U.S. v. O'Keefe

• Decision Date: 21 August 1987
• Docket Number: Nos. 86-5068,86-5136,s. 86-5068
• Citation: 825 F.2d 314
• Parties: UNITED STATES of America, Plaintiff-Appellee, v. Robert O'KEEFE, John Edwin Montgomery, Jr., Defendants-Appellants. UNITED STATES of America, Plaintiff-Appellant, v. John MONTGOMERY, and Robert T. O'Keefe, Defendants-Appellees.
• Court: U.S. Court of Appeals — Eleventh Circuit

Page 314

825 F.2d 314

UNITED STATES of America, Plaintiff-Appellee, v. Robert O'KEEFE, John Edwin Montgomery, Jr., Defendants-Appellants.

UNITED STATES of America, Plaintiff-Appellant, v. John MONTGOMERY, and Robert T. O'Keefe, Defendants-Appellees.

Nos. 86-5068, 86-5136.

United States Court of Appeals, Eleventh Circuit.

Aug. 21, 1987.

Leon B. Kellner, U.S. Atty., Linda Collins-Hertz, Lawrence H. Sharf, Sonia Escobio O'Donnell and Nancy L. Worthington, Asst. U.S. Attys., Miami, Fla., for the U.S.

Bruce A. Zimet, P.A., Ft. Lauderdale, Fla., for Robert O'Keefe.

Kenneth W. Lipman, Siegel & Lipman, Boca Raton, Fla., for Montgomery.

Appeals from the United States District Court for the Southern District of Florida.

Before RONEY, Chief Judge, VANCE, Circuit Judge, and PITTMAN ^*, Senior District Judge.

PITTMAN, Senior District Judge:

All parties to this criminal prosecution appeal portions of the judgment adverse to them. For the reasons discussed below, we AFFIRM all aspects of the district court's judgment.

Facts and Proceedings Below

Defendants Montgomery and O'Keefe were charged in a multi-count indictment with violations of the tax code, the Hobbs Act, and the Travel Act for event occurring in connection with the construction of a nursing home in Sunrise, Florida.

The defendants were charged with filing false tax returns for the years 1981 and 1982. Specifically, they were charged with failing to fully disclose their gross business receipts for those years. O'Keefe's unreported income was money withdrawn by him from Nob Hill Realty accounts. Montgomery's unreported income in 1981 consisted of checks written to him from Nob Hill accounts; for 1982, some unreported income came from Nob Hill Realty, but the greatest portion consisted of a $32,500.00 consulting fee paid to B & J Associates.

The defendants' primary defense to the tax charges was that the unreported income consisted of loans to and from Nob Hill Realty and B & J Associates. Alternatively, they maintained that they were sloppy bookkeepers and any discrepancy between their income and the returns was the result of negligence, not willfulness. Montgomery also maintained that he relied on O'Keefe to accurately report his Nob Hill income to their tax preparer. To the extortion charges, the defendants assert that the money they received was reasonable compensation for legitimate services rendered.

Montgomery, a member of the Sunrise City Council, and O'Keefe, a member and later chairman of the Planning and Zoning Board of the City of Sunrise, were charged with having participated in a scheme to demand, under color of official right and by inducing fear of economic loss, $70,000.00 and other things of value in return for the passage of various resolutions and authorizations by the Sunrise City Council and in exchange for a special use exemption to construct the nursing home in the City of Sunrise. The Travel Act charge relied on Florida's unlawful compensation statute as the predicate act.

William McKettrick and Thomas Allgood, who had been partners in nursing home projects in Georgia, decided to erect a nursing home in Broward County, Florida, through a company they formed, Richmond Health Care (Richmond). In May, 1981, a realtor introduced McKettrick to defendants Montgomery and O'Keefe, who were partners in Nob Hill Realty of Sunrise, Inc. Montgomery located a suitable site for the nursing home within Sunrise and an option contract was signed with the property's owner. Montgomery and O'Keefe ultimately received a sales commission of $36,900.00 from this transaction. The real estate commission was not charged in the indictment.

The State of Florida must approve all nursing home applications by issuing a "certificate of need," after a local advisory board holds hearings and makes recommendations. Montgomery lobbied the state, which later issued the certificate on September 29, 1981. The certificate would expire unless construction was commenced within one year.

Due to high interest rates then prevailing, it soon became apparent that conventional financing was unfeasible for Richmond. For this reason, they turned to tax-exempt industrial revenue bonds to finance the project. The City of Sunrise, through its city council, had to approve the issuance of these bonds. A Letter of Inducement and resolution authorizing the bonds were required of the city. Richmond also had to obtain a special exception use ordinance, as well as final site plan approval.

In October or November, 1981, Montgomery explained this process to McKettrick and Allgood. McKettrick testified that Montgomery stated that he would help sell the bonds for a fee. While they never reached a firm agreement, they discussed fees ranging from 6% for a private issue to 2% for a public sale. According to McKettrick, Montgomery and O'Keefe would split the fees between themselves, the city attorney, and "Spike" Leibowitz, a local lobbyist and friend of the mayor of Sunrise. McKettrick testified that those fees were to be paid in exchange for their assistance with construction of the project and for the defendants' help in obtaining city approval of the bonds.

In November, 1981, the defendants traveled to Augusta, Georgia, at Allgood's invitation. While in Georgia, the defendants requested $10,000.00 as an advance on the sale of the bonds. Allgood was unable or unwilling to advance any money, but he did agree to pay the interest on a $10,000.00 loan Montgomery later obtained.

Montgomery participated in the discussion and votes on the nursing home issues before the city council. On each of these three related issues, Montgomery voted in favor of the resolutions. The other city council members testified that they voted in favor of the resolutions because it was in the city's best interest. They also testified that their votes had nothing to do with anything Montgomery did to influence them. O'Keefe, a member of the Planning and Zoning Board, voted in favor of the special exemption use ordinance. That measure failed before the Planning and Zoning Board. However, that vote was only a recommendation to the city council, the final authority on such matters.

Under the Florida law then in effect, FSA Sec. 112.3143, a public official may vote on any matter in which he has a private interest, provided he discloses the "nature of his interest" in a public memorandum within 15 days of the vote. After each vote, the defendants filed the conflict of interest forms (Form 4), which disclosed the real estate commissions, but did not describe the other fees. However, once the other fees were paid, both defendants made the appropriate disclosures.

The nursing home project was closed in Atlanta, Georgia on August 25, 1982. At that time, the real estate commission was paid to Nob Hill and a $32,500.00 check was issued to Montgomery and O'Keefe's corporation, B & J Associates, for consulting fees. The fee paid to B & J was disclosed on the bond disclosure documents, and a portion of the consulting services were described on an invoice submitted at the closing.

The defendants filed motions to dismiss the indictment based upon allegations of prosecutorial misconduct. After an extensive pretrial hearing before Judges Roettger and Paine (who had a related case involving the mayor of Sunrise), Judge Roettger denied the motions to dismiss. Then Judge Roettger transferred the case to newly-invested Judge Thomas E. Scott, who presided over all subsequent proceedings.

At the close of the Government's case, both defendants moved for judgment of acquittal on all counts. After expressing some reservations about the Government's extortion case, the district court denied the motions. The jury returned a verdict of guilty on all counts. Subsequently, O'Keefe filed a motion for judgment of acquittal, which Montgomery adopted.

Judge Scott conducted a sentencing hearing. At the conclusion of the proceeding, he announced that he was granting the defendants' motion for judgment of acquittal as to the extortion related charges. He denied the motions as to the remaining tax charges and sentenced defendants to probation. Both the Government and the defendants filed timely notices of appeal from the portions of the judgment adverse to them.

Prosecutorial Misconduct

The defendants argue that the district court erroneously denied their motion to dismiss the indictment due to the prosecutor's misconduct before the grand jury. Similar allegations of misconduct were raised in other cases involving this prosecutor and grand jury. An extensive evidentiary hearing was held before Judge Roettger, to whom this case was assigned initially, and Judge Paine, who tried the related cases. At the conclusion of the hearing, Judge Roettger announced that he found "considerable substance" to the defendants' charges, but refused to dismiss the indictment because he found that the defendants had demonstrated no prejudice as a result of the prosecutor's misconduct. Supp.Rec. 4 at 924-25.

The defendants assert that they made a sufficient showing of prejudice to warrant dismissal of the indictment. They argue that the misconduct which occurred here was sufficient to warrant dismissal of the indictment without a showing of prejudice.

The defendants complain that during the testimony of some witnesses the prosecutor made gestures and comments indicating disbelief of or exasperation with their testimony. They argue that this conduct was intentionally calculated to discredit these witnesses' testimony. These and other witnesses were threatened with prosecution as co-conspirators unless their testimony more closely conformed to the Government's theory of the case. The defendants point to the prosecutor's "inappropriate" behavior toward Barbara O'Keefe, the defendant's wife, after she invoked her spousal and fifth amendment privileges during her grand jury appearance. O'Keefe, himself, was paraded before the grand jury under the ruse of being a...