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United States v. Fernandez

March 07, 2002

UNITED STATES OF AMERICA, PLAINTIFF-APPELLEE,
v.
PETER N. FERNANDEZ, III, PETER N. FERNANDEZ, JR., AND KENNETH K. GETTY, DEFENDANTS-APPELLANTS.



Appeals from the United States District Court for the Northern District of Illinois, Eastern Division. No. 97 CR 835--Ruben Castillo, Judge.

Before Posner, Kanne, and Diane P. Wood, Circuit Judges.

The opinion of the court was delivered by: Kanne, Circuit Judge.

As amended April 17, 2002.

UNITED STATES OF AMERICA, PLAINTIFF-APPELLEE,
v.
PETER N. FERNANDEZ, III, PETER N. FERNANDEZ, JR., AND KENNETH K. GETTY, DEFENDANTS-APPELLANTS.

Appeals from the United States District Court for the Northern District of Illinois, Eastern Division. No. 97 CR 835--Ruben Castillo, Judge.

Before Posner, Kanne, and Diane P. Wood, Circuit Judges.

The opinion of the court was delivered by: Kanne, Circuit Judge.

 Argued February 21, 2001

On October 27, 1998, defendants Peter N. Fernandez, Jr., Peter N. Fernandez, III, and Kenneth K. Getty, were convicted of eight counts of mail fraud in violation of 18 U.S.C. sec.sec. 1341 and 1346, four counts of theft of funds in violation of 18 U.S.C. sec. 666, five counts of engaging in monetary transaction in property derived from unlawful activities in violation of 18 U.S.C. sec. 1957, and four counts of money laundering in violation of 18 U.S.C. sec. 1956. The indictment provided that between the summer of 1996 and April 1997, defendants engaged in a scheme designed to defraud the Village of Lyons by rigging bids submitted for municipal building projects and then laundering the proceeds. On appeal, defendants argue that their convictions should be vacated because: (1) their activities fell beyond the purview of 18 U.S.C. sec. 1341, (2) neither the mail fraud counts nor the jury instructions embraced "materiality" as an essential element of the offense, (3) independent of the mail fraud counts, the money laundering counts cannot survive, (4) the jury instructions regarding the elements of money laundering were inconsistent and contradictory, and (5) the government failed to establish a necessary element of the alleged 18 U.S.C. sec. 666 violations. We find each of these arguments to be unpersuasive and affirm the defendants' convictions.

I. History

Defendants were charged with eight counts of mail fraud, four counts of theft of funds, five counts of engaging in monetary transaction in property derived from unlawful activities, and four counts of money laundering. In essence, the indictment alleged that defendants engaged in a scheme designed to defraud the Village of Lyons by rigging bids submitted for municipal building projects and then laundering the proceeds. Each defendant entered a plea of not guilty. A jury convicted each defendant on all counts and the district court sentenced Getty to 66 months imprisonment, Fernandez, Jr. to 60 months imprisonment, and Fernandez, III to 48 months imprisonment.

The Village of Lyons is a municipal corporation and a political subdivision of the State of Illinois. Getty served as one of six elected trustees on the Lyons' Board of Trustees from 1991 until March 1996. As a trustee, Getty received a modest salary of $3,400 per year. In addition to being a trustee, Getty also owned his own insurance business, Kenneth K. Getty Insurance Company. On March 19, 1996, the presiding mayor of Lyons resigned for personal reasons. The Board then selected Getty to serve as acting mayor until April 1997.

Shortly after becoming acting mayor, Getty took certain steps to centralize his power. For example, Getty caused the village manager, who oversaw the day-to-day operations of Lyons, to be terminated without cause. Within weeks of the village manager's termination, the position was eliminated, and Getty assumed the village manager's full-time duties. Additionally, Getty sought to complete certain municipal building projects in Lyons in order to increase his chance of success in the next mayoral election. The projects included the renovation of the Village Hall and the construction of a new Village Public Works garage.

Getty consulted with his friend, Peter Fernandez, Jr., regarding the two building projects. Fernandez, Jr. was the sole owner of Norman-Marc Associates Design Build Firm ("Norman-Marc"). Soon thereafter, Getty chose, and the Board approved, Norman-Marc to serve as the first ever "Village Architect." Andrew M. Fernandez, Fernandez, Jr.'s younger brother and a licensed architect, occasionally provided architectural services to Norman-Marc. However, Norman-Marc was not a licensed architectural firm, and Fernandez, Jr. was not a licensed architect. Although the Board approved Norman-Marc's designation as "Village Architect," only Getty and Fernandez, Jr. negotiated the details of Norman-Marc's compensation. Getty agreed to pay Norman-Marc $100 per hour for consulting work, in addition to commissions on construction projects equivalent to 9% of the total cost of each project.

In June 1996, the Board authorized Lyons to solicit bids for both the renovation of the Village Hall and the construction of a new Public Works garage. Combined, these projects were estimated to cost approximately $1 million. As the cost of these projects would exceed $10,000, Illinois law required Lyons to conduct a formal bidding process, awarding the construction contracts to the lowest qualified bidder. Lyons employed a pre-qualification process whereby potential bidders would submit pre-qualification questionnaires, requiring background and financial information. Lyons would review the submitted questionnaires prior to accepting bids on the projects in order to determine whether the bidder was sufficiently qualified for the projects.

After the Board approved the construction plans, Getty directed that a one-day notice soliciting pre-qualification applications be placed in the Des Plaines Valley News, a weekly newspaper with a circulation of 5,000, as opposed to the Suburban Life Citizen, which had a circulation of 30,000 and usually served as the forum for Village bid solicitations. The notice directed interested bidders to obtain the pre-qualification questionnaires from Lyons' Building Department Commissioner, ...


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