U.S. v. Gardiner

• Decision Date: 12 September 2006
• Docket Number: No. 05-1247.,No. 05-1248.,05-1247.,05-1248.
• Citation: 463 F.3d 445
• Parties: UNITED STATES of America, Plaintiff-Appellee, v. John F. GARDINER (05-1247); Ronald Lupo (05-1248), Defendants-Appellants.
• Court: U.S. Court of Appeals — Sixth Circuit

463 F.3d 445

UNITED STATES of America, Plaintiff-Appellee, v. John F. GARDINER (05-1247); Ronald Lupo (05-1248), Defendants-Appellants.

No. 05-1247.

No. 05-1248.

United States Court of Appeals, Sixth Circuit.

Argued: July 26, 2006.

Decided and Filed: September 12, 2006.

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ARGUED: Margaret Sind Raben, Gurewitz & Raben, Detroit, Michigan, Joan Ellerbusch Morgan, Sylvan Lake, Michigan, for Appellants. John C. Engstrom Assistant United States Attorney, Detroit, Michigan, for Appellee. ON BRIEF: Margaret Sind Raben, Gurewitz & Raben, Detroit, Michigan, Joan Ellerbusch Morgan, Sylvan Lake, Michigan, for Appellants. John C. Engstrom, Assistant United States Attorney, Detroit, Michigan, for Appellee.

Before: MOORE, CLAY, and GRIFFIN, Circuit Judges.

OPINION

CLAY, Circuit Judge.

In this appeal, Defendants John F. Gardiner ("Gardiner") and Ronald Lupo ("Lupo"), appeal their convictions and sentences for crimes committed, inter alia, in violation of the Racketeer Influenced and Corrupt Organizations Act ("RICO"), 18 U.S.C. § 1962(d), and for crimes committed in violation of 18 U.S.C. § 1951, conspiracy to affect commerce under color of official right (bribery). Gardiner challenges the sufficiency of the evidence upon which he was convicted, alleges that there was prosecutorial misconduct that impacted his substantial rights, and claims that the district court improperly enhanced his sentence. Lupo appeals claiming that: (1) he was sentenced using the wrong version of the Sentencing Guidelines; (2) his sentence is unreasonable under United States v. Booker, 543 U.S. 220, 125 S.Ct. 738, 160 L.Ed.2d 621 (2005); (3) he is entitled to a new trial where there were improper references made during his trial to his alleged mafia connections; (4) he is entitled to a new trial where the government failed to disclose that one of its witnesses had failed a polygraph test; and (6) the district court erred in refusing to grant his motion to sever.

We have reviewed all of Defendants' various claims, and for the reasons set forth below, we AFFIRM both Defendants' convictions on all grounds, and we AFFIRM Defendant Lupo's sentence, but VACATE Defendant Gardiner's sentence and REMAND his case back to the district court for a new sentencing hearing.

I. Background

1. The Indictments

A thirty-five count Indictment was handed down in the United States District Court for the Eastern District of Michigan on June 25, 2002, against the following individuals: (1) William J. Hudson ("Hudson"), owner/operator of Hudson Construction, Inc, ("HCI"); (2) Raymond Contesti, Superintendent of Clintondale Community Schools ("CCS"); (3) Defendant John Gardiner, Superintendent for East Detroit Public Schools ("EDPS"); (4) Frank S. Brasza, Director of Maintenance/Operations for EDPS; (5) Joseph Croff, EDPS Board of Education; (6) James Stonecipher, Operator of Amtek Electric; (7) Joseph Zajac, Operator of Amigo Systems, Inc; (8) Allan Torp, Assistant Superintendent/Superintendent EDPS; and (9) Douglas Packan, Operator of New Construction, Inc. and nephew of Raymond Contesti. (J.A. at 42-44.)

Gardiner was charged in Count 1, along with Hudson, Contesti, Brasza, Croff, Stonecipher and Zajac, with violations of 18 U.S.C. § 1962(d), conspiracy to violate RICO. Gardiner and Hudson were also charged in Count 3 with conspiracy to affect commerce under color of official rights in violation of 18 U.S.C. § 1951 (bribery)¹.

A Superseding Indictment was handed down on February 2, 2003, which named all of the previous indictees, and added Defendant Lupo, a retired Macomb County Sheriff Inspector, who was a close friend and associate of Raymond Contesti. Lupo and Contesti ran a purported consulting business called L & C Consulting, Inc. The Superseding Indictment generally alleged that Lupo and Contesti, in return for their assistance in securing and maintaining HCI's various contracts with CCS, and with the promise to use their influence to secure contracts for HCI, demanded that Hudson and HCI pay to them a percentage of all profits HCI received from its contracts with EDPS and CCS.

Count 1 of the Superseding Indictment charged Lupo, along with the aforementioned others, with violations of 18 U.S.C. § 1962(d), RICO conspiracy. Lupo was also charged in Count 2 with conspiracy to affect commerce in violation of 18 U.S.C. § 1951(bribery), in Counts 3 through 6 with interference with commerce by extortion and aiding and abetting in violation of 18 U.S.C. §§ 1951 and 1952, and in Count 36 with making a false, fictitious or fraudulent statement in violation of 18 U.S.C. § 1001.

2. The Crimes Giving Rise to the Indictments

a. Defendant Gardiner

In the late 1980s, while working as a high school principal with EDPS, Defendant Gardiner struck up a relationship with Hudson, owner of HCI. At the time, HCI was doing a limited amount of maintenance work for EDPS. Gardiner was later elevated to the position of Superintendent, and the relationship between Gardiner and Hudson continued to grow. It is alleged that over the course of several years, beginning in January 1990 through December 2000, Gardiner, Hudson, and their other co-conspirators engaged in a pattern of racketeering activity that included obstruction of justice, extortion, mail fraud, money laundering, structuring financial transactions, bribery of public officials, and other acts involving bribery.

During the trial, the government presented evidence and witness testimony establishing that Gardiner and his family had received hundreds of thousands of dollars worth of gifts and cash from Hudson, including the following alleged in the Superseding Indictment:

A. A check for $40,690.61 utilized by [] Gardiner as a down-payment for the purchase of his home [in Eastpointe, Michigan] in October, 1992;

B. Free construction services at [] Gardiner's home . . . including, but not necessarily limited to: (1) in about March 1993, new carpeting for $6,098; (2) in about March 1993, new cabinets, plus installation, for $4,716; (3) in 1997, the installation of new doors; (4) in 1997, painting services; (5) in 1998, the construction of a fence and landscaping, costing approximately $36,000;²

C. In about June 1995, a check from HCI for $12,262.52 to be used as the down-payment for a home purchased by [] Gardiner's daughter, Kelly D. In November 1997, the payment through a series of HCI checks, of approximately $25,000.00 in credit card debt accumulated by [] Gardiner's daughter, Kelly;

E. In 1996, the payment of $10,000 in cash toward the expenses associated with the wedding of [] Gardiner's daughter, Ann, including the wedding gown, flowers, and invitations, and an additional amount [$6,958] to pay for the rental of the Monte Carlo Club, food, and drink;

F. The payment of approximately $10,000 for one year's rent for an apartment for Ann Gardner [sic] at Crystal Lake Apartments in Shelby Township, Michigan;

G. In 1997, HCI hired [] Gardiner's step-son, David, as an assistant instructor for a Building Trades Program managed by HCI at EDPS;

H. In about 1998, [] Hudson [] gave [] Gardiner's step-son, David, a check for approximately $15,000 to be used as a down-payment on a home;

I. In July 1997, [] Hudson [] arranged for [] Gardiner's step-daughter, Heather, to be placed on the payroll of a subcontractor doing business with EDPS, and to receive weekly payroll checks in the amount of $299.44 from the subcontractor, despite the fact that she never performed any work for the subcontractor;

J. On June 24, 1997, [] Hudson [] signed a check, drawn upon an HCI account, to Jim Causley Pontiac-GMC, for $10,811.00 for the purchase of a 1994 Chevrolet Cavalier, titled in the name of Diane H. Gardiner, the wife of defendant [] Gardiner; and

K. Various trips, including a "fly-in" fishing trip to Ontario, Canada for [] Gardiner, his wife, and two stepchildren, trips to Las Vegas, Nevada, plus entertainment, golfing and meals.

(J.A. at 109-11.)

At the same time that Gardiner and his family were receiving these gifts from Hudson and HCI, Gardiner was ensuring that HCI received lucrative contracts at EDPS. During the 1989-1990 school year, HCI was made construction manager on an EDPS bond project. HCI submitted a low bid of three percent fees, well below industry standard, having been told by Gardiner that there would be other work forthcoming in the future. In 1991, EDPS began a building trades program, and Gardiner contracted with Hudson for Hudson to run the program for the district. The contract was given to Hudson over the objections of Carol Enwright, the Director of Adult Education who oversaw the program. The program ran for three years, and during that time, Enwright discovered one instance in which HCI was double-billing the district for supplies, and another where Hudson attempted to submit a false insurance claim through EDPS. Enwright brought the matters to Gardiner's attention, but Gardiner merely told her to "do what [she] had to do" with regard to the overbilling, and took no action on the insurance fraud. (J.A. at 1589-91.)

In April 1993, HCI received another bond contract with EDPS for work on an administrative building. HCI submitted the low bid of $24,000, but later submitted a change order — signed by Gardiner and Hudson — which increased the flat fee by $16,000 to $40,000. The stated reason for the increase was that there was a "change in scope of work." (J.A. at 432.) Bradley Borkowski, the HCI project manager, testified that he did not initiate the change order, was unaware of the change order at the time, and that there were no substantive changes to the scope of the work.

In August 1995, Hudson sought to obtain a $600,000 bank loan, and had to show contracts for future work in order to secure the loan. Gardiner signed a fake construction manager contract between HCI and EDPS, which was...