficient to support the mail fraud convictions; and that the district court made various evidentiary rulings which warrant reversal. We affirm the convictions.

I

Seminole Electric Cooperative, Inc. ("Seminole"), is a Florida corporation owned by several rural electric cooperatives located in central Florida. In 1979, Seminole borrowed over $1.1 billion from the Federal Financing Bank, which is an agency of the United States Treasury, for the purpose of constructing a coal-fired power plant near Palatka, Florida. The loan was guaranteed by the Rural Electrification Administration ("REA"), which is an agency of the United States Department of Agriculture. The REA administers a guaranteed loan program for eligible rural electric cooperatives. Conover was employed as Seminole's manager of procurement.

Construction of the plant began in September 1979. In order to install a transmission line running from the plant to a substation located outside of Ocala, Florida, it was first necessary to build a fifty-one mile patrol road. The patrol road had to be made of materials which would support heavy trucks and resist flooding. The construction contract for the patrol road was originally awarded to Journagan Construction Company ("Journagan").

Journagan encountered problems soon after construction of the road began. It had been assumed that Journagan would be able to use sand located in the area where the road was being built. As it turned out, however, the sand would not compact to a density sufficient to support even light-weight vehicles. Seminole hired the engineering consulting firm of Ross and Associates ("Ross") to evaluate the situation. Ross suggested that the natural sands be used as the primary fill material, and then topped with a sand-clay mixture which would be more cohesive and stable. Journagan began to implement this method, but soon encountered difficulty in obtaining sufficient amounts of clay.

A meeting was held at Seminole's Tampa office in March 1981. The purpose of the meeting was to discuss ways of accelerating the construction project. The problem of obtaining adequate fill materials for the patrol road was also discussed. During the meeting, Richard Sherrill, Seminole's supervisor of transmission engineering, instructed Conover to locate sources of fill material. Journagan representatives indicated that they had not attempted to locate alternative fill materials. They also indicated that the contract price would have to be increased substantially in order for them to complete the road. Journagan's contract was subsequently terminated.

Following the meeting, Conover called Tanner. Tanner owned a limerock mine, and was also involved in the real estate development business. Tanner and Conover discussed the possibility of using limerock and limerock overburden as an alternative fill material. Limerock overburden in a material which is generally found above limerock deposits. On March 26, 1981, at Conover's request, Seminole engineer Ken Bachor examined the fill material available at Tanner's Citra Mine. Bachor later advised Sherrill that the material would be adequate for the project. Sherrill subsequently issued a purchase order to acquire enough limerock overburden to keep construction underway. Conover did not investigate any other sources of alternative fill materials.

Tanner and Conover were friends, and had gone on several fishing trips together. They had flown to the Bahamas together in Tanner's private plane in 1980. In May 1981 Conover purchased a condominium from Crystal River Investors, a company owned by Tanner. Tanner loaned Conover $6000 so that Conover could close on the condominium; this money was repaid in June 1981. Previously, in January 1981, Conover had contracted with Tanner to perform landscaping work and install a sprinkler system at the condominum complex for a fee of approximately $13,750. On March 9, 1981, Tanner gave Conover a check for $10,035 which was allegedly made in partial payment of the money owed under the landscaping contract. Conover received a total of $15,000 under the landscaping contract. The record does not reflect how much of the $15,000 was profit.

With Journagan no longer working on construction of the patrol road, it became necessary to award a new contract for the construction of the patrol road through Seminole's formal competitive bidding procedure. Seminole decided not to award just one contract for the patrol road project as it had done with Journagan. Instead, the company decided to bid out two separate contracts: one to provide fill material and one to provide for the spreading of the fill material. The specifications for the fill material described in the contract were drawn up by Seminole's procurement department. The specifications stated that the fill material had to have a limerock content of at least twenty percent. This requirement worked in favor of Tanner for several reasons. First, the Citra Mine was relatively undeveloped. That is, there was a great deal of overburden still present above the limerock deposits; consequently, it would be easy for Tanner to remove the overburden, then mix in only the minimum amount of limerock necessary to meet the specifications required by the contract. Second, the contract specifications excluded contractors who could have made bids had the contract required the use of a sand and clay mixture rather than a limerock mixture. Additionally, one contractor complained that the time period in which bids had to be submitted was too short. Tanner submitted the lowest of several bids made on the fill contract, and was awarded the job. Tanner also made the lowest bid on the spreading contract, and was awarded that job as well.

More problems arose after Tanner began working on the road. First there was a dispute as to which party, Seminole or Tanner, was required to maintain the access roads leading to the patrol road. Conover and another Seminole employee advised Kenneth Bachor, Seminole's manager of transmission engineering, that the contract was ambiguous, and that Seminole should pay; Seminole ended up paying the costs of maintaining the access roads. Subsequently, REA complained that the bond provided by Tanner was unacceptable because the bonding company was not on the Treasury Department's list of approved sureties. In a letter dated July 17, 1981, Conover told another bonding company that the patrol road had been "essentially" completed, and that the work had been performed in a satisfactory manner. In another letter dated July 6, 1981, Conover stated that fifty percent of the road had been completed. In fact, the road was less than half finished at that time. It was also learned that limerock weakens when it becomes wet; consequently, the limerock mixture could not be used in areas subject to water flooding. As a result, "clean sand" had to be substituted in high-water areas. Tanner charged $4.75 for each cubic yard of fill material delivered and spread; Journagan had been charging only $3.82 per cubic yard of pure sand delivered and spread. The patrol road was completed in October 1981.

Prior to the time the road was completed, in June 1981, representatives of the Withlacoochie Rural Electric Cooperative, Inc., which was a member of the Seminole cooperative, demanded that Seminole terminate all business relations with Tanner. This demand was based on alleged improprieties in the manner in which the contracts with Tanner had been awarded. Federal authorities were investigating the situation by November 1981. Conover was subsequently suspended, then demoted, for violating Seminole's conflict of interest policies.

Tanner and Conover were first indicted in June 1983. The six week trial that followed resulted in a hung jury, and a mistrial was declared. Tanner and Conover were subsequently reindicted on a five count indictment. Count I alleged that Tanner and Conover had conspired to defraud the United States in violation of 18 U.S.C. Sec. 371; counts II through V alleged separate instances of mail fraud in violation of 18 U.S.C. Sec. 1341. Conover was convicted on all counts. Tanner was convicted on counts I, II, IV, and V. Two motions for new trial based on allegations of jury misconduct were filed; both were denied.

II

Appellants' first contention is that the district court erred in refusing to conduct an evidentiary hearing for the purpose of investigating claims of jury misconduct. The factual underpinnings supporting this contention are somewhat unusual. Allegations of jury misconduct were originally pressed by the appellants while their motion for new trial was still pending. In a sworn affidavit, Tanner's attorney stated that he received an unsolicited phone call from a juror. The juror told Tanner's attorney that...