U.S. v. Gee, 05-1287.

• Decision Date: 23 December 2005
• Docket Number: No. 05-1287.,05-1287.
• Parties: UNITED STATES of America, Plaintiff-Appellee, v. Carl A. GEE, Defendant-Appellant.
• Court: U.S. Court of Appeals — Seventh Circuit

Page 713

432 F.3d 713

UNITED STATES of America, Plaintiff-Appellee, v. Carl A. GEE, Defendant-Appellant.

No. 05-1287.

United States Court of Appeals, Seventh Circuit.

Argued December 7, 2005.

Decided December 23, 2005.

Steven M. Biskupic (argued), Gregory J. Haanstad, Office of United States Attorney, Milwaukee, WI, for Plaintiff-Appellee.

Dennis P. Coffey (argued), Domnitz, Mawicke & Goisman, Milwaukee, WI, for Defendant-Appellant.

Before EASTERBROOK, MANION, and SYKES, Circuit Judges.

EASTERBROOK, Circuit Judge.

Opportunities Industrialization Center of Greater Milwaukee (OIC)—an organization affiliated with the self-help movement founded in 1964 by Rev. Leon H. Sullivan in Philadelphia—holds contracts to administer Wisconsin's welfare-reform program, popularly known as W-2 (for "Wisconsin Works"). These contracts bring in about $40 million annually, approximately two-thirds of OIC's revenue. A jury concluded in this criminal prosecution that Carl Gee had conspired with Gary George and Mark Sostarich to obtain these contracts corruptly. Gee caused OIC to pay kickbacks to George, who at the time was the majority leader of Wisconsin's state senate. The kickbacks violated 18 U.S.C. § 666 because OIC receives more than $10,000 annually in federal grants (W-2 is itself about 80% federal money), and the agreement among Gee, George, and Sostarich to violate § 666 in turn violated 18 U.S.C. § 371, the general conspiracy statute. Gee has been sentenced to 24 months' imprisonment and ordered to pay restitution of some $473,000. George pleaded guilty to the § 371 charge, and we have affirmed his conviction and sentence of 48 months' imprisonment, though we directed the district court to revisit George's obligation to make restitution. See United States v. George, 403 F.3d 470 (7th Cir.2005). Sostarich pleaded guilty to a different conspiracy with George, agreed to cooperate (he testified against Gee), and was sentenced to make restitution, serve home confinement but no imprisonment, and perform community service; he did not appeal.

The evidence permitted a jury to find that Gee caused OIC to pay George for his assistance in directing the welfare-program-management contracts to OIC and preventing the state from auditing OIC's performance. Money passed from OIC to George in two ways. First, OIC gave Sostarich a monthly retainer, 80% of which he made over to George (often after one of George's aides picked up the check from OIC, delivered it to Sostarich, and waited while he made out a personal check to George for his cut). George never performed any legal work in exchange for this money; neither OIC nor Sostarich filed tax documents showing how the monthly fee had been divvied up. Second, OIC "invested" $200,000 of an affiliate's money in a corporation, controlled by George's family, whose sole asset was a TV station in the Virgin Islands. Although Gee told the affiliate that it would receive 20% of the corporation's stock, no certificates were issued and the "investment" never appeared on the corporation's books. The money seems to have gone straight to George's pocket, with OIC receiving his goodwill and political patronage rather than an equity interest in a business.

Gee contends that this evidence does not support the conviction. He offers three principal arguments. One is that the $200,000 came from OIC's profits and bonuses for administering the W-2 program rather than from any federal grant. This argument supposes that § 666 reaches only funds that can be traced directly to the grant. The Supreme Court rejected an identical argument in Sabri v. United States, 541 U.S. 600, 124 S.Ct. 1941, 158 L.Ed.2d 891 (2004), as we had done earlier in United States v. Grossi, 143 F.3d 348 (7th Cir.1998). Gee never mentions either of these decisions.

Another argument is that the evidence does not establish any specific act that George took in response to any specific payment. Gee contends that the absence of a quid pro quo prevents conviction. Yet the...