U.S. v. Welch

• Court: U.S. District Court — District of Utah
• Writing for the Court: Sam
• Citation: U.S. v. Welch, 248 F.Supp.2d 1048 (D. Utah 2001)
• Decision Date: 09 August 2001
• Docket Number: No. 2:00-CR-0324-S.,2:00-CR-0324-S.
• Parties: UNITED STATES of America, Plaintiff, v. Thomas K. WELCH and David R. Johnson, Defendants.

248 F.Supp.2d 1048

UNITED STATES of America, Plaintiff, v. Thomas K. WELCH and David R. Johnson, Defendants.

No. 2:00-CR-0324-S.

United States District Court, D. Utah, Central Division.

August 9, 2001.

COPYRIGHT MATERIAL OMITTED

Richard N. Wiedis, John W. Scott, Richard A. Friedman, Washington, DC, for Plaintiff.

William W. Taylor III, Washington, DC, Max D. Wheeler, Salt Lake City, UT, Michael Goldsmith, for Defendant or Respondent

MEMORANDUM OPINION

SAM, Senior District Judge.

I. INTRODUCTION

On July 16, 2001, the court issued a brief order granting defendants' motion to dismiss counts 2 through 5 of the indictment against them which purported to charge violations of the federal Travel Act, 18 U.S.C. § 1952. The court issued that order for the reasons more fully explained in this Memorandum Opinion.

Defendants Thomas K. Welch and David R. Johnson served as President and Senior Vice President, respectively, of the Salt Lake City Bid Committee for the Olympic Winter Games ("SLBC") and its successor organization, the Salt Lake Organizing Committee for the 2002 Olympic Winter Games ("SLOC"). SLBC was organized to seek the right from the International Olympic Committee ("IOC") to host the Olympic Winter Games in Utah. SLOC was formed to facilitate hosting the 2002 Olympic Winter Games after Salt Lake City was elected as host city in 1995.

On July 20, 2000, defendants were charged in a 15-count indictment with conspiracy, violations of the Travel Act, mail and honest services fraud, and wire and honest services fraud allegedly arising from their efforts to win and host the Olympic Winter Games. Defendants subsequently moved to dismiss all counts of the indictment for failure to state an offense.

On June 8, 2001, the magistrate judge¹ issued his Report and Recommendation ("R & R") to this court recommending that defendants' motion to dismiss counts 2 through 5 be denied.² The court rejected that recommendation and granted defendants' motion with respect to the Travel Act counts.

II. MOTION TO DISMISS STANDARD

Rule 12(b) of the Federal Rules of Criminal Procedure allows for consideration, at the pretrial stage, of any defense "which is capable of determination without the trial of the general issue." Defendants raise the defense of a defective indictment. See Fed.R.Crim.P. 12(b)(2).

An indictment is sufficient to withstand a motion to dismiss "if it (1) contains the essential elements of the offense intended to be charged, (2) sufficiently apprises the accused of what he must be prepared to defend against, and (3) enables the accused to plead an acquittal or conviction under the indictment as a bar to any subsequent prosecution for the same offense." United States v. Hall, 20 F.3d 1084, 1087 (10th Cir.1994). In considering a motion to dismiss, the "indictment should be tested solely on the basis of the allegations made on its face, and such allegations are to be taken as true." Id.

III. DISCUSSION

A. UTAH CODE § 76-6-508 IS NOT A VALID TRAVEL ACT PREDICATE IN THIS CASE

For the reasons that follow, the court concludes as a matter of law that Utah Code § 76-6-508 ("Section 76-6-508"), upon which the indictment relies to define the alleged unlawful conduct of defendants, is not a valid predicate for purposes of the Travel Act charges against defendants in this case. With respect to the Travel Act counts, the indictment, therefore, is defective because it fails to state an offense.

The Travel Act proscribes the use of interstate facilities in furtherance of illegal activity. Counts 2 through 5 of the indictment allege that defendants violated the Travel Act by bribing various IOC members in violation of Section 76-6-508.³ The elements of a Travel Act violation are: "(1) travel or use of facilities in interstate commerce; (2) with intent to promote[,] manage, establish, carry on or facilitate the promotion, management, establishment, or carrying on of a prohibited activity—e.g., bribery; and (3) subsequent attempt to commit or actual commission of the proscribed activity." United States v. Davis, 965 F.2d 804, 809 (10th Cir.1992), cert. denied, 507 U.S. 910, 113 S.Ct. 1255, 122 L.Ed.2d 653 (1993).

Prohibited or unlawful activity as defined by the Travel Act includes "bribery ... in violation of the laws of the State in which committed or of the United States ...." 18 U.S.C. § 1952(b)(2). The government relies on Utah law, Section 76-6-508, to define the illegal acts defendants are alleged to have committed. Section 76-6-508, the commercial bribery statute cited in the indictment, provides in relevant part as follows:

(1) A person is guilty of a class A misdemeanor when, without the consent of the employer or principal, contrary to the interest of the employer or principal:

(a) he confers, offers, or agrees to confer upon the employee, agent, or fiduciary of an employer or principal any benefit with the purpose of influencing the conduct of the employee, agent, or fiduciary in relating to his employer's or principal's affairs ....

An analysis of Section 76-6-508 in the context of the history and purpose of the Travel Act, interpretative Supreme Court opinion, lack of state prosecution, prior state application, and under the unique circumstances presented mandates the conclusion that Utah's commercial bribery statute is not a valid predicate for a prosecution in this instance.

1. Legislative History

The Travel Act was part of Attorney General Robert F. Kennedy's legislative program to fight organized crime and racketeering. Rewis v. United States, 401 U.S. 808, 811 n. 6, 91 S.Ct. 1056, 28 L.Ed.2d 493 (1971). In 1961, Attorney General Kennedy testified before the Senate Judiciary Committee, in part, as follows:

The target clearly is organized crime. The travel that would be banned is travel "in furtherance of a business enterprise" which involves gambling, liquor, narcotics, and prostitution offenses or extortion or bribery. Obviously, we are not trying to curtail the sporadic, casual involvement in these offenses, but rather a continuous course of conduct sufficient for it to be termed a business enterprise.

Our investigations also have made it quite clear that only the Federal Government can shut off the funds which permit the top men of organized crime to live far from the scene and, therefore, remain immune from local officials.

Id. (citation omitted) (emphasis added). The Senate Committee Report endorsing adoption of the Travel Act stated: "`Because many rackets are conducted by highly organized syndicates whose influence extends over State and National borders, the Federal Government should come to the aid of local law enforcement authorities in an effort to stem such activity.'" United States v. Nardello, 393 U.S. 286, 291, 89 S.Ct. 534, 21 L.Ed.2d 487 (1969) (citation omitted).

Federal prosecution of this case based upon Utah law does not advance the goals of the Travel Act. Congress enacted that legislation to assist states in enforcing their laws against participants in organized crime who use state boundaries to avoid prosecution. Rewis, 401 U.S. at 811, 91 S.Ct. 1056. A fair reading of the indictment does not reflect that defendants are members of a criminal business enterprise, an organized syndicate or a "crime family." It is not alleged that they are involved in crime as a continuous course of conduct, nor that they depend upon the fruits of crime for their livelihood, nor that they are eluding local authorities. The court takes judicial notice that Utah has elected not to prosecute defendants for any state law violation. Nevertheless, the federal government is attempting unilaterally to "aid" Utah in enforcing a Utah law under circumstances which defy characterization as "organized crime." Such action is contrary to the purpose of the Travel Act. See United States v. Ferber, 966 F.Supp. 90, 106 (D.Mass.1997). See also Rewis, 401 U.S. at 811-12, 91 S.Ct. 1056.

2. Supreme Court Opinion

In examining the relationship between state law and the Travel Act, the United States Supreme Court has established several principles this court must follow. First, bribery criminalized under state law may serve as a valid predicate for a Travel Act violation. Perrin v. United States, 444 U.S. 37, 100 S.Ct. 311, 62 L.Ed.2d 199 (1979). Second, the legislative history and statutory language of the Travel Act do not support a broad interpretation that would "alter sensitive federal-state relationships." Rewis, 401 U.S. at 812, 91 S.Ct. 1056.⁴ Third, when applying state statutes for purposes of defining unlawful conduct under the Travel Act, "the inquiry is not the manner in which States classify their criminal prohibitions but whether the particular State involved prohibits the [relevant] activity charged." Nardello, 393 U.S. at 295, 89 S.Ct. 534. These opinions suggest that a state bribery statute may provide a basis for a Travel Act violation as long as the conduct alleged is unlawful under the state law. The cases further suggest that neither the history nor the language of the Travel Act would sanction an expansive interpretation that would jeopardize the balance of powers between the state and federal governments when a continuous course of organized criminal conduct is not present and when there is no state enforcement to reinforce.

3. Prior Utah Case Law

Section 76-6-508 has been used rarely. It has never been applied in a reported case to a situation other than that generally encompassed in a commercial kickback scheme in which an employee in a position of control and in exchange for a "bribe" acted to the alleged detriment of his employer.⁵ Of the reported cases, only one, which was split into two cases for trial, was a criminal prosecution. Defendants' alleged conduct in attempting to win IOC votes bears little resemblance to those commercial settings where the statute has been applied.

Seeking and hosting the Olympic Games are unique cultural, social, political, and commercial...