Milking the latest Moultrie motions

You definitely read about it here first – and days ago – but… yesterday Patsy Brumfield had the story on the latest motions in USA v Moultrie in the Daily Journal… but… that was before Sop’s post on the subpoena of Carothers allegedly issued after Moultrie’s defense had ex parte contact with the Judge …and …that was before I went back to the docket and posted a half-dozen or so more documents… and …that was before I decided Patsy’s well-written story was the best way to tie all this together.

Two defendants in criminal proceedings surrounding the defunct Mississippi Beef Plant have asked U.S. District Chief Judge Michael P. Mills to dismiss a new indictment against them filed June 19.

Robert L. Moultrie, president and CEO of The Facility Group of Smyrna, Ga., and Nixon Cawood, its chief operating officer, say in legal motions this week the indictment contains defects so serious that 15 of the 16 counts should be dismissed.

They claim the indictment, which superseded the original accusations of Feb. 13, contains “misleading allegations” about the company’s service compensation as stated in its contract with the state, Community Bank of Mississippi and others.

After filing the Motion to Dismiss, the defense team turned into a motion machine that hit PACER with these on the 10th. Patsy goes into more detail later in the story – covering much the same ground we’ve been discussing in comments starting here.

Moultrie’s attorney, Thomas H. Freeland IV of Oxford, writes that “inaccurate paraphrasing” of the project agreement throughout the superseding indictment “is a fatal deficiency,” which should get the accusations dismissed.

He contends that the “ambiguous” indictment prevents them from adequately preparing for trial.

Ambiguity also extends to the project agreement, Moultrie and Cawood claim. If the court finds the agreement to be ambiguous – meaning it can be interpreted in more than one way – the superseding indictment “should be dismissed,” they say.

“Ambiguity in the agreement is important,” Freeland writes, “because the central issue in this criminal prosecution is whether the defendants with criminal intent billed for costs that were not within those permitted or contemplated by … the agreement.”

As of late Tuesday, prosecutors had not responded to the men’s claims.

The motion’s history suggests that’s not all they haven’t responded to and you’ll find that history here.

Pay particular attention to the Discovery Letter with the Motion to Compel Rule 16 Discovery.

We write this letter on behalf of Robert L. Moultrie, Nixon E. Cawood, Charles K. Morehead, Facility Holding Corp. d/b/a The Facility Group, and the other entities named as Defendants in the above-captioned case (collectively referred to as “the Defendants”). While we recognize that you are still in the process of providing document discovery, we write to set forth our detailed discovery requests and our attempt to resolve matters without filing motions requiring the Court’s involvement.

In order to permit the Defendants to file appropriate motions with the Court, we request that you notify us in writing specifically and promptly of any material that you do not intend to make available, so that our motions can address any disagreements and permit the Court to rule on them.

The Letter is dated April 4, 2008 and the Motion to Compel Rule 16 Discovery was filed July 10, 2008.

It appears – but no one has suggested – that while pulling the requested documents together the Prosecutors found evidence that resulted in the superseding indictment (June 19). After a few related “housekeeping” items, the docket shows the motion for the subpoena was granted (July 2) the second Motion for a Daubert hearing filed (July 7) followed with eight related motions/memos to exclude testimony of someone (July 9) along with this really interesting Motion to Strike Surplusage from the Superseding Indictment and Memorandum of Law in Support.

The Federal Rules of Criminal Procedure make clear that an indictment “shall be a plain, concise, and definite written statement of the essential facts constituting the offense charged.” Fed. R. Crim. P. 7(c)(1) (emphasis added). Federal Rule of Criminal Procedure Rule 7(d) provides that, on a motion by the defense, the Court may strike “surplusage” from the indictment…The term “surplusage,” essentially, refers to that immaterial or irrelevant language in the indictment that tends to be prejudicial or inflammatory. United States v. Hughes, 766 F.2d 875,879 (5th Cir. 1985).

Much of the thirty-two-page, sixteen count Superseding Indictment contains redundant, prejudicial, inflammatory, and irrelevant narrative accounts that are well outside the delineated limited parameters of an indictment – a “plain, concise, and definite written statement of the essential facts constituting the offense charged.” Fed. R. Crim. P. 7(c)(1) (emphases added)…The Fifth Circuit has stated that when language in the indictment “adds nothing to the offense charged and may be unnecessarily prejudicial,” the defendant may seek a remedy via a motion to strike the surplusage. United States v. Hood, 200 F.2d 639, 642 (5th Cir. 1953).

That 5th Circuit is something – they don’t seem to have a problem with surplusage in insurance policies. Sop calls these objections “wordsmithing” and he’s definitely got a point. I feel the same about language that calls hurricanes “windstorms” and I’ve had my say on that.

Given our Sop is a construction specialized CPA, I’ll cast my lot with his opinion which seems to be that regardless of any ambiguity in the Agreement, there was none in what they did. Did I get that right, Sop?

I encourage everyone interested in the case to take a look at the documents I posted today – this is not an easy case to understand but the documents themselves are well-written and most understandable as are the ones filed on behalf of Carothers.

For our Georgia readers, here’s the rest of Patsy’s story.

The firm’s Project Management Agreement, signed July 11, 2003, states TFG would be paid a minimum of $2.5 million to design and construct the beef processing plant in Oakland and no more than $3,021,418.

Counts 2-16 accuse them of using “false invoices” to overbill by $2 million for their services.

“There was only $521,000 of play’ between the minimum and maximum services compensation in the contract,” they insist. “A $2.0 million excess was impossible.”

Moultrie, Cawood and TFG executive Charles K. Morehead, plus the umbrella company and three of its branches, have pleaded innocent to the charges. The men have been out on bond since their March 25 arraignments.

They are scheduled to go to trial Aug. 25 in Oxford. If convicted, they each face up to 305 years in prison, $4 million in fines and restitution for the amount of the losses.

The plant built in Yalobusha County opened in August 2004 and failed three months later, leaving 400 people unemployed and costing the state of Mississippi $55 million in loan defaults. Two men associated with the plant’s construction and operation were sentenced to prison for their own actions in the scandal.

Obviously, this isn’t an insurance case but it has an important link in that the “unnamed public official” in this case is former Governor Musgrove, now a candidate for U.S. Senate – and I’ll close by letting AM speak to that.

10 thoughts on “Milking the latest Moultrie motions”

  1. I wonder how difficult it will be for both the prosecution and defense to present their case in a way that the jury can/will understand it.
    Seems like a challenge to me…coming from a jurist point of view (knowing nothing about accounting…much less a specific type of accounting)

  2. I agree with Humpty Dumpty. I have reading all of this for 3 months, and it seems to be getting alot heavier with all of this Daubert, Parte, etc.

    I work for an architect firm in Atlanta, and it sadens me that there are so many good firms here that we lost projects to the likes of this company and how they conduct business.

    Sop and Nowdou, please continue your great works, and keep us Georgians posted. T his has been great information. We are not getting this coverage in Atlanta.

    Also, please keep all the legal jargen in laymen terms 🙂

  3. Thanks Mr Concerned.

    I think the prosecution will be able to explain what happened HD. Carothers makes very specific allegations against TFG that are either supported in the TFG accounting records or not.

    To me the larger question is why hire TFG to begin with? The project was already ongoing and yes the bank evidently had some heartburn with the project but there are several firms here in MIssissippi that could have taken over as the owner’s representative for a heck of a lot less than $6MM.

    Great post Nowdy.


  4. Thanks, Sop.

    The language issues are important – but, as you’ve often told me : ) logic and law are not one in the same.

    I think the question you posed is key – why hire TFG and that goes back to the question I asked in the first post I did on this case – what is the Moultrie connection to Mississippi? We know his wife grew up here and has/had one adult child living here.

  5. Yes, great post Nowdy.

    Sop, I think the answer to “Why hire TFG in the first place” will come out at trial. I believe Sean might be able to explain that answer from a meeting he had on that subject with someone unnamed and unindicted.

  6. So is this the only time The Facility Group overbilled its client? Will a similar analysis be performed on subsequent projects? If my company ever contracted with The Facilty Group, I would want an investigation.

  7. I wish someone in Georgia would intensely interview State Rep Earl Erhart. He is the Chairman of the Ways and Means here in Georgia. Until until April he as a SR VP of Sales for Facility Group. And he says he has no knowledge of the Mississippi deal and others.

    Come on now Earl the Pearl. Its kinda like Obama in a church for 20 years and did not hear the sermons of Rev Wright.

    Earl is the TOP DOG Repulibcan in the State of Georgia. Seems no one wants to cross him

  8. As an ex-employee of TFG, if Earl came to the office 5 times for the year, he came a lot. Earl held that job in title and paycheck only!!!!

    I have a feeling that everything about the operation of TFG will come to light. The sad thing is Mr. Moultrie is such a nice man. But as the saying goes “Everything done in darkness, will come to light”

    SOP, thanks for the updates!!!

  9. You’re welcome Mr. Ex. As this case speeds to trial there is certain to be a lot of activity and we’ll do our best to keep our Moultrie case file page updated.

    Any insights you can add are most appreciated.


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