U.S. v. Collins

• Decision Date: 11 March 1996
• Docket Number: No. 94-5016,94-5016
• Citation: 78 F.3d 1021
• Parties: -1274, 44 Fed. R. Evid. Serv. 144 UNITED STATES of America, Plaintiff-Appellee, v. Billy Louis COLLINS, Defendant-Appellant.
• Court: U.S. Court of Appeals — Sixth Circuit

Page 1021

78 F.3d 1021

77 A.F.T.R.2d 96-1274, 44 Fed. R. Evid. Serv. 144

UNITED STATES of America, Plaintiff-Appellee, v. Billy Louis COLLINS, Defendant-Appellant.

No. 94-5016.

United States Court of Appeals, Sixth Circuit.

Argued Feb. 2, 1995.

Decided March 11, 1996.

On Appeal from the United States District Court for the Eastern District of Kentucky; Joseph M. Hood, Judge.

Jane E. Graham, Asst. U.S. Attorney (argued and briefed), Lexington, KY, for Plaintiff-Appellee.

Peter L. Ostermiller, Stallings & Stallings, Louisville, KY, Frank E. Haddad, Jr. (argued and briefed), Louisville, KY, Nathan Z. Dershowitz, Dershowitz & Eiger, New York City, for Defendant-Appellant.

Before: KEITH, and NELSON, Circuit Judges; BELL, District Judge. ^*

ROBERT HOLMES BELL, District Judge.

Defendant-Appellant Billy Louis Collins was convicted of conspiracy to violate the Hobbs Act, 18 U.S.C. § 1951, and conspiracy to defraud the United States by impeding the IRS function, in violation of 18 U.S.C. § 371. He was sentenced to concurrent terms of imprisonment of 63 months on Count 1 and 60 months on Count II. Collins appeals his conviction and sentence. For the following reasons we affirm the conviction and sentence.

I.

Billy Louis Collins is the husband of Martha Layne Collins, Governor of the Commonwealth of Kentucky from 1983 to 1987. The indictment charges Collins with conspiring to extort money from those who sought to do business with the Commonwealth of Kentucky from October 1983 through September 1989. The Court views the evidence presented during the seven week trial in the light most favorable to the government.

Defendant Collins was a dentist who also served as a fundraiser for his wife's political pursuits. After his wife won the democratic primary for governor in May 1983, Collins recruited Melvin Wilson, Floyd Poore, A.D. Wright, Lester M. "Mac" Thompson and Billy Wilcoxson as his five major fund-raising strategists for his wife's gubernatorial campaign. ¹ Together with these individuals Collins solicited contributions for the fall Democratic campaign and the Democratic Party in exchange for the right to contend for state contracts, particularly in the area of engineering and bond underwriting contracts.

Lester M. Thompson, who testified under a grant of immunity, was the government's primary witness. Thompson served as Secretary of Finance for the first year of the Collins Administration, from December 1983 to December 1984, when he was replaced as Secretary of Finance by Gordon Duke. The Secretary of Finance had ultimate responsibility for the award of contracts for engineers and architects which came through the Office of Facilities and Management. The Secretary of Finance also had responsibility for overseeing the issuance of bonds to finance large projects, such as turnpike issues and bond projects for the Kentucky Housing Corporation.

J.M. Crawford was a civil engineer who specialized in highway and bridge construction. Prior to the Collins administration he had received few engineering contracts from the Commonwealth. In August 1983 Crawford and another civil engineer approached Billy Wilcoxson about obtaining engineering contracts during the Collins administration. Wilcoxson told them to contribute $25,000 to receive "consideration for work to come."

The engineers made the payment directly to Wilcoxson. Subsequently, when Crawford submitted bids on state contracts he would bring copies of his bids to Wilcoxson. He began to obtain state engineering contracts.

In the spring of 1984, Wilcoxson summoned Crawford to his home and told him he had a horse lease proposition which would be an excellent tax write-off. Wilcoxson simultaneously advised Crawford that he, along with Collins and Thompson, were on the board that reviewed and selected the consultant engineers' contracts. Although Crawford did not need a tax shelter, he felt that if he did not invest, he would have no hope of getting state jobs in the future.

Over a two year period Crawford invested $160,000 in a lease with Equine Kentucky Thoroughbred Leasing. ² During this time Crawford experienced considerable success in obtaining work with the state. Furthermore, once Eddie Coleman, the Democratic Party Chairman, learned Crawford was contributing to the horse leasing program, he stopped pressuring Crawford for contributions to the party. ³ However, when Crawford allowed the lease to lapse after two years, Coleman again began expecting Crawford to contribute 3% of what he received by way of state contracts.

Lynn Luallen had been the Executive Director of the Kentucky Housing Corporation ("KHC"), a state agency which financed housing with proceeds of bonds guaranteed by the Commonwealth of Kentucky, during a previous administration. In the fall of 1983 Collins and Thompson asked Luallen to contact people he knew in the investment banking business on Wall Street to see if they would make contributions of $25,000 to the Kentucky Democratic Party in exchange for the opportunity to do business with the Commonwealth.

Luallen spoke with Bill Johnston at the Wall Street investment banking firm of Donaldson, Lufkin and Jenrette ("DLJ"). When he requested a $25,000 contribution, Johnston asked what he would get for it. Luallen told him that DLJ would get a "level playing field" and that if they wanted more information, they needed to talk to Collins.

Shortly thereafter, Joseph Harcum and Johnston of DLJ travelled to Kentucky with the initial installment on the $25,000 payment. Harcum and Johnston were introduced to Collins and met privately with him to discuss the Kentucky Housing Corporation.

In December 1983, after the election, and after DLJ had made payment in full of the $25,000 to the Kentucky Democratic Party and the Martha Layne Collins Inaugural Committee '83 fund, Harcum and Johnston returned to Kentucky for another meeting with Collins and Thompson to discuss the award of a $300-million Turnpike Bond issue.

Defendant held a breakfast meeting at the Governor's Mansion for investment bankers. Following the meeting Defendant gave Thompson a list of those investment bankers who were to participate in the $300-million bond issue. Consistent with Collins' instructions, DLJ was named as the lead manager on the $300-million Turnpike Bond issue.

In the spring of 1984 Collins, Wilcoxson, Thompson, and Broadbent met to discuss ways of providing for the Collins' retirement. They decided to use horse partnerships as a vehicle for funneling kickbacks from those doing business with the state. During 1984 and thereafter, Defendant Collins led the formation of limited horse investment partnerships known as Collins Partners No. 2 and Collins Partners No. 3.

Based upon DLJ's award of the $300-million bond issue, Collins calculated that DLJ owed a commission of $500,000 to $600,000 which would be invested in Collins Partners No. 2. DLJ agreed to purchase six partnership units in Collins Partners No. 2 at $100,000 per unit. Subsequently, DLJ agreed to purchase six additional units in exchange for the lead manager position on the $100-million Kentucky Housing bond issue to be let in the fall of 1984.

In August 1984 DLJ was named lead manager of the $100-million KHC bond issue. Shortly thereafter, $1,150,000 worth of partnership units in Collins Partners No. 2 were purchased by individuals in the Public Finance Section of DLJ with loans from DLJ. ⁴

Directly after the purchase of the partnership units, Luallen solicited $35,000 from DLJ for a custom-built piano to be presented by Collins as a gift to his wife. DLJ's Johnston commented that "those guys are tough." Nevertheless, DLJ sent the check directly to Defendant Collins.

In December 1985 DLJ was awarded another $100-million KHC bond issue, in exchange for DLJ's commitment to purchase five units at $50,000 per unit in Collins Partners No. 3. Shortly after the award of the bond issue, 4 individuals at DLJ purchased $250,000 worth of partnership units.

In December 1985 DLJ received only a co-manager position on a $40-million KHC issue. Johnston reacted angrily to being denied the lead position on the $40-million issue since he felt DLJ had done everything that had been asked of them, and they were to be the people who did housing bonds.

Prior to the time frame of the alleged conspiracy, DLJ had never done business as a bond managing underwriter with the Commonwealth of Kentucky. During the period of the conspiracy DLJ was awarded the lead manager position on the Turnpike Authority Economic Development $300-million bond issue in May 1984, the $100-million KHC bond issue in November 1984, the KHC Single-Family $100-million bond issue in December 1985; and a co-manager position on the KHC Multi-Family $40-million bond issue in December 1985. During the same time period DLJ personnel invested $1,336,500.00 in Collins Partners No. 2 and No. 3.

Cranston Securities was another investment banking firm that had never done business as a bond managing underwriter with the Commonwealth of Kentucky prior to 1984. In July 1984 Robert Cranston Kanuth, Jr., CEO of Cranston, met with Collins for the purpose of securing a KHC bond underwriting contract. After that meeting Collins told Thompson that Cranston was a player and instructed him to award Cranston a 15% junior management position in the 1984 $100-million KHC issue to show that he could get the job done. At the same time Kanuth bought a $100,000 unit in Collins Partners No. 2.

Thereafter, Kanuth agreed to make additional investments for additional business with the Commonwealth. Cranston was awarded the lead manager position on the Turnpike Authority Resource Recovery $309-million bond refunder in June 1985, the Turnpike Authority Toll Road $226-million bond issue in July 1986, the Turnpike Authority Economic Development $367-million bond issue in August 1986, the Turnpike Authority Resource Recovery $257-million bond issue in May 1987, and the Turnpike...