U.S. v. Paradies

• Citation: 98 F.3d 1266
• Decision Date: 23 September 1996
• Docket Number: No. 94-8485,94-8485
• Parties: 46 Fed. R. Evid. Serv. 656, 96 FCDR 3862 UNITED STATES of America, Plaintiff-Appellee, v. Daniel M. PARADIES, The Paradies Shops, Inc., Paradies Midfield Corporation, Ira Jackson, Defendants-Appellants.
• Court: United States Courts of Appeals. United States Court of Appeals (11th Circuit)

Page 1266

98 F.3d 1266

46 Fed. R. Evid. Serv. 656, 96 FCDR 3862

UNITED STATES of America, Plaintiff-Appellee, v. Daniel M. PARADIES, The Paradies Shops, Inc., Paradies

Midfield Corporation, Ira Jackson, Defendants-Appellants.

No. 94-8485.

United States Court of Appeals, Eleventh Circuit.

Sept. 23, 1996.

As Amended Nov. 6, 1996.

Bobby Lee Cook, Cook & Palmour, Summeville, GA, Stephanie Parker, Jones, Day, Reavis & Pogue, Larry D. Thompson, King & Spalding, Atlanta, GA, for Daniel Paradies.

Emmet J. Bondurant, Edward B. Krugman, Michael A. Sullivan, Bondurant, Mixson & Elmore, Atlanta, GA, for Paradies Shops & Paradies Midfield.

Tony L. Axam, Atlanta, GA, for Ira Jackson.

Kent Alexander, U.S. Atty., Sally Quillian Yates, Asst. U.S. Atty., Atlanta, GA, for appellee.

Appeals from the United States District Court for the Northern District of Georgia.

Before TJOFLAT, Chief Judge, COX, Circuit Judge, and WELLFORD ^*, Senior Circuit Judge.

WELLFORD, Senior Circuit Judge:

Defendants Ira Jackson, ¹ Daniel Paradies, The Paradies Shops, Inc., and Paradies Midfield Corp., ² were convicted pursuant to a 133 count indictment charging them with various offenses arising out of the operation of the concessions at the Atlanta Hartsfield International Airport. The bulk of the charges involved mail fraud (18 U.S.C. §§ 1341, 1346, and 2), conspiring to make corrupt payments to public officials (18 U.S.C. §§ 371, 666), and tax fraud (26 U.S.C. § 7206). The defendants challenge their convictions and their sentences, which were imposed after a lengthy jury trial, on several grounds.

Two fraudulent schemes were involved in the indictment. In the first, the government alleged that Jackson and D. Paradies, the largest subconcessionaire at the Atlanta airport, conspired to profit from Jackson's influence as an Atlanta City Council member and as the Commissioner of Aviation. According to the government's theory, Jackson used his political position to reduce the rent of the concessionaires, including the Paradies defendants, by very substantial amounts. In return Jackson, who allegedly owned an interest in the Paradies businesses, reaped benefits through payments from D. Paradies, which purported to be fees and dividends. In the second alleged scheme, which was much less complicated, D. Paradies and another subconcessionaire, Harold Echols, regularly gave cash to Jackson and other City Council members for favorable votes in matters before the Council in which the Paradies defendants (and other concession operators) had an interest.

The particular circumstances surrounding the fraudulent schemes were fervently disputed at trial. The facts set out below are those which the jury might reasonably have found from the evidence properly admitted at trial.

I. STATEMENT OF THE CASE

A. The Airport Concessions Program

The City of Atlanta owns and controls the Atlanta airport. From its opening in 1980, Dobbs Paschal Midfield Corp. ("Dobbs") was the principal concessionaire, managing all the airport concessions under contract with the City. Dobbs contracted with various subconcessionaires, including the Paradies defendants, to provide food, merchandise, and services. The subconcessionaires paid rent to Dobbs based on the greater of a percentage of sales or a guaranteed minimum. In turn, Dobbs agreed to pay the city a percentage of sales or a guaranteed minimum of $240 million over the first 15 years of operation. Dobbs' agreement with the City required that at least twenty percent of the total dollar volume of the concessions program be produced or controlled by minority controlled enterprises. That contractual provision provided the defendants an incentive to work out their schemes. ³

D. Paradies was president and principal shareholder of Shops, a major gift shop chain at airports across the country. D. Paradies was also president of Midfield, a company which contracted to operate exclusively the gift shops in the airport in 1979. Shops owned sixty-five percent of Midfield's stock and the other thirty-five percent was owned by minority controlled businesses in accordance with the minority participation requirement. ⁴ That thirty-five percent was comprised of three corporations that were wholly owned by black persons, Mack Wilbourn, ⁵ Nathaniel Goldston, and Joanne McClinton. Wilbourn's business, Kinley Enterprises, Inc. ("Kinley"), held 18.3% of Midfield stock; Goldston's business, Airport Enterprises, Inc. ("AEI"), held 13.7%; and McClinton's business, Estate Management ("Estate"), held 3%. As was provided for in the shareholder agreements, the minority members supposedly received a management fee of 1.1% of Midfield's gross receipts. Midfield also paid Shops a management fee of 9% by mailing checks on a monthly basis.

B. Jackson's Loan/Purchase from Goldston and Wilbourn

By the spring of 1985, D. Paradies' relationship with the first minority shareholders group soured. At that point, the government contends, D. Paradies sought to include defendant Jackson as a minority participant in Midfield. D. Paradies and Jackson were close personal friends. In 1980, Paradies and Echols hosted the wedding reception for Jackson and his bride, Maudestine "Mimi" Simmons. ⁶

In April of 1985, Paradies wrote a "personal and confidential" letter to Jackson requesting Jackson's assistance in obtaining space for additional shops in the airport. If the space was obtained by October 1, 1985, Paradies stated, the minority shareholders would receive an increase in management fees to 2%. If the space were not obtained, the fee would remain at 1.1% for those shareholders. Under the government's theory, D. Paradies' letter was an invitation to Jackson to capitalize on a near doubling of the minority participants' management fee increase. Soon thereafter, Jackson began to negotiate with Goldston to purchase his interest in Midfield.

Goldston told Jackson that he was experiencing financial difficulty, and purportedly offered to sell Jackson his stock in Midfield for $50,000. Jackson made a "loan" to Goldston for $50,000 through his wife Mimi, operating as Metro Consultants, Inc. ⁷ The government maintained that the purported loan was, in fact, a purchase by Jackson of Goldston's interest. Indeed, Jackson's check to Goldston on his personal checking account specified: "For Metro Consultants--Purchase Stock." The government also introduced agreements which purportedly transferred Goldston's Midfield stock in the name of AEI to Metro Consultants. On October 1, 1985, moreover, Midfield terminated its management agreement with Goldston and entered into a new comparable agreement with Jackson's wife. Mrs. Jackson was to render administrative assistance in return for her portion of the 1.1% management fee. Also, in order to qualify as a minority business, Metro Consultants had to be certified as a minority-owned company. Jackson asked the Atlanta Office of Contract Compliance to expedite the certification for Metro Consultants because his wife wanted to "buy out" Goldston and Wilbourn.

After Jackson had already distributed the "loan proceeds," he appeared before the City's Board of Ethics for an opinion on the propriety of his "loan." Jackson told the Board that he had loaned $50,000 to Goldston, and that his wife wished to purchase Goldston's and Wilbourn's interests in Midfield. He also stated that Wilbourn's "asking price" was $275,000. Jackson also testified that he had discussed the matter with D. Paradies. Jackson assured the Board that if the transaction were approved, he would not vote on any airport concessions matters, and that he wanted to be "up front" with the Board. Noting, among other things, that subconcessionaires issues came before the Council frequently, and that Jackson's interest could have at least an indirect influence on Council decisions, the Ethics Board disapproved of the proposed purchase. Such an acquisition by Jackson and his wife, the Board concluded unanimously, would violate the Code of Ethics and would result in a breach of Jackson's fiduciary duty to the City. ⁸ According to the Ethics director, Jackson told him that he disagreed with the Board's decision, but that he would "not undertake to do indirectly what [the] board had told him could not be done directly."

After the Ethics Board's decision, Jackson entered into another disputed transaction with Wilbourn, who, according to Jackson, was experiencing financial difficulty. ⁹ Purportedly, Jackson "loaned" Wilbourn $275,000 (the exact asking price identified by Jackson in his Ethics Board testimony) from Options International, Inc. ("Options"), a corporation created in the name of his son, Ira Jackson, Jr., but controlled by Jackson himself. ¹⁰ The transaction was to be effected in two installments: $150,000 immediately, and $125,000 payable on May 1, 1987. Wilbourn used $50,000 of the proceeds to buy Goldston's stock, and transferred all of his and Goldston's interest in Midfield to Hartsfield Concessions, Inc. ("Hartsfield"), a company purportedly wholly owned by Wilbourn. The loan from Options was secured by all the revenue from Wilbourn's interest in Midfield. The stock in Midfield, Jackson claims, was never transferred to him as security for the loan. ¹¹

The government argued that this was a sham loan agreement so that Wilbourn, doing business as Hartsfield, would be the minority participant in Midfield "on paper" only, and that Jackson was the de facto owner, reaping the full benefits of Wilbourn's interest in Midfield. There is evidence, together with reasonable inferences, that supports the government's contention. Jackson admits in his brief that, upon Wilbourn's counsel's recommendation, Jackson was given some control over the funds of Hartsfield, and that Jackson was authorized to accept payments directly from Midfield. Indeed, evidence showed that Jackson initially went to the Paradies company offices to pick up the dividend and management checks, which were made...