U.S. v. Kelley

Decision Date31 August 2006
Docket NumberNo. 05-1435.,No. 05-1361.,05-1361.,05-1435.
Citation461 F.3d 817
PartiesUNITED STATES of America, Plaintiff-Appellee, v. Wilbourne A. KELLEY III (05-1435); Barbara Kelley (05-1361), Defendants-Appellants.
CourtU.S. Court of Appeals — Sixth Circuit

Ralph H. Richardson, Detroit, Michigan, James W. McGinnis, Detroit, Michigan, for Appellants. Christopher L. Varner, United States Attorney, Detroit, Michigan, for Appellee.

Before: BOGGS, Chief Judge; KEITH and SUTTON, Circuit Judges.

OPINION

KEITH, Circuit Judge.

Defendant-Appellant, Wilbourne A. Kelley, III ("Kelley"), was convicted in the United States District Court for the Eastern District of Michigan of six counts of extortion and one count of conspiring to commit extortion, in violation of the Hobbs Act, 18 U.S.C. § 1951; bribery in connection with a federal program, in violation of 18 U.S.C. § 666; and making false statements to the FBI, in violation of 18 U.S.C. § 1001(a)(2). Co-Defendant-Appellant, Barbara Kelley, was convicted of one count of extortion and one count of conspiring to commit extortion, in violation of the Hobbs Act, 18 U.S.C. § 1951; money laundering, in violation of 18 U.S.C. § 1956; one count of bribery in connection with a federal program, in violation of 18 U.S.C. § 666; and making false statements to the FBI, in violation of 18 U.S.C. § 1001(a)(2). Defendants appeal their convictions. For the reasons set forth below, we AFFIRM.

I.

This case arises out of an improper financial relationship between a county government official, who received "kickbacks," and a county contractor, who received millions of dollars in county contracts in return. Kelley was a long-time employee of Wayne County, Michigan. His wife, Barbara Kelley, was an employee of Blue Cross Blue Shield of Michigan. From 1989 through 1997, Kelley was the Assistant Wayne County CEO, head of Airport Operations and Major County Construction. He served as the Deputy Chief Operating Officer assigned to the Office of the County Executive, Edward McNamara, for the next two years. In these positions, Kelley was responsible for the operation of Wayne County's Detroit Metropolitan Wayne County Airport ("Detroit Metro Airport"). When he left Wayne County, he was one of its highest ranking executives.

In 1992, Frank Vallecorsa ("Vallecorsa"), the owner and operator of a construction business, American International, Inc. ("American International"), and an equipment rental business, United Equipment Rental, Inc. ("United Equipment"), met Kelley and other Wayne County officials to discuss obtaining business contracts. At the time, American International had never done business with Wayne County. With a "wink and a nod," a mutually beneficial financial relationship began. From 1993 through 2002, American International held substantial airport contracts. One of its contracts, worth $11.2 million, was to provide skilled maintenance workers for the airport. This contract, which earned American International profits between 5% to 7%, was renewed yearly by Kelley. American International had another Wayne County contract to provide runway lighting and sign construction at the Detroit Metro Airport, valued at $19.7 million. Finally, American International had two smaller contracts at the Detroit Metro Airport valued at $441,000 and $553,000 to perform runway pavement replacements and restroom renovations, respectively.

Kelley held authority over all of American International's Detroit Metro Airport contracts. He interviewed potential contractors and his signature started Detroit Metro Airport's procurement and contract process. Kelley's approval was necessary in order for Wayne County to provide new funds to an airport project or to establish any new airport contracts. He was also responsible for renewing existing contracts. American International's contracts were renewed on multiple occasions and amended frequently by Kelley to increase either the payout or the length. In addition, Kelley personally authored three letters to American International awarding the company airport contracts.

A. Financial Benefits

From 1992 through 1999, the Kelleys received significantly more than $100,000 in financial benefits from American International and its owner, Vallecorsa. The first such instance occurred in December 1992, when Kelley told Vallecorsa that his home had suffered roof damage and asked whether he could "recommend" someone to fix it. Vallecorsa, apparently appreciating Kelley's not-so-subtle hint, hired one of his subcontractors, Elio Giavonne ("Giavonne"), to repair the roof. Unfortunately for Vallecorsa, the roof was beyond repair and an entirely new roof was needed. Giavonne, after getting Vallecorsa's approval for the expenses, had a new roof and gutters installed, costing approximately $14,000.

As part of this quid pro quo arrangement, on May 17, 1993, Kelley granted American International a one-year Wayne County contract valued at $1 million. Shortly thereafter, the Kelleys requested Vallecorsa to make approximately $40,000 in renovations to their kitchen. Giavonne, after getting approval from Vallecorsa, replaced the kitchen cabinets, counters, and tile flooring, and added new appliances. The Kelleys' home improvements continued: a new basement floor, water heater, refinishing all the wooden floors, brick cleaning, renovations to the garage, and a finished basement. In total, Giavonne billed Vallecorsa nearly $63,000.

In the summer of 1994, Kelley approved another contract for American International worth approximately $11 million. He sent a letter to Vallecorsa, dated August 11, 1994, officially awarding him the airport lighting and sign contract. Thereafter, Kelley asked Vallecorsa where he bought his oriental rugs. Vallecorsa recommended Nigosian's Oriental Rug Company ("Nigosian"). The Kelleys went to Nigosian and picked out rugs costing $28,000, which Vallecorsa agreed to purchase. In order to fulfill their agreement, Vallecorsa would write a check payable to himself from the American International bank account. He would then have one of his employees cash the check and would give Kelley the cash to pay the Nigosian bill. For example, at trial the government presented evidence that showed American International writing a check to Vallecorsa for $4,500, dated November 10, 1994. Five days later, the Kelleys paid Nigosian $4,300. On December 9, 1994, American International wrote a check to Vallecorsa for $4,300 and on the following day the Kelleys paid Nigosian $4,300. On January 26, 1995, American International wrote a check to Vallecorsa for $4,440. On February 13, 1995, the Kelleys paid Nigosian $4,400. On March 9, 1995, American International wrote a check to Vallecorsa for $4,400 and, four days later, the Kelleys paid Nigosian $4,000.

In addition to cash payments for the oriental rugs, Kelley would routinely request large amounts of cash, ranging from $2,000 to $4,000. American International employees testified that before Kelley would visit the office, Vallecorsa would write a large check to himself, have an employee cash it, and then, after a private meeting with Kelley, the cash was never seen again. There were fifty-nine instances where large-sum checks were written to Vallecorsa and then cashed. There were 23 unexplained large cash deposits in the Kelleys' joint checking account near the dates when Vallecorsa cashed these large-sum checks written to himself.

Vallecorsa also made large donations to the Kelleys' favorite charities. In 1995, he wrote checks totaling $2,000 to the Eastern Michigan University Black Alumni Association. Vallecorsa is a white male, who never attended college, and has no ties to Eastern Michigan University. He testified at trial that the Kelleys requested that he make several charitable donations to their selected charities totaling $16,000, including a church, where Kelley was an officer, and a community center, where Barbara Kelley was an officer.

From 1995 through 1998, the Kelleys also received free automobile repairs and service from American International. Some of these repairs were performed at American International's service garage. Other times, these repairs were made by professional mechanics, paid by American International. The repairs and service included: body work, a paint job, new tires, tune-ups, oil changes, and similar routine maintenance.

The Kelleys also requested lavish trips in exchange for airport contracts. In 1995, the Kelleys learned that Vallecorsa was planning a trip to Italy, and they wanted to join him on this excursion. Barbara Kelley asked Vallecorsa to finance their travel, and he agreed. To cover airfare, Vallecorsa gave Kelley $8,000 in cash and charged the Kelleys' hotel room, totaling $2,437.84, to an American International account. Four months later, Kelley returned the favor by approving another $1 million airport contract for American International.

Vallecorsa also helped the Kelleys keep up with the Joneses. For example, the Kelleys were invited to attend the second inauguration of President Clinton in Washington D.C., and Barbara Kelley apparently had nothing appropriate for the occasion. Accordingly, she asked Vallecorsa to purchase a gown for her. On January 9, 1997, eleven days before the inauguration, Vallecorsa paid $2,050 to Barbara Kelley for a dress. Nine days later, Kelley signed a document to begin the renewal process for American International's one-year airport maintenance contract worth $1 million. He approved the contract two months later.

In April 1997, American International submitted a bid on the runway paving project at the Detroit Metro Airport. The airport's project managers and Wayne County field engineers recommended that American International not receive the contract because of its weak capabilities and personnel problems. Kelley decided against this recommendation and...

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