U.S. v. Washington Water Power Co.

• Citation: 793 F.2d 1079
• Decision Date: 16 September 1986
• Docket Number: Nos. 84-3047,s. 84-3047
• Parties: UNITED STATES of America, Plaintiff-Appellee, v. WASHINGTON WATER POWER COMPANY, Defendant-Appellant. UNITED STATES of America, Plaintiff-Appellee, v. Jeremiah P. BUCKLEY, Defendant-Appellant. UNITED STATES of America, Plaintiff-Appellee, v. Ellsworth B. SARGENT, Defendant-Appellant. to 84-3049.
• Court: United States Courts of Appeals. United States Court of Appeals (9th Circuit)

Page 1079

793 F.2d 1079

UNITED STATES of America, Plaintiff-Appellee, v. WASHINGTON WATER POWER COMPANY, Defendant-Appellant.

UNITED STATES of America, Plaintiff-Appellee, v. Jeremiah P. BUCKLEY, Defendant-Appellant.

UNITED STATES of America, Plaintiff-Appellee, v. Ellsworth B. SARGENT, Defendant-Appellant.

Nos. 84-3047 to 84-3049.

United States Court of Appeals, Ninth Circuit.

Argued and Submitted Nov. 8, 1985.

Decided July 8, 1986.

As Amended Sept. 16, 1986.

Steve Schroeder, Asst. U.S. Atty., Seattle, Wash., for U.S.

Arthur W. Harrigan, Jr., Lane, Powell, Moss & Miller, Seattle, Wash., for Washington Water & Power.

William A. Helsell, Helsell, Fetterman, Martin, Todd & Hokanson, Seattle, Wash., for Buckley.

William G. Goodwin, Montgomery, Purdue, Blankinship & Austin, Malcolm L. Edwards, Edwards & Barbieri, Seattle, Wash., for Sargent.

Appeal from the United States District Court for the Western District of Washington.

Before WRIGHT and REINHARDT, Circuit Judges, and TAYLOR, ^* District Judge.

REINHARDT, Circuit Judge:

I. INTRODUCTION

On January 22, 1981, a federal grand jury in Seattle, Washington, indicted Washington Water Power Company (WWPC), Jeremiah P. Buckley, who was a lobbyist for WWPC, Sargent-Tyee Construction Company, and Ellsworth B. Sargent, president of Sargent-Tyee.

Count I of the indictment charged that all defendants had committed mail fraud in violation of 18 U.S.C. Sec. 1341. Count II charged that Buckley and WWPC had obstructed justice in violation of 18 U.S.C. Sec. 1503. On August 25, 1981 the district court dismissed Count I on the ground that it alleged insufficient facts to support a charge of mail fraud.

In United States v. Buckley, 689 F.2d 893 (9th Cir.1982), cert. denied, 460 U.S. 1086, 103 S.Ct. 1778, 76 L.Ed.2d 349 (1983), we reversed the district court. Although we found the indictment "lengthy, confusing, and largely irrelevant," 689 F.2d at 899, we held that the government had adequately alleged a violation of the mail fraud statute. We also noted that the government's case appeared rather weak, but stated that "the weakness of the [g]overnment's case is irrelevant to the sufficiency of the indictment." Id. at 900.

The case proceeded to trial on January 30, 1984. On February 27, at the close of the government's case, Sargent-Tyee Construction Company was severed as a defendant upon agreeing to abide by the result by means of a plea if the other defendants were found guilty. On March 13, 1984, the jury returned verdicts of guilty on Count I as to the three remaining defendants, and guilty on Count II as to both Buckley and WWPC. All three defendants timely appealed, raising several challenges to each of the convictions.

II. COUNT I--MAIL FRAUD

A. Background

The government alleged that the various defendants and Robert Perry, who at the time was the majority leader of the Washington State House of Representatives, ¹ engaged in a complicated scheme in which a percentage of the proceeds that WWPC paid to Sargent-Tyee Construction Company on various construction contracts was laundered in Hong Kong and then "kicked back" to WWPC for use in making improper payments to politicians in the State of Washington. Perry allegedly was the intermediary between WWPC and Sargent-Tyee, and was involved in various other "kick-back" schemes involving the laundering of money in Hong Kong.

In particular, the government charged that $15,000 was collected by WWPC through the "kick-back" scheme in the spring of 1975 and was used to make a political payment to one or more members of the Washington State Legislature. This payment was allegedly not reported on the Washington State Public Disclosure Commission Form L-3, Lobbyist Employer's Report, that WWPC mailed to the Public Disclosure Commission in April, 1976. A failure to disclose is a violation of Washington Revised Code Sec. 42.17.010 et seq. We have previously held that the mailing of such a form may make the federal mail fraud statute, 18 U.S.C. Sec. 1341 (1982), applicable. ² Buckley, 689 F.2d at 897-900.

The defendants raise several challenges to their convictions for mail fraud. The first is that there was not sufficient evidence to support a conviction. In considering such a challenge to the verdict, we must determine whether upon the "evidence adduced at the trial no rational trier of fact could have found proof of guilt beyond a reasonable doubt." Jackson v. Virginia, 443 U.S. 307, 324, 99 S.Ct. 2781, 2791, 61 L.Ed.2d 560 (1979).

B. Sufficiency of the Evidence

In order for a jury ultimately to have found that the defendants violated section 1341, it must first have found that the Form L-3 filed by WWPC in April, 1976, was false. Buckley, 689 F.2d at 898-99. The Form L-3 was false only if it failed to list payments to legislators that were made during 1975. Accordingly, the convictions under section 1341 can be sustained only if a rational trier of fact could have found that the defendants made payments to Washington State legislators during 1975 that were not reported.

The government concedes that it has no direct evidence of any unreported payments, but argues that there is sufficient circumstantial evidence of such payments. The prosecution's first claim is that the evidence showing that the defendants assembled $15,000 in laundered funds and that Buckley told Perry he intended to make a payment is, without more, sufficient to support a finding that at least one such payment was actually made. We reject this contention.

The prosecution's evidence might support a conviction for conspiring to make an unreported payment, but that offense was not charged. The government's argument would erase the dividing line between a conspiracy or an attempt, and the substantive offense. Instead of there being three distinct crimes, there would be only one. Under the government's theory, the planning of a crime would constitute the commission of the crime itself. This result would run counter to a fundamental concept that underlies our criminal justice system. Until an individual actually commits an offense, he is innocent. Thinking about perpetrating a crime is not unlawful. The evil lies in the commission of the illegal act. Prior to the time one actually crosses the line and acts, there is always the possibility that conscience, civic responsibility or plain good judgment will prevail. ³ The government's evidence concerning the assembling of $15,000 in laundered funds and its evidence regarding Buckley's intent is insufficient as a matter of law to support the convictions for violating section 1341. ⁴

The government's second claim is that the "unusual circumstances" surrounding the passage of Substitute House Bill 435 by the Washington State Senate in June, 1975, provide sufficient circumstantial evidence that the defendants made at least one unreported payment.

The prosecution introduced evidence which established the following facts. Substitute House Bill 435 provided for certain changes in public utility rate-making procedures, changes that would have financially benefited public utilities, including WWPC. The bill was being considered by the Washington State Senate in the closing days of a special legislative session. On June 7, 1975, a senator who opposed the bill challenged the advancement of the bill from the second reading to the third reading. Another senator moved that the rules be suspended so that the bill could be advanced. Senator Mardesich, the majority leader of the Senate, spoke in favor of the motion, which then passed 33 to 16. The 33 votes were precisely the number required. Senator Mardesich voted for the motion, although the 16 votes opposing it were all cast by members of Senator Mardesich's party. The senator who originally objected was also a member of Senator Mardesich's party. Later that day the bill was read for the third time and given final approval by a vote of 25 to 24. The 25 votes were exactly the number required. Senator Mardesich voted against the bill.

The government argues that the Senate's passage of the bill was "unusual" because Senator Mardesich provided the deciding vote that allowed the bill to advance to the third reading, even though all the opposition to the bill's advancement came from members of his own party. Thus, the government continues, given the evidence that the defendants intended to pay off a legislator and that the passage of the bill would have benefited the defendants, they must have made a payment to Senator Mardesich.

The government's evidence is clearly insufficient to support a conviction. No rational trier of fact could have found beyond a reasonable doubt that Senator Mardesich's conduct demonstrates that he received a bribe, even assuming the truth of all the other evidence offered by the government regarding the laundering of funds by the defendants. Moreover, a close examination of all the undisputed evidence relating to the Senator's vote renders the government's argument wholly untenable, if not unconscionable.

First, the government's own witness, a former legislator and chairman of the Washington State Utilities and Transportation Commission, stated that what was "unusual" about the passage of Substitute House Bill 435 was the fact that any senator had objected to its advancement to the third reading. The witness did not state that there was anything else unusual about the bill.

Second, the government in its argument has ignored the undisputed facts that provide the reason for Senator Mardesich's support of the motion to suspend the rules and allow the bill to advance. During the debate on the motion, Senator Mardesich announced that he opposed the bill. He pointed out that Senator Keefe of Spokane, who was a strong supporter of the bill, was seriously ill with cancer and was scheduled to go to the hospital that day for extended treatment. He told his colleagues that Senator Keefe had stated that he was unwilling to go to the hospital until...