Stayton v. U.S.

• Decision Date: 28 February 2011
• Docket Number: Civil Action Nos. 1:09–CV–157–WSD,1:06–CR–66–2–WSD.,1:09–CV–209–WSD.,Criminal Action No. 1:06–CR–66–1–WSD
• Citation: 766 F.Supp.2d 1260
• Parties: Jeffrey Howard STAYTON, BOP No. 11914–002, Movantv.UNITED STATES of America, Respondent.William Curtis Childree, BOP No. 11913–002, Movant,v.United States of America, Respondent.
• Court: U.S. District Court — Middle District of Alabama

766 F.Supp.2d 1260

Jeffrey Howard STAYTON, BOP No. 11914–002, Movant

v.UNITED STATES of America, Respondent.William Curtis Childree, BOP No. 11913–002, Movant,

v.United States of America, Respondent.

Civil Action Nos. 1:09–CV–157–WSD

1:09–CV–209–WSD.Criminal Action No. 1:06–CR–66–1–WSD

1:06–CR–66–2–WSD.

United States District Court, M.D. Alabama, Southern Division.

Feb. 28, 2011.

OPINION TEXT STARTS HEREWest CodenotesLimitation Recognized18 U.S.C.A. § 1346

Henry I. Frohsin, James Fredrick Barger, Jr., James Elliott Walthall, Ronald Ray Brunson, Frohsin & Barger LLC, Birmingham, AL, for Movant.Eric Olshan, Mariclaire Rourke, Matthew L. Stennes, United States Department of Justice, Washington, DC, for Respondent.

ORDER

WILLIAM S. DUFFEY, JR., District Judge.

Jeffrey Stayton and William “Curt” Childree were convicted in December 2007 of honest-services fraud, in violation of 18 U.S.C. § 1343 & 1346 [ Criminal 135].¹ Stayton was also convicted of obstruction of justice (for lying to a grand jury), in violation of 18 U.S.C. § 1503 [ id.]. Both men were acquitted on bribery charges under 18 U.S.C. § 201 [ id.]. Neither Stayton nor Childree filed a direct appeal. Both men instead filed motions, that they later amended, to vacate, set aside or correct their sentences under 28 U.S.C. § 2255.

After Stayton and Childree's amended § 2255 motions were filed, the United States Supreme Court decided Skilling v. United States, ––– U.S. ––––, 130 S.Ct. 2896, 177 L.Ed.2d 619 (2010). Skilling resolved a “void for vagueness” challenge to 18 U.S.C. § 1346 by “par[ing] that body of precedent down to its core” and holding that convictions for honest-services fraud may be returned only for “fraudulent schemes to deprive another of honest services through bribes or kickbacks supplied by a third party who had not been deceived.” Skilling, 130 S.Ct. at 2928. This Court ordered Stayton, Childree, and the Government to brief the application of Skilling to this case.

This matter is now before the Court on Stayton and Childree's § 2255 motions, as amended and briefed, the Government's responses, and the supplemental briefing ordered by the Court [ Stayton 1, 15, 24, 26, 27, 35, 36 & 37; Childree 1, 2, 12, 14, 22, 29, 46, 47, 48 & 49]. After a thorough review of the record, the Court vacates the honest-services fraud convictions of Stayton and Childree. Stayton's conviction for obstruction of justice is not vacated and his motion for § 2255 relief on this Count of conviction is denied.

I. BACKGROUND

Jeffrey Stayton was “the Aviation Officer for the Army Test and Evaluation Command in Alexandria, Virginia” [ Stayton 1 at 14]. Among his “primary functions was coordinating the acquisition of foreign aircraft for use by the Department of Defense” [ id.]. William Childree was “the principal of Maverick Aviation,” an Alabama business [ Childree 12 at 1]. Stayton and Childree were close friends. So close, that Stayton intended one day to take over Maverick Aviation [ Tr. Trans. at 429].

In the wake of September 11, 2001, the United States Government sought a military contractor to purchase, modify, and deliver “two Russian Mi–17 helicopters ... on an extremely expedited schedule” [ Stayton 15 at 1]. The contract—which was classified—had a final value of approximately $5 million [ Tr. Trans. at 318–22]. Based in significant part on Stayton's input, Maverick was selected as the contractor [ Tr. Trans. at 260–65].

Soon after Stayton, Childree, and others returned from Siberia in December 2001, $1 million in helicopter contract funds were released from escrow based on Stayton's (premature) certification that certain contract requirements had been completed [ Tr. Trans. at 322–27]. Less than two weeks later, Childree directed the Government's escrow agent to use a portion of those contract funds to pay off Childree's home mortgage. Childree also directed the Government's escrow agent to wire $61,071.75 in contract funds from Alabama to California to pay off the second mortgage on Stayton's Virginia home. Childree told the escrow agent that “he wanted us to wire this money to payoff the loan for Mr. Stayton in payment for some work that Mr. Stayton had done for him on some parts that had been purchased for the helicopters” as “payment for the part he played” [ Tr. Trans. at 74].

As a senior government official involved in procurement and government contracts, Stayton was required to attend annual ethics training [ Tr. Trans. at 704–06]. Stayton was further required to file annual financial disclosure statements [ id.]. Despite these disclosure requirements, Stayton did not disclose the 2002 payoff of his second mortgage by Childree in his annual disclosure statements (or otherwise) until at least 2006.

The Maverick contract first came under close scrutiny in 2002. Over the next few years, both Stayton and Childree received document requests and subpoenas aimed at uncovering financial transactions between them. Neither Stayton nor Childree revealed the 2002 loan payoff in response to those requests and subpoenas [ Tr. Trans. at 516–20 & 528–31]. As late as 2005, Stayton affirmatively stated in a cover note in a response to a subpoena: “I have no business dealings or financial interests that would or have made payments of [sic] or toward my home or other debts” [ Tr. Trans. at 531].

When confronted in 2006 with documentary evidence that Childree had wired contract funds to pay off Stayton's second mortgage, Stayton told investigators and grand jurors that it was a “loan.” Stayton acknowledged, however, that there was “no documentation on the loan” and “no terms that were agreed,” including, for instance, an interest rate, a maturity date, an amortization schedule, or security [ Tr. Trans. at 520–22 & 926 & 943–49]. There was no evidence that Stayton, between 2002 and 2007, ever made any payments of principal or interest on the “loan.” In contrast, when Childree loaned his own daughter money, he required payments, if not always monthly, at least “close to clockwork” [ Tr. Trans. at 1054–55].

Stayton never listed the “loan” as a liability and Childree never listed the “loan” as an asset on their own later loan applications or personal financial statements, even when those documents called for the information [ Tr. Trans. at 644–51]. Stayton's only explanation for why the “loan” was never documented was that—eleven months after his second mortgage was paid off by Childree and after the investigation into the Maverick contract was initiated—his supervisor issued a “no contact” order forbidding Stayton from communicating with Childree. In rebuttal, the Government introduced evidence indicating that Stayton repeatedly violated that “no contact” order [ Tr. Trans. at 928]. The Government also introduced evidence that, in 2002, Childree sold Stayton a 1974 Corvette for $5,000, despite having paid $15,000 for the car just a year earlier [ Tr. Trans. at 1071].

Stayton and Childree were both summoned to appear before a grand jury. Childree declined to appear. Stayton, however, elected to testify. Stayton's grand jury testimony, which was played at trial, was evasive, equivocal, and self-contradictory [ Tr. Trans. at 542–639]. In March 2006, Childree and Stayton were indicted in the Middle District of Alabama for honest-services fraud and bribery, and Stayton was also indicted for obstruction of justice (with respect to his grand jury testimony) [ Criminal 1].

After several months of pre-trial proceedings, the Honorable Mark Fuller recused himself and requested that the case be assigned to a judge from outside the Middle District of Alabama [ Criminal 68]. Pursuant to 28 U.S.C. § 292(b), the United States Court of Appeals for the Eleventh Circuit designated this Court (Duffey, J.) to preside over the litigation [ Criminal 69]. Because a classified contract was involved, motions practice and hearings were held pursuant to the Classified Information Procedures Act (“CIPA”), 18 U.S.C.App. 3. Through trial counsel, the parties, as allowed by CIPA, negotiated stipulations to be admitted at trial.²

In July 2007, trial counsel for Childree produced a copy of a note dated January 9, 2002, in which Stayton “thanked” Childree for the $61,071.75 “loan.” In part because the note was first produced 5–1/2 years after it had allegedly been written—despite earlier document requests and subpoenas directed to Stayton and Childree—the Government submitted the note to the United States Secret Service for analysis. The Secret Service's August 2007 report “determined that the black ink used ... matched a standard that was commercially available prior to 2002 and is still widely available” [ Stayton 24–2 at 3]. In other words, the note might have been written in 2002, as Stayton and Childree contended, or it might have been written in 2007, as the Government believed. The Secret Service report opined: “Therefore, no conclusion could be rendered regarding the authenticity of Exhibit Q1 with respect to the first production date of the writing ink” [ id.].

The Secret Service also conducted a watermark analysis and an indented writing analysis of the note. The watermark analysis was inconsequential because there was no discernable watermark in the note paper. The indented writing analysis showed only that at some point the word “ Curt ” was written and double underscored on a piece of paper placed on top of the note. Neither of these additional two forms of analysis indicate whether the note was written in 2002 or 2007. The Government did not share the Secret Service's report with Stayton or Childree before trial.

The trial commenced in December 2007. In light of then applicable Eleventh Circuit precedent—and consistent with precedent from circuits across the country—this Court instructed the jury that it could find Stayton and Childree guilty of honest-services fraud for “accepting a bribe, taking a kickback, or receiving a personal benefit from an undisclosed conflict of interest” [ Tr. Trans....