the intersection of federal $$$$ as the basis for prosecuting on honest services -from SLABBED archives May 18,2008 – Revisiting the Indictment in USA v Scruggs

In the interest of we’re all in this together, I recently re-read the indictment in USA v Scruggs. However, it wasn’t until I re-read the Motion to Dismiss filed by the Defense on counts 2, 3, and 4 and the Government’s response, that I began to understand the implied authority in these counts that gave them added significance.

In that regard, however, there is a piece of the puzzle missing in both the motion and the response – the audit trail “when such state or local government or agency received in any one year period benefits in excess of $10,000 under a federal program”.

Only two audit trails could be followed to reach Judge Lackey – and no evidence of either one was contained in the indictment, the defense motion or the government’s response.

If this puzzle is of interest to you, your first stop needs to be OMB and the circulars that apply when federal funds are awarded to states and local governments. Three definitions from A-133, the audit requirements, appear to be significant to USA v Scruggs.

State means any State of the United States, the District of Columbia, the Commonwealth of Puerto Rico, the Virgin Islands, Guam, American Samoa, the Commonwealth of the Northern Mariana Islands, and the Trust Territory of the Pacific Islands, any instrumentality thereof, any multi-State, regional, or interstate entity which has governmental functions, and any Indian tribe as defined in this section.

Local government means any unit of local government within a State, including a county, borough, municipality, city, town, township, parish, local public authority, special district, school district, intrastate district, council of governments, and any other instrumentality of local government.

Recipient means a non-Federal entity that expends Federal awards received directly from a Federal awarding agency to carry out a Federal program.

Next, stop by what’s known as Legislative Bill Status, the website of the Mississippi State Legislature, or just link to the relevant legislation here – the 2006 and 2007 appropriation for the entity of State government that could be described as the judicial branch, the Mississippi State Supreme Court. These two pieces of legislation were passed in the 2005 and 2006 sessions, respectively.

It’s not just what you see that’s important when you look, it’s what you don’t.

There are just two funding streams authorized for use by the State’s courts, the State General Fund and the Special Fund account where fees and fines collected by the courts are deposited. If there were any pass-through federal funds reaching any State court, the amount of those funds would be listed in the appropriation. None are.

Thus, the only remaining that route federal funds could follow and reach Judge Lackey would be an award for a specific federal program where he/his court is a designated recipient – possible but not likely and definitely not evident in any of the three case documents. However, the word recipient is controlling.

Another puzzle regarding these counts is the idea of Judge Lackey being an “agent” of Lafayette County – noting that county government is federally-defined above as separate from state government. Clearly he has statutory authority over all of the counties in his District that creates an inherent conflict as being an “agent” of the County would give him authority over himself! How that could possible be is a puzzle to tackle another day.

We’re all in this together and we all need to be thinking about these and other issues. Sop’s our resident CPA and I’m sure he’ll have more to say as well as take questions.

12 thoughts on “the intersection of federal $$$$ as the basis for prosecuting on honest services -from SLABBED archives May 18,2008 – Revisiting the Indictment in USA v Scruggs”

  1. You are right, Nowdy. The government’s response skirted around that issue pretty effectively.

    (b) The circumstance referred to in subsection (a) of this section is
    that the organization, government, or agency receives, in any one
    year period, benefits in excess of $10,000 under a Federal program
    involving a grant, contract, subsidy, loan, guarantee, insurance, or
    other form of Federal assistance.

    They spent a whole lot of words saying there didn’t need to be a connection but then they misrepresented the facts by saying the judge was a part of an organization receiving threshold amounts of federal dollars without supporting that statement at all.

    If, as in this case, a
    judge is an agent of an organization receiving the threshold amount of federal dollars, then the
    federal government is perfectly within its rights to prosecute actors charged with offering the
    bribe to that particular judge. Sabri, 541 U.S. at 606 (

  2. Thanks for the feedback. Sop, applying A-133 was not my intent – my focus was on the definition of state, recipient and so forth as those are used consistently in federal law authorizing federal programs and expenditure of federal funds.

    I was/am having a hard time with the concept of “federal funding to the judicial branch of state government” because federal funds aren’t awarded that way.

    That’s why you see a Governor named in lawsuits – the federal government recognizes the state as the recipient. The other way funds would reach Judge Lackey would be a grant where he/his court is a recipient.

    With the internet making documents available to the general public, what seems usual and ordinary to the legal profession may look like a puzzle to others.

    We’re in a period when things that seem usual to those in the legal profession can appear to be puzzles to those who are not…IMO, It’s important to work those puzzles so the public will be confident of the judicial process.

  3. Yep Belle. While most of this state was forming a lynch mob, Nowdy was trying to analyze this case using the law and common sense. The ironies that the majority of the lynch mob were made up of conservative “state’s rights” Mississippians isn’t lost on me. When it comes to some subjects principles evidently don’t count.

    sop

  4. Bittersweet to have the 5th Circuit’s affirmation when people convicted by attorneys who lacked the jurisdiction to bring charges are sitting in jail.

    Are we to believe attorneys in northern/southern district USA offices didn’t know they were stepping outside their lawful authority in bringing charges against Scruggs et al (or Minor or DeLaughter and godonlyknows who else)?

    “Jurisdiction” issues were raised in all three of these cases! Motions filed and denied.

    So, are we to believe none of the judges involved didn’t know the USA was acting outside it’s authority and needed the 5th circuit’s to rule on an issue determined by the basics of how federal funds flow to state government?

    Judge Mills served in the Legislature and even then did not learn? Surely not.

    Kings of Tort, Chapter 8 is subtitled with a quote from Judge Lackey that takes on a whole new meaning with the 5th’s civics lesson/opinion considered:

    “Boys, don’t mind the mule, just load the wagon.”

    As explained on page 134, Dawson is the individual who authorized “Judge Lackey to discuss a money bribe with Balducci regarding the Jones v Scruggs case” (date September 19, 2007)

    So, what you have is a co-author/former USA creating the “bribery” he would later use to bring charges of bribery against Scruggs…and a federal judge who knew of the investigation and approved Dawson’s application for the “trap and trace” order that produced the transcripts Dawson would use to justify those charges.

    No one should miss the significance of Judge Lackey’s “agreement” to “cooperate” with “the government” – without it, Dawson had no way to replicate the “smoke and mirrors” strategy his counterparts in the southern district had used to establish jurisdiction and convict Paul Minor.

    That’s the “hole” you asked about in email yesterday, bellesouth – and it’s a mighty big one and, I suspect, very deep.

  5. That’s what I have been thinking — with out “federal program bribery” did the feds have any jurisdiction in these cases?

  6. Wonder if those “jewels” somehow caused the gods of cyberspace to turn the text background a blinding “sapphire”?

    By any color, including the “color of official right” that allowed Judge Lackey to commit what would have otherwise been extortion, jurisdiction is a “gatekeeper” issue.

    The subject of this post is an exception to my usual limitation as a non-lawyer that restricts my opinion on legal documents to common sense. However, I’ve acutally trained lawyers, and auditors for that matter, on the “programmatic audit trail” that follows with federal funds to state governments.

    While I understand the 5th Circuit opinion on the jurisdiction issue, I can not explain how once the claimed jurisdiction invalidated; i.e. the USA was a “gatecrasher” without the jurisdiction needed to make a federal case of bribery, the entire indictment wasn’t thrown out.

    Isn’t that like catching a gatecrasher at a dinner party, throwing them out before dinner and then letting them back in for dessert?

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