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United States v. Jefferson

United States District Court, E.D. Virginia, Alexandria Division

October 5, 2017

UNITED STATES OF AMERICA
v.
WILLIAM J. JEFFERSON

          MEMORANDUM OPINION

          T.S. ELLIS, III UNITED STATES DISTRICT JUDGE.

         In 2007, William Jennings Jefferson, a nine-term Congressman from Louisiana, was indicted, tried, and convicted by a jury of bribery, honest services wire fraud, money laundering, racketeering, and conspiracy to commit those crimes. Jefferson unsuccessfully appealed his sentence to the Fourth Circuit and the Supreme Court; his convictions and sentences were affirmed by both. Then, in 2016, the Supreme Court in United States v. McDonnell, 136 S.Ct. 2355 (2016), altered the legal landscape with respect to the principal element of bribery - the “official act.”[1] Jefferson, seizing upon this decision, filed a petition under § 2255, challenging his convictions on the basis that the Supreme Court's new definition of official acts meant that the activities for which he was convicted were not criminal. Specifically, Jefferson argues that he never engaged in or agreed to engage in official acts as defined by McDonnell. The government disagrees, arguing that the evidence at Jefferson's trial supports a finding that he traded official acts for bribe payments, even after McDonnell. The matter is now ripe for disposition, and Jefferson's motion must be granted in part and denied in part.

         I.

         William Jefferson served nine terms in Congress representing the Second District of Louisiana, which includes much of the City of New Orleans. He was first elected in 1991 and maintained congressional offices in the District of Columbia and New Orleans. In his role as a congressman, Jefferson served on several House committees and subcommittees, including the Ways and Means Committee and its subcommittee on trade, and the Budget Committee. During his service in Congress, Jefferson also served as co-chair of the Africa Trade and Investment Caucus and the Congressional Caucus on Nigeria.

         The government's charges against Jefferson involved payments Jefferson solicited for assistance with business promotion and development. In essence, the indictment charged Jefferson with soliciting and receiving payments from various entities in exchange for promoting their business activities. Indeed, the government adduced evidence at trial that from 2000 to 2005, Jefferson sought hundreds of thousands of dollars from companies involved in communications, oil, and sugar, often for projects in West Africa. Because the parties' arguments focus in part on whether Jefferson's activities involved performance of “official acts” in return for receiving that money, it is important to describe in detail the evidence adduced at trial.

         A.

         In the longest running scheme, the iGate scheme, Jefferson solicited money from Vernon Jackson, the President of iGate, a Louisville, Kentucky telecommunications company, in exchange for Jefferson's promotion of iGate's technology to the Army and to various West African countries. In return for money, and delivery of iGate shares to ANJ, a company controlled by Jefferson's wife, Jefferson agreed to promote and did promote iGate technology to foreign and domestic officials over a span of several years, including in the course of trade promotion trips Jefferson took to Africa.

         The iGate scheme began when Jefferson befriended Jackson in early-2000. Jackson was then the President of iGate, a company whose goal was to market and sell its high speed broadband technology to the military, African companies, and historically Black Institutions in the United States. In mid to late 2000, Jackson attempted to secure a number of military contracts for iGate and reached out to Jefferson for assistance in this regard. To assist Jackson, Jefferson arranged meetings with army officials to promote iGate technology. In 2000, Jefferson met with General Hylton and discussed the possibility of testing iGate technology at Fort Huachuca. A few months later, in 2001, Jefferson discussed the use of iGate technology with Colonel Brown, believing that Colonel Brown was the pertinent requisition officer for the Army.

         Jackson was impressed by Jefferson's efforts on his behalf, and asked for Jefferson's help with promoting other ventures. Jefferson agreed to help, but for a price, asking Jackson to hire his family consulting firm, ANJ, to assist with marketing iGate products. Jefferson told Jackson that his wife and daughter owned and operated ANJ. Jackson and iGate agreed to hire ANJ, and Jefferson provided Jackson with a contract outlining the arrangement, under which iGate would pay ANJ with iGate shares, and $90, 000 a year in twelve $7, 500 monthly payments, with bonuses paid based on a percentage of iGate's profits. Jefferson and his wife, Andrea Jackson, executed the contract on January 15, 2001. In accordance with the contract, 100, 000 shares of iGate stock were transferred to ANJ on January 22, 2002. By September 2002, a total of 550, 000 shares of iGate stock had been transferred to ANJ. Jackson stated at trial that he understood that this arrangement really meant that he was paying Jefferson to promote iGate technology to customers, including the Army.

         Following the execution of the contract between ANJ and iGate, Jefferson upheld his bargain by promoting iGate technology in West Africa. In 2003, Jefferson met with a number of high ranking West African government officials and businesspeople. In one of those meetings in Nigeria, Jefferson discussed iGate technology with Dumebi Kachikwu and Ahmed Vanderpuije, the founders of Netlink Digital Television (“NDTV”), a satellite television provider. Jefferson negotiated an agreement between NDTV and iGate to provide satellite television service in Nigeria. As part of his pitch to NDTV officers, Jefferson agreed to arrange meetings with the United States Export-Import Bank (the “Ex-Im Bank”). Jefferson eventually followed through on his Ex-Im Bank promise, bringing representatives of iGate and NDTV to the Ex-Im Bank, and expressing his support for the joint venture at that meeting.

         Without informing iGate, Jefferson solicited a payment from NDTV, granting Jefferson a portion of revenue from the joint venture and shares in NDTV. NDTV also agreed to pay iGate $44, 000, 000 with a $6, 500, 000 down payment for the right to use iGate technology. After successfully negotiating the deal with NDTV, Jefferson convinced iGate to increase its payments to ANJ from five to thirty-five percent of iGate's profits.

         Throughout 2003 and 2004, Jefferson continued to make trips to Africa to meet with foreign officials and support the iGate-NDTV venture. Jefferson arranged a meeting in 2003 with Jackson, Vanderpuije, another NDTV representative, and Nigerian Vice President Abubakar to discuss Nigeria's support for iGate-NDTV's Ex-Im Bank application. In February 2004, Jefferson met with Nigerian President Olusegun Obasanjo to discuss improvement of Nigeria's telecommunications infrastructure, and recommended use of iGate technology as a possible solution. During these visits, Jefferson presented himself as a member of the United States Congress. He also used his congressional passport and the assistance of his staff to travel to Africa.

         In 2004, the iGate-NDTV joint venture failed, and iGate agreed to refund $3, 500, 000 of the NDTV's down payment. Not willing to allow the flow of payments from iGate to stop, Jefferson secured a replacement for NDTV's role in the iGate scheme, Lori Mody and her company W2 Limited. Brett Pfeffer, Jefferson's former legislative aide, introduced Jefferson to Mody, and after a lengthy meeting Mody agreed to enter an investment agreement with iGate, based largely on Jefferson's assurances that he would be able to secure financing from the Ex-Im Bank and cooperation from Nigerian officials. The investment agreement provided compensation to Jefferson including payments to ANJ consulting, ownership interests in Mody's businesses, and payments to other businesses owned by Jefferson's family. In July 2004, Mody and W2 paid iGate $1, 500, 000, and Vernon Jackson remitted $50, 000 to ANJ. In September 2004, Mody made a second payment to iGate in the sum of $2, 000, 000. Here again, $50, 000 was remitted to ANJ, Jefferson's family business, despite the fact ANJ had not performed any work for iGate.

         In late 2004 and early 2005, the iGate-W2 venture began to falter, and Mody grew concerned that Jefferson was engaged in criminal activity. Accordingly, Mody contacted the FBI and Justice Department and began working as a government informant in March 2005. Now working with the FBI, Mody renewed her efforts to promote the iGate-W2 venture with Jefferson. Jefferson traveled to Africa to meet with officials in Ghana and Nigeria to promote the W2-iGate venture. While in Nigeria, Jefferson determined that it would be necessary to secure the support of Nigeria Telecommunications Limited (“NITEL”) in order for the iGate-W2 venture to succeed. To guarantee NITEL's support, Jefferson met with Nigerian Vice President Abubakar on July 18, 2005 and offered Abubakar a bribe in exchange for help in securing NITEL assistance. In this regard, Jefferson asked Mody to provide cash to pay this bribe, and with the assistance of the FBI, Mody provided Jefferson with $100, 000 in marked cash in a briefcase. On July 30, 2005, Mody delivered the briefcase to Jefferson with the understanding that Jefferson would deliver the briefcase to Abubakar in payment of the bribe. Two days later, the FBI executed six search warrants for Jefferson's residences and offices across the United States. During the search of Jefferson's Washington, D.C. home, the FBI found and seized $90, 000 of the marked cash hidden in frozen food boxes in Jefferson's freezer.

         B.

         During his involvement with the iGate scheme, Jefferson was also involved in a number of other schemes related to business and development interests in West Africa. This included soliciting payments from businessman George Knost and his companies, Arkel International, Arkel Sugar, and Arkel Oil and Gas. Knost reached out to Jefferson in 2001 and arranged a meeting that fall to discuss Arkel's proposed sugar project in Nigeria. Jefferson agreed to assist Arkel with securing African and U.S. government support for the project, including promoting the project to African officials and assisting Knost in securing funding from the Ex-Im Bank. In exchange for these acts, Jefferson required Arkel to hire his brother, Mose Jefferson, as a consultant on the project. In the end, Mose would provide no consultant services and Jefferson would collect the payments from Arkel for himself.

         Jefferson also agreed to help Arkel apply for financing from the Ex-Im Bank for an oil field venture in Nigeria. Arkel ultimately decided in September 2001 that it could not pursue the venture, and offered the project to businessman John Melton. Melton, an ex-Arkel employee, created TDC Energy Overseas, Inc. (“TDC”) to pursue the project. In December 2001, Melton met with Jefferson in Louisiana to discuss the oil field venture and other projects in West Africa. Jefferson solicited payments to his brother Mose in exchange for Jefferson's assistance with trips by Melton to meet Nigerian officials. Melton ultimately accepted Jefferson's offer of assistance, but nothing came of the oil field project.

         In January 2002, Melton and TDC partners joined Jefferson on a trip to Nigeria to attend meetings with Nigerian officials arranged by Jefferson. No longer interested in the oil fields, TDC now wanted approval for a fertilizer project in Nigeria. After securing a letter of intent from a Nigerian governor authorizing TDC to move forward on a fertilizer plant project, Melton, on behalf of TDC, applied for a U.S. Trade Development Agency grant to fund a feasibility study for the Nigerian fertilizer plant. Jefferson assisted in the application process by securing support from Nigerian government officials and U.S. officials at the USTDA.

         In another scheme, Jefferson used a lobbyist, Jim Creaghan, to solicit bribes from businessperson Noreen Wilson, in exchange for Jefferson's assistance in resolving a dispute over oil exploration rights in the waters off Sao Tome and Principe. In December 2001, Creaghan discussed with Wilson the acquisition of rights to develop offshore oil near Sao Tome and Principe. Wilson was working with a South African company called Procura Financial that assisted with oil drilling projects in West Africa. Creaghan and Wilson approached Jefferson on behalf of Procura Financial to secure Jefferson's assistance in resolving disputes of several governments in the region over ownership of the oil fields. Jefferson offered his help, but told Creaghan and Wilson that in exchange he would need them to assign an ownership interest in the venture to members of Jefferson's family. Creaghan and Wilson agreed and arranged for Mose Jefferson, Congressman Jefferson's brother, to receive an ownership interest in the oil field venture. The Sao Tome and Principe oil venture ultimately failed, notwithstanding Jefferson's efforts to resolve disputes among the various African governments involved.

         Creaghan and Wilson continued to work together on a project for Life Energy called “Biosphere, ” a waste treatment plant that produced electricity and potable water from waste. Creaghan and Wilson sought Jefferson's assistance again, this time in selling Biosphere in West African countries. Again, Jefferson was interested but required that Life Energy pay his brother, Mose Jefferson, in exchange for Jefferson's help. Life Energy ultimately agreed to pay Mose ten-percent of each Biosphere project sold in West Africa, and Mose was given an ownership interest in the Biosphere business in West Africa. Creaghan, Jefferson, and Mose travelled to Nigeria in February 2003 to promote Biosphere, and Jefferson encouraged Nigerian government officials to invest in Biosphere factories.

         Jefferson also solicited payments from Noah Samara, founder of a satellite radio business, and a company named International Petroleum in exchange for Jefferson's assistance in obtaining oil concessions from the government of Equatorial Guinea. Samara first met Jefferson in the late 1990s. In May 2002, Jefferson and Samara visited countries in Africa to promote his satellite radio business, WorldSpace. Specifically, Jefferson travelled with Samara for a portion of the trip, and Jefferson convinced Samara to visit Equatorial Guinea, Congo, and Botswana. During this side trip, Jefferson recommended that Samara get involved in oil drilling in Equatorial Guinea. Jefferson suggested to Samara that he create International Petroleum to take advantage of an oil concession Jefferson was working to obtain from Equatorial Guinea. Jefferson also required that Samara hire his daughter, an attorney, to prepare the paperwork to form International Petroleum, and to pay her by giving her an ownership stake in the oil concession. Samara refused this requirement and he ultimately abandoned the pursuit of the oil concession.

         Later, in July 2002, Samara met with Jefferson and his wife to discuss a WorldSpace education initiative. By the end of that conversation, Samara agreed to hire ANJ, Jefferson's family business, to act as a consultant on the educational projects. Jefferson prepared a consulting contract between WorldSpace and ANJ, in which ANJ would be given four-percent of the gross amount paid to WorldSpace. ANJ was required to assist WorldSpace in procuring contracts in various African countries. Samara understood that Jefferson, not ANJ or Jefferson's family members, would be assisting with the contract. Jefferson wrote several letters to the President of the Democratic Republic of the Congo urging that he consider adopting the WorldSpace initiative. Eventually the WorldSpace initiative in Africa slowed down and Jefferson did not assist with any further attempts to promote WorldSpace technology in Africa.

         B.

         Based on these activities, Jefferson was arrested, and on June 4, 2007, a federal grand jury in Alexandria returned a sixteen count indictment against Jefferson, charging him with:

Count 1 - Conspiracy to solicit bribes, commit honest services wire fraud, and violate the Foreign Corrupt Practices Act (FCPA), in violation of 18 U.S.C. § 371;
Count 2 - Conspiracy to solicit bribes and commit honest services wire fraud, in violation of 18 U.S.C. § 371;
Counts 3 and 4 - Solicitation of bribes, in violation of 18 U.S.C. § 201(b)(2)(A);
Counts 5 through 10 - Self-dealing and bribery-related honest services wire fraud, in contravention of 18 U.S.C. §§ 1343 and 1346;
Count 11 - Foreign corrupt practices, in violation of 15 U.S.C. §§ 78dd-2(a), 78dd- 2(g)(2)(A), and 78ff(a);
Counts 12 through 14 - Money laundering related to bribery, in contravention of 18 U.S.C. § 1957;
Count 15 - Obstruction of justice, in violation of 18 U.S.C. § 1512(c)(1); and
Count 16 - Conducting and participating in a racketeering enterprise, in contravention of 18 U.S.C. § 1962(c) (the “RICO offense”).

         The indictment also included a count for criminal forfeiture related to the alleged offenses.

         On September 7, 2007, Jefferson moved to dismiss counts 1-10, 12-14, and 16 - the bribery-related charges - on the ground that the indictment did not allege receipt of bribes “in return for . . . the performance of an official act” as required by 18 U.S.C. § 201(b)(2)(A).[2]Jefferson argued that the definition of “official act” in 18 U.S.C. § 201(a)(3) was limited to activities involving questions before Congress, including voting on legislation or conducting committee work.

         That position was rejected on the ground that the bribery statute required the government to prove an official act by showing: “the act [was] among the official duties or among the settled customary duties or practices of the official charged with bribery[] [a]nd . . . the act involve[d] or affect[ed] a government decision or action.” United States v. Jefferson, 562 F.Supp.2d 687, 691 (E.D. Va. 2008) (“Jefferson I”). In support of this conclusion, Jefferson I held that official acts could include duties that were not in written rules but were “‘clearly established by settled practice.'” Id. (quoting United States v. Birdsall, 233 U.S. 223, 230-31 (1914)). Because the Supreme Court's one-hundred year old Birdsall opinion[3]was controlling in setting the proper definition of an “official act” under the bribery statute, Jefferson's activities such as official travel to foreign counties, official correspondence with domestic and foreign officials, and use of his congressional staff to facilitate Jefferson's activities were official acts. Thus, the bribery-related charges were not dismissed.

         On March 20, 2009, Jefferson moved for reconsideration of the ruling in Jefferson I and the government sought clarification of the decision. In response, this Court issued a clarifying opinion. See United States v. Jefferson, 634 F.Supp.2d 595 (E.D. Va. 2009) (“Jefferson II”). The Jefferson II decision clarified that an official act under the bribery statute is not limited solely to legislative acts such as “voting on or introducing a piece of legislation.” Id. at 602. Jefferson II affirmed the earlier ruling that official acts could include actions that involve the legitimate use of an official's office. Id. (citing United States v. Biaggi, 853 F.Supp.2d 96-99 (2d Cir. 1988)).

         Jefferson's jury trial began on June 9, 2009 and continued for two months. The prosecution presented more than forty witnesses. At trial, and guided by the Jefferson I and Jefferson II opinions, the government presented evidence establishing that Jefferson's meetings with foreign and domestic officials on behalf of bribers, and his use of congressional resources to coordinate trips and meetings were “constituent services, ” a well-settled congressional practice. After the parties rested, the jury was instructed on the meaning of “official act” in § 201(a)(3):

[a]n act may be official even if it was not taken pursuant to responsibilities explicitly assigned by law. Rather, official acts include those activities that have been clearly established by settled practice as part [of] a public official's position.

         Jefferson objected to this instruction, arguing that the proper definition of an official act is more circumscribed and should include only the statutory definition. That objection was rejected and the above-cited instruction was given.

         The jury returned a verdict on August 5, 2009, convicting Jefferson on eleven of the sixteen counts of the indictment.[4] Following his conviction, Jefferson was sentenced to serve thirteen years in prison. Specifically, Jefferson was sentenced to serve 60 months on Counts 1 and 2, 156 months on Counts 3, 4, 6, 7, 10, and 16, and 120 month on Counts 12, 13, and 14, all of which were to be served concurrently. Because Jefferson was allowed to remain free pending appeal, he did not begin serving his sentence until May 4, 2012.

         Jefferson appealed his conviction to the Fourth Circuit Court of Appeals, arguing (i) that the bribery instructions were erroneous for including the Birdsall settled-practice language, (ii) that the quid-pro-quo bribery instruction was erroneous, (iii) that the honest services wire fraud theory on which he had been convicted had been rejected by the Supreme Court, and (iv) that there was a lack of venue in the Eastern District of Virginia with respect to Count 10 of the indictment. The Fourth Circuit rejected all but the last of these arguments, affirming Jefferson's conviction with respect to every count except Count 10. Jefferson appealed to the Supreme Court and certiorari was denied on November 26, 2012. United States v. Jefferson, 133 S.Ct. 648 (2012) (cert denied). After Count 10 was vacated, the same sentence was imposed.

         C.

         Four years after the Fourth Circuit affirmed all but one of defendant's convictions, the Supreme Court addressed the definition of an “official act” in McDonnell, 136 S.Ct. 2355. In that case, a jury convicted former Virginia Governor Bob McDonnell of honest services wire fraud and Hobbs Act extortion. See 18 U.S.C. §§ 1343, 1349 (honest services wire fraud); id. § 1951(a) (Hobbs Act extortion). While McDonnell was in office, he and his wife accepted approximately $175, 000 in loans, gifts, and other perks from a Virginia businessman seeking to push a nutritional supplement. McDonnell, 136 S.Ct. at 2361. The businessman sought McDonnell's help in arranging for Virginia universities to perform research on the nutritional supplement. Id. In exchange for lucrative gifts and loans, McDonnell arranged meetings with state officials, hosted and attended events at the Governor's mansion, and contacted other officials to promote or ...


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