U.S. v. Fumo
| Decision Date | 15 September 2011 |
| Docket Number | 09–3389,Nos. 09–3388,09–3390.,s. 09–3388 |
| Citation | 108 A.F.T.R.2d 2011,655 F.3d 288 |
| Parties | UNITED STATES of America, Appellant/Cross–Appelleev.Vincent J. FUMO, Appellee/Cross–Appellant.United States of America, Appellantv.Ruth Arnao. |
| Court | U.S. Court of Appeals — Third Circuit |
OPINION TEXT STARTS HERE
Zane David Memeger, Esq., Robert A. Zauzmer, Esq. [Argued], John J. Pease, Esq., Office of United States Attorney, Philadelphia, PA, for Appellant/Cross–Appellee.Samuel J. Buffone, Esq. [Argued], BuckleySandler LLP, Washington, D.C., Peter Goldberger, Esq., Ardmore, PA, for Appellee/Cross–Appellant Fumo.Patrick J. Egan, Esq. [Argued], Eric E. Reed, Esq., Fox Rothschild LLP, Philadelphia, PA, for Appellee Arnao.Before: FUENTES, GARTH, NYGAARD, Circuit Judges.
On July 14, 2010, the United States District Court for the Eastern District of Pennsylvania sentenced former Pennsylvania State Senator Vincent J. Fumo to 55 months' imprisonment, a $411,000 fine, and $2,340,839 in restitution, arising from his jury conviction on 137 counts of fraud, tax evasion, and obstruction of justice. A week later, the District Court sentenced former Fumo aide Ruth Arnao to imprisonment of one year and one day, a $45,000 fine, and joint and several restitution with Fumo of up to $792,802, arising from her jury conviction on 45 counts of fraud, tax evasion, and obstruction of justice. On appeal, the Government argues that the District Court made numerous procedural errors in arriving at both sentences. In particular, the Government asserts that the District Court failed to announce a final guidelines sentencing range for Fumo. Fumo cross-appeals, contending that the District Court erred when it denied his motion for a new trial based on alleged jury partiality and the District Court's admission of evidence related to Pennsylvania's public employee ethics law. For the following reasons, we will affirm Fumo's conviction, vacate the sentences of Fumo and Arnao, and remand both for resentencing before the District Court.
Vincent Fumo was a high-profile Pennsylvania state senator at the center of one of the largest political scandals in recent state history. Fumo was first elected to the State Senate in 1978 from a district in South Philadelphia. 1 He eventually became Chairman of the Senate Democratic Appropriations Committee, which put him in control of millions of dollars that could be dispensed at his discretion for legislative purposes. Fumo served in the Pennsylvania State Senate for thirty years, where it is widely agreed that he became one of the most powerful political figures in the state.
During his three decades as a state senator, Fumo frequently directed his publicly paid Senate employees to attend to his personal needs and political interests during their working hours, as well as at night and on weekends. Fumo's Philadelphia district office was staffed by ten such employees, whose duties included providing constituent services to the residents of Fumo's district. However, the staffers often also provided Fumo with campaign and personal assistance: organizing political fundraisers and mailings, processing bills for business accounts, and handling various aspects of Fumo's personal finances. Various aides also acted as his housekeeper, drove him from place to place, managed the refurbishment of his 33–room house, ran personal errands, and even drove his daughter to school. During Fumo's annual trip to Martha's Vineyard, Massachusetts, his Senate aides would drive two vehicles from Philadelphia and back, filled with the luggage of Fumo and his guests. Staffers also used their time to assist a Philadelphia City Councilman who was Fumo's ally and, for two months, to advance the campaign of an ultimately unsuccessful Pennsylvania Democratic gubernatorial candidate. Moreover, Fumo misused his Senate staff in Harrisburg—several of them renovated and developed a farm he had purchased in 2003 as a residential and business enterprise. In exchange, Fumo arranged salaries for his employees that were substantially greater than those designated by the State Senate for comparable Senate employees.
Fumo also provided non-staffers, such as contractors, family members, and girlfriends with access to Senate resources, including laptops and computer assistance. Further, he used Senate funds to hire contractors for non-legislative tasks. For instance, Fumo obtained a $40,000 state contract for a private investigator who, in addition to his legitimate activities, conducted surveillance on Fumo's former wife, girlfriends, ex-girlfriends' boyfriends, and at times, political rivals. He obtained an $80,000 state contract for a consultant who spent much of his time assisting Fumo with political races and a $45,000 salary for an individual who spent most of his time assisting with Fumo's farm. Mitchell Rubin, the boyfriend and later husband of Ruth Arnao, was paid $30,000 per year for five years, without doing much, if any, work at all.
In order to facilitate his use of public funds for his own purposes, Fumo falsely represented that employees and contractors receiving payment by the Senate were performing proper and legitimate legislative functions that they only partially or never in fact completed, and failed to disclose the private and political services that they were actually performing. Fumo also provided false job descriptions and elevated position classifications that conflicted with the duties that employees actually carried out.
In 1991, Fumo and his staff founded a non-profit organization that became known as the Citizens Alliance for Better Neighborhoods (“Citizens Alliance”). Arnao, a Senate employee on Fumo's staff, became its director. Citizens Alliance's stated purpose was to improve Philadelphia neighborhoods through projects such as removing trash, sweeping streets, trimming trees, clearing snow, and cleaning alleys and abandoned lots. Citizens Alliance received much of its funding from grants obtained by Fumo from the state and other entities. In 1998, after Fumo brought litigation challenging its utility rates, the Philadelphia Electric Company (“PECO”) privately agreed to donate $17 million to Citizens Alliance as part of a settlement agreement. The existence of the $17 million contribution only became public knowledge in November 2003, when it was reported by the Philadelphia Inquirer. After the influx of $17 million, Citizens Alliance expanded the scope of its work, acquiring properties for renovation, opening a charter school, and attempting to develop an office building for high-tech companies.
However, concurrent with its expanded efforts, Fumo and Arnao began to use Citizens Alliance funds for their personal benefit, including $90,000 for tools and $6,528 for vacuum cleaners and floor machines used in Fumo's homes. Citizens Alliance also provided Fumo and his staff with vehicles, including a $38,000 minivan, a $52,000 luxury SUV, and a $25,000 jeep. In total, more than $387,325 went towards acquiring and maintaining vehicles for the use of Fumo, Arnao, legislative aides, and family members. Further, Citizens Alliance became the landlord of Fumo's office on Tasker Street in Philadelphia. While the Senate spent $90,000 in rent during a five-year period, Citizens Alliance spent over $600,000 to furnish, maintain, and rent Fumo's office to him at a discount. The office also served as his campaign office and ward headquarters. Further, Citizens Alliance paid for cell phones for many of Fumo's staffers, as well as his daughter. It also paid $39,000 for Fumo's trip to Cuba with five friends and $50,000 for a “war dog” memorial in Bucks County.
Fumo used Citizens Alliance in violation of federal 501(c)(3) rules for charitable organizations by having it pay $250,000 for political polling, $20,000 for a lawsuit against a Senate rival, and $68,000 to support opposition to the Government's construction of dunes along the Jersey shore, which would have blocked his seaside house's view of the ocean and reduced its property value. In order to oppose the dunes, Fumo had his Senate counsel create a nonprofit entity called “Riparian Defense Fund, Inc.” to funnel funds from Citizens Alliance, and then misled the IRS and Pennsylvania Secretary of State as to the nature and purpose of the organization. Further, Fumo misrepresented political and campaign expenses as “community development consulting” expenses on Citizens Alliance's tax filings, deceiving the IRS yet again.
Just as he had done with his public employees, Fumo directed Citizens Alliance staff to assist with his personal matters, traveling to his house on the Jersey shore to repair and paint his dock and deck, picking up trash, and undertaking other errands and tasks. They also frequently cleaned and served his Philadelphia home, and delivered equipment and personal items to his farm. Additionally, Citizens Alliance paid for a $27,000 bulldozer, a lawn tractor, a dump truck, an all-terrain vehicle, and a Ford F–150 pickup truck for his Harrisburg-area farm. Fumo and Arnao never disclosed the funds used for Fumo's personal benefit to Citizens Alliance's accountants, and when asked about those funds by an accountant, Arnao misstated their purpose. Fumo and Arnao also made repeated misrepresentations to journalists about Citizens Alliance and how it spent its funds.
Fumo served on the board of directors of the Independence Seaport Museum (“ISM”). Board members did not receive compensation or benefits from the museum, but were expected to help the museum develop and solicit donors. While Fumo did not donate or solicit much in the way of donations for the ISM, he did use his influence to obtain grants for the museum from the state and other entities. However, at the expense of the ISM, he also repeatedly used its yachts for pleasure cruises and its ship models for decorations...
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