Thursday, October 29, 2009

Did Judge Sedwick Just Stamp a Seal of Approval on Bill Allen's Payments to Ben Stevens?


From Mark Regan:

No. The issue Judge John Sedwick was deciding at Bill Allen’s sentencing yesterday morning was whether, for purposes of the Federal Sentencing Guidelines, the payments to Ben Stevens were more like bribes, or like gratuities. There’s no dispute that a lot of money was involved. Bill Allen’s plea agreement addendum says that while Ben Stevens was in the State Senate, VECO paid him a total of almost $250,000. However, there’s also no dispute that the monthly payments began well before Ben Stevens went into the State Senate and continued for more than 10 years. The payments didn’t seem to be payments for anything in particular: they didn’t go up or down when Ben Stevens did something in the Legislature that helped Bill Allen. Nor were the payments particularly secret: they eventually appeared on Ben Stevens’ financial disclosure forms.

Under the Federal Sentencing Guidelines, bribes are worse than gratuities. If at sentencing prosecutors show that a particular payment was a bribe instead of a gratuity, the sentence the defendant gets goes up. But the fact that Judge Sedwick decided that Bill Allen’s payments to Ben Stevens were only gratuities doesn’t mean the payments were legal. They could still have been part of a scheme to defraud Alaskans of Ben Stevens’ honest services, or of wire fraud, or of extortion. Or they could have been perfectly innocent. Judge Sedwick didn’t decide that issue, one way or the other.

--Mark Regan

Bill Allen and Rick Smith Face the Music and Are Rewarded for Playing Along with the Feds


Convicted briber and former VECO CEO Bill Allen got sentenced to three years in prison and his former subordinate Rick Smith got one year and nine months.

Many Alaskans were surprised and outraged by the apparent leniency of the sentences—particularly the one imposed on Allen—comparing them to the longer prison sentences given to two of the state legislators they bribed.

The same judge who yesterday morning sentenced Allen and Smith had previously sentenced ex-State Reps. Pete Kott (R.-Eagle River) and Vic Kohring (R.-Wasilla) to six years and three-and-a-half years, respectively.

U.S. District Judge John Sedwick cited three factors in giving what he tacitly conceded would be seen as a light sentence on Allen: the extensive cooperation the long-time oil-services tycoon had provided to the federal government regarding other wrongdoers; Allen’s bad health; and the difficulties Allen will face in prison.

The second and third factors seem to overlap substantially—unless the judge was referring to Allen’s status as a “snitch”—and almost like makeweights, given how many people who are ill and cooperating witnesses are sent away for long periods for such serious crimes.

Cooperation with the feds was the key in lopping years off the sentences of both Allen and Smith. The judge was making a statement that what somebody does after they’re caught—what experts call “post-offense behavior”—can make a big difference in the punishment that person gets.

Judge Sedwick stressed how much time and effort the two former VECO executives spent with federal investigators and prosecutors getting debriefed on their crimes with others and participating in monitored conversations with other suspects. The judge said that the only way that Allen could given more in cooperating was to risk the life of himself or his family. (Although Allen’s lawyer Bob Bundy said that he was unaware of any threats to Allen, the attorney suggested that the ferocity of the reaction to the VECO chieftain’s testimony against former U.S. Ted Stevens could lead a deranged fan of the long-time Republican lawmaker to try to kill Allen in the future.)

To justify the lighter sentence for Allen compared to what Kott and Kohring got, the judge contrasted the corporate tycoon’s cooperation with those former state legislators’ refusal to cooperate or to accept responsibility for their crimes. Kott even went so far, Judge Sedwick noted, to give testimony at his trial that the jury found to be false.

Assuming—as Judge Sedwick announced that he would—that Allen’s statements to the Department of Justice and to the court were “forthright and truthful,” there is an oddity in the court rewarding Allen for the extent of his cooperation. It’s odd because the sheer amount of crimes Allen had committed was the reason the corrupt businessman could cooperate so much. Allen was “the fellow at the top of the pyramid,” in the words of the judge, and being at the top gave him a good view of a lot of people he could roll over on. To put this point in the context of a more common crime, if you only do one drug deal, you can’t spend more than two years cooperating in giving information against other conspirators. If you do a lot of drug deals with a lot of different people, on the other hand, you have a lot of dirt on a bunch of potential defendants to sell to the government.

Surprisingly, Judge Sedwick did not offer what is arguably a more persuasive justification for going harder on the legislators who took the bribes than the man who paid them: Pete Kott and Vic Kohring took oaths to uphold the laws of Alaska, while Allen never did. It’s widely understood that being a public official carries a special trust and responsibility that would support greater punishment for violations.

Given that the judge never mentioned the higher standard for public officials in justifying the three-year sentence for Allen, the court is left hanging its hat on the cooperation peg. In doing this, the judge has a fundamentally different picture of Allen in his head than does the Alaska public, and this helps explain the relatively light sentence. When Alaskans think of Bill Allen, they usually see pictures of the baron of bribery in Suite 604 telling Rep. Kott “I own your ass” or handing Rep. Kohring hundreds of dollars in cash. When Alaskans don’t picture Allen in that “Animal House” hotel room, they see him in a hot tub committing illegal acts with an underage minor.

When Judge Sedwick thinks of Allen, by contrast, he seems to exclude the image of the pervert, as Allen has never been charged with—much less convicted of—any of the alleged crimes involving minors that have been covered prominently in the press. The judge does see the man in Suite 604, but he balances that with the pictures of the man sitting in a chair at FBI headquarters spilling his guts as well as the sad figure on
the witness stand testifying against former friends.

I’ll end this post with two big-picture points that the judge got absolutely right. The judge imposed the maximum fine of $750,000 on Allen, and said he would have fined him more if the law allowed. In doing so, Judge Sedwick pointed out that the Petroleum Profits Tax (PPT) legislation that was the subject of the two VECO executives’ bribery carried high stakes. The outcome of that fight over oil tax legislation meant hundreds of millions—if not billions—of dollars that would either go to the State of Alaska in taxes or stay with the major oil producers. The stakes were big for the people of Alaska, the oil companies, and for Allen personally, who made a great deal of money from VECO’s contracts with those oil companies.

The judge also observed in both sentencings that Allen and Smith’s bribery threatened the foundation of our democracy. If their corruption had succeeded, the judge said, Alaska would have become like a “Third World imitation of democracy” in which who you know and who you pay off controls your life.

Tuesday, October 27, 2009

Rick Smith Misses 40th High School Reunion Because "Bill Owned Rick"


From Mark Regan:

According to a letter Rick Smith's high school classmate submitted for Judge John Sedwick's consideration late Wednesday afternoon, Rick Smith missed his 40th high school reunion in 2003 because Bill Allen called Rick Smith to make him work that weekend. "To me, by that time, Bill owned Rick," said the classmate, Foster Dyer.

--Mark Regan

Monday, October 26, 2009

Bill Allen Seeks Leniency Because He Didn't Try to Pay Off Every Legislator


On page 19 of the 56-page text of Bill Allen's sentencing memorandum is a statement that encapsulates just how far Alaska has come in these public corruption scandals:

"Mr. Allen did not give money to all legislators whom he approached regarding certain positions on legislative matters."

And there's a footnote: Allen's lawyers say that they have asked federal prosecutors to provide defense counsel information "[i]n an attempt to determine the exact number of legislators to whom Mr. Allen did not make illegal payments...."

Big Crashes Looming at Wednesday's Hearing on Bill Allen's Sentence


There are at least two big collisions coming up on Wednesday morning at the Bill Allen sentencing hearing:

1. The federal government's new attorneys running into the high-priced Washington lawyers with their flashy records in high-profile cases.

2. The view of many Alaskans that Bill Allen is one of the worst sleazebags the Last Frontier has ever seen smashing into the reality that the government has often given breaks to a devil to get his help in putting away even bigger devils--as well as the long history the federal government has of seeing the public officials who take bribes as worse wrongdoers than the private citizens who pay them.

As to the first conflict, long-time VECO CEO Bill Allen has gone Outside for help. Previously relying on former U.S. Attorney--and long-time Alaska lawyer--Bob Bundy as his chief counsel, Allen has now added at least three heavy hitters from the Washington, D.C. office of the international law firm of White & Case. With 37 offices in 25 countries, White & Case has more than 2,000 lawyers and reported more annual revenues than even VECO ever boasted--almost $1.5 billion at last count.

Allen's best-known new lawyer is George Terwilliger, the global head of White & Case's White Collar Practice Group, but probably more famous to you as one of the key lawyers for George W. Bush in the Florida recount following the 2000 presidential election. Terwilliger also served as Deputy Attorney General--the Justice Department's No. 2 job--in President George H.W. Bush's administration, and has also prosecuted the infamous BCCI and defended the Bank of America.

Terwilliger and Bundy are aided by two other D.C. lawyers with fancy resumes. Robert Bittman was Deputy Independent Counsel in the investigation of President Bill Clinton headed by Ken Starr, and was Chief Prosecutor in charge of the Monica Lewinsky investigation. Daniel Levin has held a number of important jobs in the federal government, including Senior Associate Counsel to the President and Chief of Staff to both the Attorney General and the FBI Director.

Up against these luminaries are three lesser-known lawyers for the Department of Justice who may well hope to gain greater financial rewards in Big D.C. law if they can show well in this case. The names of these prosecutors are James Trusty (really), Kevin Gingras, and Peter Koski.

So far the government attorneys have been doing better in the pre-sentencing fencing in front of Judge John Sedwick. The court has denied some big last-minute motions filed by the defense, and Judge Sedwick appears strongly inclined to hold this sentencing on Wednesday morning and come down hard on the defendant.

The court may not slam Allen as hard as some Alaskans would want. Allen is going to get credit for helping to bring some public officials to book, and this cooperation will serve to reduce his sentence--just not as much as Allen's high-powered lawyers want.

And however titanic this struggle plays out in the abstract and in the hundreds of pages of legal filings in the last week and a half, the actual sentencing hearing is still supposed to fit into the 90 minutes allotted for it. The lawyers from Washington might want to talk a lot, the famously inarticulate Allen has a right to make his own statement in open court, and it’s safe to assume the judge will have prepared some forceful and pithy remarks for this historic occasion. It promises to be a jam-packed hour and a half.

Rick Smith Seeks Lenient Treatment Because He's a Mere "Errand Boy"


Notwithstanding the apparent success Beverly Masek’s lawyer had in getting the court to reduce her sentence for taking bribes because of her alcohol problem, former VECO executive and admitted briber Rick Smith is going a different route in asking for leniency.

It’s well-known that Smith has had an alcohol problem for years. But the 20-page sentencing memorandum submitted by his lawyers steers clear of any blame of demon booze for his crimes and instead focuses on Smith’s relative lack of power as compared to his boss, long-time VECO CEO Bill Allen.

In the document filed in advance of his sentencing Wednesday morning, the defendant comes across as a humble salaryman under the thumb of Allen the corporate titan. Smith’s title of VECO’s Vice President of Corporate and Government Affairs was a vast overstatement of his actual power: His actual signing authority to buy anything for the company was limited to $1,000. Instead of a dangerous and powerful co-conspirator, Smith’s lawyers portray him as only an “errand boy” for Allen.

Smith’s lead attorney John Murtagh seems to have calculated that U.S. District Judge John Sedwick is not likely to give Smith a break for his drinking problem, just like Judge Sedwick did not go easy on ex-State Rep. Pete Kott because of that defendant’s well-known excessive fondness for the bottle.

Disclosure: As a prosecutor, I have been up against John Murtagh in his capacity as an Anchorage criminal defense attorney. (Anchorage attorney Mike Keenan also represents Smith.)

P.S. For another discussion of the drinking problems of Pete Kott and Rick Smith by a former legislative colleague of Kott’s, see Andrew Halcro’s commentary at on the Internet.

Sunday, October 25, 2009

William Welch Resigns Post of Chief of Public Integrity Section


The head of the Washington, D.C.-based team that investigated and prosecuted public corruption in Alaska for more than six years has announced that he will leave his job.

Since March of 2007, William M. Welch II has been chief of the U.S. Department of Justice's Public Integrity Section, an elite unit of about 30 federal prosecutors who combat public corruption around the country. In that capacity, he supervised the “POLAR PEN” investigation, a probe of public corruption in Alaska that started in the summer of 2003. That investigation has produced criminal charges against 12 people—eight public officials and four lobbyists and power brokers.

The Public Integrity Section has not lost any of those cases in front of a jury, but did have the highest-profile case—against U.S. Sen. Ted Stevens—thrown out on the basis of prosecutorial misconduct after the jury rendered guilty verdicts. Two other defendants—former State Reps. Pete Kott (R.-Eagle River) and Vic Kohring (R.-Wasilla)—have been released from prison while a judge sorts out allegations of government wrongdoing in the trials which led to their convictions.

Welch is one of six prosecutors under investigation themselves as a result of the bungled handling of the Ted Stevens case. There are actually two probes of those prosecutors: an internal investigation by the Department of Justice’s Office of Professional Responsibility and a highly unusual probe by a special prosecutor looking at whether the prosecutors committed criminal contempt of court.

The departure of Welch means that most of those six prosecutors have now left the jobs they held during the Ted Stevens trial.

Welch said that he would be returning to his native Massachusetts, where he will remain an employee of the Department of Justice’s Criminal Division.

Lanny A. Breuer, Assistant Attorney General for the Criminal Division, told the Washington Post that Welch is "a dedicated public servant who's devoted his entire professional life to serving the American people." Breuer said that he and Welch had come to a "mutual decision" about what was best for the prosecutor and the division.

Welch’s lawyer issued a prepared statement that said “While the ultimate result in the Stevens case has been highly disappointing professionally and personally, Bill knows that his management decisions, where permitted, comported with his own and the department's highest ethical standards."

The Washington Post, which broke this story late last week, said that Raymond Hulser would be the acting chief of the Public Integrity Section upon Welch’s departure on October 30. The newspaper said that a nationwide search would be launched to find a new chief for the section.

Saturday, October 24, 2009

What Does It Mean that Bill Allen Has a Full-Scale IQ of 82?


Bill Allen’s lawyers submitted a report with his pre-sentencing memorandum stating that a test given in August of this year showed a full-scale IQ score of 82. This result places him in the bottom portion of the “Low Average” range. Well under 15 percent of all American adults have a score as low as 82. The range below “Low Average” starts at a score of 79 and is called “Borderline Retardation.”

Allen of course suffered a brain injury from a motorcycle accident in 2001 from which he has “improved only moderately,” according to a psychiatrist.

Since that brain injury, Allen has:

· served as Chairman of VECO, a company whose annual revenues reached a billion dollars;

· traveled and vacationed one-on-one repeatedly with then-U.S. Sen. Ted Stevens, Chairman of the Senate Appropriations Committee and one of the country’s handful of most powerful people; and

· served as the political arm of the major oil companies in Alaska politics.


Government Opposes a New Trial for Pete Kott, But Doesn't Defend Failure to Provide Information


From Mark Regan:

Late Friday afternoon, the Government filed its opposition to dismissing the corruption case against former State Representative Pete Kott (R.-Eagle River) or giving Kott a new trial.

After the Ted Stevens prosecution collapsed, a new set of Government attorneys reviewed the records of the past prosecutions, including the prosecutions of Pete Kott and of former State Representative Vic Kohring (R.-Wasilla) and determined that a lot of information had not been turned over to the defense in those two cases. The Government agreed that Kott and Kohring should be released from jail while Judge Sedwick considered motions to dismiss their cases, or to give them new trials. Pete Kott’s attorney filed that motion in late September; Vic Kohring’s attorney is supposed to file his motion next Friday. In its opposition to Kott’s motion, the Government doesn’t defend its failure to turn over information; instead, the Government says that its not turning over information before trial didn’t deprive Pete Kott of a fair trial.

The Government’s main line of argument is that its failure to give Kott various things before trial didn’t make any difference: none of the materials it initially failed to turn over to the defense, it says, would have prompted the jury to acquit Pete Kott. Part of the argument is that at trial the judge would have excluded most of the Bill Allen sexual-abuse-investigation records as irrelevant and prejudicial, so the Kott jury would never have heard about that investigation during Kott’s cross-examination of Allen. Another part of the argument is that while some withheld information might be relevant, it is outweighed by other withheld information in the same document or by other information presented at trial. For example, while parts of an FBI 302 interview-notes form might support Kott’s defense that a $7,993 payment was meant genuinely to compensate him and his son for flooring work on Allen’s home, the 302 form taken as a whole—and testimony at trial—support the Government’s theory that the payment was instead meant to compensate the son for time the son was putting in running Kott’s reelection campaign. A third part of the argument is that Kott had some of the information before trial anyway, and so failure to turn additional information over before trial didn’t make any difference.

One example the Government uses to support this third part of its principal argument sheds some light on what the POLAR PEN team’s disclosure practices might have been. One of Kott’s defenses is that Bill Allen and Rick Smith were giving him financial help not because they were bribing him, but because he was a longtime friend of Allen’s who needed the support. Not long before Kott’s trial, the prosecutors sent Kott’s trial attorney a letter, which read:

“Dear Jim:

“We write to provide you notice of the following information. Potential government witnesses Bill J. Allen and Richard L. Smith, if they testify at trial, would testify that with regard to many of the benefits they and VECO provided to Peter Kott before and during the conspiracy (including but not limited to storage space at the “Toy Store,” flooring tools, auction items, assistance for political campaigns by Kott’s relatives, and assistance with the purchase of a truck), Allen and/or Smith and/or VECO provided such benefits partly so that Kott would continue to take official actions on the part of VECO and Allen and partly because Allen and Smith considered Kott a friend.

“If you have any questions please do not hesitate to contact us.”

This letter, the Government now says, adequately conveyed to the defense that one of Allen and Smith’s motives was friendship; so, the Government now says, the fact that it didn’t initially turn over FBI 302 forms saying much the same thing (according to the Government) didn’t harm the defense.

Presumably the Kott defense will now say in its reply memo that this brief statement wasn’t good enough: it would have done a better job cross-examining Allen and Smith at trial if it had been able to use the much more detailed FBI 302 interview summaries.

A larger question is whether this prosecution practice—of withholding the FBI 302 interview summaries but providing individual items of information to the defense in a less usable form, such as a cryptic letter—is a practice it systematically followed in the Ted Stevens case and other cases. If so, one would expect the people now investigating the prosecution team’s conduct to reach some conclusions about whether that practice amounted to an ethical violation on the prosecutors’ part. It would also tend to undercut the prior prosecutors’ defense that their mistakes were a matter of oversight and haste, not deliberate decision-making.

Note that in Kott’s case the Government is not now defending its initial failure to turn over information to the defense. It does say in a footnote that it has now turned over a lot of information that it didn’t have to turn over, but it doesn’t say that any particular item shouldn’t be considered now because it wasn’t something that it was legally required to turn over before. This is consistent with the replacement prosecution team’s distancing itself from the things the prior team did. Pete Kott and Vic Kohring are out of jail because the second group of prosecutors decided to disclose information that the first group of prosecutors had failed to disclose. The second group of prosecutors will now be defending the convictions the first set of prosecutors obtained—at least the convictions of Kott and Kohring—but they apparently will not be defending the first team’s failure to turn over information to the Kott and Kohring defenses.

--Mark Regan

Judge Sedwick Announces that He Thinks that the Federal Probe into Alaska Public Corruption Will Produce No New Defendants


Mark Regan has done an excellent job in a series of posts regarding the recent flurry of filings in the Bill Allen and Rick Smith cases, and I thank him again (while hoping that he’ll keep going).

I want to underscore one point that Mark touched on briefly. Bill Allen asked for a four-month delay in his sentencing based in part on the theory that he needs to stay out of prison to testify against other people to be charged in the federal investigation into public corruption investigation in Alaska. In rejecting this request, U.S. District Court Judge John Sedwick announced that he thinks it is highly unlikely that the federal investigation will produce any new defendants beyond those already charged.

“[G]iven the passage of time and the obstacles created by the questionable conduct of the lawyers and the investigators who previously represented the interests of the United States, the only person whose future prosecution is anything more than sheer speculation is former legislator Bruce Weyhrauch,” Judge Sedwick wrote. He added that “Seeking a chance to cooperate in the prosecution of other potential corruption defendants is entirely speculative at this juncture.” (Emphasis added.)

The “other potential corruption defendants” most discussed are of course former State Senate President Ben Stevens (R.-Anchorage) and U.S. Rep. Don Young (R.-Alaska). One odd feature of Bill Allen's sentencing hearing is that the government will try to get Judge Sedwick to sentence Allen in part for his activities with Ben Stevens and Don Young while the government has never charged Ben Stevens and Don Young for any crimes relating to Allen (or anybody else).

Some have speculated that the feds have thrown in the towel on indicting additional people in the “POLAR PEN” probe, but don't want to admit it while they figure out who else--like Bill Allen--to blame for ending the investigation. One piece of evidence apparently cutting against this proposition is the extension of more than one year Judge Sedwick gave in August on the sentencing of Jim Clark, the former Chief of Staff to ex-Gov. Frank Murkowski. I have previously speculated on this blog that this delay in Clark’s sentencing meant that the feds wanted to milk Clark for more dirt on Ben Stevens and Frank Murkowski. If the folding up the tents theory is correct, however, the real reasons to hold off on sentencing Clark might have been to keep him out to testify against former State Rep. Bruce Weyhrauch (the reason suggested in the order) or to wait until after Allen was sentenced to establish a benchmark in sentencing Clark.

The feds generally do not announce either that (a) we aren't going to indict Mr. X or (b) this investigation is over, although they have occasionally said some version of (a) or (b) if specifically asked. The sentencing hearings for Bill Allen and Rick Smith on Wednesday morning may include more clues on the future of the federal government's “POLAR PEN” probe.

Thursday, October 22, 2009

What Are the Issues Going to Be at Bill Allen's Sentencing?


From Mark Regan:

There is a 550-page Federal Sentencing Guidelines Manual with Appendices. I haven’t read it.

The basic idea seems to be that Judge Sedwick will find in the Guidelines a “level” to attach to the crimes to which Bill Allen plead guilty, adjust that level up or down depending on some specific facts about the crimes – such as how much money was used to commit them – make some more adjustments based on facts about Allen himself, and then consider the Government’s motion to reduce the level of Allen’s offenses based on his cooperation. At the end of this process, the judge will have a range of months Allen might be ordered to serve – the Government says 46 to 57 months, the defense says 27 to 33 months, minus some time for cooperation -- and will pick a specific sentence out of that range. A similar but less complex process applies to the fine Judge Sedwick will levy.

The Anchorage Daily News has put the sentencing memos on its website. Allen’s memo is longer and more detailed than the Government’s, but the Government has filed its probation officer’s presentencing report under seal, as the federal Criminal Rules require, and has also filed its “5K” motion to reduce Allen’s sentence because of his cooperation under seal, with Judge Sedwick’s permission. Presumably the motion about cooperation was filed under seal because it describes Allen’s cooperation in ongoing investigations. At any rate, the Government’s public memo is detailed enough to convey its position as a general matter. The Government’s bottom-line recommendation is for Allen to serve 46 months and pay a fine of $750,000; the defense’s recommendation is for six months in jail and six months in home detention, with a fine of $150,000.

Leaving aside the defense’s legal argument that the Government has to prove facts from sources other than Allen’s own testimony or pleas, which the defense says can’t be used against him, the first factual dispute seems to be about whether Allen’s payments to the legislators were bribes, as the Government contends, or gratuities, as Allen argues. This is an interesting argument for the defense to be making because two of the three crimes to which Allen plead guilty were bribery and conspiracy to bribe. Furthermore, Judge Sedwick is the sentencing judge, and in the Kott trial Judge Sedwick essentially rejected a defense argument that Allen is making now: that to show bribery, you need to show a quid pro quo, and the legislators would have voted VECO’s way even if Allen and Smith hadn’t given anything to them. (See Allen’s memo, pages 16-18.) If the payments were bribes, the level of the offenses goes up further than if they were gratuities.

Then there’s the question of how much money should be counted as a bribe, because the more money that is counted, the higher the level of the offenses goes. There is no dispute that Allen paid a regular salary, or retainer, or fee, or something, to Ben Stevens. The Government argues that the payments from the time Ben Stevens went into the Legislature to the time they stopped should be added up (to somewhere around $200,000) and treated as bribes. Allen argues that if the payments are treated as bribes at all, payments from 2002 through 2005 should be excluded – because the 20/20 PPT wasn’t an issue until 2006 – and then only about ¼ of the $43,000 allocated to 2006 should be counted, because the Legislature was only in session for three months that year and payments made at other times of the year can’t be linked to legislative action. Allen’s underlying position is that none of the payments to Ben Stevens should be counted because they’re all semi-legitimate consulting fees. Additionally, he has a number of arguments about how the amount of payments to Kott and Kohring shouldn’t include some sums about which he testified at their trials.

It is not clear whether Judge Sedwick is going to want to hear testimony on these two sets of issues. The facts of the payments have more-or-less been established (although the defense wouldn’t agree) and it might be that testimony wouldn’t help Judge Sedwick characterize them.

The Government’s going to argue for upward adjustments based on Allen’s being a principal mover in the various schemes. One of Allen’s arguments to the contrary is going to be that the legislators approached Allen for favors, not the other way around. Having presided over the Kott and Kohring trials, Judge Sedwick might already have developed an opinion on this subject.

Then there are the defense’s claims about Allen the family and civic benefactor, and Allen the severely ill man of questionable competency. These claims are being made principally to justify an equitable reduction in the sentence, although some of the information about Allen’s bad health appears designed to counter the idea that his cooperation isn’t worth very much because he manipulated the Feds. The odds are that there won’t be much in-court testimony about this either: the Government will accept that Allen has helped out many family members and friends, and that he’s a sick man, but it’ll say that this is essentially irrelevant.

What credit Allen should get for cooperation probably partly depends on facts that aren’t going to be made public at the hearing. It’s certain that he’ll get at least some credit. Judge Sedwick already knows (and has said that he knows) that Allen has cooperated in the Kott and Kohring cases. How much of a reduction he’s willing to grant based on that cooperation, and on cooperation in cases that aren’t being made public, is an open question.

--Mark Regan

Who Wrote Letters Supporting Bill Allen?


From Mark Regan:

(Exhibit 3 to Bill Allen’s sentencing memo)

Family (a granddaughter: “He is the personification of ‘The American Dream’”; another granddaughter, a first-grader with suspiciously practiced handwriting: “Dear Your Honor: I love my Grandpa and if you took him away, I would cry”): at least 12 letters.

Mark Allen, Bill Allen’s son, co-owner of this year’s Kentucky Derby winner apparently purchased post-indictment with Allen family money, had the chutzpah to say that “My father has always believed in my dreams of racing, breeding, and training horses. … Dad made it possible for my dreams to come true this past May when my horse won the Kentucky Derby.”

Current and former VECO employees helped by Allen: at least 8 letters.

Other family friends helped by Allen: at least 5 letters.

A Pop Warner coach: 1 letter.

John Shively: 1 letter, much more nuanced than any of the others. Shively thinks Allen changed after his 2001 motorcycle accident and that Rick Smith “was not the right person for the job” of being Allen’s primary advisor. Smith “is not a strategic or political thinker, nor is he someone who would stand up to Bill or help him stay out of trouble.”

--Mark Regan

Ben Stevens' Nemesis Asks to Speak at Allen/Smith Sentencing


From Mark Regan:

Thursday afternoon, Judge Sedwick issued an order in both Bill Allen’s and Rick Smith’s cases:

“The court has received a letter dated October 21, 2009, from Ray Metcalfe who describes himself as a former legislator. Mr. Metcalfe asks to speak at the sentencing hearing scheduled for October 28, 2009, in this case. He makes the request on the basis that there are 650,000 victims (which the court interprets to be a reference to all the residents of Alaska) for whom he apparently believes he should be the spokesman. In the letter Mr. Metcalfe accuses entities and persons who are not parties to this litigation of crimes. For this reason, the copy of the letter is being filed under seal separately. The parties are directed to file a memorandum explaining why the court should or should not treat Mr. Metcalfe as a victim or victim's representative who has a right to speak at the sentencing hearing in this case. The parties may file separate memoranda or join in a single joint memorandum. The joint memorandum or separate memoranda shall be filed not later than Noon Alaska time on October 27, 2009, and may not be filed under seal.”

Conceivably one of the people Ray Metcalfe’s letter would have accused of crimes would have been Ted Stevens’s son Ben Stevens, against whom the former “Disco Ray” crusaded for years. Metcalfe sponsored a recall petition against Ben Stevens in 2005 which was thrown out by the Division of Elections, acting on the advice of the state Attorney General’s office. The principal complaint: Ben Stevens was being bribed by VECO. Bill Allen’s testimony at the Kott trial, years later: one of the people he had been bribing was Ben Stevens. Bill Allen’s current argument, made at pages 20-23 of Wednesday’s sentencing memo: his payments to Ben Stevens were legal. Partial proof of their legality, according to Allen’s memo: the AG’s office had okayed them in its 2005 advice about Ray Metcalfe’s recall petition.

It doesn’t sound like Judge Sedwick particularly wants to hear from Ray Metcalfe, but you can certainly understand why Ray Metcalfe wants to be heard.

--Mark Regan

Don Young, United States Representative A


From Mark Regan:

As Richard Mauer and the Alaska Public Radio Network (APRN) have reported, the documents filed in the Bill Allen sentencing include some “Stipulated Facts,” signed by Allen in May 2007, summarizing the testimony Allen might give against “United States Senator A” (obviously Ted Stevens) and “United States Representative A” (who can only be Don Young). The two “Representative A” paragraphs assert that

“From in or about 1993 to on or about August 30, 2006, ALLEN and SMITH also provided things of value to United States Representative A. For instance, in or about June, 2006, Smith obtained a set of golf clubs, costing approximately $1,000, that SMITH gave to United States Representative A. SMITH used ALLEN’s credit card.”

“From approximately 1993 to 2006, ALLEN and SMITH authorized the use of VECO corporate funds to pay for the expenses associated with a yearly fundraiser for United States Representative A. Each year, ALLEN and SMITH arranged for the purchases of catering expenses, liquor, equipment rentals, and other associated costs for a fundraiser for United States Representative A. These expenses were paid using VECO’s corporate funds, and amounted to approximately $10,000 to $15,000 each year. The total monies paid by VECO for these fundraisers thus totaled approximately $130,000 to $195,000.”

Could Don Young possibly have been spending high hundreds of thousands of dollars on legal fees to deal with $1000 worth of golf clubs and less than $200,000 worth of fundraisers?

--Mark Regan

Vic Kohring, The Plaintiff


From Mark Regan:

Former State Representative Vic Kohring (R.-Wasilla) is suing his attorney, John Henry Browne, and Browne filed a request Thursday afternoon to withdraw as Kohring’s lawyer. It’s not malpractice. It’s an auto accident. According to Browne’s motion, shortly before Kohring’s trial in October 2007, attorney Browne was driving a rental car, with client Kohring as a passenger, when Browne ran a stop sign and got into an accident. The statute of limitations in tort cases is two years, and so not long before that deadline, Kohring filed a personal injury suit in state court naming Browne as the defendant. Browne’s motion complains about Kohring’s not having told him up front that he was naming Browne as the defendant, and goes on to make the (fairly obvious) point that this sort of lawsuit makes it difficult for Browne to continue to represent Kohring in the criminal case.

Not mentioned in Browne’s motion to withdraw is the fact that there is an October 30 deadline for filing a new-trial and dismissal motion in Kohring’s criminal case. You’d expect that Judge Sedwick will extend this deadline while Kohring obtains new counsel. The delay will push Vic Kohring’s case further out of sync with the case of ex-State Rep. Pete Kott (R.-Eagle River); Kott’s new-trial and dismissal motion was filed in late September and the Government’s response is almost due.

--Mark Regan

Guest Post on Date of Bill Allen's Sentencing: Mark Regan Tells Us that We're Still on for Next Wednesday


I'm buried in teaching and book-writing, so I am pleased to be able to present what I hope is the first of a series of guest posts from Mark Regan, an attorney from Fairbanks whose name will be familiar to long-time readers of this blog. Mark grew up in Alaska, and interned with U.S. Sen. Ted Stevens in the 1970s before going to Harvard Law School. In 2003, Mark was the first recipient of the Alaska Bar Association's first Jay Rabinowitz Award for Public Service.

Mark's posts will appear in Verdana font while mine will continue to be in Georgia font. Mark's first post is on an order issued by U.S. District Court Judge John Sedwick.

From Mark Regan:

“It is time to turn Allen’s page in this lamentable chapter in Alaska’s history.” In an order issued late Thursday morning, Judge Sedwick has denied Bill Allen’s request to continue the sentencing, which will go as scheduled next Wednesday for both Allen and his co-defendant Rick Smith. Judge Sedwick suggested that future prosecutions in the Alaska political corruption cases face “obstacles” and for him to keep Allen out of jail to encourage Allen to cooperate in those future prosecutions would require “sheer speculation.”

One of the reasons Bill Allen had asked for a continuance was that he might be asked to cooperate in corruption trials that take place more than a year from now. Under the federal Criminal Rules, it’s hard to reduce someone’s sentence based on that person’s cooperation unless the prosecution’s request to reduce the person’s sentence is filed within a year of sentencing. As far as the need to keep Allen cooperating so he can testify against defendants whose cases have not yet gone to trial, Judge Sedwick expressed skepticism:

“[G]iven the passage of time and the obstacles created by the questionable conduct of the lawyers and investigators who previously represented the interests of the United States, the only person whose future prosecution is anything more than sheer speculation is former legislator Bruce Weyhrauch.”

Bruce Weyhrauch’s case, according to Judge Sedwick, is likely to go to trial within a year – if the U.S. Supreme Court allows the charges against Weyhrauch to stand – and so if Allen’s cooperation in that case needs to be rewarded, he, the judge, can consider a motion filed after Weyhrauch’s trial has concluded. Judge Sedwick’s order says that he, the judge, already understands that Allen has cooperated in testifying against Pete Kott and Vic Kohring, and that he’ll take that cooperation into account at next week’s sentencing.

Judge Sedwick also assured Allen that at sentencing he would not hold him “responsible for any improper conduct in which the prosecutors or investigators indulged in the [Ted] Stevens case.”

“In sum,” Judge Sedwick concluded, “the court sees the reasons offered by Allen in support of continuing his sentence to be reflections of wishful thinking and an unfounded concern that the cooperation he has already provided will not be considered in support of a lower sentence.”

Judge Sedwick will consider that cooperation, and also weigh such issues as whether Allen’s payments to various politicians ought to be considered “bribes” or “gratuities,” at next Wednesday’s sentencing.

--Mark Regan

Tuesday, October 20, 2009

How Will Prosecutors Address Issues of Bill Allen's Credibility at His Sentencing?


Most Alaskans are probably looking at the October 28 sentencing of disgraced oil-services titan Bill Allen in terms of how hard the judge hammers the admitted briber.

A number of citizens will cheer at the harsh sentence and the tough language Judge John Sedwick is expected to hand down a week from tomorrow. Already bad due to his confessed corruption of state legislators, the reputation of the former VECO chieftain has recently taken further hits from revelations about issues involving the truthfulness of some of his testimony as a federal witness as well as additional disclosures regarding allegations of his sexual abuse of minors. (Note that Allen has denied committing crimes with underage girls.)

Lawyers will watch how roughly the judge treats Allen, but some attorneys are also wondering about how prosecutors will deal with the issues about the former CEO’s credibility that helped produce the collapse of the Ted Stevens case months after a jury had returned guilty verdicts against the long-time U.S. Senator from Alaska. Allen was a key witness against his former friend Ted Stevens, and also played a critical role in the prosecutions of former State Reps. Pete Kott (R.-Eagle River) and Vic Kohring (R.-Wasilla). Kott and Kohring were convicted at trials, but the two ex-legislators are now free while Judge Sedwick sorts out allegations of prosecution misconduct that arose after the end of the Ted Stevens case.

Prosecutors have to show their hand on the question of how to think about Allen’s cooperation as a witness no later than tomorrow. That’s because court rules make tomorrow the deadline to file sentencing memoranda to help guide Judge Sedwick on the sentencings October 28 of Allen and his former subordinate Rick Smith.

With his permission, I will outsource a further discussion of the prosecution’s dilemma to a thoughtful reader of this blog, Fairbanks lawyer Mark Regan:

The really fascinating question is whether the Feds are going to hint in any way that Allen should get a harsher sentence because he might have lied on the stand in the Stevens trial. ("Might have lied on the stand" includes, for present purposes, "Exhibited more certainty about the 'Ted is just covering his ass' conversation" than would have been warranted given his initial, undisclosed, difficulty remembering that conversation.")

Here's what the subtext of a full-disclosure, sackcloth-and-ashes Federal presentation might be:

We continue to believe that the public officials we indicted were corrupt and that prosecuting their corruption was in the public interest. Eliciting Allen's cooperation was in the public interest also, as was the decision to leave him free while he was testifying against the legislators. When non-officials bribe officials, or when non-officials and officials conspire to deprive the public of the officials' honest services, the harshest penalties should go against the officials in order to deter other officials and express community condemnation of official misconduct. That said, however, it is possible that in some cases the cooperating witnesses will exaggerate their testimony and that federal prosecutors will assist in that exaggeration. There is an ongoing federal investigation about whether our predecessor prosecutors did this here. Without prejudging that investigation now, we would suggest that if you conclude that Allen exaggerated his testimony against official defendants, you give him no leniency in sentencing him based on his cooperation. If he wants to admit error, or claim that our predecessors coerced him into giving exaggerated testimony, let him say that now. If he wants to withdraw his plea, please let him do it ... and then, let's rock.

I certainly don't expect them to say this that directly -- but wouldn't it be amazing if they hinted at it?

Monday, October 12, 2009

Prosecutors Continue to Get Cooperation from a Former Top Congressional Aide to Don Young


I’m late to this party because of obligations in preparing for my class (never let anybody tell you that teaching is easy). So mostly I’m just going to point you towards Richard Mauer’s story in Saturday’s print edition of the Anchorage Daily News, available at on the Internet.

Mauer details how federal prosecutors have obtained another delay in the sentencing of Mark Zachares, a former top committee aide to U.S. Rep. Don Young (R.-Alaska). This is the eighth delay of the sentencing in the two and a half years since Zachares pleaded guilty to felony conspiracy.

Zachares served as special counsel to Young when Alaska’s only Member of the U.S. House was Chairman of the House Transportation Committee. The former staff member and his lawyer now apparently spend a lot of time with employees of the Department of Justice, as a court filing says that Zachares is cooperating in “several ongoing investigations.”

Zachares fell into trouble due to his association with the notorious lobbyist Jack Abramoff, now in prison. Mauer reports that another former top committee aide to Young—Fraser Verrusio, the Transportation Committee’s ex-Policy Director—is currently under indictment for allegedly providing assistance to Abramoff’s team while accepting a package of gratuities that included a trip to the World Series.

If he discussed these matters with the public or press—which he so far has not—Rep. Young would probably say that many dozens of people have worked under him in his 36-year Congressional career and that the overwhelming majority have been charged with no crimes. He would probably add that a number of people who served on Capitol Hill outside of his supervision have been convicted because of their illegal ties to Team Abramoff.

Nevertheless, the prosecutions of Zachares and Verrusio may help explain why Young has spent more than $1 million in legal defense fees since 2007. The Alaska Congressman may perceive that his areas of exposure go beyond golf tournaments in Alaska organized by VECO executives.

Monday, October 5, 2009

Belated Congratulations to My Aunt Sally for Making It to Her 90th Birthday


Preparing for my class contributed to my failing to post this earlier, but it’s still worth doing. My Aunt Sally turned 90 years old late last month. More than just a cause for happiness, this milestone carries a larger lesson. My aunt has worked hard in raising her family and building her business, yet she remains far more relaxed than many people. Her low-key personality has helped her weather storms in life and keep her ship sailing a long time. We could all learn from this and try to slow down a little.

Sunday, October 4, 2009

A More Complete Set of Disclosures About Your Blogger


In getting ready for my class on the topic covered by this blog, I prepared an extended biography of me that also includes various disclosures that might be relevant in considering my work on Alaska public corruption. This blog has featured some of this information before, but this is the most complete set of disclosures I have compiled. It strikes me that readers of this blog might find this information interesting as well, so here it is:

Extended Biography of Cliff Groh
(Complete with Disclosures of Interests and
Relationships Potentially Relevant to this Course)

Cliff Groh is a lifelong Alaskan who has been a lawyer for more than 20 years. He is now a writer and attorney in Anchorage. Formerly a prosecutor, Groh has represented some criminal defendants in his private law practice.

Groh has been doing research for a book on the Alaska public corruption scandals uncovered by the current federal investigations and the resulting trials. To that end, he has observed most of the trials of Pete Kott and Vic Kohring in Anchorage and all of the trial of Ted Stevens in Washington, D.C. He maintains a blog on the Alaska public corruption scandals at on the Internet.

Groh served as the Special Assistant to the Commissioner of Revenue from 1987 through 1990. In that capacity, he served essentially as the State of Alaska's chief tax lobbyist in the successful effort in 1989 to revise the state's oil taxes in a way that increased revenues from the giant Prudhoe Bay and Kuparuk fields. The legislation adopted in 1989 changed the Economic Limit Factor (ELF) of the state’s oil production (severance) tax, and that legislation created a regime for oil taxes that lasted until the Alaska Legislature adopted the Petroleum Profits Tax in 2006.

Groh was also the principal legislative staff member working on Permanent Fund Dividend legislation in 1982. That legislation produced the per capita Permanent Fund Dividend Alaska has today.

Groh has worked for Democrats while serving in these partisan positions in the Alaska State Legislature and the Alaska Department of Revenue. He is a registered Democrat who was a delegate to the 1988 Alaska Democratic Convention.

Groh has also served in government in non-partisan positions. His service includes work as an Assistant District Attorney in Anchorage and in rural Alaska communities such as St. Paul, Unalaska, and Sand Point. He has handled approximately 30 jury trials as a prosecutor. He has also served as in-house and outside counsel for municipal governments in Alaska.

When Groh was first out of college in the late 1970s, he worked as a reporter with a statewide newspaper called the Alaska Advocate. He has also published historical articles on topics ranging from the Permanent Fund Dividend to the history of journalistic coverage of the capital move.

Groh socialized with Bruce Weyhrauch during periods in the 1980s and early 1990s when both lived in Juneau, and Groh had some social contacts with Weyhrauch afterwards. While serving as City and Borough Attorney for the City and Borough of Sitka, Groh arranged in 2002 or 2003 for Weyhrauch to act as counsel for the City and Borough in a case where Groh had a conflict of interest.

Groh has known Ted Stevens all of Groh's life, and Groh's father—who passed away in 1998—was a close friend and political ally of Ted Stevens. Groh lived in a dormitory in Washington, D.C. in the summer of 1975 with interns of Stevens' Senate office while researching a college senior honors thesis on the history of the Alaska Native Claims Settlement Act of 1971, and Ted Stevens apparently made the arrangements for Groh to live in that dormitory. Groh sometimes used space in Ted Stevens' Senate office during the summer of 1975 while researching his thesis, and Groh had some social contacts with Stevens that summer.

Groh’s mother was a close friend of Ted Stevens’ first wife Ann Stevens, who died in an airplane crash in 1978. Ted Stevens and his Senate staff worked to arrange for additional medical care for both of Groh’s parents when they were stricken with cancer in the 1990s.

At various points over the years, Groh met and spoke with Jim Clark, Bill Weimar, and Pete Kott about various matters.

In the 1980s, Groh’s father served as VECO’s lawyer in defending the corporation against an enforcement action brought by the Alaska Public Offices Commission (APOC) regarding VECO’s campaign contributions. One or both of Groh’s parents also had some business dealings with Bill Allen in the 1980s.

Groh has also worked and/or socialized with a number of the Anchorage lawyers who have worked on matters associated with the “POLAR PEN” probe into public corruption in Alaska. Some of those attorneys are or have been prosecutors on those matters, and some of those attorneys have served as defense counsel on those matters.
Updated to narrow the period of any business dealings of my parents with Bill Allen to include only the 1980s.