U.S. v. Medley

• Decision Date: 26 November 1990
• Docket Number: No. 89-3780,89-3780
• Citation: 913 F.2d 1248
• Parties: UNITED STATES of America, Plaintiff-Appellee, v. Howard MEDLEY, Defendant-Appellant.
• Court: U.S. Court of Appeals — Seventh Circuit

Page 1248

913 F.2d 1248

UNITED STATES of America, Plaintiff-Appellee, v. Howard MEDLEY, Defendant-Appellant.

No. 89-3780.

United States Court of Appeals, Seventh Circuit.

Argued June 5, 1990.

Decided Sept. 21, 1990.

As Amended on Denial of Rehearing

Nov. 26, 1990.

Sean Martin, Barry R. Elden, Asst. U.S. Attys., Office of U.S. Atty., Criminal Receiving, Appellate Div., Chicago, Ill., for plaintiff-appellee.

George N. Leighton, Neal & Associates, Stanley L. Hill, Vickie Voukidis Blum, Hill & Associates, Chicago, Ill., for defendant-appellant.

Before WOOD, Jr., CUDAHY, and POSNER, Circuit Judges.

HARLINGTON WOOD, Jr., Circuit Judge.

At the outset of oral argument, defendant-appellant Howard Medley's distinguished appellate counsel ¹ characterized the broad issue in this case to be, "Whether the judges of this court will give their mark of approval to the verdict of a misled jury and a conviction procured by the government that was and is unjust." There is arguably some support in the record upon which to base Medley's characterization of this case. From our perspective, however, we conclude the jury was not misled and the government was not unjust in its prosecutorial actions. Reversal is not warranted. To understand the context in which this unusual case arises requires we look at its procedural history, and then examine in some detail the trial and the evidence.

I. THE PROCEDURAL HISTORY

In April 1988, the grand jury returned a forty-one count indictment against Medley and eight other defendants alleging numerous crimes related to fraud and bribery (the use of the term "bribery" is an issue in this case) involving the Chicago Transit Authority ("CTA") and the Metropolitan Petroleum Company ("Metropolitan"), a privately owned motor fuel supplier. Included as defendants, relevant to this appeal, were Brian Flisk, an officer of Metropolitan, and Metropolitan. Only three of the counts were against Medley. Medley was charged with mail fraud under 18 U.S.C. Sec. 1341; accepting a thing of value with the intent to be influenced or rewarded under 18 U.S.C. Sec. 666; and perjury before the grand jury under 18 U.S.C. Sec. 1623. The following month a superseding indictment was returned against the defendants, but it contained no new allegations against Medley. The following September Judge Kocoras granted Medley's motion to sever his trial from the trial of the other defendants. Severance was followed in October by the return of another superseding indictment against only Medley. This indictment did not include the prior mail fraud count but did reallege the perjury and acceptance of a thing of value counts contained in the previous indictment. Newly added were a charge of conspiracy to violate section 666 under 18 U.S.C. Sec. 371, and a charge of Hobbs Act extortion under 18 U.S.C. Sec. 1951. Thereafter, Judge Kocoras dismissed the Hobbs Act and conspiracy counts. After eleven days of trial on the perjury and acceptance of a thing of value counts and three days of jury deliberations, the jury announced it was deadlocked and a mistrial was declared.

A third superseding indictment was then returned against Medley again charging him with extortion under the Hobbs Act (Count I) and acceptance of a thing of value under section 666 (Count II). The district court dismissed the Hobbs Act charge and trial proceeded only on the remaining section 666 charge. ² During a six-day trial the defendant did not testify and presented no evidence in his own behalf. The defendant did offer some documentary evidence, but that was largely used by the government and is not significant in this appeal. The jury found Medley guilty of accepting and agreeing to accept $25,000 from Flisk with the intent to be influenced and rewarded in his duties as a CTA board member. Medley was sentenced to a thirty-month term of imprisonment and fined $10,000. This appeal followed.

Medley raises three issues: 1) whether the trial court committed error in permitting the government to call Flisk as its witness; 2) whether the trial court committed error in instructing the jury; and 3) whether the trial court committed error in denying Medley's motion for acquittal made at the close of all the evidence and again following the guilty verdict on the basis that the evidence did not prove beyond a reasonable doubt that the money actually paid to Medley by a person named John Wilson was a thing of value from Flisk and Metropolitan as charged in the indictment.

II. FACTUAL BACKGROUND

In the first trial, which resulted in a hung jury, Medley presented evidence in his defense, but in his second trial Medley presented little evidence of consequence. In examining the record we therefore have almost nothing to review except the government's evidence. When reviewing a favorable jury verdict we must view the evidence in the light most favorable to the government if it establishes that any rational trier of fact could have found the elements of the crime beyond a reasonable doubt. United States v. Field, 875 F.2d 130, 137 (7th Cir.1989). The government is also entitled to all reasonable inferences from the evidence. United States v. Douglas, 874 F.2d 1145, 1151 (7th Cir.), cert. denied, --- U.S. ----, 110 S.Ct. 126, 107 L.Ed.2d 87 (1989). The evidence heard and resolved by the jury is set forth in some detail.

In October 1986, Metropolitan, headed by Brian Flisk, entered into two, two-year contracts with the CTA to be the CTA's exclusive supplier of diesel fuel for its 2,200 vehicles. These contracts, totaling $38 million, were viewed as Metropolitan's largest and most important contracts. Flisk was awarded the CTA diesel fuel contracts by agreeing to provide the CTA with substantial discounts in the price per gallon of diesel fuel provided the CTA paid the fuel invoices within specified limited periods. Flisk also agreed to meet the CTA's Disadvantaged Business Enterprise or Minority Business Enterprise requirement. Flisk ostensibly complied with this latter requirement by specifying Casey Fuels as the minority-run subcontractor that would deliver part of Metropolitan's fuel to the CTA. A percentage of Metropolitan's profits under the contract, therefore, would pass to a minority business.

In entering into these contracts, with discounts for prompt payment, Flisk relied on his belief that the CTA would not be able to pay its fuel bills within the discount time, but the problems began when the CTA surprised him, and did. The CTA promptly paid the invoices and took the maximum price discounts. The result was that Metropolitan began losing money on its sales to the CTA. The financial effect on Metropolitan and Flisk was described as "devastating" by a Metropolitan official. Soon Flisk resorted to sending the invoices to the CTA late so as to prevent the CTA from remitting payment in time to take advantage of the discount price. Later, as an alternative, Flisk began sending inflated invoices so that even when the CTA could take advantage of the prompt payment discount, the CTA unknowingly still paid full price. The CTA's Internal Audit division became suspicious and began an investigation into Metropolitan and its CTA billing practices in late November and early December of 1986. In early January 1987, Flisk learned of the investigation after two Internal Audit investigators visited his company and spoke to his employees. Flisk feared that the possible loss of these CTA contracts would put Metropolitan out of business, and later in July 1987 that happened.

In late January or early February 1987, Howard Medley, a member of the CTA's Board of Directors, met his longtime friend Robert Sperling at a health club in Chicago. Sperling was a partner in a Chicago law firm. Medley knew Sperling from their prior work together at the Chicago Board of Election Commissioners. Sperling, his law partner Michael Zavis, ³ and several other individuals co-owned a large commercial warehouse in Chicago that had just lost its tenant and was facing severe financial difficulties. Sperling told Medley that the partners were looking for a purchaser for the multimillion dollar property, and that a substantial commission would be paid to anyone who could secure a buyer. Medley was interested in trying to find a buyer.

While Medley was keeping an eye out for a buyer for the warehouse, Flisk was looking for someone to help him defuse the CTA investigation. Flisk turned to Medley for assistance in connection with the investigation. Howard Weitzman, Flisk's personal friend and Metropolitan business partner, set up a first meeting with Medley in Medley's CTA office. Later Medley, Flisk, and Weitzman had a second meeting which began in a restaurant and then moved to Medley's apartment. At the apartment meeting, Flisk and Medley discussed CTA matters, Metropolitan's fuel contract, and Medley's needed assistance with Metropolitan's "problem." Flisk, in his trial testimony, admitted that at this meeting he and Medley also had a discussion about the matter of purchasing the Sperling and Zavis warehouse. Medley suggested that Flisk purchase the building. Flisk learned that Medley would stand to gain a $300,000 commission if Flisk bought the building. Flisk was willing to pay a commission to Medley because Medley was "helping" him with the CTA investigation. In his testimony Flisk referred to Medley's CTA investigation help and the warehouse commission as a "quid pro quo."

After his apartment meeting with Flisk, Medley contacted Sperling and told him that he knew an individual who was interested in the warehouse property. On Medley's recommendation, Flisk and Weitzman looked at the warehouse, met with Sperling and other partners in the warehouse property, and began to negotiate for its purchase or lease. Medley, through Sperling, monitored the negotiations. At this time, a CTA ethics ordinance prohibited a CTA board member, which Medley was, from doing business with CTA vendors such as Flisk.

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