United States v. Steven Terry

RECOMMENDED FOR FULL-TEXT PUBLICATION
Pursuant to Sixth Circuit I.O.P. 32.1(b)
File Name: 13a0040p.06
UNITED STATES COURT OF APPEALS
FOR THE SIXTH CIRCUIT
_________________
X
Plaintiff-Appellee, -
UNITED STATES OF AMERICA,
-
-
-
No. 11-4130
v.
,
>
-
Defendant-Appellant. -
STEVEN J. TERRY,
N
Appeal from the United States District Court
for the Northern District of Ohio at Cleveland.
No. 1:10-cr-390-1—Sara E. Lioi, District Judge.
Argued: October 10, 2012
Decided and Filed: February 14, 2013
Before: SUTTON, GRIFFIN and WHITE, Circuit Judges.
_________________
COUNSEL
ARGUED: Sylvester Summers, Jr., SYLVESTER SUMMERS, JR., CO., LPA,
Cleveland, Ohio, for Appellant. Daniel R. Ranke, UNITED STATES ATTORNEY’S
OFFICE, Cleveland, Ohio, for Appellee. ON BRIEF: Sylvester Summers, Jr.,
SYLVESTER SUMMERS, JR., CO., LPA, Cleveland, Ohio, for Appellant. Daniel R.
Ranke, UNITED STATES ATTORNEY’S OFFICE, Cleveland, Ohio, for Appellee.
_________________
OPINION
_________________
SUTTON, Circuit Judge. “If you can’t eat [lobbyists’] food, drink their
booze, . . . take their money and then vote against them, you’ve got no business being
[in politics],” said Jesse Unruh, a one-time Speaker of the California General Assembly,
in the 1960s. Bill Boyarsky, Big Daddy: Jesse Unruh and the Art of Power Politics 112
(2007). That is one way of looking at it. Another way of looking at it comes courtesy
of the federal anti-corruption statutes, one of which prohibits an official from accepting
1
No. 11-4130 United States v. Terry Page 2
things of value “in return for” official acts. 18 U.S.C. § 201(b)(2). A jury found that a
state court judge did just that and convicted him of several honest services fraud
violations. We affirm.
I.
In April 2007, Governor Ted Strickland appointed Steven Terry to fill a vacancy
on the Cuyahoga County Court of Common Pleas. Soon after, Terry announced that he
intended to seek reelection to retain the seat the following November. Having never run
for elected office before, Terry sought the help of County Auditor Frank Russo, a
presence in Cleveland politics. Russo agreed to help Terry with his reelection campaign
and indeed had already helped him by recommending Terry to the Governor for the
appointment and by lobbying members of the local judicial nominating committee to
support him.
Terry knew that Russo was helping him behind the scenes. What Terry did not
know was that the FBI was investigating Russo on corruption charges and that federal
agents had tapped Russo’s phones. On July 15, 2008, Russo had a phone conversation
with a local attorney, Joe O’Malley, about two foreclosure cases on Terry’s docket.
O’Malley represented several homeowners in a lawsuit against American Home Bank,
and he asked Russo to convince Terry to deny the bank’s motions for summary
judgment. Russo promised to call Terry and make sure Terry did what he was
“supposed to do” with the cases. Gov’t Ex. 116; 2 Trial Tr. 294.
Two days later, Russo and Terry spoke on the phone. Russo told Terry to deny
the motions for summary judgment, and Terry said he would. In the same conversation,
the two men also discussed Russo’s attendance at future fundraisers for Terry’s
reelection campaign.
That same day, Terry contacted the magistrate judge responsible for the
foreclosure cases and told her to deny the motions for summary judgment. Surprised by
Terry’s directive, the magistrate passed along the docket so that Terry could deny the
motions himself. Terry did just that, even though he never reviewed the case files, never
No. 11-4130 United States v. Terry Page 3
read the motions before denying them and never obtained a recommendation from the
magistrate or anyone else (within the court system) about how to rule on the motions.
Terry’s collaboration came relatively cheap. Russo’s political action committee
donated $500 to Terry’s reelection campaign in July 2007. Russo’s committee
purchased around $700 worth of stationery, envelopes and car magnets for Terry’s
campaign in July 2007. And Russo had his official staff work for Terry’s campaign
during business hours and provided other political help throughout the relevant time
period. In exchange for this assistance, Russo explained that he expected Terry “to
answer the phone any time I called. And any time I called with a recommendation, or
a problem, or a case, I would expect Steve to give it special attention” and “follow
through for me.” 2 Trial Tr. 290. Russo in other words expected that his political and
financial patronage meant Terry “would do what I asked him to do,” including “granting
[] a motion so it wouldn’t tie [a] case up.” Id. For his part in this and like-minded
arrangements with other Cleveland-area officials, Russo pled guilty to twenty-one
political corruption counts of one form or another and received a 262-month prison
sentence.
For his part, Terry ran into similar problems. A grand jury indicted him on five
political corruption charges. Count One alleged that Terry conspired with Russo to
commit mail fraud and honest services fraud. Count Two alleged that Terry committed
mail fraud by denying the bank’s summary judgment motions. And Counts Three, Four
and Five alleged that he committed honest services fraud by “accepting gifts, payments,
and other things of value from Russo and others in exchange for favorable official
action.” R. 24 ¶ 52. Each honest services fraud count was tied to a mailed document:
Counts Three and Four stemmed from checks Russo’s political action committee wrote
to pay for Terry’s stationery, envelopes and car magnets, while Count Five stemmed
from a thank you note Terry wrote to Russo. Id. ¶ 54.
After a five-day trial, a jury convicted Terry on Counts One, Three and Four, and
acquitted him on Counts Two and Five. The district court sentenced him to 63 months
in prison on each count, to be served concurrently.
No. 11-4130 United States v. Terry Page 4
II.
Terry presses three arguments on appeal: (1) the district court should have
dismissed the indictment because it failed to identify a crime under United States v.
Skilling, 130 S. Ct. 2896 (2010); (2) the district court improperly instructed the jury on
the requirements for showing that Terry accepted a bribe; and (3) insufficient evidence
showed that Terry accepted a bribe.
A.
The district court correctly denied Terry’s motion to dismiss. An indictment
must contain “a plain, concise, and definite written statement of the essential facts
constituting the offense charged” and a “citation of the statute . . . that the defendant is
alleged to have violated.” Fed. R. Crim. P. 7(c). Terry’s indictment did just that. It
outlined the contours of the relationship between Terry and Russo, detailed how Russo
instructed Terry to deny the bank’s motions for summary judgment, listed the benefits
Terry received from Russo and mentioned each statute Terry allegedly violated.
The indictment also complied with Skilling. Honest services mail fraud requires
the government to prove that the defendant used the mail to carry out a “scheme or
artifice to defraud” another, 18 U.S.C. § 1341, of “the intangible right of honest
services,” id. § 1346. That intangible right, Skilling made clear, covers only schemes in
which the defendant deprives another of his honest services by participating in a bribery
or kickback scheme. 130 S. Ct. at 2931. The relevant counts of Terry’s indictment
allege that he “devised and intended to devise a scheme and artifice to defraud” the
citizens of Cuyahoga County (including the litigants before him) of honest services
“through bribery and kickbacks” that he “knowingly caused to be delivered by mail.”
R. 24 ¶ 51. Several details supported the allegations, including the checks from Russo’s
political action committee that traveled through the mail and the summary-judgment
motions that Terry denied at Russo’s behest.
Terry argues that, in upholding the indictment, the district court misread Skilling
to say that honest services fraud required the government to prove that he also violated
No. 11-4130 United States v. Terry Page 5
a state-law duty. But why should Terry care? Right or wrong, the district court’s
decision benefitted Terry. By requiring the government to show Terry violated a state-
law duty, the district court added an element to the government’s case. That helped
Terry; it could not conceivably prejudice him. In narrowing honest services fraud to
require a bribe or kickback, Skilling did nothing to prevent federal courts from narrowing
the offense still further to include only bribes or kickbacks that also violate a state-law
duty. See 130 S. Ct. at 2928 n.36 (noting without elaboration that “[c]ourts have
disagreed about whether § 1346 prosecutions must be based on a violation of state law”).
We thus need not wade into the debate over whether a state-law violation is a
precondition of honest services fraud. Compare United States v. Brumley, 116 F.3d 728,
734–735 (5th Cir. 1997), with United States v. Weyhrauch, 548 F.3d 1237, 1245–46 (9th
Cir. 2008).
B.
Terry’s second claim turns on the proper definition of a bribe when it comes to
a public official. The slate is not clean. Bribery in this setting has long been taken
seriously. See, e.g., Herodotus, The Histories 5:25 (A.D. Godley trans., Harvard Univ.
Press 1920) (describing how, in ancient Persia, a judge who accepted a bribe was flayed
alive and his successor was forced to sit on a chair made from the predecessor’s skin).
Punishment for the offense today is less severe, but the prohibition remains. The
political-corruption statutes and cases make a few principles in this area clear:
• A public official can commit honest services fraud only by accepting a
bribe or a kickback. Skilling, 130 S. Ct. at 2931.
• A public official accepts a bribe when he “corruptly . . . receives
. . . anything of value . . . in return for . . . being influenced in the
performance of any official act.” 18 U.S.C. § 201(b)(2); see also
18 U.S.C. § 666(a)(1)(B) (similar definition in federal-programs bribery
statute); Ohio Rev. Code § 2921.02(b) (similar definition in state bribery
statute).
No. 11-4130 United States v. Terry Page 6
• One element of bribery is that the public official must agree that “his
official conduct will be controlled by the terms of the promise or the
undertaking.” McCormick v. United States, 500 U.S. 257, 273 (1991);
see also United States v. Brewster, 408 U.S. 501, 526 (1972) (“The
illegal conduct is taking or agreeing to take money for a promise to act
in a certain way.”); United States v. Allen, 10 F.3d 405, 411 (7th Cir.
1993) (looking to extortion cases to interpret a bribery statute because the
two crimes are “different sides of the same coin”).
• This agreement must include a quid pro quo—the receipt of something
of value “in exchange for an official act.” United States v. Sun-Diamond
Growers of Cal., 526 U.S. 398, 404–05 (1999).
• The agreement between the public official and the person offering the
bribe need not spell out which payments control which particular official
acts. Rather, “it is sufficient if the public official understood that he or
she was expected to exercise some influence on the payor’s behalf as
opportunities arose.” United States v. Abbey, 560 F.3d 513, 518 (6th Cir.
2009); accord United States v. Jefferson, 674 F.3d 332, 358–59 (4th Cir.
2012); Ryan v. United States, 688 F.3d 845, 852 (7th Cir. 2012); United
States v. Ganim, 510 F.3d 134, 147 (2d Cir. 2007).
That is a start. These principles, to be sure, do not spell out what kinds of
agreements—and what level of specificity—must exist between the person offering a
bribe and the public official receiving it. And some cases debate how “specific,”
“express” or “explicit” a quid pro quo must be to violate the bribery, extortion and
kickback laws. See, e.g., United States v. Ring, ___ F.3d ___, No. 11-3100, 2013 WL
276020, at *4 (D.C. Cir. 2013) (“[C]ourts have struggled to pin down the definition of
an explicit quid pro quo in various contexts.”); United States v. Siegelman, 640 F.3d
1159, 1171 (11th Cir. 2011); United States v. Bahel, 662 F.3d 610, 635 n.6 (2d Cir.
2011); United States v. Whitfield, 590 F.3d 325, 348–54 (5th Cir. 2009).
No. 11-4130 United States v. Terry Page 7
Yet these adjectives do not add a new element to these criminal statutes but
signal that the statutory requirement must be met—that the payments were made in
connection with an agreement, which is to say “in return for” official actions under it.
So long as a public official agrees that payments will influence an official act, that
suffices. What is needed is an agreement, full stop, which can be formal or informal,
written or oral. As most bribery agreements will be oral and informal, the question is
one of inferences taken from what the participants say, mean and do, all matters that
juries are fully equipped to assess. “[M]otives and consequences, not formalities,” are
the keys for determining whether a public official entered an agreement to accept a bribe,
and the trier of fact is “quite capable of deciding the intent with which words were
spoken or actions taken as well as the reasonable construction given to them by the
official and the payor.” United States v. Evans, 504 U.S. 255, 274 (1992) (Kennedy, J.,
concurring in part and concurring in the judgment); see also McCormick, 500 U.S. at 270(“It goes without saying that matters of intent are for the jury to consider.”); Ring, 2013
WL 276020, at *7 (noting that intent “distinguishes criminal corruption from
commonplace political and business activities”); United States v. Wright, 665 F.3d 560,
569 (3d Cir. 2012) (“We rely on the good sense of jurors . . . to distinguish intent from
knowledge or recklessness where the direct evidence [of a quid pro quo] is necessarily
scanty.”).
That a bribe doubles as a campaign contribution does not by itself insulate it from
scrutiny. No doubt, a contribution is more likely to be a duty-free gift than a bribe
because a contribution has a legitimate alternative explanation: The donor supports the
candidate’s election for all manner of possible reasons. See Buckley v. Valeo, 424 U.S.
1, 21 (1976). But the prosecution may rebut that alternative explanation, and context
may show that an otherwise legitimate contribution is a bribe. Take Evans. In that case,
the Court permitted a jury to convict a state legislator who attempted to claim the
payment he received was a campaign contribution. See 504 U.S. at 257–59. Take as
well the Fifth Circuit’s decision in Whitfield. Two state judges argued that the loan
guarantees they received were made in the context of their electoral campaigns and thus
required special protection, but the court upheld a finding that the payments were bribes.
No. 11-4130 United States v. Terry Page 8
590 F.3d at 353. If an official receives money “through promises to improperly employ
his public influence,” he has accepted a bribe. Abbey, 560 F.3d at 519. A donor who
gives money in the hope of unspecified future assistance does not agree to exchange
payments for actions. No bribe thus occurs if the elected official later does something
that benefits the donor. On the other hand, if a donor (like Russo) makes a contribution
so that an elected official will “do what I asked him to do,” 2 Trial Tr. 290, and the
official (like Terry) accepts the payment with the same understanding, the donor and the
official have formed a corrupt bargain. That agreement marks the difference between
a run-of-the-mine contribution and a bribe.
Hold on, says Terry: Bribery should have two definitions, not one, a definition
for public officials who may not receive campaign contributions and a
definition for those who may. For public officials who may not receive campaign
contributions—appointed officials, for instance—any payment in exchange for a future
benefit is a bribe, he says. Terry Letter Br. at 3. But for officials who may accept
campaign contributions, a payment becomes a bribe only if it is made “in exchange for
a specific official act or omission.” Id. (emphasis added). Congress, however, did not
distinguish between public officials who may legally accept contributions and those who
may not in the bribery statutes. Nor has the Supreme Court. It has refused to
“distinguish[] between legal and illegal campaign contributions” in the context of
extortion. McCormick, 500 U.S. at 271; see also United States v. Brewster, 506 F.2d 62,
77 (D.C. Cir. 1974) (refusing to carve out an exception in the federal bribery statute for
campaign contributions). An agreement, once again, is the dividing line between
permissible and impermissible payments.
Terry persists that campaign contributions must meet a higher standard to
become a bribe because “the financing of political campaigns depends upon officials
accepting contributions from people expecting some kind of benefit in return.” Terry
Reply Br. at 20. That sentiment may sum up Frank Russo’s donation strategy, but a
contribution also may represent nothing more than “a general expression of support for
the candidate and his views.” Buckley, 424 U.S. at 21. Just as “[n]ot every campaign
No. 11-4130 United States v. Terry Page 9
contribution by a litigant or attorney creates a probability of bias that requires a judge’s
recusal,” Caperton v. A.T. Massey Coal Co., 556 U.S. 868, 884 (2009), not every
contribution to an elected judge is a bribe. Whatever else McCormick may mean, it does
not give an elected judge the First Amendment right to sell a case so long as the buyer
has not picked out which case at the time of sale.
The jury instructions in this case accurately conveyed that an agreement is the
key component of a bribe. The district court told the jury that, in order to find that Terry
violated the honest services fraud statute, it needed to find a “quid pro quo”: that is,
Terry agreed “to accept [a] thing of value in exchange for official action.” 5 Trial Tr.
1189. A “thing of value” could include a campaign contribution, so long as that was
“received in exchange for official acts.” Id. at 1192. Terry’s intent to exchange official
acts for contributions could be “based on [Terry’s] words, conduct, acts, and all the
surrounding circumstances disclosed by the evidence and the rational or logical
inferences that may be drawn from them.” Id. Each payment did not need to be tied to
a specific official act, so long as Terry understood that, “whenever the opportunity
present[ed] itself,” Terry would “take specific official actions on the giver’s behalf.” Id.
at 1190. These instructions matched the definition of bribery. The jury needed to find
that Terry agreed to accept things of value in exchange for official acts.
C.
Based on these instructions, the jury found that Terry accepted a bribe. We may
overturn that conclusion only if, after “viewing the evidence in the light most favorable
to the prosecution, [no] rational trier of fact could have found the essential elements of
the crime beyond a reasonable doubt.” Jackson v. Virginia, 443 U.S. 307, 319 (1979).
A jury could find that Terry and Russo entered an agreement to fix cases. Start
with the benefits, financial and otherwise, that Russo provided to Terry during the
relevant time period. He gave Terry’s campaign $500. He supplied Terry’s campaign
with approximately $700 in campaign materials. He expected his employees in the
Auditor’s office to engage in electioneering for Terry during office hours. And he hired
No. 11-4130 United States v. Terry Page 10
a woman Terry had fired from his chambers staff to prevent Terry from suffering
negative publicity.
A flow of benefits from one person to a public official, to be sure, does not by
itself establish bribery. The benefits instead must be part and parcel of an agreement by
the beneficiary to perform public acts for the patron. That existed as well. On one side
of the bargain, Russo thought that they had a deal. In return for showering Terry with
benefits, Russo expected Terry to use his official powers whenever and however Russo
requested. Any time Russo called, he expected Terry to “give it special attention” and
“follow through with me.” 2 Trial Tr. 290. “Special attention,” he clarified, meant that
“whether it would be a character reference or whether it would be a case,” Terry would
“do what I asked him to do.” Id.So, too, on the other side of the bargain. Although Terry disclaimed at trial any
agreement to fix cases in which Russo had a stake, his actions belied his words. Terry’s
rulings on the foreclosure cases were, at the very least, highly irregular, and the reality
that a tape recording captured the Russo-Terry conversation immediately preceding these
rulings did Terry no favor. No subtle winks and nods were needed. Russo straight up
asked Terry to deny the bank’s motions for summary judgment in the two cases, and
with Terry’s tape-recorded reply (“Got it.” Gov’t Ex. 117), Terry agreed to do just that.
And he did, within hours of the conversation. Here is the timeline: Terry and Russo
spoke at 11:58 a.m. on July 17; Terry called the magistrate later that afternoon, around
12:30 p.m.; and Terry called Russo at 10:31 a.m. the next morning to confirm he had
denied the motions. Without reading the motions, without consulting the case files and
without relying on the recommendation of anyone—within the court system—who had
read the files, Terry did just what Russo asked. That is not an everyday occurrence in
the judicial branch, and a jury could readily infer that Terry’s unusual behavior, along
with the other evidence, stemmed from an agreement to use his position as a public
official to do Russo’s bidding in return for Russo’s financial, campaign and staff support.
In the face of this evidence, Terry claims that the record nonetheless does not
establish an agreement between him and Russo to exchange campaign contributions and
No. 11-4130 United States v. Terry Page 11
help for official acts. Yes and no. Yes, the government never presented a formal
agreement between Russo and Terry stating that Russo’s gifts would control Terry’s
actions. But no, there was ample evidence for the jury to infer that an agreement
nonetheless existed between the two men.
Not every campaign contribution, we recognize, is a bribe in sheep’s clothing.
Without anything more, a jury could not reasonably infer that a campaign contribution
is a bribe solely because a public official accepts a contribution and later takes an action
that benefits a donor. See, e.g., McCormick, 500 U.S. at 272. But when a public official
acts as a donor’s marionette—by deciding a case to a donor’s benefit immediately after
the donor asks him to and without reading anything about the case—a jury can reject
legitimate explanations for a contribution and infer that it flowed from a bribery
agreement. Here, the jury rejected any legitimate explanation for Russo’s contributions
in the face of strong circumstantial evidence that Terry and Russo had a corrupt bargain.
Once the jury found Terry and Russo had an agreement, it could easily find that Terry
accepted a bribe, violating the honest services fraud statute along the way. The same
holds true for Terry’s conspiracy conviction.
III.
For these reasons, we affirm.