Petition — Buckley v. United States

FILED

2=1459 hice

ALEXANDER L. STEVAS,

se CLERK

Office -Supreme Court, US. |

IN THE

Supreme Court of the United States

October Term, 1982

JEREMIAH P. BUCKLEY,

ELLSWORTH B. SARGENT,

WASHINGTON WATER POWER COMPANY,

AND SARGENT - TYEE CONSTRUCTION COMPANY,

Petitioners,

V.

THE UNITED STATES OF AMERICA,

Respondent.

PETITION FOR A

WRIT OF CERTIORARI TO THE

UNITED STATES COURT OF APPEALS

FOR THE NINTH CIRCUIT

Thomas S. Zilly* George W. Akers

Arthur W. Harrigan, Jr. William K. Goodwin

Larry S. Gangnes MONTGOMERY, PURDUE,

LANE POWELL MOSS BLANKINSHIP &

& MILLER AUSTIN

3800 Rainier Bank Tower 1515 Norton Bldg.

Seattle, Washington 98101 Seattle, Washington 98104

Telephone: (206) 223-7000 Telephone: (206) 682-7090

Attorneys for Petitioner Attorneys for Petitioner

Wash. Water Power Co. Ellsworth B. Sargent

*Attorney of Record

William A. Helsell Payton Smith

HELSELL, FETTERMAN, DAVIS, WRIGHT, TODD,

MARTIN, TODD RIESE & JONES

& HOKANSON 4200 Seattle-First

1500 Washington Bldg. National Bank Bldg.

PO. Box 21846 Seattle, Washington 98154

Seattle, Washington 98111 Telephone: (206) 622-3150

Telephone: (206) 292-1144 Attorneys for Petitioner

Attorneys for Petitioner Sargent-Tyee Construction

Jeremiah P. Buckley Company

i

QUESTIONS PRESENTED

1. Does a mail fraud indictment which alleges mailing of

a public disciosure form in furtherance of a scheme to conceal

political contributions allege a ‘‘scheme to defraud’’ under

United States v. Dixon in the absence of allegation of any

corrupt payment?

2. Under the criteria of United States v. Russell, does a

mail fraud indictment adequately inform the defendants of

the fraudulent act charged against them when it alleges, by

implication only, omission of an unidentified payment to an

unknown person for a purpose which is neither alleged nor

otherwise disclosed?

3. Under United States v. Parr, does a mail fraud

indictment based upon nondisclosure of political

contributions allege a connection between the mailing of a

legally compelled disclosure form and the scheme when it

alleges no falsity in the disclosure form?

ii |

PARTIES TO THE PROCEEDING

The Indictment reads Sargent‘Iyee Construction Company,

Inc. The correct name is SargentTyee Construction Company.

Sargent‘Tyee Construction Company is a predecessor

corporation of Tyee Construction Company, now operating

as a division of Commonwealth Electric Company, a wholly-

owned subsidiary of Commonwealth Companies, Inc., a

Delaware Corporation.

DAVIS, WRIGHT, TODD, RIESE & JONES

By

Payton th

Attorneys for Sargent“liyee

Construction Company

The Washington Water Power Company, a Washington

corporation named as a defendant in the Indictment, has the

following subsidiary companies (excluding wholly-owned

subsidiaries): The Limestone Company, an Idaho corporation,

and Spokane Industrial Park, Inc., a Washington corporation.

LANE POWELL MOSS & MILLER

By

Thomas S. Zilly

TABLE OF CONTENTS

Page

NON L502 CAME cltars PCUME Win 0's 8 eB iON aaa 1

SE a ut) bc, Wes thats vain SH eRe. 0 6 Cedi bin ola Oe 2

Statutory Provisions Involved ................... 2

I MS he idee Cv bes tener Vee bus 4

Reasons For Granting the Writ .................. 9

I. The Decision Below Conflicts With the Decisions

of Other Courts of Appeal Concerning the Reach

of the Mail Fraud Statute ................. i)

II. The Decision Below Raises Significant Questions

Concerning the Application of This Court’s

Holdings in United States v. Russell and in Parr

DD. S sasuhS aso ieee eee wks 13

Se PETS abs aes k-eR WU bide hie se Cae 13

SME CAS 6 aids p cow a Atorde ap mints gO tow hehe Wd 21

EL Og Peo Ue CRT ES 24

TABLES OF AUTHORITY

Table of Cases

Kann v. United States, 323 U.S. 88 (1945) ....... 22-23

Parr v. United States, 363 U.S. 370 (1960) .. 8,21-22,23,24

Russell v. United States, 369 U.S. 749 (1962) . 13,14,20,21

United States v. Bohonus, 628 F.2d 1167 (9th Cir.), cert.

denied, 447 U.S. 928 (1980) ............e eens 11-12

United States v. Boyd, 606 F.2d 792 (8th Cir. 1979) . 22

United States v. Curtis, 506 F.2d 985 (10th Cir. 1974) 14

United States v. Cruikshank, 92 U.S. 542 (1876) .... 14

United States v. Dixon, 536 F.2d 1388

REED Ra Paap aN 7,9,10,12-13,15,24

United States v. George, 477 F.2d 508 (7th Cir. 1973) 19

iv

United States v. Hess, 124 U.S. 483 (1888) ......... 14

United States v. Isaacs, 493 F.2d 1124 (7th Cir. 1974) 19

United States v. Louderman, 576 F.2d 1383 (9th Cir.) cert.

ey Ge ULE GG ROT noi ieee ccc cece 12

United States v. McNeive, 536 F.2d 1245

EE Ou Pale ges Cen wake c's 08 8 16,17-19

United States v. Nance, 533 F.2d 699 (DC. Cir. 1976) 14

Statutes

EE iS Maas Gd FAN Te aly d's v a\W 0 4» 9 aye 8,49 14

SOS ee 9

re) See ee ie 2,4

a 2

I GUD RUNG GRIND ko dds cic espe ection 2

Wash. Rev. Code $ 42.17.170 (1981) ............0.. 2,4

Wash. Rev. Code § 42.17.180 (1981) ............... 3,4

Wash. Rev. Code § 42.17.240(2) ...........00 00 cues 3

IN THE

Supreme Court of the United States

October Term, 1982

JEREMIAH P. BUCKLEY,

ELLSWORTH B. SARGENT,

WASHINGTON WATER POWER COMPANY,

AND SARGENT - TYEE CONSTRUCTION COMPANY,

Petitioners,

v.

THE UNITED STATES OF AMERICA,

Respondent.

PETITION FOR A

WRIT OF CERTIORARI TO THE

UNITED STATES COURT OF APPEALS

FOR THE NINTH CIRCUIT

This petition is filed pursuant to Rule 21 of the Rules of

this Court for a writ of certiorari to the United States Court

of Appeals for the Ninth Circuit, to review the judgment of

that Court in United States v. Jeremiah P. Buckley, Ellsworth

B. Sargent, Washington Water Power Company and Sargent-

Tyee Construction Company, Inc., No. 81-1597 (October 8,

1982).

OPINIONS BELOW

The court of appeals entered judgment is this case on

October 8, 1982. United States v. Buckley, 689 F.2d 893 (9th

Cir. 1982). The court of appeals’ opinion is attached hereto

as Appendix A. On December 28, 1982, the court of appeals

denied defendants’ Petition for Rehearing (suggested en banc).

The court of appeals’ Order denying rehearing is attached

hereto as Appendix B. The trial court’s Order, entered August

20, 1981 and granting defendants’ motion to dismiss Count

I of the Indictment and denying defendants’ motion to

2

dismiss Count II, is attached hereto as Appendix C. A copy

of the two-count Indictment is attached hereto as Appendix

D. A transcript excerpt from the proceedings of August 16,

1981 before the trial court is attached hereto as Appendix E.

JURISDICTION

The judgment of the court of appeals was entered on

October 8, 1982. The court of appeals denied defendants’

Petition for Rehearing (suggested en banc) on December 28,

1982. This Court has jurisdiction under 28 U.S.C. § 1254(1).

STATUTORY PROVISIONS INVOLVED

18 U.SC. § 1341:

Whoever, having devised or intending to devise any scheme

or artifice to deiraud, or for obtaining money or property by

means of false or fraudulent pretenses, representations, or

promises, or to sell, dispose of, loan, exchange, alter, give away,

distribute, supply, or furnish or procure for unlawful use any

counterfeit or spurious coin, obligation, security, or other

article, or anything represented to be or intimated or held

out to be such counterfeit or spurious article, for the purpose

of executing such scheme or artifice or attempting so to do,

places in any post office or authorized depository for mail

matter, any matter or thing whatever to be sent or delivered

by the Postal Service, or takes or receives therefrom, any such

matter or thing, or knowingly causes to be delivered by mail

according to the direction thereon, or at the place at which

it is directed to be delivered by the person to whom it is

addressed, any such matter or thing, shall be fined not more

than $1,000 or imprisoned not more than five years, or both.

Wash. Rev. Code § 42.17.170:

(1) Any lobbyist registered under RCW 42.17.150 and any

person who lobbies shall file with the commission periodic

reports of his activities signed by the lobbyist. The reports

shall be made in the form and manner prescribed by the

commission. They shall be due monthly and shall be filed

within fifteen days after the last day of the calendar month

covered by the report.

3

(2) Each such monthly periodic report shall contain:

*“* *

(c) An itemized listing of each such expenditure in the

nature of a contribution of money or of tangible or intangible

personal property to any candidate, elected official, or officer

or employee of any agency, or any political committee

supporting or opposing any ballot proposition, or for or on

behalf of any candidate, elected official, or officer or employee

of any agency, or any political committee supporting or

opposing any ballot proposition. All contributions made to, or

for the benefit of, any candidate, elected official, or officer or

employee of any arency, or any political committee supporting

or opposing any ballot proposition shall be identified by date,

amount, and the name of the candidate, elected official, or

officer or employee of any agency, or any political committee

supporting or opposing any ballot proposition receiving, or to

be benefited by each such contribution.

Wash. Rev. Code § 42.17.180:

Every employer of a lobbyist registered under this chapter

during the preceding calendar year shall file with the commis-

sion on or before March 31st of each year a statement disclos-

ing for the preceding calendar year the following information:

(1) The name of each state elected official and the name of

each candidate for state office who was elected to such office

and any member of the immediate family of such persons to

whom such employer has paid any compensation in the amount

of five hundred dollars or more during the preceding calendar

year for personal employment or professional services, including

professional services rendered by a corporation, partnership,

joint venture, association, union, or other entity in which such

person holds any office, directorship, or any general partnership

interest, or an ownership interest of ten percent or more, the

value of such compensation in accordance with the reporting

provisions set out in RCW 42.17.240(2), as now or hereafter

amended, and the consideration given or performed in exchange

for such compensation.

4

(2) The name of each state elected official, successful

candidate for state office or members of his immediate family

to whom the lobbyist employer made expenditures directly

or indirectly, either through a lobbyist or otherwise, the

amount of such expenditures and the purpose for such

expenditures: Provided, That for the purposes of this

subsection, the term expenditure shall not include any

expenditure made by the employer in the ordinary course of

business if such expenditure is not made for the purpose of

influencing, honoring, or benefiting such elected official,

successful candidate or member of his immediate family, as

an elected official or candidate.

(3) The total expenditures made by the employer for

lobbying purposes, whether through or on behalf of a

registered lobbyist or otherwise.

(4) All contributions made to a candidate for state office, to

a political committee supporting or opposing a candidate for

state office, or to a political committee suporting or opposing

a state-wide ballot proposition. Such contributions shall be

identified by the name and the address of the recipient and

the aggregate amount contributed to each such recipient.

(5) The name and address of each registered lobbyist

employed by such employer.

(6) Such other information as the commission shall by

rule prescribe.

STATEMENT OF THE CASE

In January 1981, the grand jury indicted petitioners on

one count of mail fraud in violation of 18 U.S.C. § 1341,

alleging a money-washing scheme for political contributions

that operated from 1972 to 1976, in part to deprive the public

of its “right to know” under a state law requiring disclosure

of contributions to state legislators. As of February 1974,

Washington state law required that both lobbyists and their

employers report lobbying expenditures. Wash. Rev. Code

$§ 42.17.170-.180 (1981).

5

The Indictment alleged that Buckley distributed $15,000

to unknown state legislators on behalf of his employer,

Washington Water Power Company (“WWPC’”), at unknown

times after receiving it in early June 1975, and that he filed

Form L-3 reports from January 1973 to January 1976 with

the Washington Public Disclosure Commission in which he

intentionally failed to disclose the moneys paid to him in

accordance with the scheme and subsequently distributed

by him to members of the Washington State Legislature on

behalf of WWPC. The only allegation of use of the mails in

furtherance of the alleged fraudulent scheme within the

applicable statute of limitations is contained in the 28th and

final paragraph of Count I of the Indictment:

On or about April 1, 1976, within the Western District

of Washington, JEREMIAH P. BUCKLEY,

ELLSWORTH B. SARGENT, WASHINGTON

WATER POWER COMPANY, and SARGENT-TYEE

CONSTRUCTION COMPANY, the defendants herein,

for the p of executing the aforesaid scheme and

artifice and attempting to do so, knowingly caused to

be delivered by mail, according to the direction thereon,

an envelope addressed to the ‘Public Disclosure

Commission, 403 Evergreen Plaza, 711 Capitol Way,

Olympia, Washington 98504’’ containing Public

Disclosure Commission Form L-3, Lobbyist Employer’s

rt, for the year 1975, fom WASHINGTON

WATER POWER COMPANY.

Deprivation of the public’s “right to know”’ by use of the

mails pursuant to the alleged scheme could only have

occurred if the 1976 L-3 form was false, and the Government

has so conceded. 689 F.2d at 898. This 1976 Form L-3 called

for disclosure of contributions made during the year 1975.

The Indictment alleges that it was mailed “for the purpose

of executing” the scheme, but the Indictment does not allege

that this 1976 Form L-3 was false. (Appendix D, Indictment

{ 28.) Nor did the Government state in what respect it is

contended the L-3 was false when directed to do so in a Bill

of Particulars. (Appendix E-42-47.) In fact, Government

6

counsel candidly admitted in oral argument before the district

court that the Government cannot do so. (Appendix E-46.)'

There is no allegation or implication in the Indictment that

any money was distributed in 1975 and thus required to be

reported in the 1976 Form L-3 report. It is no surprise,

therefore, that the Indictment pointedly omitted any

allegation that the 1976 filing was false.

The Indictment does not allege any improper payment or

any fact constituting fraud or undue influence. It tells the

defendants nothing about any undisclosed payment: to whom

it was made, when or for what allegedly corrupt purpose. Even

if the Indictment alleges by implication that some undisclosed

payment was made, it tells the defendants nothing which

would enable them to show propriety in the payment, because

the payment is not and cannot be identified.

The district court granted in part petitioners’ motion for

a Bill of Particulars, including a request for further

information about paragraph 28 of the Indictment.

Specifically, the Government was directed to state:

which perensnte or expenditures, if any, were omitted

from the Form L-3 for the year 1975, and by identifying

any other statements contained in said form which it

has contended were untrue, and the respect in which it

was contended they were untrue and by stating whether

it is contended that any required information was

omitted from said report and, if so, by identifying all

such information.

1. In contrast, the Indictment alleges that other, earlier filings (not

within the statute of limitations) were also made in furtherance of the

scheme. (Appendix D, Indictment {{ 26, 27 and 28.) Unlike the allegations

of paragraph 28 concerning the 1976 L-3, it is alleged that each prior form

“intentionally failed to disclose” contributions. These allegations

concerning the pre-1976 filings, however, are based upon clear errors of

fact and law in the Indictment. The allegations of payments prior to 1975

are completely consistent with distribution of such sums at times when

no disclosure law was in effect. See Washington Water Power Company's

Memorandum in Support of Defendants’ Motion to Dismiss Indictment.

The Government has never contested this point.

7

(Appendix E-43.) The Government then provided the

following information relevant to paragraph 28:

The L-3 filed by Washington Water Power Corporation

for the year 1975 sah to report any of the money received

from Robert A. Perry pied on ‘on behalf of Washington

Water Power Corporation by deri Buckley.

(Appendix E-45.)

Petitioners then moved for dismissal of the mail fraud

count. The district court granted the motion on two grounds.

First, taking all allegations of the Indictment and Bill of

Particulars as well as those made in open court by the

Government as true, without an explicit allegation that

Buckley made payments to legislators in 1975 and

intentionally omitted them from the 1976 Form L-3, the court

concluded that the Indictment failed to allege any facts

implying that the Form L-3 was false, and thus mailed for

the purpose of executing the alleged scheme to defraud.

(Appendix C, Order { 1(e).)

Although the Indictment recites the language of the mail

fraud statute in alleging that the 1976 Form L-3 was “for

the purpose of executing” a fraudulent scheme, the district

court held it deficient in that it failed to inform the defendants

of the essential facts of this fraud charge: the nature of the

alleged fraud which inhered in the alleged payments and the

alleged connection between the 1976 mailing and the fraud.

(Id.) Since the Government is unable to state to whom, when

or for what purpose any payment was made, or which such

payments were omitted from the form, the Government is

unable to inform the defendants of the nature of the fraud

with which they are charged, and defendants are unable to

gather evidence showing the non-fraudulent character of any

payment because none is identified. (Jd.)

The court of appeals reversed, distinguishing the decision

in United States v. Dixon, 536 F.2d 1388 (2d Cir. 1976)

(Friendly, J.) and held that “the Government made barely

sufficient allegations in this mail fraud indictment,” 689 F.2d

at 900, of “a ‘scheme to defraud’ Washington citizens of their

statutory right to know who made what political payments

8

to whom, and a knowing use of the mails to further the

scheme in violation of the mail fraud statute,’ 689 F.2d at

898, despite the facts that “the Government conceded that

it could not prove the omission in the 1976 Lobbyist Report

of any specific payment to any specific legislator in 1975 and

that the Government refused to make such specific

allegations in the bill of particulars.” 689 F.2d at 899.

Agreeing “with the district court’s preliminary assessment

of the weakness of the Government’s case,” 689 F.2d at 900,

the court concluded that “[ajlthough the Government’s

theory appears weak, and a judgment of acquittal may be

granted if the Government presents inadequate evidence at

trial, the weakness of the Government’s case is irrelevant to

the sufficiency of the indictment.” Id.

As a result, the court agreed with the Government that

though “ ‘the only way [the disclosure form] could be in

execution or furtherance [of a scheme to defraud] is if it were

false; ” the Indictment “need not explicitly state that WWPC

filed a false form by failing to report the 1975 payments to

legislators because it implied that fact when it alleged a money

laundering scheme in 1975, payments to legislators as a result

of that scheme, and the mailing of a Lobbyist Employer’s

Report for the year 1975 in furtherance of the scheme.” 689

F.2d at 898 (emphasis added). “Thus, the defendants had

sufficient notice of the charged crime to prepare a defense and

plead double jeopardy despite the fact that the indictment

was lengthy, confusing, and largely irrelevant.” 689 F.2d at

899 (footnote omitted). Distinguishing Parr v. United States,

363 U.S. 370 (1960), the court held legally sufficient the

allegation that the mailing was made in furtherance of a

scheme to defraud despite the fact it was “legally compelled.”

Finally, the court found unpersuasive the defendants’ plea that

they could not defend against a fraud charge when none of

the particulars of the fraud were alleged: who was paid, when

and for what alleged “fraudulent” purpose.

9

REASONS FOR GRANTING THE WRIT

I. The Decision Below Conflicts With the Decisions of

Other Courts of Appeal Concerning the Reach of the

Mail Fraud Statute.

The court of appeals’ decision demonstrates the potentially

limitless reach of the mail fraud statute when its plain words

are stretched beyond normal bounds by imaginative

Government prosecutors. It also is in direct conflict with the

Second Circuit’s decision in United States v. Dixon. The

indictment here alleges a scheme not to disclose political

contributions as required by a state disclosure law. In Dixon,

the indictment alleged a scheme not to disclose loans to a

corporate officer in violation of a federal disclosure statute,

Section 14 of the Securities Exchange Act of 1934, 15 U.S.C.

§ 78n.

There, the defendant corporate president allegedly had

distributed false proxy statements and made false filings with

the SEC, both concealing corporate loans to him, and had

then used the mails to obtain proxies. Fraud does not inhere

in loans to corporate officers. Nor is it inherent in political

contributions. In Dixon and in this case, the sole vice alleged

was nondisclosure. Judge Friendly, speaking for the Second

Circuit, held that nondisclosure in Dixon of otherwise proper

corporate loans was not a “scheme or artifice to defraud”

within the purview of the mail fraud statute.

When all is said and done, the Government’s on

the mail fraud counts was simply that Dixon | nar

se a retuennan Wiad aid nok elaeaae the ladeers

roxy statement which did not contain the isioemation

choke tauihe 06 Dina tad: & choula have contend. Po

hold that this alone constituted a violation of the mail

fraud statutes would stretch its words

beyond normal

bounds; “am the ambit of criminal

statutes Ber gd Boe my my bod of leniety,’ Rewis

vu. United States, 401 U.S. 808, 812, 91 S. Ct. 1056, 1059,

28 L. Ed. 2d 493, 497 (1971), quoted and lied in

United Svates v. Bass, 404 U.S. 336, 347-49, 92 S. Ct.

515, 522-523, 30 L. Ed. 2d 488, 496-497 (1971).

536 F.2d at 1401.

10

The facts alleged in this Indictment afford no basis for

distinguishing it from Dixon. The court of appeals attempted

to do so as follows:

In Dixon, the court held that nondisclosure a

corporate official of certain loans in violation of SEC

regulations was not a scheme to defraud because the

shareholders did not rely on the disclosure regulations,

and the nondisclosure was not intended to secure m ae |

or property in a fraudulent manner. Jd. at 1398-14

In contrast, the Government alleges that the defendants

here did not disclose all of their contributions to state

tors in violation of a state statute for the purpose

iding contributic 2s that were intended to influence

the officials improperly.

689 F.2d at 897 (emphasis added).

The key language underlined above does not accurately

describe the Indictment in this case. The only fact alleged

which even implies impropriety is the allegation of

nondisclosure. That, under Dixon, is not enough to constitute

a “scheme or artifice to defraud.” There is no allegation of

any payment constituting bribery, corruption or improper

influence — and for good reason since the Government has

admitted in three places in the Indictment (Appendix D,

Indictment { 23(a), (b) and (c)) and in open court (Appendix

E-45-46) that it cannot prove any specific payment by anyone

to any legislator for any purpose.

The Indictment does allege in a conclusory way that the

purpose of the “scheme” was improper influence, but no facts

are alleged to support that charge:

Phra 29% er ee s peice 0 Ae ae

conineng Ena 1977, in the Western

W. a aa elsewhere, JEREMIAH P.

BUCKLEY, ELLSWORTH 8B. SARGENT,

WASHINGTON WATER POWER COMPANY and

SARGENT-TYEE CONSTRUCTION COMPANY, Doe

11

Washington State Legislature openly and honestly, free

from corruption, bias, dishonesty, deceit, official

misconduct, and fraud;

(b) to defraud the citizens of the State of Washington

of their right to have the State’s electoral processes

conducted openly and honestly free from corruption,

bias, dishonesty, deceit, official misconduct, and fraud

and in accordance with the laws of the State of

Washington;

(c) to defraud the citizens of the State [oe

of their right to know of any benefits, financial or

otherwise, conferred upon members of the Washi n

State Oey ASHINGTON WATER POWER

COMP. and JEREMIAH P. BUCKLEY as lobbyist

for WASHINGTON WATER POWER COMPANY.

Following these allegations, this Court may search the

remainder of the Indictment in vain for any alleged act of

“corruption, bias, dishonesty, deceit, official misconduct and

fraud,” or any allegation of a single payment made for an

“improper” purpose. The Indictment simply alleges payments

by Buckley were made “for the purpose of furthering the

legislative interests of WASHINGTON WATER POWER

COMPANY.” (Appendix D, Indictment {{ 2, 12(a) and (b).)

All political contributions are presumably made for such

purposes, and do not constitute “improper influence.”

The Government may hold the view that political

contributions “corrupt” legislators, but there is no allegation

of corruption here; in fact, the Indictment admits that there

will be no evidence of it by conceding that the persons who

allegedly received such payments were “unknown to the

Grand Jury.” (Appendix D, Indictment { 23(a), (b) and (c).)

Neither does making political contributions rise to the level

of a fraudulent scheme that, using the words of the court

below, “fail[s] to measure up to the ‘reflection of moral

uprightness, of fundamental honesty, fair play and right

dealing in the general and business life of members of

society.” 689 F.2d at 897, quoting United States v. Bohonus,

628 F.2d 1167, 1171 (9th Cir.), cert. denied, 447 U.S. 928 (1980).

In Bohonus, the court of appeals concluded that “depriving

an employer of one’s honest services and of its right to have

its business conducted honestly can constitute a ‘scheme to

12

defraud’ under § 1341.” 628 F.2d at 1172; see also United

States v. Louderman, 576 F.2d 1383, 1387-88 (9th Cir. ), cert.

denied, 439 U.S. 896 (1978) (scheme to gather private

information by deception held fraudulent). “In light of

Bohonus and Louderman,’ the court below held that the

“Government adequately alleged a ‘scheme to defraud’

Washington citizens of their statutory right to know who

made what political payments to whom, and a knowing use

of the mails to further the scheme in violation of the mail

fraud statute.” 689 F.2d at 898. This reasoning, however, was

considered and expressly rejected by Judge Friendly in Dixon.

eter weird tape chicrdaey eagrsars ban mag 2° pod BP

stockholders’ ty to exercise a full and fair

felgues dgment by D ’s § 14 violation rived them of

‘honest and faithful services,’ see United States v.

Isaacs, 493 F.2d 1124 (7 Cir.), cert. peated 417 US. 976,

94 S. Ct. 3184, 41 L. Ed. 2d 1146, reh. denied, 418 US.

955, 94 S. Ct. 3234, 41 L. Ed. 2d 1178 (1974), in the sense

required to constitute a violation of the mail fraud

statute. This doctrine of the deprivation of honest and

faithful services has to fit the situation in

which a public official avails himself of his public

position to enhance his private advan often by

indood, eg inf Such actions may not deplete the fisc;

as in Isaacs they may have enriched it, but they

nonetheless frauds since sso the public official has been

Te ee aes te Econ Ut hie cating: Tins the doctrine bes

applied to the corruption of a public official with

to the allocation of insurance commissions

al these must, in any case, have been paid by the

state to someone, United States v. Barrett, 505 F.2d

1091, 1103-05 (7 Cir. 1974), cert. denied, 421 U.S. 964,

rsh Ss. Ct 1951, 44 os es 2d 450 3 480 G97). Bes alee the cases

statute,

ra i Eide malas th a oes to noasehe “to

defraud the United States, or any thereof in any

manner or for any aas v. Henkel, 216

U.S. 462, 30 “S. 249, 54 L. Ed. 569 (1910);

Hammerschmidt v. United States, 265 U.S. 182, 188, 44

S. Ct. 511, 512, 68 L. Ed. 968, 970 (1924); United States

v. Johnson, 383 U.S. 169, 172, 86 S. Ct. 749, 751, 15 L.

Ed. 2d 681, 683 (1966); Miller v. United States, 24 F2d

353, 358-59 (2 Cir,), cert. denied, 276 U.S. 638, 48 S. Ct.

421, 72 L. Ed. 745 (1928); United States v. Peitz, su pope hae pn

433 F.2d at 51-52. All these cases, however, invo

13

element of corruption not present here. We therefore need

not consider whether the doctrine of the cited cases

should be carried over into the private field, e.g., if, for

example, Dixon had bribed Entwistle to put out a proxy

statement known to be incomplete.

536 F.2d at 1400 (emphasis added).

Since this Indictment contains no factual allegation of

bribery, corruption, bias, dishonesty, deceit, official

misconduct, fraud or improper purpose, the decision of the

court below conflicts with Dixon. In short, the political

contributions alleged to have been made here and not

disclosed were not fraudulent or corrupt within the meaning

of the mail fraud statute. Nondisclosure of such contributions,

if made in 1975, would violate Washington state law, but it

is not mail fraud any more than nondisclosure of otherwise

legitimate loans in violation of federal law was fraud in the

Dixon case.

II. The Decision Below Raises Significant Questions

Concerning the Application of this Court’s Holdings in

United States v. Russell and in Parr v. United States.

A. Russell

The Government has conceded that the “only way [the 1976

L-3 disclosure form] could be in execution or furtherance [of

a scheme to defraud] is if it were false.” 689 F.2d at 898. It

is undisputed that the Indictment on its face does not allege

any such falsity, nor does it apprise the defendants of the

alleged fraudulent or corrupt elements of any allegedly

undisclosed payment. Nonetheless, the Government contends

that it was sufficient to allege only, using the words of the

mail fraud statute, that the mailing of the 1976 L-3 report

was “for the purpose of executing” a scheme which the

Indictment labels fraudulent without any particularization

of the basis for that label. The court below agreed, holding

that the “barely sufficient allegations in this mail fraud

indictment,” 689 F.2d at 900, “implicitly alleged the falsity

of the [1976] disclosure report . . . [and thus were] clear enough

to give the defendants notice of the crime charged and to

allow them to plead double jeopardy.” 689 F.2d at 898

(emphasis added). This statement, even if true as far as it

14

goes, ignores the failure to allege the elements of the fraud:

who was paid, for what corrupt purpose, with what sum of

money and when.

In Russell v. United States, 369 U.S. 749 (1962), this Court

held fatally defective indictments that charged an offense

using only the general language of the underlying criminal

statute. In that case, the defendants were indicted for

violating 2 U.S.C. § 192, which makes it a criminal offense

for a witness before a congressional committee to refuse to

answer any question “pertinent to the question under

inquiry” by the committee. Because the indictments simply

charged that the questions the witnesses refused to answer

“were pertinent to the question then under inquiry” without

setting forth facts showing what the subject of the inquiry

was, which was “the very core of criminality under” the

statute, they failed “ ‘to inform the court of the facts alleged,

so that it may decide whether they are sufficient in law to

support a conviction, if one should be had’ ” 369 U.S. at 768,

quoting United States v. Cruikshank, 92 U.S. 542, 558 (1876).

Although the Russell Court concluded that the language

of the underlying statute may be used in the general

description of an offence, “ ‘it must be accompanied with such

a statement of the facts and circumstances as will inform the

accused of the specific offence, coming under the general

description, with which he is charged.” 369 U.S. at 765,

quoting United States v. Hess, 124 U.S. 483, 487 (1888). This

the indictments in Russell failed to do. “The vice of these

indictments, rather, is that they failed to satisfy the first

essential criterion by which the sufficiency of an indictment

is to be tested, ie., that they failed to sufficiently apprise the

defendant ‘of what he must be prepared to meet.’ ” 369 U.S.

at 764; accord, United States v. Nance, 533 F.2d 699 (D.C.

Cir. 1976) (wire fraud indictment using statutory language

to allege that “false representations” were made held fatally

defective for failing to allege any of the factual particulars

thereof); United States v. Curtis, 506 F.2d 985 (10th Cir. 1974)

(mail fraud indictment held fatally defective because it failed

to inform defendant as to what aspects of the alleged scheme

were contended to be fraudulent).

15

The very core of criminality in the case at bar is the

omission from the 1976 L-3 report of a corrupt payment: e.g.,

a bribe. The Indictment alleges neither the omission nor the

facts making any omitted payment corrupt. Although the

court below found that the Indictment alleged omission of

some payment by implication, it clearly does not allege in

what way that omission was part of a fraudulent scheme. A

political contribution, like the loan in Dixon, is not inherently

corrupting and mere nondisclosure of it is not fraud. In Dixon

the Indictment at least identified the loan. Here the

Government has, arguendo, implied some unidentified

payment was made but has utterly failed to inform the

defendants how the unidentified payment formed any part

of a scheme of undue influence or fraud.

To find by implication or otherwise that this Indictment

alleges the defendants “corrupted” legislators or exerted

“improper influence,’ this Court must rely solely upon the

general allegations of the purposes of the alleged scheme of

nondisclosure in paragraphs 1(a)-(c) (set forth above). But

those resounding generalities tell the defendants nothing

about the nature of the corrupt acts that are the core of any

fraud charge. Once it is conceded that “corruption” or

“improper influence” is a necessary element of the alleged

scheme of nondisclosure here, it follows as a fundamental

principle of due process that the defendants are entitled to

know the facts constituting the improper influence or

corruption in order to prepare a defense.

Questions which are unanswered by this Indictment are:

Who was influenced? How were they influenced? By what

payment were they influenced? What was improper about the

influence? Did a legislator agree to vote a certain way for

money? What witnesses should defendants interview to

defend this allegation? Which legislators should it call to

testify in their defense? How are the defendants to show a

payment was for a proper purpose when they are not advised

of any payment they are alleged to have made or, of any

improper purpose for which they are alleged to have made it?

16

In its opinion, the court below discussed the failure to allege

any specific payment in 1975 solely in connection with the

question whether the Indictment alleged falsity in the 1976

L-3 report and thus connected the filing with the alleged

scheme. The court found the Indictment alleged a payment

in 1975 by implication. But the Indictment must allege a

payment made in 1975 for the purpose of improperly

influencing a legislator in order to allege fraud.

More importantly, it must allege sufficient facts about that

payment and its allegedly improper aspects to permit

defendants to gather the evidence relating to that claim in

order to defend against it. Alleging “by implication” a

payment of an unknown amount at an unknown time to an

unknown person for an undisclosed objective hardly meets

the test for pleading fraud; nor is this inadequacy cured by

the shadow of vague “improper purposes” cast over the

Indictment in paragraphs 1(a)-(c).

Compare the allegations confronting the defendants here with

those in United States v. McNeive, 536 F-2d 12465 (8th Cir. 1976).

In that case, a mail fraud conviction was reversed because,

although it was alleged and proved that a public official received

gratuities by mail, in the absence of evidence that they accorded

preferential treatment to the payors, there was no scheme to

defraud, ie., the payments were not shown to be bribes. The

defense in McNeive was able to show a lack of influence. Defen-

dants cannot do so here because they are not told whom they

are supposed to have paid, when, or for what.

The gravamen of a mail fraud indictment is fraud. The

reported cases are replete with indictments describing bribes,

kickbacks, corruption, and influence-peddling. This

Indictment and the McNeive indictment are unique in the

complete omission of any facts constituting corruption. The

gravamen of this Indictment is nondisclosure. But

se agai of political contributions is not a mail fraud

violation.

The McNeive court distinguished several other leading mail

fraud cases on grounds showing how vital it is to the defense

of such a charge to be apprised of the specific fraudulent act

complained of. The following excerpts from the opinion show

17

how the presence or absence of the elements of fraud depend

upon circumstances surrounding specific payments or efforts

to influence:

The first category, which comprises the bulk of the

mail fraud cases, includes the m tive schemes

which are intended to defraud individuals of money or

other tangible property interests. There can be little

dispute that these schemes are within the scope of § 1341

since + ed a hyd calculated aionte. to use

misrepresentations or other deceptive practices to induce

the innocent or unwary to give up some tangible interest.

** *

Tae satin’, pallies So tecr eee) fees

of those which operate to ive individuals

of i or interests. In United States v. States,

488 F.2d 761, 765 (8th Cir. 1973), cert. denied, 417 US.

909, 94 S. Ct. 2606, 41 L. Ed. 2d 212 (1974), this court

ruled a fraud scheme was a proper subject

a mail fraud prosecution since the scheme detrauded

citizens of “certain intangible political and civil rights.”

** *

An increasing number of courts have expanded the

rationale of United ser v. bso pod su ay and related

cases — the arena of vil rights. These

courts held that a agentes ee can be

rosecuted under § 1341 if he breaches his ance to

pred by kt bribes or kickbacks in the

yr PAE since such conduct defrauds

roger right to the employee’s honest and

the employer services. United States v. Bryza, ea, 522 F.2d 414

(7th Cir. 1975), cert. denied, __U.S.__., 96 S. Ct. 2237,

48 L. Ed. 2d 837, 44 U.S.L.W. 3685 (1976). Similar

schemes devised by public officials have been viewed as

defrauding state or municipal citizens of the same

in ble right. United States v. Isaacs, 493 F.2d 1124

(7th Cir.), cert. denied, 417 U.S. 976, 94 S. Ct. 3184, 41

L. Ed. 2d 1146 (1974).

**

In sup of its position, the Government relies

primary upon the Seventh Circuit cases of United

tates v. "Dash 522 F.2d 641 (7th Cir. 1975), cert. denied,

424 US. 977, 96 S. Ct. 1484, 47 L. Ed. 2d 748, 44 US.LW.

3532 (1976); United States v. Keane, 522 F.2d 534 (7th

18

Cir. 1975), cert. denied, 424 U.S. 976, 96 S. Ct. 1481, 47

L. Ed. 2d 746, 44 U.S.L.W. 3532 (1976); United States

uv. Isaacs, supra, and United States v. George, 477 F.2d

508 (7th Cir.), cert. denied, 414 U.S. 827, 94 S. Ct. 155,

38 L. Ed. 2d 61 (1973). In each of these cases, the court

found that either — or public official had

breached his duty to thful and honest services

and that this breach contributed to the court’s finding

of a § 1341 scheme to defraud. These opinions contain

broad statements which the Government cites as

supportive of its position in the present case. However,

these general statements, standing alone, are not

necessarily controlling ....

United States v. George, supra, is a kickback case. It

involved a defendant who permitted his personal

financial interests to interfere with his duty to secure

the most favorable bargain for his employer.

United States uv. Keane, supra, is also distinguishable.

In thas cose, Keone, a city eidarmen, perticipated in a

complicated and clandestine scheme to purchase, through

a newly-established investment company, oe

propery from county-sponsored scavenger sales.

used position as chairman of the City Finance

Committee to secure preferential treatment for the

ne pres apteroe dein np et deny mummy

The activities described in Keane cannot be deemed

to McNeive’s conduct. Keane permitted his

personal interest to distort his discretion and to

adversely affect the legislative functions of the Cit

Council. McNeive's scheme did not interfere at all wit

any of his discretionary functions since the issuance of

the permits was only a ministerial duty.

The Government's reliance upon United States u. Isaacs,

supra, and other bribery cases is likewise The

19

this case, however, does not fit within that mold. The

Government does not, and could not, characterize the

tips received by McNeive as disguised bribes.

Furthermore, the tips did not affect McNeive’s

discretio judgment nor result in any official

derma treatment ae ares a

ve's compared egregious bribery

scheme in /saacs, is relatively innocuous, and petty to

the extent that there is no actual intent to defraud, whi

is an essential element of the mail fraud statute.

The case of United States v. Bush, supra, is likewise

not on point. In that case, a public official concealed his

interest in an advertising agency and used his official

influence to induce the City to issue an advertising

contract to his agency. The court, dra an analogy

to kickback cases such as George, correctly concluded

that defendant’s conduct deprived the City of the

opportunity of securing the most economically favorable

contract. As previously stated, this constituent is absent

in the present case.

ee

Based upon the language and underlying policy of

1341, we concluded that McN eive’s conduct is beyon

the pale of that statute. We simply <io not believe that

pine oat enacting the mail fraud statute,

con that a situation similar to McNeive’s

would classified as a scheme to defraud. The

acceptance of small unsolicited gratuities or tips is not

a bribe, kickback, an extortion or a “scheme or artifice

to defraud”’ under the facts of this case.

536 F.2d at 1248-51 (emphasis added) (footnotes omitted).

In the present case, the defendants cannot compare the

amount of any contribution alleged with the “small,

unsolicited gratuities” in McNeive, or show a lack of influence

on the alleged recipient’s vote as in McNeive, or distinguish

a payment from the blatant bribery in United States v. Isaacs,

493 F.2d 1124 (7th Cir. 1974), or from the kickbacks in United

States v. George, 477 F.2d 508 (7th Cir. 1973) — because

nothing is alleged that identifies any payment, its purpose,

its recipient or the surrounding circumstances. And the

Government admittedly cannot now and never will be able

to supply such facts. (Appendix E-45-46.)

20

The defendants are not supplied with the gravamen of this

offense: the nature of the alleged fraud. Nondisclosure of some

payment in 1975 is alleged (according to the circuit court),

by implication. The “improper influence” the court found

present in the Indictment is there only by innuendo, yet that

must be the essence of the charge. The Indictment falls

squarely within the holding in Russell:

Where guilt — so crucially upon such a specific

identification of fact, our cases have uniformly held that

an indictment must do more than simply repeat the

language of the criminal statute.

“It is an elemen principle of criminal pleading,

that where the definition of an offense, whether it be at

common law or by statute, ‘includes generic terms, it

is not sufficient that the indictment shall charge the

offense in the seg gar terms as in the definition;

but it must state species, — it must descend to

culars.’ ” United States v. Cruikshank, 92 U.S. 542,

58, 23 L. Ed. 588, 593.

The v? xe which inheres in the failure of an indictment

under 2 U.SC. § 192 to identify the subject under inquiry

is thus the violation of the basic schnchsle “that the

accused must be apprised by the indictment, with

reasonable eaea i of the nature of the accusation

t him, .. .” United States v. Simmons, supra (96

S. at 362). A tic form of indictment in cases of

this kind requires the defendant to go to trial with the

chief issue undefined. It enables his conviction to rest

on one . ~ the — io Sticlunise to rest

on . It gives the prosecution hand on appeal

to fill in the gaps of proof by surmise or conjecture.

369 U.S. at 764-66 (emphasis added).

Even without considering the weakness of the

Government's circumstantial evidence that some payment

must have been made in 1975, it is clear from the Indictment

that the Government, without having presented any evidence

to the grand jury that payments were made to legislators in

1975 and not disclosed in the 1976 L-3 form, wants a petit

jury to speculate about two essential elements of this offense:

(1) that a payment was made by Buckley at all in 1975; and

(2) that it was made for a “corrupt” purpose. The Government

21

remains free to sift through its evidence and to select any

purpose it feels it can support in closing argument,

unhindered by any description in the Indictment limiting the

purpose in any way. We concede that defendants are not

entitled to the Government's evidence in an indictment. But

this Indictment omits the gravamen of the fraud charge —

the facts constituting the claimed improper influence or

corruption — in violation of the principles announced by this

Court in Russell.

B. Parr

This Court has carefully differentiated between those

mailings that could be part of a “fraudulent scheme” (and

that would therefore support a mail fraud indictment) and

those that could not have been done “for the purpose of

executing” such a scheme. In Parr v. United States, 363 U.S.

370 (1960), the defendant and his associates controlled the

affairs of a school district in Texas. Parr’s co-defendants were

members of the school board and he was the president of the

bank in which the school district funds were deposited. He

and his associates devised a scheme to defraud the district

of large sums of money.

The actual defalcations did not involve any use of the mails.

The school board was required by Texas law to mail out

certain documents and notices to taxpayers and taxpayers

in return sent their tax payments using the mails. The monies

22

no a issue was submitted to, nor, hence, determined

we must conc that the legally compelled

ings, complained of in the first 16 counts of the

indictment, were not shown to have been unlawful

‘step[s] in a plot,” Badders v. United States, su ra (240

US., at 394), A partis} of the execution of the ” Kann

v. went States, supra (323 U.S., at 95), “incident to an

essential ra of the scheme,” Pereira v. United States,

— (3 S., at 8) or to have been made “‘for the

se of executing such scheme,” within the meaning

of 1341, for we think it cannot be said that mailings

made or caused to be made under the imperative

command of, Guty Sempoces by state law are —

under the federal fraud statute, even though so

of those who are 80 required to do the mailing for the

District plan to steal, when or after received, some

indefinite part of its moneys.

363 U.S. at 391 (emphasis added); accord United States v.

Boyd, 606 F.2d 792 (8th Cir. 1979) (defendant’s “legally

compelled” mailing of income tax payments comprised in part

of monies obtained from his lawful activities held not

sufficient to sustain mail fraud conviction).

In Kann v. United States, 323 U.S. 88 (1945), defendants

were charged in a mail fraud indictment with conceiving a

scheme to defraud a corporation and its shareholders by

diverting to themselves profits from government contracts

held by the corporation. The alleged scheme contemplated

distribution of the profits in question to a subsidiary

corporation (Elk Mills), which would in turn pay large salaries

and bonuses to defendants. The indictment alleged that the

defendants, by cashing a check at a bank, had caused that

check to be transmitted by mail from that bank to the bank

on which it was drawn. Reversing defendants’ convictions,

the Court held that this mailing was collateral to the scheme

and not a part of it.

scheme was co executed as the

a ey eee

roger to be obtained by their fraud, and

23

the su t banking transactions between the banks

co were merely incidental and collateral to the

scheme and not a part of it.

We hold, therefore, that one element of the offense

defined by the statute, namely, that the must

be for the purpose of executing the fraud, is in

the present case. The judgment must be reversed.

323 U.S. at 95.

In this case, Parr mandates that the “legally compelled”

mailing of the 1976 L-3 cannot be alleged to have been part

of any mail fraud “scheme” in the absence of any allegation

that it omitted reference to specific payments to legislators.

Likewise, in the absence of any allegation that the 1976 L-3

failed to report payments to specific legislators, Kann holds

that it too must be considered as only “incidental and

collateral to the scheme” and “not a part of it.” The court

below was unable to distinguish Parr in any meaningful way.

Parr involved a situation where the eeally em

was not made in furtherance of a scheme

defraud. In this case the Government pr Sti that the

false mailing of the 1976 disclosure form was in

furtherance of the scheme to make secret payments to

legislators.

689 F.2d at 900.

The Court of Appeals could not meaningfully distinguish

Parr because the Indictment there, like here, alleged that the

“legally compelled” mailings were made “for the purpose of

executing the scheme.” Moreover, in both cases there was no

ion or evidence that the mailings — tax collections in

Parr and the 1976 L-3 here — were unlawful or false. The

Government has sought to distinguish the holding in Parr by

arguing that the Texas School directors who were defendants

in Parr were required by law to “issue statements and deliver

receipts upon collection.” It argued that neither Washington

Water Power nor Jeremiah P. Buckley were legally obligated

to “engage in lobbying” and sought to distinguish Purr on that

ground. This argument is without substance.

Texas law did not require that the defendants in Parr run

for election to the School Board. It required that tax

24

statements be delivered. The significant point in Parr was that

the directors (once having assumed that position) were

compelled by law to deliver certain statements to taxpayers

and they used the mails for that purpose. So here, once Mr.

Buckley was assigned by his emplayer to the legislature as a

lobbyist, he too was compelled by law to file lobbyist

registration statements with the Public Disclosure Commission.

He used the mails to make a “legally compelled” filing.

The point that Parr makes which the Government and court

below ignored is that, where mailings are legally compelled,

courts will hesitate to find that they were “steps in a plot,”

“parts of the execution of the fraud,’ or “incident to an

essential part of the scheme.” Purr teaches that, in the absence

of factual allegations showing the falsity of the legally

compelled mailing relied on by the Government here to

support its entire case, the Court of Appeals could not

conclude that that legally compelled mailing was made “for

the purpose of executing such scheme.” Its decision therefore

is in direct conflict with Parr.

CONCLUSION

This Indictment alleges no facts showing the connection

between the mailing and a scheme of nondisclosure because

it omits any allegation that the mailing was false. If the

Indictment can be said to imply such falsity, that implication

does not afford any basis for distinguishing the implied

political contribution from the undisclosed loan in Dixon. Nor

does an allegation, by implication only, of an unidentified

political contribution made for an unknown purpose to an

unknown person apprise the defendants of the allegedly

corrupt elements in the payment, which, under Dixon, must

be present for there to be a fraudulent scheme. The defendants

cannot establish the legitimacy of a payment which the

Indictment does not identify.

25

DATED this 26th day of February, 1983.

Respectfully submitted,

Thomas S. Zilly

Arthur W. Harrigan, Jr.

Larry S. Gangnes

LANE POWELL MOSS & MILLER

3800 Rainier Bank Tower

Seattle, Washington 98101

Telephone: (206) 223-7000

Attorneys for Petitioner Washington

Water Power Company

William A. Helsell

HELSELL, FETTERMAN,

MARTIN, TODD & HOKANSON

1500 Washington Bldg.

P.O. Box 21846

Seattle, Washington 98111

Telephone: (206) 292-1144

Attorneys for Petitioner

Jeremiah P. Buckley

George W. Akers

William K. Goodwin

MONTGOMERY, PURDUE,

BLANKINSHIP & AUSTIN

1515 Norton Building

Seattle, Washington 98104

Telephone: (206) 682-7090

Attorneys for Petitioner

Ellsworth B. Sargent

Payton Smith

DAVIS, WRIGHT, TODD, RIESE,

& JONES

4200 Seattle-First National Bank Bldg.

Seattle, Washington 98154

Telephone: (206) 622-3150

Attorneys for Petitioner

Sargent-Tyee Construction

Company

APPENDIX A

UNITED STATES of America,

Plaintiff-Appellant,

Vv.

Jeremiah P. BUCKLEY, Ellsworth B. Sargent,

Washington Water Power Co., and Sargent-

Tyee Construction Co., Defendants-Appellees.

No. 81-1597.

United States Court of Appeals,

Ninth Circuit.

Appeal from the United States District

Court for the Western District of

Washington

Donald S. Voorhees,

District Judge, Presiding

Argued and submitted April 6, 1982.

Decided Oct. 8, 1982.

Michael P. Ruark, Asst. U.S. Atty.,

Seattle, Wash., for plaintirf-appellant.

Arthur Harrigan, Seattle, Wash.,

argued, for defendants-appellees; W. A.

A-2

Helsell, Seattle, Wash., G. W. Akers,

Payton Smith, Seattle, Wash., on brief.

Before KILKENNY, HUG, and SKOPIL,

Circuit Judges.

SKOPIL, Circuit Judge:

The Government appeals the dismissal

of an indictment of one count of mail fraud

in violation of 18 U.S.C. § 1341. The

district court dismissed the indictment on

the ground that the Government had not

alleged, or shown that it could prove, that

a lobbyist disclosure form, mailed by

appellee Washington Water Power Company

("WWPC"), contained false information.

Because the indictment provided a minimally

adequate description of the charge nie

ficient to enable preparation of a defense

and a plea of double jeopardy, we reverse.

A-3

FACTS

In January 1981 the grand jury indict-

ed the appellees on one count of mail

fraua.!

The mail fraud charge alleged

a money-washing scheme that operated

from 1972 to 1976, in part to avoid a

state law requiring disclosure of contribu-

tions to state legislators. As of 1974,

state law required that both lobbyists and

their employers report lobbying expendi-

tures. Wash. Rev. Code §§ 42.17.170,

42.17.180.

The indictment alleged that Buckley

distributed $15,000 to state legislators on

behalf of WWPC after receiving it in early

June 1975. The indictment alleged that

Buckley filed reports from January 1973 to

l. The Government also indicted two of the

appellees, Buckley and Washington Water

Power Company, on one count of obstruction

of justice. This count was not dismissed

and is not in issue on appeal.

A-4

January 1976 in which he “intentionally

failed to disclose the money paid to him in

accordance with the scheme described in

2 and subse-

paragraph 2 of this indictment

quently distributed by JEREMIAH P. BUCKLEY

to members of the Washington State Legis-

lature on behalf of WASHINGTON WATER POWER

COMPANY. " The only allegation of use of

the mails in furtherance of the alleged

fraudulent scheme is contained in the 28th

2. Paragraph 2 of the indictment summar-

izes the charge:

2. It was part of the said scheme and

artifice that JEREMIAH P. BUCKLEY,

ELLSWORTH B. SARGENT, WASHINGTON WATER

POWER COMPANY, SARGENT-TYEE CONSTRUC-

TION COMPANY, and Robert A. Perry

entered with one another into a

corrupt relationship in which each of

them would and did act with intent to

benefit himself and other defend-

ants, directly and indirectly, through

the use of fraud and deception. It

was further part of the scheme to

defraud that, during the spring 1972,

Robert A. Perry, ELLSWORTH B. SARGENT,

and JEREMIAH P. BUCKLEY, in order to

circumvent the requirements of

Washington State's public disclosure

law (Initiative 276) which became

effective January 1, 1973, developed a

plan to have WASHINGTON WATER POWER

A-5

and final paragraph of the indictment:

On or about April 1, 1976, within the

Western District of Washington,

JEREMIAH P. BUCKLEY, ELLSWORTH B.

SARGENT, WASHINGTON WATER POWER

COMPANY, and SARGENT-TYEE CONSTRUCTION

COMPANY, the defendants herein, for

the purpose of executing the aforesaid

scheme and artifice and attempting to

2. (Continued)

COMPANY awared certain day crew

contracts to SARGENT-TYEE CONSTRUCTION

COMPANY and, in return, SARGENT-TYEE

CONSTRUCTION COMPANY would kick back a

portion of the proceeds to WASHINGTON

WATER POWER COMPANY after first

laundering the money through Sam Lee

of Hong Kong. Thereafter said money

was returned to WASHINGTON POWER

COMPANY for undisclosed payments to

members of the Washington State

Legislature for the purpose of fur-

thering the legislative interests of

WASHINGTON WATER POWER COMPANY. These

paymentez would then be intentionally

omitted from the publicly filed

disclosure statements required to be

filed under the public disclosure

statute, thereby concealing those

payments from the voters of the State

of Washington.

A-6

do so, knowingly caused to be deliver-

ed by mail, according to the direction

thereon, an envelope addressed to the

"Public Disclosure Commission, 403

Evergreen Plaza, 711 Capitol Way,

Olympia, Washington 98504" containing

Public Disclosure Commission Form L-3,

Lobbyist Employer's Report, for the

year 1975, from WASHINGTON WATER POWER

COMPANY.

The district court granted in part the

defendants’ motion for a bill of particu-

lars, including a request for further

information about paragraph 28 of the

indictment. The Government provided the

following information relevant to paragraph

28:

The L-3 filed by Washington Water

Power Corporation for the year 1975

failed to report any of the money

received from Robert A. Perry and

spent on behalf of Washington Water

A-7

Power Corporation by Jeremiah Buckley.

The defendants moved for dismissal of

the mail fraud count. The court granted

the motion on the ground that the indict-

ment and Bill of Particulars did not

“establish that any payments to any part-

icular legislatcrs made by Buckley in 1975

were not reported on the Form L-3 filed on

April 1, 1976." The court found that

without an explicit allegation that Buckley

made payments to legislators in 1975 and

intentionally omitted them from the Form

L-3, there were insufficient facts sup-

porting the allegation that the Lobbyist

Form L-3 was false, and thus mailed in

furtherance of the alleged scheme to

de fraud.

The Government appeals, pursuant to 18

U.S.C. § 3731.

A-8

DISCUSSION

I

Standard of Review

An indictment is sufficient if

it contains the elements of the charged

crime in adequate detail to inform the

defendant of the charge and to enable him

to plead double jeopardy. Hamling v.

United States, 418 U.S. 87, 117 (1974).

Two corollary purposes of an indictment

are: (1) to ensure that the defendants are

being prosecuted on the basis of the facts

presented to the grand jury, and (2) to

allow the court to determine the suf-

ficiency of the indictment. See Russell v.

United States, 369 U.S. 749, 768-71 (1962);

United States v. Bohonus, 628 F.2d 1167,

1173 (9th Cir.), cert. denied, 447 U.S.

928 (1980); United States v. Cecil, 608

F.2d 1294, 1296-97 (9th Cir. 1979); United

A-9

States v. Keith, 605 F.2d 462, 464 (9th

Cir. 1979).

Indictments alleging a scheme to

defraud must provide sufficient facts to

fulfill the purposes of an indictment. See

United States v. Cecil, 608 F.2d at 1297

(citing with approval United States v.

Curtis, 506 F.2d 985 (10th Cir. 1974),

which held a mail fraud indictment invalid

for failure to identify with particularity

the nature of the alleged scheme). Yet,

3. Before trial, these corollary purposes

of an indictment are generally met if the

indictment adequately informs the defendant

of the charge to enable him to defend

himself and plead double jeopardy. See,

e.g., Hamling v. United States, 418 U.S. at

117; United States v. Chenaur, 552 F.2d

294, 301 (9th Cir. 1977). The instant

indictment satisfies these corollary

purposes. After trial, when the theory on

which the Government has obtained a convic-

tion is clear, these corollary purposes

assume additional importance. See,

e.g., United States v. Stewart Clinical

tats

ratory, o52 F.2d 604, 80? (9th Cir.

1981); United States v. Gordon, 64l F.2d

1281, 1285-87 (Sth Cir.) cert. denied,

102 S.Ct. 312 (1981).

A-10

the issue in judging the sufficiency of the

indictment is whether the indictment

adequately alleges the elements of the

offense and fairly informs the defendant of

the charge, not whether the Government can

prove its case. United States v. Thordar-

son, 646 F.2d 1323, 1337 & n.25 (9th Cir.),

cert. denied, 102 S.Ct. 601 (1981).

The allegations of the indictment

are presumed to be true. Boyce Motor

Lines v. United States, 342 U.S. 337, 343

n.16 (1952). The Government need not allege

its theory of the case or supporting

evidence, but only the “essential facts

necessary to apprise a defendant of the

crime charged."

3. (Continued)

Because an indictment must be returned

by the grand jury, a bill of particulars

that may give the defendants adequate

notice of the charge against them cannot

save an invalid indictment. Russell v.

United States, 369 U.S. at 770.

A-11l

United States v. Markee, 425 F.2d 1043,

1047-48 (9th Cir.), cert. denied, 400 U.S.

847 (1970). We review de novo the suf-

ficiency of the indictment. See United

States v. Bohonus, 628 F.2d at 1173; United

States v. Chenaur, 552 F.2d at 301.4

4. The rule that indictments that are

challenged after trial are liberally

construed in favor of validity, see, e.g.,

United States v. Pheaster, 544 F.2d <3"

361 (9th Cir. 1976), cert. denied, 429 U.S.

1099 (1977), does not apply to this case

where the defendants timely challenged the

indictment before trial. In 1932 the

Supreme Court left open the question

whether an indictment should be read more

strictly before trial than after trial. In

Hagner v. United States, 285 U.S. 427

, the Court upheld an indictment for

mail fraud that failed explicitly to allege

delivery of a letter in furtherance of a

fraudulent scheme, because that fact could

be presumed from the indictment's allega-

tions that the letter was placed in the

mail. The Court stated, however, that it

was deciding only that the “loosely and

inartificially drawn" indictment was

sufficient, in the absence of a showing of

prejudice, after conviction; and that it

was not "deciding that the indictment would

not have been open to some form of chal-

lenge at an earlier stage of the case".

Id. at 433.

A-12

Il

| Fraudulent Scheme

The essential elements of mail

fraud under 18 U.S.C. § 1341 are: (1) a

scheme to defraud; and (2) a knowing use of

the mail to execute the scheme. United

States v. Kaplan, 554 F.2d 958, 965 (9th

Cir.), cert. denied, 434 U.S. 956 (1977).

The appellees contend that the alleged

scheme was not a scheme to defraud under

the statute, relying on United States v.

Dixon, 536 F.2d 1388 (2d Cir. 1976). In

Dixon, the court held that nondisclosure by

a corporate official of certain loans in

4. (Continued)

Neither the Supreme Court nor our

circuit has explicitly answered this

question. It appears that we have conduct-

ed a searching de novo review of an indict-

ment dismissed before trial on sufficiency

grounds. See, e.g., United States v.

Inryco, Inc., 642 F.2d 290, 294-95 (9th

Cir. 1981), cert. dismissed, 102 S.Ct. 1045

(1982). We follow this procedure here.

A-13

violation of SEC regulations was not a

scheme to defraud because the shareholders

did not rely on the disclosure regulations,

and the nondisclosure was not intended to

secure money or property in a fraudulent

manner. Id. at 1398-400. In contrast, the

Government alleges that the defendants here

did not disclose all of their contributions

to state legislators in violation of a

state statute for the purpose of hiding

contributions that were intended to in-

fluence the officials improperly.

Fraudulent schemes include those that

are “contrary to public policy or which

fail to measure up to the ‘reflection of

moral uprightness, of fundamental honesty,

fair play and right dealing in the general

and business life of members of society.'"

United States v. Bohonus, 628 F.2d at

1171.

In Bohonus, we concluded that “depriv-

ing an employer of one's honest services

A-14

and of its right to have its business

conducted honestly can constitute a ‘scheme

to defraud’ under § 1341." Id. at 1171-72.

See also United States v. Louderman, 576

F.2d 1383, 1387-88 (9th Cir.), cert.

denied, 439 U.S. 896 (1978) (scheme to

gather private information by deception was

fraudulent).

In light of Bohonus and Louder-

man, we hold that the Government adequately

alleged a “scheme to defraud" Washington

citizens of their statutory right to know

who made what political payments to whom,

and a knowing use of the mails to further

the scheme in violation of the mail fraud

statute.

Ii!

Use of the Mail

The district court concluded that the

indictment would have sufficiently alleged

use of the mails to execute a scheme to

A-15

defraud if it had alleged that WWPC had

filed a false Lobbyist Employer's Report in

1976 that did not disclose payments to

legislators.

The Government concedes that "the only

way [the disclosure form] could be in

execution or furtherance [of a scheme to

defraud] is if it were false." It argues

that it was not necessary for it to allege

that the report was false, and insists that

it was sufficient for it to allege that the

mailing of the report was for the purpose

of executing the scheme. It contends that

the allegation of a false mailing is

evidentiary in nature and relates only to

its theory of the crime, not to the suf-

ficiency of the indictment. The Government

contends that it need not explicitly state

that WWPC filed a false form by failing to

report 1975 payments to legislators because

it implied that fact when it alleged a

money laundering scheme in 1975, payments

A-16

to legislators as a result of that scheme,

and the mailing of a Lobbyist Employer's

Report for the year 1975 in furtherance of

the scheme. We agree.

Because the indictment implicit-

ly alleged the falsity of the disclosure

report, it was clear enough to give the

defendants notice of the crime charged and

to allow them to plead double jeopardy.

See United States v. Castor, 558 F.2d 379,

385 (7th Cir. 1977), cert. denied, 434 U.S.

1010 (1978) (Government need not allege

evidentiary facts sufficient to prove its

allegation that mailings were made in

furtherance of a fraudulent scheme). The

Government's allegation that the mailing of

the disclosure form was in execution of the

scheme to make undisclosed payments to

legislators referred to that part of the

indictment that alleged that the mailed

disclosure form falsely failed to disclose

A-17

such payments. The indictment in paragraph

2 stated:

Thereafter [the money laundered

through Hong Kong] was returned to

Washington Water Power Company for

undisclosed payments to members of the

Washington State Legislature for the

purpose of furthering the legislative

interests of Washington Water Power

Company. These payments would then

be intentionally omitted from the

publicly filed disclosure statements

required to be filed under the public

disclosure statute... .

The indictment concluded in paragraph 28 by

stating that the defendants, "for the

purpose of executing aforesaid scheme and

artifice and attempting to do so, knowingly

caused to be delivered by mail .. . [a]

Public Disclosure Commission Form L-3,

Lobbyist Employer's Report, for the year

1975, from Washington Water Power Company.”

A-18

Although a mailing need not be false

to be in furtherance of a scheme to de-

fraud, see United States v. Halbert,

640 F.2d 1000, 1007 (9th Cir. 1981); Byron

v. United States, 273 F. 769, 771-72 (9th

Cir.), cert. denied, 257 U.S. 653 (1921),

the parties to not dispute that the only

way the mailing of the disclosure form

could be in furtherance of the scheme to

make secret political payments is if it

falsely failed to report such payments as

alleged in paragraph 2 of the indictment.

What the district court believed that the

indictment failed to do was to include any

facts supporting the allegation that the

Lobbyist Form L=-3 was mailed in furtherance

of the alleged scheme. It is true that the

Government did not specifically allege that

Buckley made payments to legislators in the

year 1975 and that these payments were

intentionally omitted from the Lobbyist

Form mailed in 1976. But an indictment

A-19

should be: (1) read as a whole; (2) read

to include facts which are necessarily

implied; and (3) construed according to

common sense. See United States v. Inryco,

Inc., 642 F.2d at 294; United States v.

Anderson, 532 F.2d 1218, 1222 (9th Cir.),

cert. denied, 429 U.S. 839 (1976).

In this case, the crucial allegation

that Buckley made payments to legislators

in 1975 and intentionally omitted them from

the disclosure form was necessarily implied

in the three sentences of the indictment

quoted above. In the first crucial sent-

ence of the indictment, at paragraph 2, the

Government alleged that WWPC had money set

aside for payments to legislators. The

second crucial sentence alleged that these

payments would be intentionally omitted

from the disclosure statement. Although

the indictment does not explicitly allege

that any money was delivered to any legis-

lators, this fact is necessarily implied.

A-20

There is no way that payments could be

intentionally omitted from the disclosure

statement if none were ever made. More-

over, the making of such payments is not an

element of the crime. Cf. United States v.

Debrow, 346 U.S. 374 (1953) (although an

essential element of the crime of perjury

is that the defendants be administered an

oath authorized by law, indictment was

sufficient when it alleged that the defend-

ants had “duly taken an oath;" allegation

that the person giving the oath was author-

ized to give it was unnecessary. )

The third crucial sentence of the

indictment, at paragraph 28, alleges that

in 1976 WWPC mailed the disclosure form for

the year 1975 in furtherance of the alleged

scheme. Although the indictment fails to

allege explicitly that WWPC made payments

to legislators in 1975, that fact is

A-21

necessarily implied when these three

sentences are read together. The only way

that the 1975 disclosure form could have

been mailed in furtherance of the alleged

scheme, as charged in paragraph 28, is for

WWPC intentionally to omit the payments to

legislators from the disclosure statement,

as charged in paragraph 28, is for WWPC

intentionally to omit the payments to

legislators from the disclosure statement,

as charged in paragraph 2. Cf. Pipefitters

Local Union v. United States, 407 U.S. 385,

439 n.48 (1972) (dictum) (reading allega-

tions of an indictment together to draw

inferences to determine sufficiency).

Thus, the defendants had sufficient notice

of the charged crime to prepare a defense

and plead double jeopardy despite the fact

A-22

that the indictment was lengthy, confusing,

and largely irrelevant.”

It is immaterial that at a hearing

about the sufficiency of the indictment,

the Government conceded that it could not

prove the omission in the 1976 Lobbyist

Report of any specific payment to any

specific legislator in 1975 and that

the Government refused to make such spec-

ific allegations in the bill of particu-

lars. It was possible for the Government

to prove these payments to unknown legis-

lators with circumstantial evidence, rather

5. Although Fed.R.Crim.P. 7(c) requires

that the indictment be a “plain, concise

and definite written statement of the

essential facts constituting the offense

charged," the courts have construed this

language to require little more than that

the indictment give the defendants suf-

ficient notice of the crime. See United

States v. Debrow, 346 U.S. 374 (1953);

United States v. Root, 366 F.2d 377, 384

(9th Cir. 1966), cert. denied, 386 U.S. 912

(1967).

A-23

than direct evidence. Although the Govern-

ment was reticent about its theory, it

apparently wanted a jury to infer that

because legislation important to WWPC

passed by one vote in 1975 and WWPC had

established a laundering scheme which put

$15,000 in Buckley's hands in 1975, that

Buckley must have given it to some unknown

legislators in 1975 to influence their

votes, and that consequently WWPC failed to

disclose those 1975 payments in the 1976

Lobbyist Form.

Although the Government's theory

appears weak, and a judgment of acquittal

may be granted if the Government presents

inadequate evidence at trial, the weakness

of the Government's case is irrelevant to

the sufficiency of the indictment. See

United States v. Thordarson, 646 F.2d at

1337 n.25. At this stage of the proceed-

ings it is unknown whether the Government

A-24

has overwhelming circumstantial evidence to

support its theory. The indictment stage

of the proceedings is not the appropriate

time to require the Government to present

its proof. See United States v. Sampson,

371 U.S. 75, 78-79 (1962).°

6. There is some indication in the record

that the district court dismissed the

indictment in part because it believed that

it would have to grant a motion for acquit-

tal at the end of the Government's case.

Buckley contends that a judgment of acquit-

tai is proper before the Government has

presented its case when it is clear that

the Government's proof is insufficient.

See United States v. Ubl, 472 F.Supp. 1236

(N.D. Ohio 1979) (motion for acquittal

granted in the middle of the Government's

case after it was apparent that Government

could not introduce sufficient evidence);

United States v. Maryland Cooperative Milk

Producers, Inc., 145 F.Supp. I5I (D.D.c.

T9556) (motion for acquittal granted after

Government stipulated to certain facts that

precluded conviction); United States v.

directed verdict for defendant

proper after Government admitted a fact

during its opening statement that precluded

conviction). We need not decide the

validity of these cases in light of United

States v. Martin Linen Supply Co., 430 U.S.

564, 570 n-.8 (1977) Cia that a motion

A-25

In charging mail fraud, the Government

is required only to make specific factual

allegations concerning the mailing alleged-

ly in furtherance of the alleged scheme to

defraud. See United States v. Livengood,

427 F.2d 420, 423 (9th Cir. 1970) (mail

fraud indictment couched in the language of

the statute was sufficient and met the

requirements of Fed.R. Crim.P. 7(c) where

the alleged schemes were particularized in

some detail). We hold that the Government

made barely sufficient allegations in this

mail fraud indictment.

6. (Continued)

for judgment of acquittal can be enter-

tained at the earliest, after the evidence

on either side is closed). In the instant

case, unlike the Ubl line of cases, the

Government has not conceded that it could

not prove the falsity of the disclosure

form, nor stipulated that it had provided

the court and the defendants with all its

evidence on this issue.

A-26

IV

Other Issues

The appellees contend that the mailing

was "legally compelled" under Parr v.

United States, 363 U.S. 370 (1960), and thus

not in execution of a fraudulent scheme.

Parr involved a situation where the legally

compelled mailing was not made in further-

ance of a scheme to defraud. In this case

the Government alleges that the false

mailing of the 1976 disclosure form was in

furtherance of the scheme to make secret

payments to legislators. See United States

v. Bagnariol, 665 F.2d 877, 899 (9th Cir.

1981) (per curiam), cert. denied, 102 S.Ct.

2040 (1982). Compare United States v.

Curry, 681 F.2d 406, 412 (5th Cir. 1982).

The Government contends that this case

should be remanded for trial before a

different judge, because the district court

has indicated that it found the Government

A-27

case to be weak. We find this request to

be frivolous in light of the Government's

concession that the district court has

shown no personal bias. See United States

v. Doe, 655 F.2d 920, 929 (9th Cir. 1980).

Not only was it proper for the court to

express its opinion about the Government's

case; we note our agreement with the

district court's preliminary assessment of

the weakness of the Government's case. We

hold only that the district court erred in

dismissing the indictment too early in the

criminal proceedings. If the Government

does not offer substantial evidence to

support its theory by the time it rests its

case, the district court can properly grant

a motion for acquittal.

A-28

CONCLUSION

Because the indictment implicitly

alleged the falsity of the disclosure

report and was clear enough to give the

defendants notice of the crime charged and

to allow them to plead double jeopardy, we

reverse the dismissal of the indictment.

REVERSED.

APPENDIX B

UNITED STATES COURT OF APPEALS

FOR THE NINTH CIRCUIT

UNITED STATES OF

AMERICA,

No. 81-1597

DC No. CR 81-21-1/4

Appellant,

Vv.

JEREMIAH P. BUCKLEY,

ELLSWORTH B. SARGENT,

WASHINGTON WATER

POWER CO., and

SARGENT-TYEE

CONSTRUCTION CO.,

ORDER

me ee ee ee ee ee ee ee ee ee ee

Appellees.

Appeal from the United States District

Court for the Western District

of Washington

Donald S. Voorhees,

District Judge, Presiding

Before: KILKENNY, HUG, and SKOPIL, Circuit

Judges

The panel has voted to deny the

petition for rehearing and to reject the

suggestion for rehearing en banc.

The full court has been advised of

the en banc suggestion, and no judge of the

court has requested a vote on it.

B-2

The petition for rehearing is denied,

and the suggestion for rehearing en banc is

rejected.

APPENDIX C

UNITED STATES DISTRICT COURT

WESTERN DISTRICT OF WASHINGTON

UNITED STATES OF

AMERICA,

Plaintiff, NO. CR 81-021V

ORDER DISMISSING

COUNT I OF INDICTMENT

AND DENYING MOTION TO

DISMISS COUNT II

Ve

JEREMIAH P. BUCKLEY,

et al.

Defendants.

me ee ee ee ee ee ee ee

THIS MATTER having come on regularly

' for hearing before the undersigned judge of

the above entitled court upon the motions

of the defendants for an order dismissing

Count I and Count II of the Indictment

herein, the United States appearing and

being represented by Michael P. Ruark,

Assistant United States Attorney, defendant

Jeremiah P. Buckley appearing and being

represented by William A. Helsell, his

attorney, defendant Ellsworth B. Sargent

appearing and being represented by William

C-2

K. Goodwin, his attorney, defendant Wash-

ington Water Power Company appearing and

being represented by Arthur W. Harrigan,

Jr. and Larry S. Gangnes, its attorneys,

and defendant Sargent-Tyee Construction

Company appearing and being represented by

Dennis E. Kenney, its attorney, and the

court having considered the memoranda and

affidavits filed in support of and in

opposition to said motions, and the bill of

particulars and the amended bill of part-

iculars filed herein by the United States,

and having listened to oral argument of

counsel and being fully advised in the

premises, now makes and enters the follow-

ing order:

1. COUNT I.

Count I of the indictment is hereby

dismissed with prejudice. This ruling

is made for the following reasons:

(a) The only conduct on the part of

the defendants which is relied on by the

C-3

government to invoke the provisions of the

mail fraud statute (Title 18 U.S.C. § 1341)

is the mailing of the Form L-3 for the year

1975 on or about April 1, 1976 to the

Public Disclosure Commission of the State

of Washington. The mailing of that form is

also the only act alleged by the government

to have occurred within the period of the

five-year criminal statute of limitations

(Title 18 U.S.C. § 3282).

(b) Although the indictment alleges

that earlier forms filed with the Public

Disclosure Commission for the State of

Washington “intentionally failed to dis-

close” the monies paid to the defendant

Buckley and subsequently distributed by him

to members of the Washington State Legis-

lature, paragraph 28 of the indictment

fails to make that allegation as to the

Form L-3 filed on April 1, 1976.

(c) Partly because of the failure of

the indictment to make that critical

C-4

allegation as to the Form L-3 filed on

April 1, 1976, this court granted the

motion of the defendants for a bill of

particulars on March 19, 1981 and required

the government to specify, among other

things, as to paragraph 28:

+ « « Which payments or expendi-

tures, if any, were omitted from the

Form L-3 for the year 1975, and by

identifying any other statements

contained in said form which it is

contended were untrue, and the

respect in which it is contended

they were untrue and by stating

whether it is contended that any

required information was omitted

from said report and, if so, by

identifying all such information.

In response to this court's order, the

government filed its bill of particulars

on April 15, 1981, saying simply, with

reference to the Form L=-3 in question:

The L-3 filed by Washington Water

Power Corporation for the year 1975

failed to report any of the money

received from Robert A. Perry and

spent on behalf of Washington Water

Power Corporation by Jeremiah

Buckley.

C-5

It should be noted that Washington Law

does not require that payments made

to a lobbyist to be distributed by him for

political purposes be reported. The forms

L-3 only require that amounts paid by a

lobbyist to persons holding public office

be reported. The response by Bill of

Particulars above quoted did not go far

enough to establish that any payments to

any particular legislators made by Buckley

in 1975 were not reported on the Form L-3

filed on April 1, 1976.

(d) The indictment uniformly alleges

as to each of the sums received by Jeremiah

P. Buckley from Robert A. Perry that the

monies were thereafter distributed on

behalf of Washington Water Power Company

". « « to Washington State legislators

presently unknown to the grand jury." See

paragraphs 23(a), (b) and (c). It thus

appears on the face of the indictment and

C-6

from the Bill of Particulars that the

government is completely unable to prove

that any particular payment was made by Mr.

Buckley to any particular legislator at any

particular time from the monies allegedly

received from Robert A. Perry. Mr. Ruark,

the attorney for the government, frankly

conceded this in oral argument before the

court.

(e) In the opinion of the court the

government is required to both allege and

prove that payments were made to Washington

legislators by the defendant Buckley in the

year 1975, and that those payments were

intentionally omitted from the Form L-3 in

question. Without such allegation and

proof, there is no charge of or evidence of

falsity of the Form L-3. Without an

allegation and proof of falsity of the Form

L-3, the indictment does not allege facts

establishing that that form was mailed

C-7

“. . » for the purpose of executing the

aforesaid scheme and artifice". The

conclusory allegation to that effect in the

indictment in a case where falsity of

Public Disclosure Commission filings is the

crux of the mail fraud scheme alleged is

inadequate to properly inform the defend-

ants of the charge against them. For all

of the above reasons the indictment is

fatally defective. Any court, having

proceeded with trial of this action, would,

in the absence of evidence of falsity of

the 1976 Form L-3, be compelled in this

court's opinion to grant the defendants’

motion for judgment of acquittal at the

conclusion of the government's case. This

court is unable to find from the descrip-

tion of other circumstantial evidence

available to the government given by Mr.

Ruark during argument, that there is

available to the government any evidence

c-8

sufficient to withstand a motion for

judgment of acquittal at the end of the

government's case to show that the Form L-3

in question was talse.

For all of the foregoing reasons, the

court is of the opinion that Count I must

be dismissed.

2. COUNT II

Defendants’ motion to dismiss Count II

of the indictment is denied. The fact that

the case of United States v. Robert A.

Gulino, No. CR77-158M, was pending in the

Western District of Washington during the

time referred to in Count II provides a

sufficient basis for the trial of that

count in this district and the court is not

persuaded that the defendants Washington

Water Power Company and Jeremiah P. Buckley

are entitled to be tried in the Eastern

District of Washington simply because all

of their activities occurred there. The

court finds the reasoning of the opinions

c-9

in United States v. O'Connell, 510 F.2d

1190 (6th Cir. 1974), and United States v.

Tedesco, 635 F.2d 902 (lst Cir. 1980), more

persuasive than the reasoning of the

opinions in other circuits to the contrary.

DONE IN OPEN COURT this 21 day of

August, 1981.

APPENDIX D

UNITED STATES DISTRICT COURT

WESTERN DISTRICT OF WASHINGTON

AT SEATTLE

UNITED STATES OF

AMERICA,

Plaintiff, NO. CR 81-021V

Vv.

INDICTMENT

JEREMIAH P. BUCKLEY,

ELLSWORTH B. SARGENT,

WASHINGTON WATER POWER

COMPANY,

and SARGENT-TYEE

CONSTRUCTION COMPANY,

ee ee ee ee ee ee ee ee ee ee

Defendants.

The Grand Jury charges that:

COUNT I

l. Beginning at some point prior to

April 1972 and continuing thereafter until

October 1977, in the Western District of

Washington and elsewhere, JEREMIAH P.

BUCKLEY, ELLSWORTH B. SARGENT, WASHINGTON

WATER POWER COMPANY, and SARGENT-TYEE

CONSTRUCTION COMPANY, the defendants

herein, and Robert A. Perry devised and

D-2

intended to devise a scheme and artifice:

(a) to defraud the citizens of the

State of Washington of their right to the

conscientious, loyal, faithful, disinter-

ested, and unbiased services, actions, and

performance of official duties by members

of the Washington State Legislature openly

and honestly, free from corruption, bias,

dishonesty, deceit, official misconduct,

and fraud;

(b) to defraud the citizens of the

State of Washington of their right to have

the State's electoral processes conducted

openly and honestly, free from corruption,

bias, dishonesty, deceit, official miscon-

duct, and fraud and in accordance with the

laws of the State of Washington;

(c) to defraud the citizens of the

State of Washington of their right to know

of any benefits, financial or otherwise,

conferred upon members »f the Washington

D-3

State Legislature by WASHINGTON WATER POWER

COMPANY and JEREMIAH P. BUCKLEY as lobbyist

for WASHINGTON WATER POWER COMPANY.

2. It was part of the said scheme and

artifice that JEREMIAH P. BUCKLEY, ELLS-

WORTH B. SARGENT, WASHINGTON WATER POWER

COMPANY, SARGENT-TYEE CONSTRUCTION COMPANY,

and Robert A. Perry entered with one

another into a corrupt relationship in

which each of them would and did act with

intent to benefit himself and other defend-

ants, directly and indirectly, through the

use of fraud and deception. It was further

part of the scheme to defraud that, during

the spring 1972, Robert A. Perry, ELLS-

WORTH B. SARGENT, and JEREMIAH P. BUCKLEY,

in order to circumvent the requirements of

Washington State's public disclosure law

(Initiative 276) which became effective

January 1, 1973, developed a plan to have

WASHINGTON WATER POWER COMPANY award

D-4

certain day crew contracts to SARGENT-TYEE

CONSTRUCTION COMPANY and, in return,

SARGENT-TYEE CONSTRUCTION COMPANY would

kick back a portion of the proceeds to

WASHINGTON WATER POWER COMPANY after first

laundering the money through Sam Lee of

Hong Kong. Thereafter said money was

returned to WASHINGTON WATER POWER COMPANY

for undisclosed payments to members of

the Washington State Legislature for the

purpose of furthering the legislative

interests of WASHINGTON WATER POWER

COMPANY. These payments would then be

intentionally omitted from the publicly

filed disclosure statements required to be

filed under the public disclosure statute,

thereby concealing those payments from the

voters of the State of Washington.

3. Beginning in January 1973, and

continuing to the date of this Indictment,

Initiative 276, as adopted by the people of

D-5

the State of Washington in the November

1972 general election and codified in the

Revised Code of Washington, Title 42,

Chapter 17, incorporated by reference

herein, provided in part:

42.17.010 Declaration of policy

It is hereby declared by the

sovereign people to be the public

policy of the state of Washington:

(1) That political campaign and

lobbying contributions and expendi-

tures be fully disclosed to the public

and that secrecy is to be avoided.

* “ *

(10) That the public's right to

know of the financing of political

campaigns and lobbying and the finan-

cial affairs of elected officials and

candidates far outweighs any right

that these matters remain secret and

private.

42.17.170 Reporting by lobbyists

+ « amy person who lobbies shall

file with the commission periodic

reports of his activities signed by

the lobbyist... .

(2) Each such monthly periodic

report shall contain:

D-6

(a) The totals of all expenditures

made or incurred by such lobbyist or

by the lobbyist's employer during the

period covered by the report, .. .

42.17.1180 Reports by employers

of registered lobbyist

Every employer of a lobbyist regis-

tered under this Chapter during the

preceding calendar year shall file

with the commission on or before March

3lst of such year a statement disclos-

ing for the preceding calendar year

the following information:

* * *

(3) The total expenditures made by

the employer for lobbying purposes,

whether through or on behalf of a

registered lobbyist or otherwise.

4. At all times material to this

Count of this Indictment, WASHINGTON WATER

POWER COMPANY, a corporation incorporated

under the laws of the State of Washington,

was a private utility providing electrical

power to Eastern Washington and Northern

Idaho.

5+ At all times material to this

Count of this Indictment, SARGENT-TYEE

D-7

CONSTRUCTION COMPANY, a corporation incorp-

orated under the laws of the State of

Washington, was engaged in providing

electrical construction services to public

and private utilities in the State of

Washington.

6. At all times material to this

Count of this Indictment, JEREMIAH P.

BUCKLEY was Vice President and Secretary of

Washington Water Power Company and perform-

ed all the duties, functions, and roles

attendant upon him as Vice President of

Washington Water Power Company which

included representing Washington Water

Power Company before the Washington State

Legislature as a lobbyist.

7. At all times material to this

Count of this Indictment, ELLSWORTH B.

SARGENT was President of Sargent-Tyee

Construction Company and performed all the

D-8

duties, functions, and roles attendant upon

him as President of Sargent-Tyee Construc-

tion Company.

8. At all times material to this

Count of this Indictment, Robert A. Perry

was an Assistant to the President of

Sargent-Tyee Construction Company and was

an elected Representative to the Washington

State Legislature performing the duties,

functions, and roles attendant upon him as

a duly elected member of the House of

Representatives.

9. At all times material to this

Count of this Indictment, Sam Lee was a

resident of Hong Kong engaged in business

enterprises there and elsewhere and was

president of SEA Engineering, Ltd., and

Trans Pac Services Corporation, Ltd.

10. That on March 29, 1972, Initita-

tive 276, a proposed Washington State

D-9

public disclosure law, was filed with the

Secretary of State in Olympia, Washington.

ll. It was further part of the scheme

and artifice that on April 17, 1972,

ELLSWORTH B. SARGENT and Robert A. Perry

traveled to Spokane, where they met with

JEREMIAH P. BUCKLEY and adopted and agreed

to the scheme and artifice as described in

paragraph 2 of this Indictment.

12. The participation of each defend-

ant in the scheme was, in part, as follows:

(a) ELLSWORTH B. SARGENT, indi-

vidually and as an officer of SARGENT-TYEE

CONSTRUCTION COMPANY, would and did act

with intent to circumvent the requirements

of Washington State's public disclosure law

(Initiative 276) by acting as a conduit for

money paid by WASHINGTON WATER POWER

COMPANY to SARGENT-TYEE CONSTRUCTION

COMPANY for services rendered and by

providing a vehicle for transfer of said

D-10

money to Sam Lee of Hong Kong who would

thereafter cause the return of said money

to WASHINGTON WATER POWER COMPANY for use

in making undisclosed payments to members

of the Washington State Legislature for

the purpose of furthering the legislative

interests of WASHINGTON WATER POWER

COMPANY.

(b) JEREMIAH P. BUCKLEY, indi-

vidually and as an officer of WASHINGTON

WATER POWER COMPANY, would and did act with

intent to circumvent the requirements of

Washington State's public disclosure law

(Initiative 276) by causing money to be

paid by WASHINGTON WATER POWER COMPANY to

SARGENT-TYEE CONSTRUCTION COMPANY, which

would forward a portion of the money to Sam

Lee of Hong Kong, who would thereafter

cause the return of said money to WASHING-

TON WATER POWER COMPANY for undisclosed

payments to members of the Washington State

D-11

Legislature for the purpose of furthering

the legislative interests of WASHINGTON

WATER POWER COMPANY.

13. It was further part of the scheme

and artifice that SARGENT-TYEE CONSTRUCTION

COMPANY did submit a bid for day crew work

to WASHINGTON WATER POWER COMPANY on May

23, 1972, said bid being fifth highest out

of a field of six.

14. On July 6, 1972, the Secretary of

State of the State of Washington certified

Initiative 276 for the November 7, 1972

general election.

15. In the November 7, 1972 general

election, the voters of the State of

Washington adopted Initiative 276 to become

effective January 1, 1973.

16. It was further part of the scheme

and artifice that SARGENT-TYEE CONSTRUCTION

COMPANY commenced day crew work for WASH-

INGTON WATER POWER COMPANY on November 28,

D-12

1972, at a time when lower bidders from the

May 1972 submission were not offered the

work.

17. It was further part of the scheme

and artifice that on November 29, 1972,

ELLSWORTH B. SARGENT met with WASHINGTON

WATER POWER COMPANY personnel.

18. It was further part of the scheme

and artifice that SARGENT-TYEE CONSTRUCTION

COMPANY, alone among the bidders of May 23,

1972, was allowed to submit a revised bid

to WASHINGTON WATER POWER COMPANY for day

crew work on December 1, 1972, said bid

appearing to move SARGENT-TYEE CONSTRUCTION

COMPANY to the position of third lowest

bidder.

19. It was further part of the scheme

and artifice that on December 8, 1972,

WASHINGTON WATER POWER COMPANY awarded a

day crew contract to SARGENT-TYEE CONSTRUC-

TION COMPANY in accordance with its Decem-

ber 1, 1972 bid.

D-13

20. It was further part of the scheme

and artifice that SARGENT-TYEE CONSTRUCTION

COMPANY and other contractors submitted

bids for day crew work on February 3, 1973,

for the following contract year.

21. It was further part of the scheme

and artifice that on February 8, 1973,

SARGENT-TYEE CONSTRUCTION COMPANY submitted

a bill to WASHINGTON WATER POWER COMPANY

for day crew work started on November 27,

1972, and thereafter WASHINGTON WATER POWER

COMPANY paid said bill.

22. Thereafter, WASHINGTON WATER

POWER COMPANY awarded substantial day crew

work to SARGENT-TYEE CONSTRUCTION COMPANY,

even though SARGENT-TYEE CONSTRUCTION

COMPANY was frequently the highest bidder,

and paid SARGENT-TYEE CONSTRUCTION COMPANY

substantial amounts of money pursuant to

those contracts.

23. It was further part of the scheme

and artifice that SARGENT-TYEE CONSTRUCTION

D-14

COMPANY would pay Sam Lee of Hong Kong

certain sums of money and, thereafter,

Robert A. Perry, at various times, would

and did obtain a portion of said money from

Sam Lee and pay it to JEREMIAH P. BUCKLEY,

who distributed the money to Washington

State legislators on behalf of WASHINGTON

WATER POWER COMPANY, to wit:

(a) On April 22, 1973, Robert A.

Perry traveled from the Western District

of Washington to Hong Kong where he

delivered to Sam Lee a SARGENT-TYEE CON-

STRUCTION COMPANY check in the amount of

$11,015.00. Sam Lee negotiated the check

in Hong Kong, retained $1,000.00 as his

fee, and returned the remaining $10,000.00

to Robert A. Perry. On or about May 13,

1973, Robert A. Perry traveled from Hong

Kong to Vancouver, B.C. where, on approxi-

mately May 17, 1973, he paid the $10,000.00

to JEREMIAH P. BUCKLEY who had traveled

from the State of Washington to meet Robert

D-15

A. Perry. Thereafter, JEREMIAH P. BUCKLEY

distributed that money on behalf of WASH-

INGTON WATER POWER COMPANY to Washington

State legislators presently unknown to the

Grand Jury.

(b) On approximately November 20,

1973, Robert A. Perry received a check in

the amount of $15,000.00, made payable to

SEA Engineering, Ltd., drawn on the account

of SARGENT-TYEE CONSTRUCTION COMPANY. On

or about December 3, 1973, Robert A. Perry

traveled from the Western District of

Washington to Hong Kong where he delivered

the check to Sam Lee, President of SEA

Engineering, Ltd. Sam Lee negotiated the

check in Hong Kong, retained $1,500.00

as his fee, and returned the remaining

$13,500.00 to Robert A. Perry. On or about

December 19, 1973, Robert A. Perry traveled

from Hong Kong to Vancouver B.C., where, on

approximately December 20, 1973, he paid

the $13,500.00 to JEREMIAH P. BUCKLEY who

D-16

had traveled from the State of Washington

to meet Robert A. Perry. Thereafter,

JEREMIAH P. BUCKLEY distributed that money

on behalf of WASHINGTON WATER POWER COMPANY

to Washington State legislators presently

unknown to the Grand Jury.

(c) During the winter and spring of

1975, Robert A. Perry telephoned Sam Lee in

Hong Kong and told him to bring $15,000.00

to the United States. During the spring of

1975, Sam Lee traveled to the United

States, where he gave $15,000.00 to

Robert A. Perry. In late May or early

June 1975 in Seattle, Robert A. Perry

paid the $15,000.00 to JEREMIAH P. BUCKLEY

who distributed that money on behalf of

WASHINGTON WATER POWER COMPANY to Washing-

ton State legislators presently unknown to

the Grand Jury.

24. It was further part of the scheme

and artifice that during March 1975,

ELLSWORTH B. SARGENT prepared SARGENT-TYEE

D-17

CONSTRUCTION COMPANY's bid for WASHINGTON

WATER POWER COMPANY's 1975 day crew con-

tracts, which bid included an additional

10%. Thereafter, prior to submission of

the bid, ELLSWORTH B. SARGENT discussed the

amount of the bid with WASHINGTON WATER

POWER COMPANY personnel and was directed to

reduce the bid by 5%.

25. It was further part of the scheme

and artifice that on July 2, 1975, SARGENT-

TYEE CONSTRUCTION COMPANY issued a check

payable to Trans Pac Services Corporation,

Ltd., in the amount of $15,000.00, and the

check was subsequently negotiated.

26. It was part of the scheme and

artifice that beginning in January 1973 and

continuing through January 1976, JEREMIAH

P. BUCKLEY filed reports as a registered

lobbyist with the Public Disclosure Commis-

sion in which he intentionally failed to

disclose the money paid to him in accord-

ance with the scheme described in paragraph

D-18

2 of this Indictment and subsequently

distributed by JEREMIAH P. BUCKLEY to mem-

bers of the Washington State Legislature on

behalf of WASHINGTON WATER POWER COMPANY.

27. On January 31, 1975, WASHINGTON

WATER POWER COMPANY submitted Public

Disclosure Commission Form L-3, Lobbyist

Employer's Report, that intentionally

failed to disclose the moneys paid to

JEREMIA! P. BUCKLEY in accordance with the

scheme described in paragraph 2 of this

Indictment and subsequently distributed by

JEREMIAH P. BUCKLEY to members of the

Washington State Legislature on behalf of

WASHINGTON WATER POWER COMPANY.

28. On or about April 1, 1976, within

the Western District of Washington,

JEREMIAH P. BUCKLEY, ELLSWORTH B. SARGENT,

WASHINGTON WATER POWER COMPANY, and

SARGENT-TYEE CONSTRUCTION COMPANY, the

defendants herein, for the purpose of

executing the aforesaid scheme and artifice

D-19

and attempting ‘to do so, knowingly caused

to be delivered by mail, according to the

direction thereon, an envelope addressed to

the “Public Disclosure Commission, 403

Evergreen Plaza, 711 Capitol Way, Olympia,

Washington 98504" containing Public Dis-

closure Commission Form L-3, Lobbyist

Employer's Report, for the year 1975, from

WASHINGTON WATER POWER COMPANY.

All in violation of Title 18, United

States Code, Sections 1341 and 2.

COUNT II

Commencing in the spring of 1977 and

continuing until the fall of 1977, within

the Western District of Washington and

elsewhere, JEREMIAH P. BUCKLEY and WASH-

INGTON WATER POWER COMPANY, the defendants

herein, and Robert A. Perry, unlawfully,

willfully and knowingly did corruptly

endeavor to influence, obstruct or impede

the due administration of justice in

D-20

connection with the proceeding then pending

before the United States District Court for

the Western District of Washington, by

arranging for Robert A. Perry to be em-

ployed outside of the United States, to

wit: in Mexico, to prevent Robert A. Perry

from appearing and testifying in the trial

of the case of United States v. Robert A.

Gulino, No. CR77-158M.

All in violation of Title 18, United

States Code, Section 1503 and Section 2.

A TRUE BILL:

DATED: January 20, 1981

s

FOREPERSON

s/ JOHN C. MERKEL

n tates Attorney

(si MICHAEL P. RUARK

sistan nite tates Attorney

/s/ BRUCE D. CARTER

Specia Sistant U.S. Attorney

APPENDIX E

UNITED STATES DISTRICT COURT

WESTERN DISTRICT OF WASHINGTON

SEATTLE, WASHINGTON

UNITED STATES OF AMERICA,

Plaintiff,

vs.

JEREMIAH P. BUCKLEY,

et al.,

Defendants.

)

)

)

)

)

EXCERPT FROM PROCEEDINGS

Before The Honorable DONALD S. VOORHEES

Wednesday, August 19,

1981

U. S. District Courthouse

Seattle, Washington

APPEARANCES:

For the Plaintiff:

For the Defendants:

For J. P. Buckley

For Sargent~-Tyee

Construction Company

For Washington Water

Power Company

MICHAEL RUARK

Asst. United States

Attorney

WILLIAM HELSELL

Washington Building

Seattle, WA 98101

DENNIS E. KENNY

Seafirst Building

Seattle, WA 98104

LARRY GANGNES

ARTHUR HARRIGAN, Jr.

Rainier Tower

Building

Seattle, WA 98101

E-2

For E. P. Sargent WILLIAM GOODWIN

Norton Building

Seattle, WA 98104

Also appearing: DAVID UTEVSKY

For Post Intelli- Seafirst Building

gencer Seattle, WA 98104

THE COURT: Very well. The motions I

would like to take up first have to do with

the motion to dismiss Count 1. I will take

up discovery motions later. So there is a

motion to dismiss the mail fraud count.

May I hear from the movers? I am particu-

larly concerned about the statute of

limitations aspect of it.

MR. HELSELL: With reference to your

Honor's last observation let me say that

the statute of limitations aspect of it is

likewise directly involved in whether or

not a mail fraud scheme has been alleged.

We said in recent motions to be filed

before your Honor that lynch cannot govern

this whole case, the allegation that a

E-3

public disclosure commission form filed in

April 1976 is a part of this alleged

fraudulent scheme.

THE COURT: It really has to be,

doesn't it, to get it within the statute?

MR. HELSELL: It absolutely has to be

because there isn't another act alleged in

the indictment that didn't occur more than

five years before the indictment was

returned. But let me say first about our

motion to dismiss that our government in

the early days was said by many political

writers to be a government of laws not men,

and I say this with as much sincerity as I

can muster because I think what we have

graduated to in the indictment which you

have before you is symptomatic of a subtle

change that has come over the criminal law

in recent decades and perhaps the last

fifty years where we suddenly find our-

selves a government of men not laws.

E-4

And the reason I say that, your Honor,

is this: We have here a strained and

distorted effort, I submit, to find that

acts described in the indictment violate

the mail fraud statute and we have a

situation where a defendant, even if we

concede for purposes of argument that he

was engaged in all of the things and did

all of the acts alleged in the indictment,

could hardly have gone to one lawyer out of

ten to ask him whether there was any

federal offense involved in what he was

doing and have been told, “yes, I think

what you are doing violates the mail fraud

statute.” And what we have, in essence, is

the fertile imagination of our assistant

U.S. attorneys who have concluded that the

mail fraud statute has been violated by the

acts which they have alleged, and in a way

which, I submit, produces of necessity a

tortured and strained construction of that

statute.

E-5

A highschooler would conclude if told

that there was a mail fraud statute that

the offense must be something that involves

the mails to defraud somebody and in the

ordinary connotation of fraud would con-

sider that what the person who violates

that statute must probably have done is to

cheat somebody out of some money or prop-

erty and used the mails to do it.

And I submit that that was the genesis

of our mail fraud statute, and yet we see

cases cited by the government here where

the statute has been strained to cover the

situation where a politician takes money

wrongfully -- that is said to be a fraud on

the public -- and where somehow the mails

are utilized in connection with that kind

of a scheme.

THE COURT: Don't you think I am bound

by those decisions though?

MR. HELSELL: No. And that's what I

want to get to next. Here we do not have

E-6

even one of those cases. We do not have a

Governor Mandell case of Maryland, for

example. We have a case where the indict-

ment is totally silent as to any claim that

any politician received one dollar wrong-

fully. It is totally silent as to any

charge of bribery, corruption, improper

undercover payment to any politician. So

we do not have a Mandell case. We do not

have a United States vs. States case. We

do not have any of the cases which have

involved corrupt and crooked politicians

who utilized the mails in connection with

their corrupt scheme.

And if your Honor will carefully read

the Dixon case which we have cited to the

Court you will see that therein lies the

distinction which was applied by Judge

Friendly in Dixon which we urge your Honor

to apply here.

In the Dixon case Mr. Dixon, a corpo-

rate officer, had received loans from his

E-7

company which were required to be reported

to the SEC and there, as contrasted with

here, at least the Government could point

to the specific loan because they showed in

the records of his company. They could

point to his SEC filings and establisa

beyond the shadow of a doubt that his SEC

filings were technically false. And they

could also point to mailings which were

involved in the solicitation of proxy.

statements. But Judge Friendly, holding

the case up by its four corners and anal-

yzing every aspect of the transaction, said

in words which are applicable to this case,

"We don't have here a classic mail fraud

scheme. We don't have a public official

who is charged with having taken some

improper corrupt payment." Judge Friendly

distinguished the case, which your Honor

just commented about, on that very ground.

And that is why Dixon is controlling

here.

E-8

Here we have not a word in the indict-

ments, not a word of any corrupt payment to

any legislator. We have only the allega-

tion that payments were made to legislators

which your Honor must presume then were

simply the normal kinds of campaign contri-

butions, and that those payments were not

reported on the PDC filing of April 1 of

‘76. So when the government distinguishes,

as it attempts to do in its answering

Dixon, by saying, “Here we have a corrupt

scheme," I submit that the government is

saying that in a brief but the grand jury

didn't charge it in an indictment.

I think I can't emphasize too strongly

the proposition that there isn't any word

in the indictment which can be construed to

allege any corrupt payments to legislators.

There simply is the charge that payments

were made and they were not recorded.

Now, we pointed out to your Honor in

our memorandum that as to the 1976 forn,

E-9

the one on which the whole case hangs,

there is also a significant absence of

another allegation which was made as to

earlier forms. In the indictment it is

alleged as to earlier filings, which are

beyond the period of the statute, that

payments to legislators were intentionally

omitted from those forms. And yet when

your Honor reads the allegations of the

paragraph that deals with April 1, 1976

filing, that allegation is conspicuously

absent. So for another reason we have a

filing which the government must rely on if

it is to stay in court as to which it has

not and cannot allege any omitted payments.

Since we made our motion, your

Honor, we have received the affidavit of

Mr. Harrigan to which is attached the grand

jury testimony of Mr. Perry and it is

significant, your Honor, that the session

of the grand jury -- which, by the way,

E-10

occurred on January 22, 1981 -- appears to

be one where a grand juror asked almost all

the questions, and it appears to have

troubled the grand juror that Mr. Perry

hadn't been able to identify a single

recipient of money from Mr. Buckley.

Your Honor will see in the transcript,

which is attached to Mr. Harrigan's affida-

vit, that Perry over and over again was

asked by grand jurors, or a grand juror,

it's hard to tell which, who got the money,

and he kept saying that was none of his

business, he didn't know, that wasn't his

function, it was up to Mr. Buckley. So it

is apparent from the Perry testimony now

that the government has not alleged the

intentional omission of payment to legisla-

tors from the April 1, 1976 PDC filing

because there is no evidence that Mr.

Buckley made any particular payments to

legislators in 1975, which was the only

year covered by the April 1, 1976 filing.

E-11

And it would appear that the govern-

ment somehow hopes to take the case to

trial on the theory that Buckley got money

in previous years and maybe some of it was

left in 1975 and maybe some of it in 1975

was paid to legislators, and if it was then

this was all a scheme to wiolate the mail

fraud statute. And i don't believe, your

Honor, that that kind of speculation is

permissible. I don't think it is permis-

sible to even indict someone let alone take

his case to the jury in a criminal trial

and insist that because of it the receipt

of earlier payments is shown.

THE COURT: Do you have any comment to

make upon the bill of particulars filed for

the government with respect to that?

MR. HELSELL: In the bill of particu-

lars filed by the government the government

was asked to specify the respects in which

the 1976 PDC filing was false. And in

E-12

responding, without stating any particular

payments which it claims should have been

reported in it, it simply said that pay-

ments weren't reported in it. Now, I don't

believe that is enough. It was incumbent

upon the government at that point if it had

evidence of specific payments by Mr.

Buckley in 1975 made to legislators which

were required by Washington law to be

reported, to have named them in response to

your Honor's specific order that it specify

those things if it could. So in that

regard I think the government, and in that

one sense I commend Mr. Ruark's candor, he

wasn't going to say anything more in his

bill of particulars than he could prove,

but il don't think according to the Perry

testimony he can prove any particular

payment made by Mr. Buckley in 1975 to a

legislator that was not reported in that

statement. And your Honor will see because

E-13

it is attached to some of the pleadings

that the statement itself reports payments

to legislators.

THE COURT: During the previous

year.

MR. HELSELL: During the previous

year. That what the government must do is

prove there was a payment to a legislator

in that year that was not reported on that

form. That is what I firmly believe the

government is totally unable to do and was

unable to respond to the bill of particu-

lars in that connection.

Now, we cited in our preliminary

memorandum, I believe it's the Russell

case, which points out that an important

function of the bill of particulars is to

enable the Court to see whether the govern-

ment can prove the case which it has

alleged in the indictment. And of course,

it follows that if the government can't

prove the case that is lodged in the

E-14

indictment which here speaks in generali-

ties about the April 1976 filing being in

furtherance of the scheme, then the Court

should dismiss the indictment for the

inability of the government to prove a case

which should go to the jury in connection

with the charge which it makes.

And that is exactly the situation we

have here. The government was asked by

motion for a bill of particulars and

ordered by your Honor to specify the

respects, and that obviously means the

particular respects in which the 1976 form

was false. And it did nothing more than to

say payments received by Buckley and

distributed by Buckley were not reported in

that form.

Well, we can concede payments made in

1973 weren't reported in that form. So we

are not overly concerned about what hap-

pened in 1975 and what can the government

prove Buckley did with the money in 1975.

E-15

And if it can't prove what he did with the

money in 1975 then this case should not

proceed to trial.

THE COURT: All right. Would you care

to say anything further?

MR. HELSELL: No, I think that com-

pletes it.

THE COURT: Do any of the other

attorneys for the Defendants wish to

address this issue?

MR. HARRIGAN: I would like to,

your Honor.

THE COURT: For the Reporter would you

state your name?

MR. HARRIGAN: Arthur Harrigan,

representing Washington Water Power.

Your Honor, the indictment begins with

paragraphs la, b, and c, and which purport

to set out three purposes of schemes which

are then going to be tied into the mail

fraud statute. The first two of those,

however, are not supported subsequently by

E-16

any statements of fact. The first one is

essentially that the scheme was one to

deprive citizens of the loyal and faithful

services of the legislature free from

corruption, bias and dishonesty. That is

the last there is in the indictment,

however, on that subject. There is no fact

alleged which could possibly constitute

corruption, bias or dishonesty on the part

of the legislator. All that subsequently

is alleged is a circuitous method of making

political contributions with the idea of

avoiding Initiative 276 and its disclosure

requirements.

The second paragraph, 1(b), says that

the purpose of the scheme in part was to

defraud citizens of their right to have

electoral processes free from corruption,

bias and dishonesty. Again, there isn't

another word in the indictment about the

electoral processes or suggesting that

E-17

there was any bias, corruption or dishon-

esty in them. What is alleged in this

indictment is a circuitous method by which

Washington Water Power is said to have

gotten money back to itself presumably --

or not presumably but according to the

indictment -- with the idea that it would

then be difficult to show that the money

had originated with Washington Water Power

so the company could successfully conceal

these political contributions. That is all

that is actually alleged.

THE COURT: Don't they say in (c), “to

defraud the citizens of the right to know

of any benefits and actions otherwise given

to the legislators," -- that is, by the

filing of false forms?

MR. HARRIGAN: That's correct. And I

agree that the third paragraph of paragraph

1, that is l(c), is the one that alleges

the only scheme that the government then in

the indictment fleshes out with any facts

E-18

at all and it says that it is to defraud

the citizens of their right to know. So

that is the one we have to examine. And

the government cannot rely upon l(a) or

1(b) because the indictment does nothing

further with either one of them.

So we are not talking about a case of

corruption of public officials. The basic

point I am trying to make here, we are

talking about a case where the government

alleges a scheme to violate the public

disclosure act is what it boils down to

because the public's right to know, of

which the government says it was defrauded,

arises only by reason of the public dis-

closure act. Prior to that act there was

no right to know and therefore there

couldn't be a defrauding of such a right to

know.

So what this indictment boils down to

is this allegation that there was a scheme

to violate Initiative 276. That is what it

E-19

boils down to. And when you look at this

indictment in that light, your Honor, what

it amounts to is an effort to stretch the

federal mail fraud statute to this, not

just to a violation of state law but to a

nori-violation of state law because this

indictment doesn't anywhere allege that

anyone filed a false public disclosure

statement within at least the applicable

statute of limitations period for the mail

fraud statute.

THE COURT: It does allege, does it

not, the filing of false forms?

MR. HARRIGAN: It alleges the filing

of false forms in the years 1973 and 1974

and if I'm not mistaken, 1975, none of

which would, even if the mails were used,

obvicusly allege a federal offense.

THE COURT: Because of the statute?

MR. HARRIGAN: Because of the statute.

So the only paragraph of the indictment

which purports to allege any offense

E-20

wouldn't support a claim of violating

Initiative 276 because that paragraph which

speaks with regard to the 1976 statement is

unique in omitting the allegation that that

form was false.

Now, the fact is, your Honor, that

although the indictment purports to state

that there were false statements filed in

previous years, as a matter of law that

isn't the case, and it may not be vitally

important.

THE COURT: Why do you say that?

MR. HARRIGAN: I say it, your Honor,

because what the indictment says is that

Mr. Buckley began filing these statements

in January of 1973 with the Public Dis-

closure Commission. Let me back up. What

it says is that he received two payments

from Mr. Perry both in 1973, one in May and

one in mid-December, and that thereafter he

distributed that money to legislators and

E-21

that thereafter in 1973, 1974 and 1975

those payments to legislators were omitted

from the form.

Well, the fact is that as a matter of

law, your Honor, there was no public

disclosure act in force in 1973.

THE COURT: What about 1974 and 5?

MR. HARRIGAN: There was starting

on February 5, 1974, your Honor, but there

is no allegation in the indictment that any

money was paid to any legislator in 1974 or

1975. All that is alleged is that money

was received in 1973 by Buckley and was

thereafter distributed to legislators. It

is perfectly consistent with the indictment

that all that money was distributed in

1973. In fact, if one makes the assumption

that the government would like the jury to

make in this case that Mr. Buckley wanted

to avoid disclosure. obviously, given the

fact that he gets the last 1973 payment in

December he has two months in which to get

E-22

rid of that money before there even is a

public disclosure requirement. So if he

had the motive that the government would

ascribe to him he would have obviously have

distributed that money before he was under

any legal obligation to disclose it. So

those are the two 1973 payments that are

alleged.

There is only one left and that is

1975.

THE COURT: In 1973 was there a ten

thousand and a fifteen thousand?

MR. HARRIGAN: The claim is ten

thousand and thirteen five, as I recall.

THE COURT: Because of the payment

to Sam Lee?

MR. HARRIGAN: That is the way I

recall it. And so, your Honor, the reason

I say that as a matter of law there was no

violation of any public disclosure act in

1973, 4 or 5 is that --

E-23

THE COURT: When did the initiative go

into effect?

MR. HARRIGAN: February 5, 1974.

(Continuing) -- is that there were only two

payments prior to the one in 1975 alleged

and for all that appears from the indict-

ment both of them would have been distrib-

uted before there was any public disclosure

act.

THE COURT: Or they could have been?

MR. HARRIGAN: Could have been. Now,

that leaves us with 1975. Now, obviously,

the only public disclosure act filing that

we are concerned with with regard to that

fifteen thousand dollars alleged payment to

Buckley is the public disclosure filing of

April 1976 and the other reason that is the

only one we are concerned with is that it

is the only one within the statute of

limitations anyway. And as to that one the

government was required by the bill of

particulars to state which payment, if any,

E-24

was omitted from that form. And the

response was, in effect, “We don't know."

I would like to read exactly what the

government responded. This was the

question --

THE COURT: I have read that myself,

but you read it.

MR. HARRIGAN: The question is, “Which

payments, if any, were omitted from the

Form L=-3 for the year 1975?" and the

answer was, “The L-3 filed by Washington

Water Power for the year 1975 failed to

report any of the money received from

Robert A. Perry and spent on behalf of

Washington Water Power by Jeremiah Buck-

ley."

Well, your Honor, when asked to say

which payments were omitted an answer that

says, “They failed to report any of the

money" does not answer the question other

than to say, “We don't know," because if

there were an allegation in the indictment,

E-25

or even inferred from the indictment that

the money had been paid in 1975 it would be

possible to state something other than "any

of the money." "Any of the money” just

asks the jury to speculate that maybe some

of the 1973 money was left over and was

paid out in 1975 or maybe the 1975 money

was paid out in 1975. But the only thing

the government actually alleges or the

indictment actually alleges about the 1975

money is “thereafter" it was distributed to

legislators. Well, “thereafter" includes

any year after the date that the money was

allegedly received in May or June of 1975.

And if it was after December 31 there is no

requirement that it be disclosed in that

disclosure statement.

Now, why does that matter? If we were

dealing here with a claim that Initiative

276 had been violated obviously this

indictment would have to be thrown out

because there is no allegation that any

E-26

payment was made that had to be disclosed

in that statement. If we were dealing with

Initiative 276 prosecution and the allega-

tion was money was received in 1975 and at

some later time was distributed to legisla-

tors and a filing was made in 1976, that

charge wouldn't get to first base because

unless there is proof of payment made

in 1975 covered by that statement there is

no allegation of a violation. So what the

government wants to do is take a non-viola-

tion of state law, facts which couldn't

even constitute a violation of state law,

and make them into a violation of the mail

fraud statute by doing what? By baldly

asserting the statutory language that the

mailing was in execution of a scheme. And

then by citing some cases that say if we

charge you in the statutory language that

the mailing was in execution of the scheme

we don't have to prove that the mailing

itself was false, nor are we prevented from

E-27

going to trial as long as we have quoted

the statutory language in the indictment.

And neither of those assertions is

accurate when applied to this particular

case because this is a scheme whose whole

alleged purpose is to avoid disclosing

payments to legislators. The only way in

which a mailing of a disclosure statement

could have any connection with such a

scheme would be if it were false. And

there is no possible way in which mailing a

true disclosure statement can be in execu-

tion of a scheme to hide payments.

So the cases that say that the mailing

itself need not be false under the mail

fraud statute just don't have anything to

do with this case. Those deal with situ-

ations where the party is out defrauding

somebody and that part is alleged in the

indictment: that he has misrepresented

thus and so to Mrs. McGillicuddy and she

gave him money and he mailed it to his

E-28

brother. There is no allegation that

anybody is being defrauded here, which is

the other basis of our motion to dismiss.

But this basis is even more funda-

mental than that, your Honor, and that is

that the government has to show that the

mailing was in execution of the scheme even

if it is a scheme to defraud. And mailing

a true statement cannot be in execution of

a scheme to mail false statements, which is

what this question boils down to. So this

is one of those cases where it appears from

the face of the indictment that there is no

connection between the mailing and the

alleged scheme. And on that basis alone

this indictment should be dismissed,

particularly when you bear in mind that the

government, the whole thrust of this, is to

try to create a federal violation where

there isn't even a state violation alleged.

A federal violation, I should say, out of

E-29

the state statute where there isn't even an

alleged violation of the state statute.

Now, the government relies fairly

heavily in its reply brief on a case called

Hanling vs. United States, 418 U.S. 87. It

quotes this language: "It is generally

sufficient that an indictment set forth the

offense in the words of the statute itself.

As long as those words of themselves fully,

directly and expressly --"

THE COURT: I think we are beyond that

though because the motion of the Defendants

asking the bill of particulars specified

the information that they wanted and I

ordered that that inforination be given. So

irrespective of the cases saying an indict-

ment is sufficient, in this case I don't

think it is.

MR. HARRIGAN: I think it is relevant

too, though, if I may, that in that Hanling

case the Court reached the same conclusion

that this Court did in ordering that the

E-30

bill of particulars be provided, and that

was that here this crucial issue of the

connection between the mailing and the

scheme is a basic factual question. It's

the guts of this whole case and if the

government can't identify that connection

then there is no offense alleged. And it

really boils down to whether we are talking

about a factual question that is basic to

the case or, as in Hanling, a question of

law where the Court said that the defini-

tion of obscenity, which was what was being

attacked, was a legal matter, not a factual

matter, and where that is the case the

indictment can use just the statutory

language.

Here the government is required to

specify the connection and it cannot do it.

And the reason it can't do it is that the

grand jury was apparently unwilling to

state in the indictment that that L-3 was

false because no one had testified that it

E-31

Now, the alternate basis of the motion

is that this is not a scheme to defraud.

Even if the L-3 were palpably false and it

was so alleged, what we have here is no

more than an allegation that there was a

scheme to avoid disclosing otherwise

perfectly legitimate political contribu-

tions. Now, the allegation regarding the

Day Crew contracts and the additional

funds that are supposed to be flowing to

Sargent-Tyee and what have you, when you

look at it in the light of what is ulti-

mately charged, that it is mail fraud,

there is nothing more than a complicated

way for Washington Water Power to return

money to itself. Once Mr. Perry, as is

alleged, hands the money to Mr. Buckley,

all we have is what we had to begin with,

namely, a sum of money in the hands of

Washington Water Power. And the question

then becomes What did they do with it? And

as far as the indictment alleges, all they

E-32

did with it was to pay it to legislators

just like they pay other political contri-

butions to legislators. But according to

the indictment --

THE COURT: Well, the gravamen of the

indictment, however, is the failure to

disclose that to the commission.

MR. HARRIGAN: That's true, your

Honor.

THE COURT: If the payments made had

been legal but they failed to disclose

them. And in that connection I would be

inclined to think if the form which was

filed in 1976 was false that definitely is

important.

MR. HARRIGAN: I think the form was

not false. And of course, these are two

totally independent grounds but I would

disagree with your Honor to this extent.

There was no question in the Dixon case

that the forms filed with the SEC were

false. Judge Friendly, in fact, said there

E-33

was “an intention to deceive." There

wasn't any question about that. And there

wasn't any question that it was done with

the idea of hiding the loans.

THE COURT: My impression is that the

Ninth Circuit cases are more liberal than

that Second Circuit case. Isn't that

true?

MR. HARRIGAN: Well, your Honor, I

think the Dixon case is the only one we

found that parallels our situation and what

I am suggesting is that all of the cases

that deal with this hazy area of corruption

of public officials involves some act of

bribery or corruption. That is, where the

actual payment of the money is wrongful.

THE COURT: Well, my feeling there

though would be that, say, if you assume

the form which was filed in 1976 was a

false one in that it did not disclose

payments to legislators even though the

payments to legislators may have been

E-34

perfectly legal, that there would be a

scheme to defraud the general public by

failing to disclose that which the public

had ordered to be disclosed by Initiative

276.

MR. HARRIGAN: Well, your Honor, all I

can say in response to that is I believe

that the facts of the cases that would

support that viewpoint don't go that far.

And in those cases there is always an

element of the public official being

influenced wrongfully by the payment of

money. And actually, as the Dixon case

describes all those cases, essentially the

same ones cited by the government, it

describes in this way -- "This doctrine of

the deprivation of honest and faithful

services has developed to fit the situation

in which the public official avails himself

of his public position to enhance his

private advantage often by taking bribes or

where a public official is paid to act ina

E-35

breach of his duties." And in a general

statement about those cases Judge Friendly

says, "All of these cases, however, in-

volved an element of corruption not present

here."

And what I am saying is that in

handing the money to the legislator you are

not doing any different from any other

political contribution. The wrong part is

not disclosing it and that may be a viola-

tion of the public disclosure act but it is

not fraud.

Thank you, your Honor.

THE COURT: Anything else from any

counsel for Defendants?

(Brief pause)

THE COURT: Apparently not. Mr.

Ruark?

MR. RUARK: Thank you, your Honor. I

would like to begin my remarks by focusing

in on exactly what we are talking about

here and that is the sufficiency of this

indictment.

E-36

THE COURT: The sufficiency of the

indictment coupled with the bill of par-

ticulars.

MR. RUARK: Coupled with the bill of

particulars. Because I understand the law,

your Honor, and the government is not

arguing the bill of particulars. We will

correct or remedy an insufficient indict-

ment. We are talking about whether or not

this indictment is sufficient in charging

the offense. And in that regard it is

important to remember and keep in mind that

at this stage of the proceedings we are

talking about that the allegations in the

indictment are presumed to be true.

THE COURT: We are and we are not.

The Court has ordered certain disclosure in

the bill of particulars and I don't want to

dismiss this count of indictment. That is

really not my function. But if it should

be I am going to. What I don't want to do

is to have a visiting judge come in here

E-37

and try this thing for two or three or four

weeks and then he be compelled to grant a

motion for judgment of acquittal because

there just is no proof that the form filed

in 1976 was a false form.

MR. RUARK: All right. I would like

to address that for a moment, your Honor.

What I am trying to get at here is the

standard we are dealing with in this

hearing is whether or not the Court is

going to presume the allegations as they

are set forth in the indictment for pur-

poses of this motion are true. I believe

that is the standard when such motions are

before the Court.

The indictment alleges, just the

indictment without going into the bill of

particulars now, alleges a scheme to

defraud and corrupt public officials in the

performance of their public duties. A

scheme to corrupt the electoral processes

in the state of Washington and a scheme to

E-38

deprive the public of its right to know of

the relationship, financial responsibility,

between legislators and Washington Water

Power. It goes on to allege further the

mechanics of that scheme and how it was

carried out, setting up a laundry operation

so money could be laundered from Washington

Water Power through Sargent-Tyee to Mr. Sam

Lee and back to Vancouver and returned to a

representative of Washington Water Power,

Mr. Buckley. The indictment then alleges

that payments were made to legislators who

were unknown at the time the indictment was

returned. And finally the indictment --

THE COURT: Is that illegal? Paying

legislators? Making contributions to

legislators?

MR. RUARK: It would be illegal if it

could be denominated a fraud, yes.

THE COURT: You don't have any evi-

dence on that?

E-39

MR. RUARK: We have not used the word

"bribe" because we do not know any parti-

cular legislators who have received any

payments.

THE COURT: So what you are really

going on, is it not, is the failure to

disclose the payments?

MR. RUARK: I think that they are very

closely interrelated, your Honor. It seems

to me there is no reason in the world not

to disclose these payments if they are for

a legitimate purpose. And you can draw

reasonable inferences from the activities

as alleged in the indictment. And our

point is that the only reason that you can

come up with to make these payments under

the table at a time when there is a dis-

closure requirement in effect is to affect

the judgment decision of a legislator on

particular issues.

If that is the case then it is a

corruption of the political system and

in effect would be a bribe although bribe

E-40

under State of Washington law has a much

more generai meaning and does not just

involve the cash payments, as it were.

And then finally you have in the

indictment an allegation of a mailing,

particular mailing in 1976 in execution of

this overall scheme to hide the existence

of this money and the payment of this money

to legislators.

THE COURT: Of course, it is not to

hide the existence of the money because I

don't think the form requires that, that

disclosure. It is the payment. Isn't that

true?

MR. RUARK: Yes, in terms of the legal

consequences. I am talking about the fact

that there was a pool of money available.

The Water Power Company didn't want that

known either. But in terms of legal

consequences it is the payment of money,

obviously. And I suggest to the Court that

the motion to dismiss at this point based

E-41

upon insufficiency of the indictment is

semantics at the very best. The indictment

should be taken as a whole, and I cannot

conceive of reading this indictment without

a clear understanding that the mailing in

1976 was false.

THE COURT: Well, you may be right on

the indictment but when the motion came in

for a bill of particulars they asked for a

great deal of details about this particular

form and I ordered that disclosure and

apparently you did disclose all that you

knew.

MR. RUARK: That's correct.

THE COURT: So I gather that you do

not know and have no facts to prove that

that particular return was false.

MR. RUARK: I disagree with that.

THE COURT: You didn't disclose it.

MR. RUARK: I cannot give specifics in

which way or fashion the form is false. In

other words, I can't say specifically that

E-42

legislator X received X amount of money at

a particular time.

THE COURT: Do you have any evidence

that Buckley paid out any of that money in

1975?

MR. RUARK: We have circumstantial

evidence that would indicate that Buckley

made payments in 1975.

THE COURT: Don't you think that my

order required the disclosure of that?

MR. RUARK: I didn't understand your

order to do that, your Honor. I understood

your order to be related to the form itself

and in what fashion it indicated a false-

hood.

(Brief pause)

THE COURT: Well, the paragraph -- I

guess there were two paragraphs pertaining

to paragraph 28 and I think that is the one

we are talking about. And paragraph 14 of

the motion. Let me just see if I didn't

order 14 and 15.

E-43

(Brief pause)

THE COURT: Well, paragraph 14 of the

motion was -- am I correct it was paragraph

28 that we are talking about? -- by stating

as to paragraph 28 how it is contended the

mailing of public disclosure commission

form L-3 for the years 1975 related to the

scheme of artifice described in paragraph

l-a, 1l-b and 10c, answering separately as

to each such paragraph. And paragraph 15

of the motion is "by stating as to para-

graph 28 which payments or expenditures, if

any, were omitted from the form L-3 for the

year 1975 and by identifying any other

statements contained in said form which it

is contended were untrue and the respect in

which it is contended they were untrue and

by stating whether it is contended that any

required information was omitted from said

form, and if so, by identifying all such

information.”

E-44

And the bill of particulars which you

filed just didn't do that at all.

MR. RUARK: Your Honor, may I ask you

which -=- I don't have your order, I just

have the motion itself.

THE COURT: My order -=- and I don't

have it before me -- my order just said,

“with respect to paragraph -- granted,

denied, denied," and so forth. I'm posi-

tive that I granted the motion with respect

to paragraph 15 and I think I did with

respect to 14.

MR. RUARK: I am not disputing, your

Honor, I just couldn't find the motion and

I was trying to find out where you were.

THE COURT: The motion is dated

February 1981.

MR. RUARK: I have it in front of me

now.

THE COURT: Then the paragraphs are 14

and 15, and I am quite certain, although I

don't have it before me, that I granted the

E-45

motion with respect to both of those

paragraphs.

MR. RUARK: 14 and 15?

THE COURT: I think I did.

MR. RUARKE: According to my notes on

my copy of the motion 14 was denied and 15

was granted.

THE COURT: All right. Now, your

response to the bill of particulars in

paragraph 15 was, "The L-3 filed by Wash-

ington Water Power Company for the year

1975 failed to report any of the money

received from Robert A. Perry." I don't

think there is a requirement to report. I

may be wrong.

MR. RUARK: There is not.

THE COURT: On receipt. Yes. (Con-

tinuing) -- and spent on behalf of Washing-

ton Water Power Corporation by Jeremiah

Buckley." What I wanted you to do and what

E-46

the Court needs is to tell the Defendants

what was paid out and what was not re-

ported.

MR. RUARK: OK. And I think that my

response answers to paragraph 15 -- I don't

know if it answers 14 and I didn't under-

stand we were required to answer 14 -- 15,

as I understand it, says identifying any

other statement. Basically we said we

couldn't do that.

THE COURT: I think that's right. In

effect you say you couldn't do it.

MR. RUARK: I understood that to

answer the question.

THE COURT: Well -- and I gather

that's the answer -- you can't do it.

MR. RUARK: Yes. Other than, well,

maybe we ought to get back to what the

question was before.

THE COURT: Well, it seems to me that

before a jury could find one or more or all

of the defendants liable here on this

E-47

scheme that they must find that the form

filed in April of 1976, because that's the

only one within the statute of limitations,

was in some respects false.

MR. RUARK: I agree.

THE COURT: You alleged that it was

false, isn't that true? The indictment

charges that is false?

MR. RUARK: We alleged it was an

execution in furtherance of the scheme and

the scheme would have -- our position is,

the allegation is that it was false.

THE COURT: But in furtherance of the

scheme?

MR. RUARK: Yes.

THE COURT: Because it seems to me

that a form which was true is simply not in

furtherance of the scheme because that

would mean if you had a conspiracy in the

years 1972 to 1974 every form filed

thereafter -- this year, next year, and so

forth, would be in furtherance of the

E-48

scheme. I don't see how the government

could prevail in a motion for judgment of

acquittal if the only evidence the govern-

ment has would just be an inference from

the fact this had been done previously.

MR. RUARK: I'm not saying that is

all we have.

THE COURT: I think there are one or

two facts that you can take into consider-

ation in arriving at a decision on a motion

for judgment of acquittal. The fact that

it was done in the past under the same

scheme and under the same general idea.

What evidence do you have?

MR. RUARK: All right. In addition to

that we have comments --

THE COURT: In addition to what?

MR. RUARK: In addition to those two

factors we have been talking about, the

previous payments, the previous things Mr.

Buckley admitted to making, admitted in

1973 the payments he had been making,

E-49

payments to legislators, which were not

disclosed.

THE COURT: And for purposes of this

motion I would accept the fact that prior

forms were false? And I just assume

that?

MR. RUARK: I don't remember if there

were prior forms at that point.

THE COURT: I think forms were filed

prior to April 1976, forms for prior

years.

MR. RUARK: All right. And in addi-

tion to that we will have testimony

from Mr. Perry that Mr. Buckley was putting

a great deal of pressure on him during the

1975 legislative session relating to a bill

called House Bill 435 which was an omnibus

bill dealing with utilities in general and

specifically Washington Water Power and

other private utilities and how they could

set their rates.

E-50

THE COURT: What kind of pressure was

he putting on Perry?

MR. RUARK: He wanted the money. The

money hadn't come through. This scheme was

supposed to be going on during a period of

time 1972 through 1975, and ad infinitum if

it was successful. And for reasons unre-

lated to Mr. Perry, or for that matter to

the water power, Sargent-Tyee was not able

to produce the money on a.-regular basis.

One of the reasons was that at one point, I

believe it was in the year 1974 and 1975,

Sargent-Tyee could not expend any money

without a counter signature of an official

of the bank. So there is a period of time

in 1973, December of 1973, I believe,

through about until June or July of 1975.

And the background of these payments was

that Mr. Buckley had a close vote coming up

on 435 and he was putting pressure on Mr.

Perry to generate the money that was

supposed to come out of this money washing

E-51

scheme that hadn't been made available

before. Mr. Buckley specifically was

alluding to House Bill 435, the necessity

of getting that passed. Mr. Buckley or Mr.

Perry arranged for a meeting with Sargent

in Olympia. The meeting was had. Mr.

Perry also called Sam Lee in Hong Kong and

asked him to bring fifteen thousand dollars

to the United States. Mr. Lee brought

fifteen thousand dollars to the United

States. He met Mr. Perry in late May of

1975. Mr. Perry took the money from Mr.

Lee. He kept it until he gave it to Mr.

Buckley.

THE COURT: When was that?

MR. RUARK: That would be either late

May of 1975 or early June of 1975. Mr.

Buckley reiterated that the money was going

to be used for Mr. -- excuse me, for House

Bill 435 and getting its passage. Except

for, I think it was fifteen hundred dol-

lars, which Mr. Buckley told Mr. Perry he

E-52

was going to keep for himself and he didn't

want the water power company to know about

that. Shortly thereafter House Bill 435

passed and it passed by one vote in the

Senate of the State of Washington.

The government will also establish

through the valuation of the 1976 form, the

one with the charge, all the expenditures

that are listed on that form and we will

document them with expenditures or vou-

chers, receipts, from Washington Water

Power records to show that they match up.

In other words, everything that is reported

Washington Water Power has a voucher for.

There is no indication or no evidence

whatsoever that the fifteen thousand

dollars minus the fifteen hundred dollars

was ever reported to the Public Disclosure

Commission in any way, shape or form. The

government's position is that evidence of

that nature is sufficient to take the case

to jury. And we don't need to specifically

E-53

isolate it. We are looking for having the

bill come forward.

THE COURT: You know of no payment?

MR. RUARK: No direct individual

payment, that's correct, your Honor.

Mr. Perry has maintained, as Mr. Helsell

read in the proceedings, that Mr. Buckley

never did tell him specifically to whom

money was going. Used for legal purposes

relating to House Bill 435.

THE COURT: Why don't you go ahead?

Do you have more?

MR. RUARK: I would rather respond to

your questions because I think it would be

more profitable. I don't want to reiterate

what I have put into my written pleadings.

I do think the scheme as alleged involves

more than just a non-disclosure scheme Mr.

Harrigan seems to think, and for that

reason the Dixon case is not an appropriate

precedent for this case. In Dixon there

was no additional scheme to defraud. Here

E-54

you have that and the intangible rights

doctrine under case law developed by the

various circuits around the United States.

One of the problems, I suspect, one of

the things that makes this case disconcert-

ing for everybody is that normally a case

like this would be focused in on the

legislators themselves actually taking some

money. Here you have a different situ-

ation. You have the scheme from the

outside being developed to, in effect,

corrupt legislators for specific purposes,

and that is for the purpose of passing

specific legislation in this case.

If the Court has no further questions

I will conclude my remarks.

THE COURT: Well, the bill of partic-

ulars was certainly a proxylized response

to the order of the Court.

MR. RUARK: I apologize, your Honor.

I did not understand the order of the

Court to go to that kind of material.

E-55

THE COURT: Any rebuttal argument?

MR. HELSELL: Yes, your Honor.

THE COURT: Let me tell you what I

would like to have you address because the

thing that still concerns me because it is

absolutely critical is could the government

go to the jury if they do prove the evi-

dence that Mr. Ruark spoke about? That is

that in the past money went to Buckley

which he then paid out which he didn't

report. But that in 1975 he got money.

There was a critical bill at issue. He

said he was going to use it for the pur-

poses of making contributions.

MR. HELSELL I don't believe that Mr.

Ruark told your Honor that Mr. Perry will

testify that Buckley told him that he was

going to use it for the purpose of making

political contributions. I have become a

student, I can assure you, of Mr. Perry's

grand jury testimony.

E-56

THE COURT: What do you think Perry

will say? From the grand jury?

MR. HELSELL: If Perry says no more in

the trial than he said in the grand jury he

will say that Mr. Buckley was given fifteen

thousand dollars by him in the spring of

1975. But more remarkably, he will say

that he thought it was coming from his

money over in the Orient. And I can refer

your Honor even though it requires going

ouside the record, to page 52 of Mr.

Perry's grand jury testimony in the first

session where he was before the grand jury

where a lady grand juror asked him, "Whose

money was that that you gave to Mr. Buckley

in May of 1975?" And Mr. Perry said -- or

I could just read two questions and ans-

wers. Question: "That was his money

then? He didn't have any compensation for

that money like before when you gave him a

check and --"

E-57

THE COURT: When she says “his" who is

the “his"?

MR. HELSELL: Sam Lee.

THE COURT: Oh, Lee. Now would you

read the answer?

MR. HELSELL: He says, “That was his

money then?" meaning Sam Lee, "He didn't

have any compensation for that money like

before when you gave him a check and he

would return cash less ten percent? This

time he didn't receive any money? It was

all from his pocket, this fifteen thousand

dollars? His sources?" Answer: "I had

some other money in the Orient at that

time." Mr. Ruark. "She asked the ques-

tion. Tell her.” "I had what I was

convicted for. I had other moneys in the

Orient at that time. So I assumed that Mr.

Lee took it out of the moneys I had."

THE COURT: Does that make any differ-

ence?

E-58

MR. HELSELL: It certainly does.

THE COURT: Why does it?

MR. HELSELL: The whole scheme here is

alleged to have been a scheme to take

Washington Water Power money and launder it

through Sargent-Tyee and do that laundering

so that it could be concealed on the public

disclosure statement. But let me return to

the question your Honor first asked.

Surely a criminal case can't go to the

jury on the issue of whether a statement

was false, as your Honor has correctly

observed in Michelle DeVee in 1976 because

the government can say or prove, "Look,

earlier statements were false back in other

earlier years so we can presume that there

was some lie built into an April 1, 1976

statement even though we can't prove it."

Now, certainly your Honor would not let

this case go to the jury on that argument

nor on the argument that Mr. Buckley was

putting pressure on Mr. Perry to pay him

E-59

some money in the spring of 1975. It would

be like sending somebody to jail, your

Honor, for bank robbery by saying Well, he

did it in '73 and so we presume he must

have done it again in 1976. No criminal

case could go to the jury on the specula-

tive kind of evidence which Mr. Ruark has

to concede is the only “circumstantial

evidence” that the government has that

certain specific legislators were paid in

1975 and that payments to those legislators

were not recorded on the 1976 form L-3.

So I think your Honor should, because

Judge Bilby hopefully will think as your

Honor has indicated here you think, at the

close of the case, the close of the govern-

ment's case, and in the absence of any

legislator getting a payment in 1975, Judge

Bilby should, I submit, dismiss this

indictment for the absolute failure of the

government to prove any falsity in the 1976

L-3. And now that there is spread on the

E-60

record for your Honor both from the bill of

particulars and from the government judic-

ial admissions in this proceeding the fact

that no such payments can be proven, your

Honor should simply now dismiss this

indictment because the government has

conceded that it does not have an essential

element of proof which would be required to

take this case to the jury.

And it is not enough to simply allege

in the language of the statute that the

form filed in April of 1976 was in further-

ance of the scheme. It couldn't be in

furtherance of the scheme, as Mr. Harrigan

has argued, if it was true. The govern-

ment, therefore, must prove that it's

false. The government cannot prove that

it's false. It follows as night follows

day that this indictment should be dis-

missed because the key factor is Was the

1976 form false? Something the government

cannot prove.

E-61

THE COURT: Any other counsel want to

speak?

MR. HARRIGAN: If I may, your Honor.

Your Honor, the grand jury, the various

members of it, repeatedly asked Mr. Perry

the same question that your Honor asked Mr.

Ruark and I believe one of numerous exam-

ples --

THE COURT: I saw your pleading and I

looked over your affidavit hastily. Can

you tell me when you filed the one in which

you incorporated the grand jury?

MR. HARRIGAN: It was approximately

ten days or two weeks ago.

THE COURT: Oh, yes. Here it is. Is

it a supplemental affidavit?

MR. HARRIGAN: Yes, your Honor.

THE COURT: All right. Now, you

go ahead.

MR. HARRIGAN: I believe attached to

that affidavit is Mr. Perry's testimony of

January 22, 1981, and on page 26 of that

E-62

testimony one of the many instances of this

question being asked appears. A juror --

this is halfway down on line 14 -- says, "I

think what he is asking is that the Wash-

ington Water Power Company was opposed to

perhaps some bills that were going through

the legislature or in the process of going

through. Perhaps part of this question

would be this money that you for a short

period of time had control of and passed to

Mr. Buckley. Was there any discussion as

to who that would go to (inaudible) most

favorable to the company that you repre-

sent?" Answer. "No."

Now, he goes on at length to explain

that deals are compartmentalized. He

doesn't know what happened to the money.

That is the testimony, and the kind of

testimony that the grand jury heard over

and over. This whole excerpt consists of

an attempt to get Mr. Perry to identify

what happened to any of this money that he

E-63

says he paid over. And his answer repeat-

edly is that he doesn't know. Now, as a

result, your Honor, the grand jury drew a

distinction, because I would ask the Court

to look at the indictment.

THE COURT: I know there is a differ-

ence in the indictment.

MR. HARRIGAN: Yes, as to the dis-

closure statement other than the one in

question. It is specifically alleged that

there was an intentional failure to dis-

close.

THE COURT: Point it out to me, would

you please?

MR. HARRIGAN: Paragraph 26, line 25.

THE COURT: It says continuing through

January of 1976 he did that.

MR. HARRIGAN: That's right, your

Honor.

THE COURT: And after that.

MR. HARRIGAN: And then in paragraph

28, the one dealing with the L-3 form in

E-64

question, and the only one within the

statute, there isn't a word about falsity

or failure to disclose.

And so, your Honor, the grand jury

when it handed down this indictment was

unwilling to say that that form L-3 was

false or that it failed to disclose any-

thing because there hasn't been the testi-

mony, circumstantial or otherwise, from

which they could conclude that it was

false. That is the only conceivable reason

that that line is missing from paragraph

28. And what the government would like to

do is to invite the jury to speculate that

because they can prove someone received

money in 1975 that he distributed it in

1975. And unless they can prove that he

did -- well, I should say unless the

indictment alleges that he did -- it

doesn't allege a violation of the public

disclosure act. It doesn't in the context

of this indictment allege a connection

E-65

between the mailing of the form and a

scheme not to disclose payments. And

having Mr. Ruark recite what the circum-

stantial evidence may be simply -- I mean

if a bill of particulars can't rescue an

insufficient indictment, a recitation by

Mr. Ruark in open court can't. And this

indictment in paragraph 28 just does not

allege that there was anything false in

that form, and when asked to specify what

was false in that form the government ducks

the question and tries to say that it

didn't disclose any of the money paid

without saying that any was paid in 1975.

And so if, in fact, the government has

circumstantial evidence that would justify

the inference that this fo

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