Feds Lose Big In Alabama Bribery Acquittals, Hung Jury

Montgomery CourthouseFederal prosecutors suffered one of their most remarkable setbacks nationally in decades Aug. 11 when an Alabama federal jury failed to convict any of nine defendants on any count in a massive gambling corruption case against state senators and those accused of trying to bribe them.

In a case that an Alabama legal commentator described even before the verdict as "a flat-out farce" signifying a collapse nationally in law enforcement, a jury in the state capitol of Montgomery acquitted two of the defendants outright. The jury either acquitted or failed to reach a decision on all charges against remaining defendants.

Milton McGregor, 73, owns the VictoryLand casino near Montgomery, and was the alleged mastermind of a plan to bribe politicians to ensure that electronic bingo would be affirmed as legal by the legislature last year. The jury acquitted him of one count of bribery and two counts of honest services fraud. The jury of 11 women and one man meeting in the courthouse at top right failed to reach a verdict on his 14 other charges following 39 hours of deliberation. Myron ThompsonU.S. District Judge Myron Thompson declared a mistrial on undecided charges. "It's a great day," news reports quoted McGregor attorney Joe Espy as saying. "We walk out of the courtroom and go home." Defendants included two sitting state senators, two former state senators and McGregor, who is reputed to be the most powerful political broker in the state, in part because of a reported $40 million in profits in 2009. The investigation and prosecution has riveted much of the state for a year and a half, in part because prosecution has closed down two popular casinos providing sorely needed jobs in the state’s battered economy. Roger Shuler, who writes the Legal Schnauzer blog, described the case early this week as a travesty of justice showing that the Obama DOJ was willing to waste vast amounts of money, just as the Bush administation did in pursuing targets selectively.

Among the two acquitted outright was Democratic State Sen. Quinton Ross, Jr. Also, McGregor's lobbyist, Robert E. "Bob" Geddie Jr., was acquitted of all charges. "It feels pretty good. I just feel so damn bad for everybody else," Geddie told reporters as he left the courthouse. But his attorney, Jimmy Judkins, was visibly upset, according to AP and Fox News. They reported him saying, "It's an unbelievable thing that the government can put an innocent citizen through this with no evidence."

Bob RileyNo matter what happens next, this was a humiliation of epic proportions for the Obama Justice Department and its Bush DOJ holdovers. The government, including the Republican state administration of two-term Gov. Bob Riley, right, spent vast amounts in its investigation, prompted in part by Riley’s public stance of opposing gambling. Riley last year sent 135 police vehicles on a dawn raid to shut down the Country Crossing electronic bingo casino in Dothan, for example. That police raid proved to be a public relations disaster that in effect previewed this week's. A YouTube video of the raid showed that the casino was already closed upon the arrival of what became known as the "Riley's Raiders" police armada, which seemed more suitable for quelling an armed urban riot than raiding a bingo parlor. On top of all the planning that must have gone into the 4 a.m. operation, troopers arrived without a search warrant and therefore had to return to HQ on that basis also.

Despite Riley’s public opposition to gambling, our Justice Integrity Project has reported that he and his associates have secretly accepted $27 million in gambling money. Some $13 million reportedly came from Mississippi gambling casino operators who did not want competition from legalized gambling in Alabama. These purported donations were described in a U.S. Senate oversight investigation into the dealings of Mississippi casino clients of former gaming lobbyist Jack Abramoff and his colleague, Michael Scanlon, a former Riley aide. A separate $14 million is reputed to have come to Riley and his associates from pro-gambling Alabama residents, including $13 million from McGregor. This was reputedly for a lottery business in Russia. The money mysteriously disappeared.

None of this $27 million became an issue at trial or in the pro-Riley, corporate-controlled news media of Alabama. The scuttlebutt in Alabama is that Riley and his cronies fleeced McGregor and the other lottery investors out of their $14 million, but no one really wanted to make an issue out of this kind of money so long as Riley was held power as governor and McGregor was making $40 million a year otherwise from gambling. But as the term-limited Riley prepared to leave office in January a question might reasonably arise whether McGregor would continue to be happy. To some of those who like Riley, the contrast between the two successful men was sharp. The former governor is tall, handsome and affable. McGregor is old and short. Although one of McGregor's most commonly used photographs in the press presents him with a big smile, he is reputed to be tough-minded and well-connected. In sum, he's not considered to be someone you would want roaming around, free to be an adversary.

There is no public indication that the DOJ, Securities and Exchange Commission or Federal Election Commission have ever investigated these matters. Both the Bush DOJ and the Obama DOJ have apparently focused on other targets, mostly notably the defendants in the electronic bingo case. Riley won from the courts the right to be excused from responding to defense questions in the bingo case because of his motorcycle accident in June. But he recovered enough to register as a lobbyist. One client is EADS North America subsidiary of the European defense contractor whose goals he served also as governor. EADS wanted to wrest a $35 billion Air Force tanker contract from Boeing in a long-running bidding war, which included an EADS offer to build an assembly factory in Alabama.

And as it turned out, the casino defendants barely put on a defense. Only one of nine defendants called a witness, and that only briefly.

Leura CanaryTed StevensFederal prosecutors include several who have become nationally notorious because of their roles in helping to prosecute Democratic former Gov. Don Siegelman and the late Republican Sen.Ted Stevens of Alaska, left. The DOJ prosecution, run jointly from the Middle District U.S. Attorney's office in Montgomery and from DOJ's Washington headquarters, was headed until recently by the Bush-appointed Middle District U.S. Attorney Leura Canary, right. Her husband, William Canary, was Riley’s campaign manager in the Siegelman-Riley election in 2002. Riley narrowly won the election after some 6,000 votes were realigned in rural Baldwin County following the closing of polls and an initial announcement that Siegelman had won.

Closing arguments for the government in the casino trial were by Assistant U.S. Attorney Steve Feaga, a colonel in the Air Force reserves who played a key role in the long-running prosecution of Siegelman. In 2006, Siegelman was convicted for backdating a check on the gift of a motorcycle from a lobbyist and for asking a businessman to contribute to the Alabama Education Foundation, a non-profit advocating a state lottery to fund education. Leading an anti-Siegelman task force headquartered at an Air Force base, Feaga during the Bush administration helped interrogate Nick Bailey, the main prosecution witness Siegelman, up to 70 times without required disclosure to the defense. As a technical matter, that prosecution was led by Acting U.S. Attorney Louis Franklin, another pfosecutor in prominent in the failed bingo prosecution.

Another federal prosecutor in the gambling case was Brenda Morris, a key member of DOJ’s disgraced Public Integrity Section. A Washington, DC federal judge harshly criticized her and her DOJ boss, William Welch II, among others in the section, for withholding evidence illgally to win a conviction against Stevens in 2008 just before he stood for re-election. The conviction ended the Republican's long political career in disgrace. A federal magistrate-judge this spring again criticized Morris and her colleagues for withholding evidence, this time in the bingo case.

Despite such aggressive prosecutors, the jury this week was not swayed. Early this week, the Alabama commentator Shuler summarized the astonishing irregularities in the federal prosecution. And that was before the jury decision. The Associated Press and Fox News provided this coverage of reaction to the day’s developments:

The Justice Department, which spent more than a year investigating Statehouse corruption, issued a brief comment that did not indicate whether it would continue to prosecute all unresolved charges against the seven remaining defendants. "We appreciate the jury's service in this important public corruption trial. Our prosecutors will discuss next steps as we move forward in this matter," spokeswoman Laura Sweeney said in an email.

Although there was no conviction Thursday, prosecutors earlier secured three guilty pleas. Among those who pleaded guilty was Country Crossing casino operator Ronnie Gilley, who was represented by an attorney convicted in the 1990s of dealing large quantities of the drug methamphetamine. Shuler noted the defense lawyer's felony conviction as among the many mini-mysteries of the case. Another matter sure to be analyzed not simply in Alabama but in legal circles nationally, including on this site, was how the DOJ run by Attorney General Eric Holder, right, could come up with so little in a state so notorious for big-dollar official corruption.

One explanation we have heard directly from a prominent Democratic political figure in Alabama is that oversight in the two-party system is effectively dead in certain states such as Alabama. In this view, the Obama administration has decided to let Republicans in Alabama and similar Red States do what they want in hopes the Repubicans will similarly smile on Democratic machinations in other parts of the country.

Pat LeahyA spokesperson for Senate Judiciary Committee Chairman Pat Leahy (D-VT), left, provided a variant of this rationale on-the-record for an Aug. 5 Huffington Post column. The spokesperson explained why Obama's nomination of a Tea Party Republican to become U.S. Attorney for Utah fits with Leahy's deference to Republicans on such Presidential appointments. We have reported how Leahy's committee approved Alabama attorney George Beck as Canary's successor without questioning him at a hearing. The Senate rubber-stamp of Beck enabled by Leahy thereby installed with scant scutiny as U.S. attorney someone who had every reason to cover-up the office's wrongdoing in the Siegelman case. Beck was the defense attorney for Bailey, the main prosecution witness pressured at the Air Force base without required notice to the defense, thus helping to frame his former boss, Siegelman.

Assessing the "farce" of the casino case early this week and cited below, the blogger Shuler wrote, "A reasonable citizen might observe the strange proceedings and ask, 'What in the name of Eric Holder is the U.S. Justice Department doing with my taxpayer dollars?'" Shuler continued:

We are used to writing about dubious prosecutions from the George W. Bush era. After all, the case of former Alabama GovernoBarack Obamar Don Siegelman might be the most notorious political prosecution in American history. But the electronic-bingo case is a production of the Barack Obama Justice Department, and that truly is unsettling.

Not only are we rotting from the inside, we are rotting from both sides of the political aisle -- from the Republicans and the Democrats. It's hard to know exactly what is going on in the Montgomery trial. But it almost certainly has nothing to do with legitimate just
ice. And when you consider the investigation leading up to the trial, probably several million taxpayer dollars have been spent to fund what amounts to a farce. And we wonder why the federal government has debt problems.

For now, the last word in this column goes to the attorney for one of the defendants who risked trial. Country Crossing spokesman Jay Walker was one of the defendants receiving a mix of acquittal and no-decision verdicts. “This jury,” his attorney Susan James is quoted as saying, “didn't give the government a thing, not a single thing."

Contact the author Andrew Kreig or comment

 

Below are columns on the above topic above plus significant articles for this week on legal reform. The articles, including a strong representation from independent blogs and other media, contain a sample of news. See the full article by clicking the link.

Mobile Press-Register, Do not retry the bingo case, Editorial board, Aug. 20, 2011. The Justice Department has a better chance of hitting the jackpot at a Mississippi casino than of convicting the remaining defendants in Alabama’s electronic bingo corruption case. Of course, it’s the dream that keeps gamblers coming back, regardless of the odds. The Justice Department appears intent on retrying Milton McGregor and six other defendants on the 33 charges on which the first jury couldn’t agree. Thirty-three criminal charges sound like a lot, but not when compared to the 91 not-guilty verdicts handed down by the federal court jury. So far, the government has nabbed two lobbyists and a casino operator, all of whom made plea deals before the trial. Retrying the case is not worth the expense, nor the time, nor the likelihood of the prosecution losing again.  It’s time to cash out the winnings and go home.

Legal Schnauzer, Mississippi Choctaws Were Hemorrhaging Money at the Time of Riley's Raids in Alabama, Roger Shuler, Aug. 18, 2011. Mississippi Choctaw gaming facilities had fallen on financial hard times when former Alabama Governor Bob Riley launched a crusade last year to close gaming facilities in his state. That is one of several revelations in recent days from Mississippi, including news that the Choctaws' money woes are ongoing. The Choctaw story is of profound interest in Alabama because former Governor Riley reportedly received at least $13 million in support from Mississippi gaming interests, funneled through GOP felon Jack Abramoff. Those funds apparently were designed to protect Choctaw market share from Alabama gaming entities. Riley responded, it appears, by launching a crusade to shut down electronic bingo facilities in Alabama. And that led to a federal investigation and trial that ended last week with no convictions--and now is scheduled for a retrial in October. Records obtained by the FBI show that when former tribal chief Phillip Martin left office in 2007, the casinos were earning more than $120 million in cash. By the end of 2010, that amount was only half of what it had been.

Teresa TolbertAssociated Press / Boston Globe. AP Interview: Ala. gambling jury favors acquittals, Phillip Rawls, Aug. 15, 2011. A rural mail carrier who was a juror in Alabama's 10-week gambling corruption trial said Monday the majority of the predominantly female jury wanted to acquit the defendants on all charges because of scant evidence and a dim view of some prosecution witnesses. In a phone interview with The Associated Press, Teresa Tolbert said she was among those favoring acquittal on all charges. She said federal prosecutor Justin Shur told the jury in his opening statement that wiretapped phone calls and secretly recorded meetings would tell a story of greed and corruption at the Alabama Legislature, but the tapes never lived up to his billing. "From the very beginning when we were listening to the tapes, I was like, `Surely this can't be all they have.' I kept waiting and waiting," she said.

Legal Schnauzer, Obama Justice Department Wants a Second Dose of Humiliation in Alabama Bingo Trial, Roger Shuler, Aug. 16, 2011.  Federal prosecutors apparently intend to retry the Alabama bingo case, even though a juror in the first trial said the panel voted overwhelmingly to acquit across the board. A reasonable person might expect federal prosecutors to be dissuaded by the fact that jurors in the first trial voted 8 to 4 for across-the-board acquittals. But that reasonable person would be wrong. An expensive second federal trial, on charges that clearly are driven by Republican politics, would come as the president is being attacked for excessive spending...by Republicans.

Legal Schnauzer, Verdict in Federal Bingo Trial Shines New Light on the Don Siegelman Case, Roger Shuler, August 15, 2011. The outcome of the federal Alabama bingo trial, which produced zero convictions for nine defendants and 37 counts, has been described as "one of the most remarkable setbacks nationally" for federal prosecutors in decades. It also has been described as a "humiliation of epic proportions" for the Obama Justice Department and its Bush DOJ holdovers. In a narrower sense, the bingo verdict provides proof that the Don Siegelman case, perhaps the most notorious political prosecution in American history, was unlawfully decided. It also provides proof that at least one other Bush-era political prosecution, that of Mississippi attorney Paul Minor, was unlawfully decided.

Eric HolderHarper’s / No Comment, Justice Department Rolls Snake Eyes in Alabama Gambling Trial, Scott Horton, Aug. 14, 2011. The Justice Department’s public-integrity section was hit with another embarrassing setback Thursday, this time from the jury in the bizarre Alabama bingo case — Justice’s highest-profile political litigation since its botched prosecution of former Alaska Senator Ted Stevens. Assistant Attorney General Lanny Breuer touted the case against the Alabama politicians as “astonishing” when he announced the arrests. The jury, however, turned out to be quite unimpressed with the evidence offered. It fully exonerated two defendants, acquitted the others on a number of counts, and deadlocked on the rest. Jurors subsequently disclosed that the overwhelming majority — between eight and ten of them — had been prepared to acquit all of the defendants on all counts. [At left, Obama Attorney Gen. Eric Holder.]

Legal Schnauzer, Bingo Jury Gives Obama Justice Department a Kick in the Crotch, Roger Shuler, Aug. 12, 2011.This might have been the most blatant political prosecution of them all -- and it happened on Obama's watch, which should give progressives considerable pause. The general allegation was that certain individuals tried to buy the votes of state legislators on bills related to electronic bingo. But the investigation, and the trial, focused only on those who were pro- bingo. It did not even begin to scrutinize those who were against bingo, led by former Republican Governor Bob Riley and his henchmen. Let's consider a few big lessons from this fiasco: It's All About the Bushies; Judges and Jury Instructions Matter; and Don't Let the Feds Bully You Into Guilty Pleas.What does the bingo trial teach us in a national sense?  The administration, to Obama's eternal shame, has adopted Bush policies on a number of key justice issues.

Fox News / Associated Press, No convictions in Alabama gambling trial, Aug. 11, 2011. Federal prosecutors didn't get a single conviction in Alabama's gambling corruption trial Thursday when jurors acquitted or failed to reach a verdict on all the charges against the nine defendants, including Victoryland casino owner Milton McGregor and two sitting state senators.

Associated Press / Columbus (IN) Republic, Former Alabama Gov. Bob Riley registers as a lobbyist, Aug. 2011. Former Alabama Gov. Bob Riley has registered with the Alabama Ethics Commission as a lobbyist. A Republican, Riley said the lobbying group is part of his efforts to continue work he did as governor and before that in three terms in Congress to bring new industry to Alabama and to improve education in the state. "We're going to be very active in trying to push education reform," Riley said. Riley, 66, registered his lobbying group as Bob Riley and Associates. Riley listed on his Ethics Commission lobbyist registration form that his clients include Austal USA. That's the company that is building warships for the Navy at its shipyard in Mobile. Riley also listed EADS North America as a client. EADS in February lost a competition with Boeing to build refueling tanker aircraft for the Air Force in Mobile.

Legal Schnauzer, Is Our Country Rotting From the Inside Out? Roger Shuler, Aug. 8, 2011. We are used to writing about dubious prosecutions from the George W. Bush era. But the electronic-bingo case is a production of the Barack Obama Justice Department, and that truly is unsettling. Not only are we rotting from the inside, we are rotting from both sides of the political aisle -- from the Republicans and the Democrats. The case went to the jury over the weekend, and a verdict could come at any moment. Regardless of the outcome, the case has been emitting foul odors for weeks.

Huffington Post, Obama U.S. Attorney Nominee David Barlow Is Tea Party Senator's General Counsel, Dan Froomkin, Aug. 5, 2011.  President Barack Obama dismayed fellow Democrats on Tuesday when he announced his pick to be the next U.S. attorney for Utah is David Barlow, currently the general counsel to freshman senator and Tea Party favorite Mike Lee (R-Utah). It's unclear whether Barlow shares Lee's more extreme legal theories about the limits of federal power. But what is known about Barlow is that he has no significant criminal law experience -- he was a corporate lawyer practicing pharmaceutical defense, toxic tort and product liability law before starting to work for Lee in January -- and he's a registered Republican who contributed $300 to Obama's opponent, Sen. John McCain, in 2008. One answer is that Obama's leeway when it comes to successfully nominating U.S. attorneys and federal judges is severely limited by intransigent Republicans -- and by Senate Judiciary Committee Chairman Pat Leahy (D-Vt.). The Vermont senator has insisted that either senator from a nominee's home state can block the nomination simply by refusing to signal support. The end result is that Obama, in many cases, is working off a list of candidates drawn up and considered acceptable by Republicans, rather than the other way around.

Washingtonian, William Welch: Obama Administration’s Point Man to Stop Leaks, Shane Harris, July 20, 2011. The prosecutor has been called a tenacious and tough-as-nails lawyer, but also overzealous. On June 10, one of the biggest cases in the Obama administration’s campaign to stanch leaks of sensitive government information to the press collapsed when the Justice Department dropped espionage charges against Thomas Drake, a former senior official at the National Security Agency. But just three days before the trial was scheduled to begin, the lead federal prosecutor, William M. Welch II, told the judge that he couldn’t proceed without revealing details in court about classified systems that NSA uses to eavesdrop on global communications. Welch is now the administration’s point man in its historic anti-leaks campaign. He is prosecuting a former CIA officer, Jeffrey Sterling, and he has subpoenaed James Risen, a Pulitzer Prize–winning New York Times reporter, to testify about whether Sterling was the source for the journalist’s book State of War, which revealed that the CIA may have botched classified operations against Iran.

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