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United States v. Sorich

November 15, 2006

UNITED STATES OF AMERICA PLAINTIFF,
v.
ROBERT SORICH, TIMOTHY MCCARTHY, JOHN SULLIVAN, PATRICK SLATTERY, DEFENDANTS.



The opinion of the court was delivered by: Honorable David H. Coar

MEMORANDUM OPINION AND ORDER

Before this Court are several post-trial motions. Defendants Robert Sorich, Timothy McCarthy, John Sullivan and Patrick Slattery have filed motions for judgments of acquittal or a new trial. For the reasons stated in this opinion, the motions for acquittal or new trial are DENIED.

Facts

A jury trial was held for Robert Sorich, Timothy McCarthy, John Sullivan and Patrick Slattery. The jury found Sorich guilty with respects to Counts 2, 3, 4 and 5 of the Second Superceding Indictment. The jury found McCarthy guilty with respects to Counts 2 and 5 of the Second Superceding Indictment. The jury found Sullivan guilty with respect to Count 8 of the Second Superceding Indictment. The jury found Slattery guilty with respect to Count 6 of the Second Superceding Indictment. Defendants now bring post-trial motions for judgment of acquittal or new trial.

Legal Standard

Under Rule 29, in determining whether a judgment of acquittal is appropriate, the relevant inquiry is whether "after viewing the evidence in the light most favorable to the prosecution, any rational trier of fact could have found the essential elements of the crime beyond a reasonable doubt." Jackson v. Virginia, 443 U.S. 307 (1979). The movant's burden is to demonstrate that the evidence cannot support a finding of guilt beyond a reasonable doubt. United States v. Rahman, 34 F.3d 1331 (7th Cir. 1994).

Analysis

I. "Personal Gain" Jury Instruction for Honest Services Fraud

Sorich and McCarthy move for a judgment of acquittal on the grounds that jury instructions on 18 U.S.C. §1346 honest services fraud was incorrect because it did not limit personal gain to a member of the scheme, but could also be for any other person. This matter was taken up in the jury instruction conference, where the instruction was found to be appropriate. There is no reason to change that decision.

Sorich and McCarthy rely on United States v. Bloom which states that the distinction between "run of the mill" violations of fiduciary duty and federal crime is the element of private gain from misuse of office. 149 F.3d 654-57. There is no question that personal gain is an important element of §1346. In the jury instructions, the element of personal gain was duly included, where a scheme to defraud required intent "to deprive a governmental entity of the honest services of its employees for personal gain to a member of the scheme or another." Jury Instructions at 27.

The inquiry is whether the scope of "personal gain" requires that the gain be limited to the individual members of the scheme. In United States v. Spano, the Seventh Circuit stated:

A participant in a scheme to defraud is guilty even if he is an altruist and all the benefits of the fraud accrue to other participants, just as a conspirator doesn't have to benefit personally to be guilty of conspiracy--a point so obvious that we can't find a case that states it, although it is implicit in statements of the elements of conspiracy, of which personal benefit is not one. 421 F.3d 599, 603 (7th Cir. 2005).

Further, Spano instructs that "In the case of a successful scheme, the public is deprived of its servants' honest services no matter who receives the proceeds." Id. In the present case, governmental workers defrauded the public of honest services when defendants manipulated the hiring and promotion process. Like Spano, the public was deprived of its servants' honest services, no matter who received the benefit. As such, the jury instructions are proper and within the proper scope of §1346.

Furthermore, the evidence, when construed in a light most favorable to the government, supports that a rational jury could have found that defendants did receive personal gain in the form of job security and advancement in their own careers.

II. Use of the Shakman Decree

Sorich again attacks the use of the Shakman Decree, arguing that an honest service case cannot be based on a consent decree, the "people of the City" are not proper victims under the Shakman Decree, and that the decree does not arise under state law as required by federal prosecution of a state official. We have dealt with this issue extensively prior to trial, and see no reason to deviate from our previous decision. See United States v. Sorich, 427 F. Supp. 2d 820, 831-34 (D. Ill. 2006).

In our prior decision, this court found that the "Shakman Decrees come into play because, among other reasons, they are one source of the Defendants' fiduciary duties. The indictment offers a variety of sources to illustrate the scope of Defendants' duties, including the Chicago Governmental Ethics Ordinances, the Chicago municipal code, the Illinois code, the Illinois constitution, and the Shakman Decrees." Id. We find now, as we did then, that the Shakman Decrees are an appropriate basis for evaluating honest service fraud. Defendants claim that the "City of Chicago" is not an appropriate victim of a Shakman Decree violation, since the Decree protects registered voters. Because the Shakman Decree is not the only basis of fraud, the fact that the "people of Chicago" may be a broader than "registered voters" does not bar the consideration of the Shakman Decree as one of many sources of consideration. There are, after all, a significant portion of the "people of Chicago" who are registered voters, and valid "victims" even according to Sorich. If the Shakman Decree were the only source of law, questioning the scope of the victim class might be appropriate.

Sorich argues that the court can look only to state law to define mail fraud violations, citing a Fifth Circuit case in support. However, the Seventh Circuit has held otherwise. In United States v. Martin, the Seventh Circuit upheld that federal mail fraud statutes are not required to be grounded solely in state law. 195 F.3d 961 (7th Cir. 1999). Federal statutes may be used to help in narrowing the interpretation of the broad, and often vague, mail fraud statutes. Id. There is also a strong grounding in this case in state law and state statutes. The Shakman Decree is but one of several bases for fiduciary duty. As such, the jury instructions regarding the Shakman Decrees were proper, and do not warrant the granting of a judgment of acquittal.

Alternatively, McCarthy asserts that defining honest services on the basis of state law violations was contrary to the mail fraud statute. State law, as we addressed in 427 F.3d at 834-37, is a proper basis for defining honest services. This position is supported by United States v. Warner, where it was held that "the Seventh Circuit does not mandate that a fiduciary duty of honest services be defined only in reference to state law; however, the Seventh Circuit does not appear to prohibit any consideration of state law in determining the nature of the duty." 2006 U.S. Dist. LEXIS 64085 (D. Ill. 2006).

McCarthy further argues that Count Five should be dismissed because the mailing charged in Count Five was not a Shakman violation. This misconstrues the issue. The government does not allege that Count Five contained a Shakman violation. The Shakman Decree, as explained above, is simply one, out of many, aids in narrowing and defining honest service in mail fraud. Further, McCarthy claims that because The 2004 Building Inspector Hiring was a different process than the Political Hiring, this constitutes different schemes. Although there were two hiring processes, the people and mechanisms in place were the same. Having more than one group of favored candidates in the described scheme does not mean there are multiple schemes. See United States v. Dvorak, 115 F.3d 1339 (7th Cir. 1997), United States v. Zeidman, 540 F.2d 314 (7th Cir. 1976), United States v. Stout, 965 F.2d 340 (7th Cir. 1992). Finally, McCarthy argues that the jury instructions were flawed in that it did not instruct the jury that Defendants had to have knowledge of the job candidate's political affiliation in order to violate the Shakman Decree. This is a misplaced argument, as the charged offense is not violation of the Shakman Decree, but violation of the mail fraud statutes. The mail fraud statutes have no requirement for knowledge of job candidates' political affiliation, but only knowledge of the scheme to defraud. As such, the jury instructions were properly given.

III. Constitutionality

Sorich and McCarthy repeat the arguments made in pretrial motions on the unconstitutionality of §1346, in which this court has already ruled. The Defendants are directed to this court's earlier decision at 427 F.3d at 835-37, where we found that there was fair notice to trigger the mail fraud statue, and that enforcement of the statute does not constitute arbitrary enforcement. The use and application of §1346 is constitutional for government hiring fraud. 427 F.3d at 835-37; see also United States v. Dvorak, 115 F.3d ...


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