U.S. v. Bryan

• Citation: 58 F.3d 933
• Decision Date: 22 August 1995
• Docket Number: No. 94-5124,94-5124
• Parties: , Fed. Sec. L. Rep. P 98,787 UNITED STATES of America, Plaintiff-Appellee, v. Elton E. BRYAN, a/k/a Butch, Defendant-Appellant.
• Court: U.S. Court of Appeals — Fourth Circuit

Page 933

58 F.3d 933

64 USLW 2043, Fed. Sec. L. Rep. P 98,787

UNITED STATES of America, Plaintiff-Appellee, v. Elton E. BRYAN, a/k/a Butch, Defendant-Appellant.

No. 94-5124.

United States Court of Appeals, Fourth Circuit.

Argued Dec. 9, 1994.

Decided June 27, 1995.

Rehearing and Suggestion for Rehearing En Banc Denied Aug. 22, 1995.

ARGUED: Jerald Elton Jones, West & Jones, Clarksburg, WV, for appellant. Michael Lee Keller, Asst. U.S. Atty., Charleston, WV, for appellee. ON BRIEF: John S. Kaull, West & Jones, Clarksburg, WV, for appellant. Rebecca A. Betts, U.S. Atty., Charleston, WV, for appellee.

Before LUTTIG, Circuit Judge, MICHAEL, United States District Judge for the Western District of Virginia, sitting by designation, and CURRIE, United States District Judge for the District of South Carolina, sitting by designation.

Affirmed in part and reversed in part by published opinion. Judge LUTTIG wrote the opinion, in which Judge MICHAEL and Judge CURRIE joined.

OPINION

LUTTIG, Circuit Judge:

Appellant, Elton "Butch" Bryan, is a former director of the West Virginia Lottery. In September 1993, a federal jury in Charleston, West Virginia found Bryan guilty of two counts of mail fraud in violation of 18 U.S.C. Secs. 1341, 1346, one count of wire fraud in violation of 18 U.S.C. Secs. 1343, 1346, and one count of securities fraud in violation of 15 U.S.C. Secs. 78j(b), 78ff and 17 C.F.R. Sec. 240.10b-5. These convictions stemmed from Bryan's fraudulent manipulation of two government contracts and from Bryan's use of confidential, nonpublic information in the purchase of securities of companies doing business with the West Virginia Lottery. Bryan was also convicted of perjury in violation of 18 U.S.C. Sec. 1623, for giving false testimony before a grand jury. The district court sentenced Bryan to 51 months in prison.

Bryan challenges each of his convictions on appeal. We affirm both mail fraud convictions, the wire fraud conviction, and the perjury conviction. We reverse Bryan's conviction for securities fraud.

I.

Bryan became Director of the West Virginia Lottery (the Lottery) in April 1990, when he was appointed by West Virginia Governor Gaston Caperton. As Lottery Director, Bryan was charged with negotiating and securing contracts on behalf of the Lottery. In January 1991, with its existing advertising contract due to expire that summer, the Lottery began the selection process for its award of a $2.8 million advertising contract. Although the Lottery previously had relied on subcontractors to secure the Lottery's advertising services, it was decided in 1991 that the Lottery would contract with the new advertising agency directly and that the forthcoming contract would be awarded through an open bidding process.

Bryan assigned responsibility for the selection process to Tamara Gunnoe, the Lottery's Deputy Director of Marketing. Gunnoe in turn formed a seven-member evaluation committee, which included five Lottery employees and two advertising consultants, to review presentations made by agencies bidding on the contract. In early April 1991, six agencies made presentations before the evaluation committee in formal one-hour sessions. The committee members scored each presentation on a numerical evaluation sheet designed to rate the merits of the presentations. Among the companies bidding for the $2.8 million contract was the Fahlgren Martin Agency, the agency that had provided the Lottery's advertising services under the expiring contract. Tabulation of the scoresheets, however, revealed that the Arnold Agency had received the committee's highest rating.

After completing the evaluation process, Gunnoe met with Bryan to brief him on the results. She informed Bryan that the Arnold Agency had received the committee's highest rating and that the committee had decided to recommend that the Arnold Agency be awarded the contract. Gunnoe also presented Bryan with a sheet summarizing the results the committee had reached. Bryan advised Ms. Gunnoe that he would have to give the matter further consideration before making any decisions.

After meeting with Gunnoe, Bryan discussed the matter of the advertising contract with Governor Caperton. Caperton and Bryan decided to award the contract to the Fahlgren Martin Agency, notwithstanding the committee's recommendation of the Arnold Agency. Bryan informed Gunnoe of this decision and directed her to surrender to Edward ReBrook, legal counsel for the Lottery, all of the evaluation committee's forms documenting that the Arnold Agency had received the committee's highest evaluation.

Neither Bryan nor the Governor, however, had unilateral power to award the advertising contract. Rather, the seven-member West Virginia Lottery Commission (the Commission) had to approve the contract before it could officially be awarded. Hearings before the Commission to consider the contract had already been scheduled for April 24, 1991.

Fully aware of the Commission's authority and fully aware that hearings had already been scheduled, Bryan, without the Commission's knowledge or approval, sent letters on April 16 notifying those agencies bidding for the contract that Fahlgren Martin had been awarded the advertising contract. Although he had already notified the interested parties that Fahlgren Martin had been selected, Bryan nonetheless decided to seek the approval of the Commission at the April 24 hearing and to represent to the Commission at the hearing that the selection process was still open.

Deputy Director Gunnoe appeared before the formal session of the Commission on April 24 to testify about the evaluation committee's findings and recommendations. At Bryan's direction, Gunnoe falsely testified to the Commission that the evaluation committee had decided to recommend the Fahlgren Martin Agency for the contract, that the committee had not used a numerical scoring procedure in evaluating the bid proposals, and that there existed no numerical scoresheets reflecting the committee's evaluations. To support her falsified testimony, Gunnoe presented to the Commission altered versions of her notes of the evaluation committee's meetings and characterized those notes as reflective of the committee's deliberations. The Commission voted to adopt the evaluation committee's "recommendation" of Fahlgren Martin on May 29, 1991.

Bryan's scheme to have Fahlgren Martin awarded the contract hit a snag in June 1991, when Harold Curtiss of the Department of Administration's Purchasing Division found Bryan's contract proposal recommending Fahlgren Martin to be deficient. In particular, Curtiss questioned the absence of any quantitative data to support the Commission's recommendation. When Curtiss inquired of the Lottery whether a quantitative analysis had been used in the evaluation process, he was falsely advised that the committee had not used a quantitative analysis. Fearing that Curtiss might persist in challenging the Lottery's contract proposal, Bryan instructed Gunnoe to have some of the evaluation committee's members prepare memoranda falsely evidencing their support for Fahlgren Martin. Bryan and Gunnoe later met with Curtiss and his supervisor and continued in their misrepresentation that the only quantitative data to support the recommendation were Gunnoe's altered notes, which had earlier been provided to the Commission.

As a result of Bryan's and Gunnoe's misrepresentations, the Purchasing Division ultimately approved the proposed $2.8 million advertising contract, which was signed by the Lottery and Fahlgren Martin on August 6, 1991. The Lottery immediately thereafter began sending checks through the mail pursuant to the terms of the contract. The mailing of these checks, in conjunction with Bryan's conduct in manipulating the award of the advertising contract, served as the basis for Bryan's first mail fraud conviction.

At about the time Bryan was completing the advertising contract, he began to investigate the possible expansion of video lottery gaming throughout West Virginia. "Video lottery" is the gaming trade name for those lottery games played by individuals on interactive electronic terminals. The state-run video lottery industry in West Virginia was in its infancy in the summer of 1991, with the only authorized video lottery machines located at Mountaineer Park, a horse-racing track in Chester, West Virginia.

In July 1991, high-level members of Governor Caperton's administration, including Bryan, decided to launch a statewide expansion of video lottery gaming. The plan called for the installment of approximately 5,000 machines in race tracks, bars, restaurants, and other locations throughout the state. Due to the perceived political unpopularity of expanding video lottery, however, it was decided in the summer of 1991 that the implementation of a statewide video lottery system would not take place until after Governor Caperton's anticipated re-election in November 1992.

Several video lottery manufacturing companies began lobbying for a piece of the anticipated video gaming business in July 1991, after they became aware of the proposed expansion of video lottery in West Virginia. One company in particular, Video Lottery Consultants (VLC) of Bozeman, Montana, aggressively sought to maximize its share of the potential West Virginia video lottery market. VLC ultimately gained favor with Governor Caperton in the summer of 1992, when it promised to locate a manufacturing plant in West Virginia in exchange for a statewide monopoly on the sale of video lottery machines. Governor Caperton developed a strong interest in the proposal and ultimately decided that VLC would be granted a "single source" contract, under which VLC would be the exclusive supplier of video lottery gaming terminals in West Virginia.

After Governor Caperton decided upon VLC, Bryan sought to ensure that VLC would receive a single source contract and that West Virginia would receive a manufacturing facility,...