United States v. Whiteagle
| Decision Date | 21 July 2014 |
| Docket Number | No. 12–3554.,12–3554. |
| Citation | 759 F.3d 734 |
| Parties | UNITED STATES of America, Plaintiff–Appellee, v. Timothy G. WHITEAGLE, Defendant–Appellant. |
| Court | U.S. Court of Appeals — Seventh Circuit |
OPINION TEXT STARTS HERE
Laura A. Przybylinski Finn, Office of the United States Attorney, Madison, WI, for Plaintiff–Appellee.
Glenn C. Reynolds, Madison, WI, for Defendant–Appellant.
Before WOOD, Chief Judge, and POSNER and ROVNER, Circuit Judges.
A jury found Timothy G. Whiteagle guilty of (among other offenses) bribing and conspiring to bribe a Ho–Chunk Nation legislator in order to secure favorable treatment for three different vendors wishing to do business with the Nation. The district court ordered him to serve a prison term of 120 months. Whiteagle now appeals his conviction and sentence. We affirm.
The Ho–Chunk Nation of Wisconsin, known formerly as the Wisconsin Winnebago Nation, is a federally recognized Indian tribe headquartered in Black River Falls, in the west-central region of the State. About half of the Nation's roughly 7,200 enrolled members live in Wisconsin. Among the Nation's four branches of government, its legislature possesses the authority to enter into contracts on behalf of the Nation. Clarence Pettibone served as one of those legislators from 1995 until 2011. During the time period relevant to this case, the legislature was comprised of eleven elected representatives; the total has since been enlarged to thirteen.
The Ho–Chunk Nation has been active in the gaming industry for over 30 years. Judge Crabb's decision in Oneida Tribe of Indians of Wisconsin v. Wisconsin, 518 F.Supp. 712, 719–20 (W.D.Wis.1981), held that once Wisconsin's constitution was amended in 1973 to legalize bingo games licensed by the State, the State ceded its authority to restrict and regulate bingo on Native American reservations. Thereafter, many of Wisconsin's tribes and bands turned to bingo halls as a source of badly-needed revenue. The Ho–Chunk Nation established its first such hall in 1983, in a used trailer on tribal land in the Wisconsin Dells. See Bill Lueders, Wisconsin Center for Investigative Journalism, Casino profits give Ho–Chunk new outlook,Wis. State Journal, Mar. 3, 2014, at A1. With the Supreme Court's decision in California v. Cabazon Band of Mission Indians, 480 U.S. 202, 107 S.Ct. 1083, 94 L.Ed.2d 244 (1987), congressional enactment the following year of the Indian Gaming Regulatory Act, P.L. 100–497, 102 Stat. 2467 (1988), and Wisconsin's creation of a state lottery in 1987, the door was opened to the operation of full-fledged casinos by the tribes. By June 1992, the Governor of Wisconsin had entered into gaming compacts with all eleven of the State's tribes and bands, including the Ho–Chunk Nation, authorizing a range of gaming activities at tribal casinos including blackjack, electronic video games, slot machines, and “pull-tab” gambling tickets. Today, the Nation operates a network of six casinos in the State, at sites in or near Black River Falls, Madison, Nekoosah, Tomah, Baraboo (Wisconsin Dells), and Wittenburg. Wis. Legislative Reference Bureau, Research Bull. 97–1, The Evolution of Legalized Gambling in Wisconsin 21–27 (Sept.1997).
The casinos have proven to be highly lucrative for the Ho–Chunk Nation. Currently it nets over $200 million annually from its gambling operations. The profits have enabled the Nation to establish a relatively generous set of benefits for its members, including annual per-capita stipends of $12,000 for adults and one-time payouts of up to $200,000 from a children's trust fund when a youth turns 18 and graduates from high school. See Lueders, Casino profits give Ho–Chunk new outlook; Ho–Chunk may change how they dole out trust funds,Daily Herald (Arlington Hts., Ill.), May 6, 2014.
The large amount of revenue generated by casino gaming naturally attracts vendors seeking a share of the pie, along with influence peddlers who claim an ability to pave the way for such vendors among tribalofficials. Cash Systems, Inc. fell into the former category. Cash Systems was one of a number of firms that specialize in what are described as cash-access or cash-resources services, which principally involve issuing cash to casino customers via automated teller machines and kiosks, check-cashing, and credit-and debit-card advances. (Cash Systems was acquired by a competitor in 2008 after it lost its contract with the Ho–Chunk Nation.) Key to the profitability of casino operations is maximizing the amount of cash on the casino floor—in other words, cash that customers have in their hands ready to spend. This is why cash-access services are important to casino operators: by making it easy for customers to access cash on the spot, they encourage customers to gamble away more of their money. In the early 2000s, Cash Systems was ahead of its peers in some of the services that it offered: it not only had the ability to process cash advances against a customer's credit or debit card, but it was pioneering the use of hand-held, mobile devices that enabled cash-access transactions to take place anywhere on the casino floor.
Timothy Whiteagle fell into the category of influence peddlers. Whiteagle, a member of the Ho–Chunk Nation, held himself out as an insider whose relationships with other tribal members and legislators offered interested vendors an entrée into the tribe's governance and gaming operations and, once there, a means of preserving the firm's business relationship with the tribe. Whiteagle conducted his business in part through his limited-liability company, Wolfbow Big Game Sources.
Cash Systems engaged Whiteagle in 2002 as a confidential consultant as the company was attempting to win a contract with the Nation to provide Ho–Chunk casinos with cash-access services. (Cash Systems was already serving as a subcontractor to the Nation's existing cash-access vendor, Bank Plus.) The firm agreed to pay Whiteagle a monthly salary of $22,500. Whiteagle's job was to engage in a behind-the-scenes effort to win the contract and, once the Nation engaged Cash Systems as its vendor in 2002, to help maintain that relationship. Cash Systems served as the Nation's cash-access services vendor for the next six years. During that time, it reaped over seven million dollars in revenue from the services it provided to the Nation. And over the course of those six years, it paid Whiteagle just under two million dollars.1 That figure included both Whiteagle's monthly salary as well as a series of payments that Whiteagle solicited from Cash Systems on Pettibone's behalf. The total represented nearly 30 percent of the company's gross revenue on the contract.
The “in” with the tribal legislature that Whiteagle held out to Cash Systems was his relationship with Clarence Pettibone. Whiteagle's and Pettibone's parents were related and their families had known and socialized with one another for many years. Pettibone, as we have noted, had been serving in the Ho–Chunk legislature since 1995. During his tenure, he served on the legislature's finance and development committees and twice held the office of Vice President of the Nation. Pettibone was actively involved in cash access services. As Ho–Chunk legislator Ona Garvintestified, “If it had anything to do with check cashing, Clarence was on it.” R. 187 at 66. Whiteagle represented to Cash Systems personnel that he would secure Pettibone's assistance in having Cash Systems selected (and maintained) as a vendor to the Nation by convincing Pettibone to serve as Cash System's champion in the Ho–Chunk legislature.
Cash Systems was one of three firms seeking to become the Nation's new cash-access vendor in 2002. The government presented testimony at trial indicating that when the matter came before the Ho–Chunk legislature in May 2002, there was no true consensus among the legislators as to which company among the three should be selected. As it turned out, a vote on the matter was called when a legislator who was outspoken in his opposition to Cash Systems left the chamber. Pettibone moved that the legislators present give their preliminary approval to enter into a contract with Cash Systems. The motion carried unanimously.
Whiteagle's mission from this point forward was to ensure that the contract with Cash Systems was finalized and to preserve the company's status as the Ho–Chunk Nation's cash-access vendor. To that end, he and Pettibone conferred regularly on the company's status with the Nation and specifically regarding the possibility that Cash Systems might be replaced by another cash-access provider. Kristine Fortney, who was married to Pettibone from 1994 to 2008, could remember overhearing at least 20 such conversations between her husband and Whiteagle. As Fortney recalled the discussions, Whiteagle would give Pettibone advice, if not instruction, as to what needed to be done to preserve Cash Systems' position. Whiteagle also wrote multiple emails to Pettibone giving him advice on how to ward off potential competitors to Cash Systems. See, e.g., Gov. Exs. 3–1(c)–(f). In one email, Whiteagle warned Pettibone that the two of them had to get a Cash Systems competitor “killed off” or they would “pay big time soon.” Gov. Ex. 3–2(b). A natural inference from that statement is that Pettibone, like Whiteagle, stood to suffer financially if Cash Systems lost its contract with the Nation.2
Over the course of the next six years, Whiteagle would periodically ask Cash Systems personnel for money, over and above his monthly salary, to pay Pettibone, with the express purpose of ensuring that Pettibone would pursue favorable treatment for Cash Systems in the Ho–Chunk legislature. On occasion, Whiteagle would ask that these amounts be added to the balance of a series of loans Whiteagle had taken from the company. Cash Systems typically would accede to the requests, usually issuing the payments to Whiteagle's LLC...
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