U.S. v. O'Malley, 79-5083

• Decision Date: 23 June 1983
• Docket Number: No. 79-5083,79-5083
• Citation: 707 F.2d 1240
• Parties: 13 Fed. R. Evid. Serv. 1078 UNITED STATES of America, Plaintiff-Appellee, v. Thomas D. O'MALLEY, Defendant-Appellant.
• Court: U.S. Court of Appeals — Eleventh Circuit

Page 1240

707 F.2d 1240

13 Fed. R. Evid. Serv. 1078

UNITED STATES of America, Plaintiff-Appellee, v. Thomas D. O'MALLEY, Defendant-Appellant.

No. 79-5083.

United States Court of Appeals Eleventh Circuit.

June 23, 1983.

Michael J. Osman, Miami, Fla. (Court-Appointed), Jeffrey A. Tew, Miami, Fla. (Court-Appointed Co-Counsel), Lawrence E. Besser, Miami, Fla., for defendant-appellant.

Atlee W. Wampler, III, U.S. Atty., Jon May, Michael P. Sullivan, Asst. U.S. Attys., Miami, Fla., for plaintiff-appellee.

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

Before HILL and HATCHETT, Circuit Judges, and HAYNSWORTH ^*, Senior Circuit Judge.

PER CURIAM:

Thomas E. O'Malley, former Insurance Commissioner of the State of Florida, appeals his convictions on nineteen counts of

                mail fraud in violation of 18 U.S.C.A. Sec. 1341 and for two counts of extortion in violation of 18 U.S.C.A. Sec. 1951. 1   We affirm
                

FACTS

In 1970, Thomas D. O'Malley, the appellant, was elected Insurance Commissioner of Florida. Following his election, O'Malley entered into a contract with friends and law school associates, Ricardo Ciravolo and Bennett Feldman. By the contract, O'Malley agreed to sell his seventy percent (70%) interest in the law firm of O'Malley and Ciravolo for $240,000. Ciravolo, a minority partner, had a thirty percent (30%) interest in the law firm. In 1969, the year preceding the sale, the law firm had an income of approximately $73,000. Ciravolo and Feldman agreed to buy O'Malley's interest for $240,000 at four percent interest, to be paid over an eight year period.

An addendum to the contract provided that O'Malley would receive no payments in any year in which Ciravolo and Feldman did not each realize an income of $25,000 from the partnership. The addendum further provided that the contract would become void upon the death of any of the parties.

As insurance commissioner, O'Malley regularly met with insurance company executives prior to considering their applications for licenses to do business in Florida. At these meetings, O'Malley occasionally urged insurance companies to use Ciravolo and Feldman's law firm if they needed legal help and often distributed the law firm's business cards. The evidence is best shown by outlining five events.

A. Hardy Snow

Hardy Snow, president of Accredited Bail Bond Agencies, testified that he met O'Malley in September, 1970, at which time O'Malley indicated that he knew Snow had contributed $4,000 to O'Malley's recently defeated primary rival, and that Snow should contribute $4,000 to the O'Malley campaign if he and Snow were "going to get along." Snow gave O'Malley $4,000 in cash. O'Malley told Snow that in order for the two of them to continue to get along Snow should continue to give money.

In October, 1970, Feldman met Snow at an airport and accepted $1,000 for O'Malley. In September, 1971, O'Malley telephoned Snow, telling him to send the law firm of Ciravolo and Feldman a check for $1,000. When Snow protested, O'Malley urged, alternatively, that Snow could write off the sum as a fee for a building which Snow purchased through the insurance department's receivership, or, that Snow could deduct the sum from his income taxes as attorneys' fees. Snow sent the money to Ciravolo and Feldman, listing it on his income tax return as attorneys' fees. The law firm had not performed legal work for Snow.

Snow testified that O'Malley told him that he intended to force Snow's underwriter, the Southern American Fire Insurance Co. (Southern), out of business. O'Malley told Snow to tell the owner of Southern that he would have to pay O'Malley $10,000 if he wanted everything "to be right" between the two of them. The insurance department eventually forced Southern out of business.

In April, 1972, at O'Malley's suggestion, Snow contributed $400 to O'Malley's trust fund. ² In January, 1973, Snow made a $300 contribution to the trust fund. O'Malley indicated to Snow that the money in his trust fund would be used for incidental office expenses. The trust fund, however, was used for incidental expenses as well as to pay O'Malley's club memberships and his attorneys' fees.

Snow also testified that he felt compelled to buy two paintings totaling $5,900 from an art show sponsored by O'Malley and his wife. Snow bought the art works after O'Malley telephoned Snow urging him to come to the show, saying, "[i]f you don't come down our friendship can start all over again." Snow's last contribution to O'Malley was $1,000 to O'Malley's legal defense fund. In each instance Snow testified that he gave the money because he felt he had to contribute in order to "get along."

B. Glyn Sawyer

In 1971, Glyn Sawyer was an officer of the Great Atlantic Insurance Co. (Great Atlantic). At that time, Great Atlantic decided to merge with National Investors Life Insurance Company (National Investors) of Little Rock, Arkansas. In order to do this, Great Atlantic had to obtain the approval of the insurance commissioner.

In June, 1971, Sawyer met O'Malley in New York City while attending a meeting of the national association of insurance commissioners. As Sawyer and O'Malley talked about the merger, O'Malley inquired about Great Atlantic's legal representation. Sawyer told O'Malley that his company was represented by an attorney named Sanchez. O'Malley told Sawyer that Sanchez would not be an effective counsel because Sanchez had not supported O'Malley in his election bid, and therefore, Sanchez could not expect "good service" from the insurance department. When Sawyer asked O'Malley to recommend a law firm, O'Malley recommended Ciravolo and Feldman. Great Atlantic retained Ciravolo and Feldman, and the firm handled the merger. Sawyer testified that he believed that had Great Atlantic used Sanchez the merger would have been delayed.

C. Jim Hanna

Jim Hanna, a security analyst for the insurance department, denied Commonwealth of Puerto Rico's (Commonwealth) application to do business in Florida. Hanna testified that he denied the application because he believed the company was undercapitalized. Subsequent to the disapproval, O'Malley visited Commonwealth's home office in Puerto Rico. After the visit, Commonwealth retained Feldman as counsel and it was authorized to do business in Florida. Four years later, Commonwealth was declared bankrupt.

Hanna testified that Ciravolo and Feldman began representing Farmers National Life Insurance Co. (Farmers) in the fall of 1973. A year later, Farmers changed owners, which required the company to submit a new application to the insurance department. An insurance department audit revealed that the new owners "were bleeding off" Farmers's assets. The audit also revealed that Farmers had accumulated excessive expenses.

When Hanna learned that O'Malley was engaged in an ongoing contract with Ciravolo and Feldman, he asked the auditors to determine how much money Farmers had paid to the law firm. The figure for 1974 was $57,000. A meeting was held between the employees of the insurance department, a representative from Farmers, and Feldman to determine whether Farmers should be allowed to continue doing business in Florida. Hanna itemized the expenditures thought to be excessive, including the attorneys' fees paid to Ciravolo and Feldman. The insurance department staff thought the legal fees were excessive because it could not determine what work was performed in exchange for the attorneys' fees. In addition, the chief examiner for the insurance department stated that he believed Farmers's assets were worthless. O'Malley disagreed with this assessment, stating that all expenses and fees were justified management decisions. Only after O'Malley left office was Farmers ordered to cease doing business in Florida.

D. Thomas Brown

In September, 1971, Life Insurance Co. of the Southwest (LIC) applied to do business in Florida. LIC's application was not approved until six months later. Thomas Brown, the assistant insurance commissioner, testified that he submitted LIC's application to O'Malley for his signature in May, June, July, August, and September of 1972. O'Malley took no action on the application. Brown testified that Richard Lee, the president of LIC, attempted to call O'Malley in August and November, 1972, concerning the status of the application, but Lee's calls were not returned and his letters were unanswered.

Lee testified that he spoke with Jack Terry, the president of Highlands Insurance Co., about his problem in obtaining approval. As a result of his talk with Terry, Lee contacted and retained the law firm of Ciravolo and Feldman. Brown testified that on March 20, 1973, Feldman sent a letter to the insurance department concerning LIC's application. Ten days later, O'Malley personally approved LIC's application.

E. Jack Quaritius

Jack Quaritius, president of Peninsular Life Insurance Co. (Peninsular), testified that his company decided that it would be advantageous to form a holding company. To form a holding company, Peninsular needed the approval of its stockholders and the insurance department. Quaritius testified that he visited O'Malley in July, 1972, and explained that Peninsular intended to form a holding company and because of upcoming changes in Security and Exchange Commission regulations, the company had to be approved prior to December 31, 1972. Quaritius made several telephone calls to O'Malley, but none of the calls were returned.

Quaritius testified that he learned that O'Malley could be reached through Ciravolo and Feldman. In October, Quaritius contacted Feldman explaining the problem he was having in contacting O'Malley. Later that month, Quaritius played golf with O'Malley and mentioned that his company was considering hiring Ciravolo and Feldman. O'Malley told him that he had no interest in whatever law firm he chose. Quaritius retained Feldman, however, on November 1, 1972, paying $10,000. On November 6, Feldman...