U.S. v. Wyly
| Decision Date | 13 October 1999 |
| Docket Number | No. 98-30434,No. 98-30411,No. 98-30865,98-30411,98-30434,98-30865 |
| Citation | 193 F.3d 289 |
| Parties | (5th Cir. 1999) UNITED STATES OF AMERICA, Plaintiff-Appellee, v. CAPTAN JACK WYLY; DOROTHY MORGEL; EAST CARROLL CORRECTIONAL SYSTEMS, INC., Defendants-Appellants. UNITED STATES OF AMERICA, Plaintiff-Appellee, v. EAST CARROLL CORRECTIONAL SYSTEMS, INC., Defendant-Appellant. UNITED STATES OF AMERICA, Plaintiff-Appellee, v. DALE RINICKER; ET AL., Defendants, CAPTAN JACK WYLY, JR.; KENNETH KNIGHT KILLEN, JR., on behalf of William Bryant Killen; JAMES PAUL BROWN, on behalf of Matthew P. Brown, on behalf of Kathrine J. Brown; BAHIA W. BROWN; JACK S. HAMILTON; BONNIE G. WYLY; WILLIAM N. WYLY; HONDA W. KILLEN, Appellants |
| Court | U.S. Court of Appeals — Fifth Circuit |
[Copyrighted Material Omitted]
Appeals from the United States District Court for the Western District of Louisiana
Before KING, Chief Judge, and SMITH and BARKSDALE, Circuit Judges.
Primarily at issue in these consolidated appeals from criminal convictions for mail fraud, conspiracy, money laundering, and forfeiture is whether the Government's rebuttal closing argument deprived Captan Jack Wyly, Dorothy Morgel, and East Carroll Correctional Systems, Inc. (ECCS), of a fair trial. They contest their convictions and the forfeiture order; in addition, ECCS contests its $4.8 million fine. And, various ECCS shareholders contest not being permitted to assert a claim to ECCS' forfeited assets. We AFFIRM all but the forfeiture of Morgel's seized checking account funds and the ECCS fine.
In 1990, Dale Rinicker, then Sheriff of East Carroll Parish, Louisiana, asked Wyly, then a 72-year-old Lake Providence attorney, to finance the construction of a private prison in the parish to house state prisoners. Under state law, such facilities must be sponsored by a governmental entity. Because public funding was not available, an investor was needed.
Wyly agreed to construct a prison and lease it to the Sheriff's Office. Rinicker testified that Wyly offered him 38% (later reduced to 30%) of the profits of the corporation (ECCS) that Wyly planned to form for purchasing and constructing the facility. Wyly, however, testified that, after construction was well underway, Rinicker threatened to withdraw his prison sponsorship unless he received a 38% share; and that he ultimately agreed to give Rinicker 30%.
In April 1990, Wyly formed ECCS as a subchapter S corporation; he was president and Morgel, his then 62-year-old legal secretary (she had worked for Wyly for 35 years), was secretary-treasurer. Thirty-five of the 100 ECCS shares were issued in Morgel's name (representing 5 for her and 30 for Rinicker); the remainder, to Wyly, members of his family, and Jack Hamilton, who owned land near the facility and, post-indictment, became ECCS' president.
Soon after its incorporation, ECCS purchased an abandoned school building and began renovating it the East Carroll Detention Center (ECDC). Financing was through another of Wyly's corporations, Desona Dairy-Corbin Planting Company, Inc. (Desona). On the day of the building purchase, ECCS and the Sheriff's Office entered into a lease agreement, pursuant to which the latter agreed to pay ECCS 25% of the funds it received from the Louisiana Department of Public Safety and Corrections for housing state prisoners.
A few months later, August 1990, ECDC began housing prisoners. Additional buildings were constructed, also financed by loans from Desona. Until May 1993, ECCS repaid the construction loans, making no shareholder distributions except as needed for payment of taxes under the subchapter S corporate structure; thereafter, shareholder distributions were made.
The parties went to elaborate lengths to conceal Rinicker's interest in, and his distributions, from ECCS. From May 1993 through August 1995, ECCS made distributions to Morgel based on a 35% interest in ECCS (her 5% and Rinicker's 30%).
Although Morgel had a checking account at a bank in Lake Providence, where she lived, she opened another in May 1993 in Oak Grove, 15 miles away. She deposited the ECCS distribution checks in the Oak Grove account, and then wrote checks, generally for less than $10,000 (to avoid currency transaction reporting requirements), payable to Glen Jordan, Rinicker's friend.
These May 1993 through August 1995 payments totaled $286,025. After August 1995, by six checks totaling $54,116, ECCS paid Jordan directly (on behalf of Rinicker).
Rinicker and/or Jordan cashed these checks at a bank in Monroe, Louisiana, where Rinicker's sister, Myra Jackson, worked. Rinicker received the proceeds, giving Jordan a small amount from each check.
When questioned by the Louisiana Office of Legislative Auditor and the FBI regarding the payments to Jordan, Morgel and Wyly gave false explanations and incorrect information. Jordan, however, cooperated with investigators and explained his role in funneling money to Rinicker.
Wyly, Morgel, ECCS, Rinicker, and Jackson (but not Jordan), were charged with mail fraud, conspiracy to launder money, and money laundering. The indictment sought forfeiture of: (1) ECDC; (2) a certificate of deposit purchased by ECCS; (3) all funds in ECCS' bank account; (4) all funds in Morgel's Oak Grove account; (5) ECCS' assets and property, including approximately $2.8 million in rental payments from the Sheriff's Office; and (6) the approximate $340,000 paid Rinicker.
Jackson's charges were dismissed pursuant to a pre-trial diversion agreement. Rinicker pleaded guilty and testified at trial for the Government.
A jury convicted Wyly, Morgel, and ECCS on all counts, and found the charged property to be subject to forfeiture. Departing downward from the Sentencing Guidelines' range, the district court sentenced Wyly to 48 months imprisonment and a $17,500 fine and Morgel to prison for one year and one day and a $12,500 fine. ECCS was fined $4.8 million. Moreover, Wyly, Morgel, and ECCS were ordered to forfeit their interests in the property described in the forfeiture verdict.
Following entry of an initial forfeiture order, the other ECCS shareholders (Hamilton and members of Wyly's family) petitioned for a hearing on their claims to an interest in ECCS' assets. The district court held they lacked standing.
The district court refused the Government's downward departure request for Rinicker and sentenced him, inter alia, to 60 months imprisonment and a $10,000 fine. His appeal was voluntarily dismissed. Likewise, the Government voluntarily dismissed its appeal contesting the departures given Wyly and Morgel.
Wyly, Morgel, and ECCS (Appellants) challenge the admission of Rinicker's testimony, the sufficiency of the evidence, certain jury instructions, the denial of their new trial motions based on prosecutorial misconduct, and the forfeiture order; in addition, ECCS challenges its fine. The other ECCS shareholders contest being denied a hearing.
Circuit precedent forecloses the contention that Rinicker's testimony, pursuant to a plea agreement, violated 18 U.S.C. § 201(c)(2) (). E.g., United States v. Haese, 162 F.3d 359, 366-68 (5th Cir. 1998), cert. denied, ___ U.S. ___, 119 S. Ct. 1795 (1999).
The scope of our review of the sufficiency of the evidence after conviction by a jury is narrow. We must affirm if a reasonable trier of fact could have found that the evidence established guilt beyond a reasonable doubt. We must consider the evidence in the light most favorable to the government, including all reasonable inferences that can be drawn from the evidence. The evidence need not exclude every reasonable hypothesis of innocence or be wholly inconsistent with every conclusion except that of guilt, and the jury is free to choose among reasonable constructions of the evidence.
United States v. Bermea, 30 F.3d 1539, 1551 (5th Cir. 1994), (citations omitted), cert. denied, 513 U.S. 1156, and 514 U.S. 1097 (1995).
Bribery under Louisiana law is the offense the mail fraud scheme was devised to further and conceal; that scheme and bribery produced the illegal proceeds for laundering and concealment. Therefore, as the parties acknowledge, bribery is an essential element for each of the counts in the indictment. The evidence of bribery is claimed insufficient because Wyly and Rinicker denied any intent to offer or receive a bribe; that, instead, Rinicker extorted an ownership interest in ECCS after ECCS was formed; and that later acts of concealment had a non-criminal purpose because they were undertaken, not to cover up a bribe, but out of fear of Rinicker, who wanted his ownership concealed for his own purposes.
Under La. Rev. Stat. 14:118, the elements for public bribery are "(1) [t]he giving or offer to give of something of apparent present or prospective value by the Defendant; (2) [t]hat the recipient is a public officer or public employee ...; and (3) [t]hat the gift or offer to give is for the purpose of influencing the official duties of the public officer or employee". United States v. L'Hoste, 609 F.2d 796, 804-05 (5th Cir.), cert. denied, 449 U.S. 833 (1980).
The bribery evidence is more than sufficient. The Government presented evidence of an offer by Wyly and acceptance by Rinicker, an elected official, of a concealed interest in ECCS, for the purpose of influencing Rinicker in the performance of his official duties. Although Rinicker testified that he did not think Wyly offered him a secret ownership interest in ECCS as a bribe, he also testified that he believed the arrangement was illegal. The jury was entitled to reject Wyly and Morgel's claims that, because they feared Rinicker, they acted without specific intent, and to find, instead, that their efforts to conceal Rinicker's interest and the payments to him were undertaken with the requisite specific intent.
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