U.S. v. Foley

• Decision Date: 04 January 1996
• Docket Number: D,No. 516,516
• Citation: 73 F.3d 484
• Parties: -389 UNITED STATES of America, Appellee, v. Richard FOLEY, Jr., Defendant-Appellant. ocket 94-1051.
• Court: U.S. Court of Appeals — Second Circuit

Page 484

73 F.3d 484

77 A.F.T.R.2d 96-389

UNITED STATES of America, Appellee, v. Richard FOLEY, Jr., Defendant-Appellant.

No. 516, Docket 94-1051.

United States Court of Appeals Second Circuit.

Argued Feb. 8, 1995.

Decided Jan. 4, 1996.

Leonard C. Boyle, Assistant U.S. Attorney, New Haven, Connecticut (Christopher F. Droney, U.S. Attorney for the District of Connecticut, Nora R. Dannehy, Assistant U.S. Attorney, New Haven, Connecticut, on the brief), for appellee.

James W. Bergenn, Hartford, Connecticut (Sheila Huddleston, Shipman & Goodwin, Hartford, Connecticut, on the brief), for defendant-appellant.

Before: LUMBARD, KEARSE, and CARDAMONE, Circuit Judges.

KEARSE, Circuit Judge:

Defendant Richard Foley, Jr., a state legislator, appeals from a judgment entered in the United States District Court for the District of Connecticut convicting him, following a jury trial before T.F. Gilroy Daly, Judge, on one count of accepting a bribe, in violation of 18 U.S.C. Sec. 666(a)(1)(B) (1988); two counts of filing a false income tax return, in violation of 18 U.S.C. Sec. 7206(2) (1988); and one count of conspiring to file a false income tax return, in violation of 18 U.S.C. Sec. 371 (1988). Foley was sentenced principally to 40 months' imprisonment, to be followed by a three-year term of supervised release, and was fined $25,000. On appeal, he contends that his convictions should be reversed because (a) the bribery conduct alleged and proven was not within the scope of Sec. 666(a)(1)(B), and (b) the verdicts on the

tax-related counts were dependent on the validity of his conviction on the bribery count. For the reasons stated below, we agree that the proven transaction was not shown to be within the scope of Sec. 666(a)(1)(B); the conviction on the bribery count must therefore be reversed and that count dismissed. We conclude that the convictions on the tax-related counts, because they may have resulted from the invalid verdict on the bribery count, must be vacated and those counts remanded for further proceedings.

I. BACKGROUND

The present prosecution charged that Foley, a member of the Connecticut General Assembly's House of Representatives, accepted payments in exchange for agreeing to influence certain legislation. Among the government's witnesses at trial were real estate developers Richard Barbieri, Sr., and John Corpaci, who had pleaded guilty to, inter alia, bank fraud and political corruption. They testified that they made the corrupt payments to Foley and that Foley provided them with fraudulent receipts in order to facilitate their deduction of the payments as business expenses. Taken in the light most favorable to the government, the evidence showed the following.

In 1989, Barbieri, Corpaci, and Vinal S. Duncan, through their Taft-Crosspointe Limited Partnership ("Taft-Crosspointe" or the "Partnership"), planned to develop a shopping plaza in Naugatuck, Connecticut, and sought a $12,500,000 loan for that purpose from Fleet Bank ("Fleet"). Fleet owned United Bank and Trust ("UBT"), but it had merged with Norstar Bank and thus was required, under Connecticut law, to divest itself of UBT promptly after the merger. Fleet was attempting, however, to obtain from the state legislature a delay of the divestiture requirement. Fleet informed Barbieri and Corpaci that a proposed one-year exemption had been defeated in the Connecticut General Assembly and that a majority of those voting against it were Republicans. Fleet asked Barbieri, who was active in Republican politics, and Corpaci to contact legislators who might be able to assist in having the proposal reconsidered.

Foley, a Republican and long-time acquaintance of Barbieri, was a member of the General Assembly's Banking Committee. Barbieri and Corpaci contacted Foley in an effort to help Fleet. During their conversation, Foley said he could not change his own vote on the exemption proposal because he had been so openly opposed, but he indicated that he could deliver the necessary votes from others. In exchange, Foley asked to be hired as a consultant for Taft-Crosspointe at a salary of $2,500 a month. Barbieri and Corpaci, who on numerous prior occasions had agreed to make payments to public officials in exchange for political favors, agreed. Thus, Taft-Crosspointe would pay Foley monthly, and Foley would send invoices that would enable the Partnership to deduct those amounts on tax returns as a business expense. It was agreed that Foley would contact several people so as to permit the Partnership to claim that Foley was soliciting business for it and provide an explanation for the payments to him if the three men were ever questioned; however, their understanding was that the payments were made in return for Foley's assistance on the Fleet legislation rather than for any consulting work.

The Connecticut General Assembly thereafter reconsidered the exemption requested by Fleet and, on reconsideration, passed the legislation. Foley submitted to the developers invoices listing charges for "tenant solicitation" or the like, which were paid by Taft-Crosspointe or by Taft Group, another entity owned by the developers. In fact, Foley did not provide any services to Taft-Crosspointe or Taft Group other than in connection with the banking exemption, but he received from them payments totaling $25,000.

In 1993, Foley was indicted on charges (a) that his acceptance, as "an agent of state government" (Indictment p 20), of money with the intent to be influenced with regard to the proposed exemption legislation in the Connecticut General Assembly violated 18 U.S.C. Sec. 666(a)(1)(B) (count 1) (the "bribery count"); and (b) that his submission of false invoices aided in the preparation of false tax The bribery count charged, in pertinent part, that Foley had

returns for Taft-Crosspointe and Taft Group, in violation of 26 U.S.C. Sec. 7206(2) (counts 2 and 3, respectively), and furthered a conspiracy to violate the federal tax laws, in violation of 18 U.S.C. Sec. 371 (count 4) (collectively the "tax-fraud" counts).

knowingly, willfully, and corruptly solicited, demanded for his benefit, accepted, and agreed to accept things of value, that is, checks in the total amount of $25,000, from Richard D. Barbieri, Sr. and John A. Corpaci, acting through and on behalf of the Taft Group, intending to be influenced and rewarded in connection with the business and transactions of Connecticut state government involving a thing of value of $5,000 or more, that is, a legislative exemption to the divestiture provisions of the state's Interstate Banking Law.

(Indictment p 23.) One of Fleet's attorneys testified that because of the cost of selling UBT, the exemption was worth substantially more than $5,000 to Fleet. The evidence did not show what value, if any, the one-year's difference had to the State of Connecticut.

The trial court instructed that, in order to return a verdict of guilty on the bribery count, the jury must first find "that Richard Foley was an agent, official or representative of a state government at the time of the alleged offense," and it advised the jury that "[a] state legislator is an agent of a state government for the purposes [of] this element." (Trial Transcript dated October 28, 1993 ("October 28 Tr."), at 81-82.) The court also instructed the jury that the government was required to prove, inter alia, that Foley had accepted something of value in connection with a business or transaction of the state government involving anything having a value of $5,000 or more. As to the latter requirement, the court instructed the jury that "it is not necessary for the transaction or transactions by the state government actually to have involved any federal funds received by the state" and stated that this element was otherwise "self-explanatory." (Id. at 83.)

As to the tax-fraud counts, the court charged the jury, inter alia, that an income tax return is false or fraudulent if the taxpayer's income is understated or its deductions are overstated, that deductions from gross income are lawful only for legitimate items and expenses, and that "[m]oney paid to a public official for a corrupt purpose is not a legitimate expense and a taxpayer is not allowed to deduct such payments as business expenses." (Id. at 93.)

The jury found Foley guilty on all counts, and he was sentenced as indicated above. This appeal followed.

II. DISCUSSION

On appeal, Foley contends principally that the conduct with which he was charged and which was proven at trial does not constitute a violation of Sec. 666(a)(1)(B) because (1) the value to Fleet of the exemption under the banking law was not shown to be a proper measure of value for purposes of that provision, and (2) a state legislator is not an "agent" within the meaning of the statute. We agree with his first contention and hence need not reach the second. Foley also contends that the tax-fraud convictions cannot be upheld because they were premised on the flawed bribery conviction. Since we cannot be sufficiently certain that the tax-fraud convictions were not based on the flawed bribery conviction, we conclude that they should be vacated and those counts retried.

Preliminarily, we address the government's contention that we should not entertain the above challenges to the bribery conviction because Foley failed to make them in the district court. Although some claims of error may be forfeited by the failure to make timely objection, see, e.g., United States v. Olano, 507 U.S. 725, 730-32, 113 S.Ct. 1770, 1776, 123 L.Ed.2d 508 (1993); Yakus v. United States, 321 U.S. 414, 444, 64 S.Ct. 660, 677, 88 L.Ed. 834 (1944), others are so fundamental that an appellate court will review them despite the fact that they have not been raised below. For example, an appellate court that sees that the lower court proceeded without subject matter jurisdiction must correct the error even if neither party brought it to the lower court's...