U.S. v. Washita Const. Co.
| Decision Date | 22 April 1986 |
| Docket Number | Nos. 85-1442,85-1461,85-1817 and 85-1819,s. 85-1442 |
| Citation | 789 F.2d 809 |
| Parties | 1986-1 Trade Cases 67,060, 20 Fed. R. Evid. Serv. 897 UNITED STATES of America, Plaintiff-Appellee, v. WASHITA CONSTRUCTION COMPANY, and Billy Ray Anthony, Defendants-Appellants. |
| Court | U.S. Court of Appeals — Tenth Circuit |
Carl Hughes, Oklahoma City, Okl. (McKinney, Stringer & Webster, Oklahoma City, Okl., with him on briefs), for defendants-appellants.
Stephen MacIsaac, Atty., Dept. of Justice, Washington, D.C. (Douglas H. Ginsburg, Asst. Atty. Gen., W. Stephen Cannon, Deputy Asst. Atty. Gen., and John J. Powers, III, Atty., Dept. of Justice, Washington, D.C., and Laurence K. Gustafson, Atty., Dept. of Justice, Dallas, Tex., with him on brief), for plaintiff-appellee.
Before McKAY, LOGAN and MOORE, Circuit Judges.
The defendants, Billy Ray Anthony (Anthony) and Washita Construction Company (Washita), were convicted by a jury of participating in a conspiracy to rig Oklahoma highway construction contract bids in violation of the antitrust statute 1 and three counts of mail fraud. 2 Anthony, the principal stockholder and president of Washita, was sentenced to eighteen months' imprisonment for each of the four convictions, his sentences to run concurrently. He was fined $40,000 under the antitrust statute and $1,000 for each mail fraud conviction. Washita was fined $80,000 for the Sherman Act violation as well as $1,000 for each mail fraud conviction.
In this consolidated appeal, the defendants raise the following allegations of error: (1) The mail fraud convictions are invalid because the evidence against the defendants is insufficient, and the statute is not applicable to collusive bidding. (2) The trial court deprived the defendants of a trial by an impartial jury when the court instructed the venire panel that this case was not connected to the highly publicized county commissioner kickback scandals. (3) The trial court erred in conducting an ex parte meeting with a juror and in misstating the juror's concerns to the attorneys. (4) The trial court erred in treating the evidence as probative of one continuing conspiracy, thereby confusing the preferred order of proof in admitting coconspirator hearsay. (5) The prosecutor, during closing argument, improperly invited the jury to clean up the corrupt highway construction industry by convicting the defendants. (6) The trial court erred in instructing the jury. (7) The trial court erred in denying defendants' motion for a new trial based on newly discovered evidence.
After a careful review of the record, we conclude that the defendants' allegations of error are without merit. Therefore, we affirm the convictions.
On August 21, 1984, the grand jury returned a seven-count indictment against the defendants. The first count charged the defendants with participating in a combination and conspiracy "to submit collusive, noncompetitive and rigged bids to, or to withhold bids from, the Oklahoma Department of Transportation [ (ODOT) ] for the award of highway construction projects." The government charged anticompetitive conduct in the letting of seven highway projects between July 1978 and October 1981. 3 The second count charged the defendants with knowingly making false, fictitious, and fraudulent statements as to material facts relative to F-91(15) Murray County. The remaining counts charged the defendants with violation of the mail fraud statute in mailing collusive bids for various projects and receiving progress payments for work done on SAP-50(82), a project the defendants were awarded allegedly as a result of the illegal agreement between contractors.
The trial began on October 10, 1984, and the jury returned a verdict on October 19, 1984, after deliberating most of the day. Guilty verdicts were returned on the antitrust charge and on three mail fraud counts relating to projects SAP-69(133) and SAP-50(82). The jury acquitted the defendants of making false statements under 18 U.S.C. Sec. 1001 and violating the mail fraud statute in bidding on projects F-91(15), MC-50(90), and MC-50(94).
The government proffered the testimony of eight immunized witnesses who admitted participating in a conspiracy to prearrange which contractor would submit the lowest bid. 4 Carl Foster, former vice president of South Prairie until October 1978, and James Baldwin, former area manager for Peter Kiewit Sons Construction Co., the parent company of South Prairie, testified to their efforts to "set up" I-35 McClain County. Ken Jacobs, Foster's successor until he left the company on July 1, 1982, testified to his participation in "working out" I-35 Noble County. 5
Milton Beyer, former field superintendent for Broce, testified to his discussions with other contractors which allowed Broce to submit the lowest bid in SAP-69(133) Stephens County, MC-50(90) Falls Creek, and MC-50(94) Turner Falls. Ray Broce, founder, principal owner, and president of Broce, testified to his efforts to set up F-91(15) Murray County and to preserve his earlier plans when the projects were relet as SAP-50(81) and (82). 6 Everett A. "Doc" Taylor and A.A. "Bud" Vance, Broce employees, testified to their roles in estimating bids after Beyer or Broce had talked to the other contractors. James Freeman, president of Frascon, admitted submitting collusive bids for Projects SAP-50(81) and (82) Murray County and SAP-69(133) Stephens County.
The mechanics of the conspiracy remained essentially the same during its operation: After the ODOT advertised its intent to award certain highway contracts, interested contractors would request a bidding proposal, which included specifications for the job and an estimate of costs prepared by the state's engineers. It was not unusual for as many as fifteen or twenty contractors to request a bidding proposal.
The monthly bid lettings were usually scheduled on Fridays. The day before the bids were opened, the ODOT would publish a list of contractors who had requested proposals. Many of the contractors would rent rooms in the Lincoln Plaza in Oklahoma City that day. On Thursday evenings the Association of General Contractors (AGC) generally would sponsor a cocktail party, which most of the contractors and vendors attended. According to the government witnesses, many of the agreements to submit collusive bids were made during or after the cocktail party.
According to Foster, not every contractor who had requested a bid proposal could be considered a serious contender for a contract. Foster and Beyer testified that they knew the preferences, work load, and equipment locations of the other contractors and would determine which companies could competitively bid on each project. If a contractor was seriously interested in a job because his crews were completing another project nearby or the new project was close to his company's plant, he would approach other potential competitors to ask how interested they were in the project. According to Foster, not all projects were "set up" or "worked out," and he knew that not all contractors would be receptive to his overtures.
The colluding bidders often negotiated subcontracts or promised to stay off a future project. In this way, the corporate principals would decide who would be awarded the contract. Later that night and early the next morning, the actual bids would be completed.
Once the winning contractor finished his bid, he would tell the other contractors who had promised to submit "complimentary bids" the total their bids should exceed. Before submitting a bid, each contractor was required to submit an affidavit attesting to the fact that the bid was arrived at independently and was not the product of collusion. The bid automatically would be rejected if the signed affidavit was not included in the bid documents submitted to ODOT.
Bid openings were broadcast on a local radio station on Friday. The lowest bidder would receive the contract unless the ODOT determined that the bids were too far above the engineer's estimate.
The government's witnesses testified that the conspiracy, when implemented, usually brought the desired results. 7 Several of the witnesses testified that Anthony, as president of Washita, was an active conspirator, willing to submit complimentary bids or refrain from bidding sometimes in exchange for the promise of a substantial subcontract.
Title 18 U.S.C. Sec. 1341 provides, in pertinent part:
Whoever, having devised or intending to devise any scheme or artifice to defraud, or for obtaining money or property by means of false or fraudulent pretenses, representations, or promises, ... for the purpose of executing such scheme or artifice or attempting so to do, places in any post office or authorized depository for mail matter, any matter or thing whatever to be sent or delivered by the Postal Service, or takes or receives therefrom, any such matter or thing, or knowingly causes to be delivered by mail according to the direction thereon, ... any such matter or thing, shall be fined not more than $1,000 or imprisoned not more than five years, or both.
Therefore, mail fraud is established by proof of (1) a scheme or artifice to defraud or obtain money or property by false pretenses, representations, or premises; and (2) the use of the United States mails for the purpose of executing the scheme. United States v. Warren, 747 F.2d 1339 (10th Cir.1984).
The defendants challenge their three mail fraud convictions on alternate grounds: (1) the evidence linking the defendants to the conspiracy was insufficient to sustain the convictions, and (2) the mail fraud statute was not intended to reach the allegedly illegal conduct. We address these issues in turn.
The defendants argue that the government failed to prove beyond a reasonable doubt their participation in the conspiracy to rig SAP-69(133) Stephens County and SAP-50(82) ...
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