Prosecution's Summary of Case Against Don Hill, Etc

8/14/2019 Prosecution's Summary of Case Against Don Hill, Etc

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Hill and Lee made oral motions for judgment of acquittal on all counts except those1

relating to bribery (Counts 10-14). Farrington Hill filed written motions as to Counts 16 and 18

(see Docket #969, 970) and moved orally as to Count 19. Reagan and Robertson filed written

motions as to all of the charges against them. (See Docket #973; Reagans motion (not yet filed

on PACER)).

Response to Mot ions for Judgment of Acquittal Page 1

IN THE UNITED STATES DISTRICT COURT

FOR THE NORTHERN DISTRICT OF TEXAS

DALLAS DIVISION

UNITED STATES OF AMERICA

v. No. 3:07-CR-289-M

DONALD W. HILL (01) ECF

a/k/a Don Hill

DANGELO LEE (02)

SHEILA D. FARRINGTON (03)

a/k/a Sheila Hill

DARREN L. REAGAN (07)

a/k/a Dr. Darren L. Reagan

RICKEY E. ROBERTSON (10)

a/k/a Rick Robertson

Governments Response to Defendants Motions for Judgment of Acquittal

For the reasons stated below, the Court should deny the defendants oral and

written motions for judgment of acquittal. The evidence supports each of the charges,1

which are based on valid legal theories.

A district court must deny a motion for judgment of acquittal as long as a rational

jury could have found the defendant guilty beyond a reasonable doubt. United States v.

Barlow, 568 F.3d 215, 218 (5th Cir. 2009). This standard does not require that the

Case 3:07-cr-00289-M Document 989 Filed 09/20/2009 Page 1 of 30


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evidence exclude every reasonable hypothesis of innocence or be wholly inconsistent

with every conclusion except that of guilt. United States v. Loe, 262 F.3d 427, 432 (5th

Cir. 2001). Moreover, in making the determination, the court does not assess the

credibility of witnesses or weigh the evidence, since the jury retains the sole authority to

weigh any conflicting evidence and to evaluate the credibility of the witnesses. Id.

1. Count 10: Conspiracy to commit bribery

Count 10 charges Hill, Lee, Farrington Hill, and Robertson with conspiring to

commit bribery under 18 U.S.C. 371. To establish a conspiracy, the government must

prove (1) an agreement between two or more persons to [commit bribery]; (2) the

defendants knowledge of the unlawful objective and voluntary agreement to join the

conspiracy; and (3) an overt act by one or more of the members of the conspiracy in

furtherance of the objective of the conspiracy. United States v. Floyd, 343 F.3d 363, 370

(5th Cir. 2003). To be guilty of bribery, a defendant must corruptly solicit[] or demand[]

for the benefit of any person, or accept[] or agree[] to accept, anything of value from any

person, intending to be influenced or rewarded in connection with any business,

transaction, or series of transactions of such ... government[] or agency involving any

thing of value of $5,000 or more, or corruptly give[], offer[], or agree[] to give anything

of value to any person, with intent to influence or reward an agent of ... local ...

government, or any agency thereof, in connection with any business, transaction, or series

of transactions of such ... government[] or agency involving anything of value of $5,000



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or more. 18 U.S.C. 666(a)(1)(B) & (2).

Robertson, the only defendant to have moved for judgment of acquittal on this

count, asserts that the evidence is insufficient to show he conspired to commit bribery.

Instead, he argues, he was simply a car salesman who sold a used BMW, at fair market

value, to Farrington Hill and who looked for a Lexus for Lee. The evidence, however,

shows more.

Brian Potashnik and Bill Fisher testified that Robertson, working with Lee,

attempted to obtain construction work with SWH and with ORH in the summer of 2004.

The jury heard evidence that one of the reasons Fisher initially contacted the FBI was that

Lee was attempting to have Fisher hire Robertson, an unqualified subcontractor.

Email traffic shows that Matt Martin from SW H sent its subcontractor

qualification and bid sheet to Robertson on September 21, 2004. Robertson forwarded

the paperwork to co-defendant Ron Slovacek. Slovacek was actively seeking the

concrete work on Arbor Woods, through Lee, during the same time frame.

In February 2005, Robertson purchased and sold the 1998 BMW that found its way

to Hill. He was paid with a $15,000 certified check purchased by Farrington &

Associates. The jury heard substantial evidence of Robertsons involvement with Lee in

the extortion scheme against Fisher and that information is relevant to Robertsons

knowledge of Lee given that Lee and/or Farrington & Associates began spending large

sums of money with him for the purchase of vehicles.



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The vehicle purchases continued into March and April 2005 with the purchase of a

Lexus and a Mercedes for Lee. In each instance, Lee paid cash down on the vehicle.

Additionally, Robertson endorsed and deposited a check on Slovaceks Millennium Land

Development account made payable to Farrington & Associates the same entity to

which Robertson and Lee discussed registering Hills 1998 BMW.

Finally, in a series of intercepted conversations on April 26, 2005 between Hill,

Potashnik, Lee, Slovacek, and Spencer, Lee discussed with Slovacek the prospect of

using Robertson as the front for a framing contract on two SWH developments, Rosemont

at Scyene and Rosemont at Laureland. Two days later, Lee told Robertson he had a

framing contract for him.

This evidence supports the governments theory that Robertson participated in the

bribery scheme.

2. Count 15: Conspiracy to commit extortion

Count 15 charges Hill, Lee, Reagan, and Robertson with violating the Hobbs Act

by conspiring to obstruct[], delay[], or affect[] commerce or the movement of any article

or commodity in commerce, by ... extortion, which is defined as the obtaining of

property from another, with his consent, induced by wrongful use of actual or threatened

force, violence, or fear, or under color of official right. 18 U.S.C. 1951(a) & (b)(2).

Extortion by wrongful use of fear includes fear of economic harm. United States v.

Edwards, 303 F.3d 606, 635 (5th Cir. 2002).



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A. Hills and Lees oral motions

Contrary to the defendants claims, there was ample evidence to support

convictions on this count. On or about November 4, 2004, Lee left a message for Fisher

seeking a $2,500 contribution/sponsorship for Hills birthday party. In the same recorded

message, Lee told Fisher that his deal (a zoning vote on Dallas West Village pending

before the City Plan Commission) would be held-over two weeks. The vote was

postponed again on November 8, 2004, and December 2, 2004, and was finally approved

on December 16, 2004. Prior to its approval, Fisher apologized for not contributing to the

birthday party and told Lee that he was ready to do what was required of him to get his

deals across the finish line. Fisher also met with Robertson and Rashad and agreed to use

RA-MILL if Robertson and Rashad could prove they had the necessary qualifications to

do the work. Fisher also paid money to Reagan on December 16, 2004, and Reagan

spoke in favor of Dallas West Village at the CPC meeting on that date.

Fisher later met Lee at a Starbucks and Hill was nearby having lunch. Lee patted

down Fisher and then took Fisher to meet Hill. Hill told Fisher he was in favor of the

Dallas West Village development and that Fisher would get his zoning vote.

Untrue to his word, Hill postponed the zoning vote on Dallas West Village

numerous times even though Fisher continued to make payments to BSEAT and meet

with contractors that Lee and Reagan wanted to use as fronts. Hill did not approve the

zoning change until Fisher signed a contract requiring him to pay $250,000 and use



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KDAT as a subcontractor and also allow KDAT to control leasing of the commercial

portion of the development.

Numerous recorded phone calls, meetings, and documentary evidence establish

that Hill, Lee, and others engaged in a conspiracy to extort Fisher.

B. Robertsons written motion

Robertson separately contends, first, that he had no political influence so he had

no ability to instill any fear in Developer Fisher that he could do [Fisher] any economic

harm. (Motion/5.) Yet Robertson told Fisher in a consensually recorded videotaped

meeting that his silent partner was CPC Lee and in other recordings told Fisher that his

deal was not going to get approved. Robertson also lied to Fisher about the RA-MILL

construction manager. He likewise participated with Lee, Reagan, and Rashad in

preparing the $180,000 invoice at the Superbowl party.

Fishers initial representation to Lee that he would use RA-MILL as long as they

were qualified was instrumental to the December 18, 2004 passage at the CPC of his

zoning issue on Dallas West Village. Fishers failure to hire Lee and Reagans

unqualified subcontractors including RA-MILL caused, at least in part, his zoning

case to be postponed over and over again. The electronic evidence in this case shows that

Robertson was aware of this. Recorded conversations demonstrate his knowledge of

when the matter was coming before the City Council and his knowledge that the matter

was going to be postponed again.



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There was also ample evidence by which the jury could conclude that Robertson,

Rashad, and RA-MILL were completely unqualified to do any of the work they were

seeking. Altogether, this evidence demonstrates a conspiracy to extort Fisher.

Robertson also asserts that because all of the money Fisher allegedly paid was

provided by government agents, the Government has failed to prove that the allegedly

extortionate transactions had any impact on interstate commerce. (Motion/6.) However,

all of the defendants stipulated to the interstate commerce elements on all of the charged

offenses; thus, Robertson waived this argument.

C. Reagans written motion

Reagan argues that there is no evidence a public official obtained payment to

which he was not entitled or that any public official was involved in the extortionate

scheme. Reagan ignores the evidence that shows that, with the help of Hill, he extorted

$22,500 from Fisher on February 22, 2005, and then placed $10,000 of that money in the

Councilmans hand. Of those funds, it is uncontroverted that Lee received $2,500.

Reagan also claims that the evidence shows he was engaged merely in hard-

bargaining, not extortion that he offered legitimate services in exchange for

compensation. However, both Fisher and Kathy Nealy testified that Fishers Pecan Grove

project and Memorial Park Town homes development had the full support of Councilman

Hill. Not until relatively late in the process did Fisher begin to see his developments go

down in flames.



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This culminated in Fisher losing all of his projects that were voted on during the

October 27, 2004 DCC meeting. Fishers remaining project, Homes of Pecan Grove, was

postponed until November 10, 2004, and was directly competing against another SWH

development (Simpson Villas).

Reagan called Fisher on November 10, 2004, and told him that his development

did not have the necessary support to pass but that if Fisher agreed to pay $100,000,

Reagan could get it done. Fisher signed a contract in the City Hall parking lot with

Reagan on the Homes of Pecan Grove development. Reagan then entered City Hall and

Fishers project was approved that day.

Contrary to his claim, Reagan offered no legitimate services to Fisher. Fisher paid

some invoices for phone bill usage and vehicle allowances. However, as both Fisher and

Allen McGill testified, neither Reagan nor anyone else from BSEAT did any real work.

What Reagan offered were increasingly exorbitant extortionate demands on Fisher,

demands that could not be met. Requiring Fisher to hire unqualified subcontractors at

above-market rates so kickbacks could be paid to Reagan was not hard bargaining in an

effort to provide legitimate services. See United States v. Vigil, 523 F.3d 1258, 1265

(10th Cir. 2008) (reasoning that a defendants demand that someone hire a specific and

unwanted individual for a price set by the defendant is not a legitimate objective or

genuine contract term).



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For instance, Fisher had expended large sums of money pre-development on the Dallas2

West Village project. He needed to get the zoning changed so he could come back in the future

and build a tax credit project on the site.


Of course, this is not all Reagan demanded: He also demanded an increased

ownership in the project and an increased percentage of income (over that which Fisher

agreed to pay on November 10, 2004, when the company he worked for was on the brink

of financial ruin). The jury could easily conclude that Reagans actions were nothing sort

of extortionate.

Finally, Reagan asserts that Fisher did not have a fear of economic loss because

the FBI provided some of the money Fisher used to pay off the defendants. (Motion/7.)

Reagan appears to believe that the economic loss at issue is Fishers payments to Reagan.

To the contrary, the relevant economic loss is Fishers financial ruin if Hill continued to2

postpone or vote down his projects. See 18 U.S.C. 1951(b)(2) (The term extortion

means the obtaining of property from another, with his consent, induced by wrongful use

of actual or threatened ... fear [of economic loss], or under color of official right.).

In sum, Reagan has proffered nothing to support a judgment of acquittal here.

3. Counts 16-17: Extortion

Hill, Lee, Farrington Hill, and Reagan are also charged with substantive counts of

extortion. Based on the facts outlined in Section 2, the Court should deny Hills oral

motion as to Counts 16 and 17 and Lees oral motion as to Count 16. The remaining

motions, by Farrington Hill and Reagan, are addressed below.



10/30

Response to Mo tions for Judgment of Acquittal Page 10

A. Farrington Hills written motion

With regard to Count 16, Farrington Hill argues that her connection to the $22,500

at issue was too attenuated to support an aiding and abetting theory on that count. She

claims that [t]he only facts ... that even involve Mrs. Hill are that she received $5,000

from Darren Reagan, and that a BSEAT invoice was found at her apartment.

(Motion/1.) It is the governments theory, and a rational jury could certainly find based

upon the evidence, that the Farrington & Associates bank account was used virtually

exclusively in a criminal venture wherein public officials sought or demanded things of

value for themselves and their associates in connection with official actions as related to

tax credit affordable housing developments in the City of Dallas.

Indeed, the account was established on October 22, 2004, with a check from one of

the developers. By May of 2005, checks from seven different business entities

(Southwest Housing Development Corporation, TX Laureland LP, TX Scyene LP, Bright

III, Dallas Urban League, Millennium Land Development, and The LKC Dallas) had

been deposited into the account, with most of the proceeds withdrawn in cash.

Additionally, and specifically pertinent to this argument, Farrington Hill deposited at least

$5,000 in extortion proceeds into this account on February 22, 2005. And, as specifically

directed by Hill when he gave Farrington Hill the $5,000, she gave $2,500 to Lee.

Farrington Hill was the only person who could withdraw the bribes, kickbacks, and

extortion proceeds from the Farrington & Associates account. Clearly, she knowingly



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participated in the criminal venture charged in Count 16 and sought by her own action to

make it successful.

B. Reagans w ritten motion

Reagan argues that the evidence is insufficient as to Count 17 because it fails to

establish any connection with or knowledge of KDAT, Kevin Dean, or John Lewis, and

Lewis testified that [he] was not a participant in this scheme. Reagans argument

ignores the facts of the case. First, he ceased interaction with Fisher around March 10,

2005. The extortionate scheme did not end and new players approached Fisher about

getting his deal approved.

However, in that process, the new players, specifically Kevin Dean, were

instructed to make sure Reagan had no unresolved issues with Fisher. Reagan, in an

intercepted phone call, admitted to Dean (and also to Lewis, who was listening) that

Fisher had no contractual obligations with BSEAT. This was because Fisher had refused

to comply with the ever-increasing BSEAT extortionate demands.

Nonetheless, Reagan left a message for Hill telling him not to approve Fishers

deal. Ultimately, Hill approved it, but only after it had been continued again at Reagans

request, after $50,000 was paid and another contract was signed, and after Reagan and

Lewis had a conversation from Hills office on May 11, 2005. The evidence clearly

shows that Reagan was a participant in the $50,000 extortionate payment.



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Although only Farrington Hill filed a written motion on this point, her arguments also3

apply to Hill and Lee. Therefore, the governments response to her arguments defeats Hills and

Lees oral motions on this charge.


4. Count 18: Honest services fraud

Hill, Lee, and Farrington Hill are charged with conspiring to commit honest

services wire fraud. Wire fraud is (1) the formation of a scheme or artifice to defraud,

and (2) use of the wires in furtherance of the scheme. United States v. Brown,

459 F.3d 509, 518-19 (5th Cir. 2006). Violation of the wire-fraud statute requires the

specific intent to defraud, i.e., a conscious knowing intent to defraud[] ....

Honest-services wire fraud is wire fraud in which the scheme or artifice to defraud

deprive[s] another of the intangible right of honest services. Id.

In her written motion, Farrington Hill asserts that the governments honest-3

services fraud theory is invalid because the government has not shown that Hill or Lee

took any official action for personal gain or that Farrington Hill participated in any

conspiracy to do so. She also claims that an honest-services fraud conviction must rest on

the violation of a state, rather than a local, law, and that it must also be a penal law.

Farrington Hills arguments are wrong both factually and legally.

A. The governments honest-services fraud theories.

The government has proven that Hill, Lee, and Farrington Hill conspired to

commit honest-services fraud by having Hill and Lee take official actions to benefit The

LKC and related entities, including Kiest Blvd. In taking these actions, Hills intent was



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not to further the public good but to enrich himself through kickbacks. Similarly, Lees

actions were motivated by the fact that he was a hidden owner in The LKC and Kiest

Blvd.

i. Hill and Lee took official actions to advance their own interests.

Farrington Hill ignores the evidence in claiming that neither Hill nor Lee took any

official acts in furtherance of the conspiracy. The following are examples of acts Hill

took that are clearly within the scope of his official responsibilities:

On December 8, 2004, Hill moved the City Council to authorize an amendment to

the Citys review criteria for multi-family project applications that made

construction or substantial rehabilitation of a mixed use development that

includes a minimum 10,000 square feet of retail space a higher priority than new

construction of housing for low and moderate income households. The

governments theory is that this was intended to skew the criteria in favor of

developments like The LKC.

On February 23, 2005, Hill voted to approve the consent agenda that (1) approved

a resolution authorizing the City to disburse $883,250 in 2003 General Obligation

Bond Funds to Kiest Blvd. for Cedar Crest Square and that (2) approved a

resolution authorizing the City to make a Residential Development Acquisition

Loan Program loan of $150,000 to Kiest Blvd. Kiest Blvd. was another of

Slovacek and Spencers entities in which Lee was a silent partner.

On March 14, 2005, Hill sent an email instructing a city employee to prepare a

memorandum to the mayor requesting that a resolution to approve and/or set for

public hearing the creation of the Lancaster Kiest Corridor TIF be placed on the

City Councils April 13, 2005 agenda. Hill then signed the memorandum as

Council member for District 5.

On April 5, 2005, Hill pledged to Lee that he would give $1 million of his

discretionary bond money to The LKC.



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At the same time, Farrington Hill received a $500 check from Spencer on her LCG4

account the same entity that executed the Arbor Woods subcontract that resulted in the 10%


On May 21, 2005, Hill, in his official capacity as mayor pro tem, met with U.S.

Representative Johnson to request federal funding for The LKCs development of

the Dallas Lancaster Station project.

The evidence showed that Hill took these actions, among others, in return for

kickbacks from The LKC that were funneled through Farrington Hill. Although

Farrington Hill claims that Hill did not expect any money in return for his actions, the jury

could infer from the evidence that Hill, through the Farrington & Associates bank

account, had already received kickbacks from Spencer and Slovacek under the Arbor

Woods subcontract. Against this background, Hill took an active role in attempting to

make The LKC a reality, telling Lee at one point, Bring me in[,] whatever you need me

to do, wherever I need to go ....

In return for his support, Hill instructed Farrington to have the conversation with

Lee. The day after Farrington Hill ha[d] that conversation with him, Lee instructed

Slovacek to write a $5,000 check to Farrington & Associates, stating: We need to take

care of, of Don via Sheila. The same day, Hill told Farrington Hill how to contact

Slovacek and Spencer so that Farrington Hill could get it in the bank today. Hill then

asked her to withdraw $1,000 of that money for him. Farrington Hill promised to meet

with Slovacek and Spencer and take it straight to the bank.

On May 26, 2005, Spencer did indeed give Farrington Hill a $5,000 check from

The LKC account, and followed that up with a check for $9,500. A few days later, Lee4



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kickbacks to Farrington & Associates.


asked Hill whether Hill had received that package and Hill responded, I think they

ended up getting about 15 total ... I think the second day they did 95, or something.

This evidence, coupled with Hills official acts on behalf of The LKC and Kiest

Blvd., is more than sufficient to show that he violated state and local law, including Texas

Penal Code 26.02(a)(1), which prohibited him from intentionally or knowingly ...

accept[ing], or agree[ing] to accept from another ... any benefit as consideration for the

recipients decision, opinion, recommendation, vote, or other exercise of discretion as a

public servant.

Similarly, as Plan Commissioner, Lee took the official act of writing a letter of

recommendation for Herb Frison of Frison Development LLC for Frisons proposed

development, Dilworth Estates. Lee wrote the letter in his capacity as Plan

Commissioner, on Donald Hills City letterhead, at the request of Maurice Williams, who

needed a document for a lender that showed official City support for the development.

Lee required in return that Frison obtain a proposal from Spencer for The LKC to provide

development and construction services for a fee of $55,000. Lee even had Spencer

draft the actual support letter for Frison, which Lee signed. Spencers services, as listed

in her consulting proposal, included acting as a liaison to local and state agencies and

facilitat[ing] all necessary City Council, Planning and Zoning and related meetings.



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As with Hill, Lees official action violated, among other things, Texas Penal Code

26.02(a)(1), which prohibits someone from intentionally or knowingly solicit[ing]

any benefit as consideration for the recipients recommendation or other

exercise of discretion as a public servant.

. ii. Farrington Hill actively participated in the conspiracy.

Contrary to her claim, the evidence shows that Farrington Hill participated in the

conspiracy by associating herself with The LKC to further the conspiracy and to facilitate

payments to herself and Hill. On March 17, 2005, Hill told Farrington Hill that she was a

business partner in The LKC and that she needed to go to a meeting because she

represented The LKC. On April 8, 2005, Hill told Lee that the LKC in its broadest

form included Farrington Hill. This evidence, along with the above evidence that

Farrington Hill had the conversation with Lee and soon after received $15,000 from

The LKC, support her participation in the conspiracy.

B. The honest-services fraud conviction can rest on local as well as state

law.

Farrington Hills motion also urges the Court to reconsider its decision to allow the

government to pursue allegations relating to the defendants violation of local laws. The

Court should refuse the invitation.

The government alleges that both state law, such as Texas Penal Code 36.02

(regarding bribery), and local law, such as City Charter Chapter III, 10 (regarding

conflicts of interest) and City Code of Ethics Chapter II, 12A-3 (regarding conflicts of



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The Code of Ethics was enacted by ordinance number 24316 and amended by ordinance5

number 24720. Seehttp://www.amlegal.com/nxt/gateway.dll/Texas/dallas/

volumei/chapter12acodeofethics?f=templates$fn=altmain-nf.htm$3.0#JD_12A-3.


interest), imposed duties upon Hill and Lee that they conspired to violate. Relying on5

United States v. Brumley, 116 F.3d 728 (5th Cir. 1997) (en banc), Farrington Hill asserts,

however, that the government cannot rely on the City Charter or the City Code of Ethics

because governing authority allows only a state law passed by a state legislature to

serve as the basis for an honest services conviction.

This argument errs in several respects. First, it ignores that, in Texas, local laws

have the force of state law. See Seay v. Hunt, 55 Tex. 545, 1881 WL 9811, at *5 (Tex.

1881) (The council, or governing body of a municipal corporation, is ... the legislature of

the corporation, with its charter as a constitution. A city council is a miniature general

assembly, and their ordinances have the force of laws passed by the legislature of the

state.); Perry v. Greanias, 95 S.W.3d 683, 693-94 (Tex. App.-Houston [1st Dist.] 2002)

(A home-rule citys charter is ... the fundamental law of the municipality just as a

constitution is the fundamental law of a state.).

Second, it misreadsBrumley. Brumley addressed whether the governments proof

that an employee of astate agency, the Texas Industrial Accident Board, violated astate

law that applied tostate employees like him was sufficient to uphold his honest services

conviction. As the court explained: Under the most natural reading of the statute, a

federal prosecutor must prove that conduct of astate officialbreached a duty respecting

http://www.amlegal.com/nxt/gateway.dll/Texas/dallas/volumei/http://www.amlegal.com/nxt/gateway.dll/Texas/dallas/volumei/http://www.amlegal.com/nxt/gateway.dll/Texas/dallas/volumei/http://www.amlegal.com/nxt/gateway.dll/Texas/dallas/volumei/


18/30


the provision of services owed to the officials employer understate law. Brumley, 116

F.3d at 734 (emphasis added). Had Brumley been a local official, as is the case here,

there is no reason to doubt the Brumley court would have substituted the word local for

state in the above sentence. Indeed, the opinion suggests that the court used the words

state law not to the exclusion of local law, but as a contrast tofederallaw

specifically, the federal common law that had grown to define the duties a defendant

could violate to commit honest services fraud. Id. at 734 (We find nothing to suggest

that Congress was attempting in 1346 to garner to the federal governmentthe right to

impose upon states a federal vision of appropriate services to establish, in other words,

an ethical regime for state employees.) (emphasis added). Thus, Farrington Hill errs in

interpretingBrumleysuse of the term state law as excluding local law.

Third, although the Fifth Circuit has not spoken on the specific issue of whether an

honest-services fraud conviction can be predicated on a violation of local law, the Third

Circuit which, like the Fifth, applies the state-law limiting principle has indicated in

two cases that it can. First, in United States v. Gordon, 183 Fed. App. 202 (3d Cir. 2006),

the prosecution, to support an honest-services fraud count, alleged the violation of state

and local law. Id. at 211-12. The court held that the government had pleaded the charge

sufficiently, reasoning: The indictment sets forth the schemes in which the defendants

allegedly participated .... and the defendants official duties and responsibilities under

state and local law. Id. at 214 (emphasis added).



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Additionally, in United States v. Antico, 275 F.3d 245, 262 (3d Cir. 2001), the

court explained that [h]onest services fraud typically occurs in two scenarios: (1)

bribery, where a legislator was paid for a particular decision or action; or (2) failure to

disclose a conflict of interest resulting in personal gain. This duty to disclose a conflict of

interest .... is oftentimes prescribed by state and local ethics laws. Id. (emphasis added).

It then affirmed the defendants honest-services fraud conviction on the basis that he

violated duties imposed by a Pennsylvania state ethics statute andby a Philadelphia ethics

ordinance regarding conflicts of interest that is similar to the Dallas Charter and Code

provisions. Id. These cases suggest that the umbrella of state law encompasses local

law.

Because the Fifth Circuit has not held otherwise and case law from the Third

Circuit supports the governments theory of prosecution, this Court should not grant a

motion for judgment of acquittal on this basis.

C. The conviction need not be based on a state or local criminallaw.

Farrington Hill concedes that the Fifth Circuit has left open the question whether

the state or local law must be criminal to support an honest-services fraud conviction.

She argues, however, that this Court should conclude that violation of a state criminal law

is required based on principles of federalism, adequate notice, and the rule of lenity.

However, all of these concerns are sufficiently addressed by the limitsBrumley already

placed on the honest-services statute, which require that a conviction be grounded in a



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violation of state (or local) law. See United States v. Weyhrauch, 548 F.3d 1237, 1244-45

(9th Cir. 2008) (The Fifth Circuits state law limiting principle ... addresses all of these

concerns. It limits how much control federal prosecutors have over state public affairs by

restricting federal criminal liability to conduct prohibited by the states themselves and sets

a clear outer limit to the reach of the federal statute by tying liability to violations of

specific state statutes, thereby allaying concerns over fair notice.).

Moreover, as other courts have noted, the Fifth Circuits approach to honest-

services fraud is already the strictest of all the circuits. See id. at 1243-45. If this Court

added another layer to that approach one that requires violation of a state (or local)

criminallaw it would do what no circuit court in the country has done. Indeed, the

Third Circuit, which is the closest to the Fifth in terms of its strictures on honest services

fraud,see Weyhrauch, 548 F.3d at 1244-45, has explicitly held that violation of a state

criminal law is notnecessary. Cf. United States v. Gordon, 183 Fed. App. 202, 211 (3d

Cir. 2006) ([A]lthough a violation of a state criminal law may be sufficient to lay the

foundation for honest services fraud, it is clear from our analysis of the requisite fiduciary

duty that honest services fraud does not require a violation ofcriminallaw ....).

Finally, Farrington Hills suggestion that it would be unfair to impose federal

criminal liability on the basis that the defendants violated a noncriminal state or local law

oversimplifies the crime of honest-services fraud. Indeed, to convict under the statute,

the jury must not only find a violation of the state or local law at issue, but also the other



21/30


elements of fraud, including an intent to defraud another of the right to the honest and

faithful services of the public official. Here, the governments theory is not simply that

Hill or Lee violated a local conflict-of-interest law and therefore is guilty of a federal

criminal offense; instead, it is that Hill and Lee did not disclose their conflicts of interest

which they were required to do under local law - and engaged in self-dealing,

defrauding the City and their constituents of the right of their honest services. Thus, as

required byBrumley, the governments honest-services fraud theory is tiedto a violation

of state or local law, but it is not simply the federal criminalization of a state or local law

violation.

D. The conviction can rest on violations of ethics laws.

Farrington Hill last asserts, erroneously, thatBrumley held that an honest-services

fraud conviction can never be tied to violation of an ethics law. She relies upon

statements inBrumley such as:Although the district court found clear evidence of

ethical violations, it did not rely on them to make its decision. Instead, the district court

found a scheme to defraud that included conduct that violated Texas penal law.

Brumley, 116 F.3d at 735-36. In interpreting this phrase, however, it is important to note

that the ethical violations to which the court was referring were notethics laws they

were violations of the Industrial Accident Board and Texas Workers Compensation

Committee regulations. (See Brumley Indictment at 20 (Brumley violated IAB and

TWCC regulations and State law regarding benefits provided by attorneys to Brumley).)



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In light of this fact,Brumley should be read only as suggesting that violations of

uncodified ethics rules such as the IAB and TWCC regulations as opposed to violations

of actual laws would likely not support an honest-services fraud conviction.

Farrington Hill also points toBrumleys statement that

a violation of state law that prohibits only appearances of corruption will not

alone support a violation of [the honest-services statute.] See United States v.

Sawyer, 85 F.3d 713, 728-29 (1st Cir.1996).... Thus, the mere violation of a

gratuity statute, even one closer to bribery than the Texas statute, will not

suffice. Sawyer, 85 F.3d at 729-30.

Brumley, 116 F.3d at 734.

Farrington Hill reads this passage far too broadly in asserting that it forecloses an

honest-services fraud theory based on an ethics law intended to prevent appearances of

corruption, such as the conflict-of-interest laws at issue here. In fact, a review ofUnited

States v. Sawyer, 85 F.3d 713 (1st Cir. 1996), upon which this passage relies, shows that

such ethics laws can serve as the basis of an honest-services fraud conviction, as long as

the jury is instructed properly on the requisite intent:

To establish the scheme to defraud through [violation of an ethics law

like one prohibiting gifts to legislators by lobbiests], it must also have been

charged and shown that the intent behind the violations was the deprivation of

honest services. Thus, this case required a separate instruction that, to prove

the intent to commit honest services fraud, the jury had to find that[, in paying

the illegal gratuities,] Sawyer intended to influence or otherwise improperly

affect the officials performance of duties, not merely that he intended to

violate the state statute.

Id. at 729. The conviction in Sawyerwas reversed because the district court had

instructed the jury that it was to find the defendant guilty of honest services fraud if it



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found that he violated the state illegal gratuities statute it did not require the jury also to

find that the defendant possessed any corrupt intent in violating the law. Id.; cf. Brumley,

116 F.3d at 734 ([A] violation of state law that prohibits only appearances of corruption

will not alone support a violation of [the honest-services statute].) (emphasis added).

Here, in contrast, a breach of ethics laws is but one finding the jury must make to

convict the defendants. It must also find that, in conspiring for the public official to

violate the ethics law at issue, the defendants had an intent to defraud, defined in the

Courts instructions as an intent to deceive or cheat someone of the services that

would be rendered by a totally faithful employee. In other words, these instructions

unlike those at issue in Sawyer prevent the jury from convicting the defendant based on

a mere appearance of corruption. Thus, the instructions and the governments theory

satisfyBrumley and Sawyer.

Indeed, interpretingBrumley as proscribing the governments reliance on codified

ethics laws such as those prohibiting conflicts of interest would run afoul of a more recent

Fifth Circuit case, United States v. Brown, 459 F.3d 509, 521 (5th Cir. 2006), which

recognized that self-dealing cases are, along with bribery, the paradigmatic honest-service

fraud crimes. Id. (reasoning, Turning to the case law, ... cases upholding [honest

services fraud] convictions ... can be generally categorized in terms of either bribery and

kickbacks orself-dealing, and listing self-dealing/conflict-of-interest cases going back to

1949) (emphasis added). Preventing reliance on state or local laws prohibiting conflicts



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of interest would virtually eliminate the possibility of obtaining public-official

convictions for self-dealing.

Moreover, the Third Circuit, which is the closest to the Fifth in terms of its

approach to honest-services fraud, has expressly recognized that

[h]onest services fraud typically occurs in two scenarios: (1) bribery, where a

legislator was paid for a particular decision or action; or (2)failure to disclose

a conflict of interest resulting in personal gain. This duty to disclose a conflict

of interest arises in the private sector from the fiduciary relationship between

an employer and an employee. In the public sector, the duty is oftentimes

prescribed by state and local ethics laws.

United States v. Antico, 275 F.3d 245, 261 (3d Cir. 2001);see also United States v.

Woodward, 149 F.3d 46, 62 (1st Cir. 1998) ([N]ondisclosure of a conflict of interest is a

second way in which a public official can steal his honest services.).

In Antico, the Third Circuit endorsed a similar conflict-of-interest theory to the one

under which the government is proceeding here and affirmed the defendants convictions

for violating state and local ethics laws prohibiting conflicts of interest. Antico, 275 F.3d

at 253-54, 260-65. Antico was an employee of the City of Philadelphia zoning and permit

department. In lieu of paying child support to his girlfriend, he offered to refer clients to

her so that she could earn money as an expediter an independent contractor who, in

exchange for a fee, represented individuals and businesses before Anticos department.

Antico then prepared and approved her permits. Through this position, the woman earned

$700,000. Id.



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In concluding that the jury properly found Antico guilty of honest services fraud,

the Third Circuit reasoned:

Anticos employment with [the City] required him to refrain from using

his position to secure advantages for himself or his family members. The

Philadelphia Code provides that city employees must disclose publicly a

conflict of interest and recuse themselves from taking any official action in a

matter where they have a financial interest. In addition, state ethics laws

prohibited him from using his employment for private pecuniary gain.

....

We agree w ith the Government that Anticos duty to disclose material

information with respect to his conflict of interest with [his girlfriend] arose

from state and local law.... Antico owed the City a duty to disclose this

financial arrangement, the failure of which constitutes honest services fraud.

Antico correctly notes that the broad scope of the mail fraud statute ...

does not encompass every instance of official misconduct that results in the

officials personal gain.... Anticos exercise of his discretionary authority in

both filling out and approving the applications submitted by [his girlfriend]

without disclosing his interest in the scheme goes ... into the realm of

interested decision-making. When coupled with the duty imposed by state and

local conflict of interest laws, Anticos failures to disclose his financial

business arrangement with [the girlfriend] and to recuse himself from taking

action with respect to her applications fall within the scope of honest services

fraud.

Id. at 253, 263-64.

As inAntico, the government here is proper in tying its theory to Hills and Lees

violations of local laws prohibiting conflicts of interest. Their self-dealing, which

violated those laws, deprived the City and its citizens of their right to honest services.

Farrington Hills motion for judgment of acquittal on this count should be denied.



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5. Count 19: Conspiracy to commit money laundering

Hill, Lee, Farrington Hill, and Robertson are charged with conspiring to commit

money laundering under 18 U.S.C. 1956(a)(1)(A)(i) and (B)(i)-(ii), which prohibit a

defendant who know[s] that the property involved in a financial transaction represents

the proceeds of some form of unlawful activity from conduct[ing] or attempt[ing] to

conduct such a financial transaction ... with the intent to promote the carrying on of

specified unlawful activity, or from conducting or attempting to conduct the financial

transaction knowing that the transaction is designed in whole or in part ... to conceal or

disguise the nature, the location, the source, the ownership, or the control of the proceeds

of specified unlawful activity; or ... to avoid a transaction reporting requirement under

State or Federal law.

As the evidence has shown, the defendants conspired to launder money in several

ways. For instance, the defendants attempted to conceal the receipt of proceeds by

requiring Potashnik to make payments through Farrington & Associates. Additionally,

the defendants withdrew funds in cash from the Farrington & Associates account to use

for the benefit of Hill and Lee. $15,000 from the account was also used to purchase a

1998 BMW and plans were made to not register the vehicle in Hills name even though

he used it.

Moreover, the defendants laundered the 10% kickbacks on the Arbor Woods

concrete contract. SWH contracted with LCG/RON-SLO to do concrete work at an



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inflated price, and the construction draws were deposited into the RON-SLO account.

Slovacek opened a new bank account called Millennium Land Development (MLD) and

then paid 10% of the construction draws out of the MLD account either directly to the

Farrington & Associates account or through The LKC Dallas and then into the Farrington

& Associates account.

Finally, the defendants laundered funds by inserting, at Hills direction,

Community Housing Development Corporations (CHDOs) into the ownership of the

properties. Payments went from SWH to the CHDOs (Bright III and Urban League) and

then to Farrington & Associates.

Additionally, on at least one occasion, Hill instructed Farrington Hill not to

withdraw $10,000 or more from the Farrington & Associates account because it would

trigger a currency transaction reporting requirement. Hill told Farrington that there was

no need to bring her up on the radar like that.

This evidence defeats the defendants factual insufficiency claims. Farrington Hill

and the other defendants also moved for a judgment of acquittal based on the legal

arguments made her Motion to Dismiss Count Nineteen. (Docket #875.) For the reasons

stated in the Governments Response to that motion (Docket #987), the Court should

deny the defendants motion for judgment of acquittal on that count.



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6. Count 20: Conspiracy to commit money laundering

A. Hills and Reagans oral motions

The evidence was also sufficient on this count. Essentially, proceeds from the

extortion were laundered through one or more BSEAT accounts and efforts to

legitimize the extortionate payments were made through contracts and invoices. The

thrust of the money laundering evidence presented to the jury are payments of $22,500 on

February 22, 2005 (discussed above on page 7), and a payment on March 7, 2005, for

$40,000. On each occasion, the checks were deposited into a BSEAT bank account at

Wells Fargo. On February 22, 2005, Reagan withdrew $12,000 and then paid at least

$10,000 of it to Hill. On March 7, 2005, Reagan withdrew over $18,000 in cash and then

met with Lee and gave him $7,000.

Hill attempted to legitimize his receipt of the $10,000 by calling it partly a

campaign contribution from several individuals, including four co-defendants, and by

calling it partly payment for services rendered, or to be rendered, by Farrington &

Associates. Based on this evidence, the Court should deny the motions on this count.

B. Reagans w ritten motion

Reagan also argues that he is entitled to a judgment of acquittal on this count

because the government failed to prove he is guilty of the predicate counts, 16 and 17.

For the reasons stated in Section 3, the Court should reject Reagans argument.



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Conclusion

The government respectfully requests that the Court deny the motion.

Respectfully submitted,

JAMES T. JACKS

UNITED STATES ATTORNEY

/s/ Chad Meacham

CHAD MEACHAM

Assistant United States Attorney

Texas State Bar No. 00784584

1100 Commerce Street, Third Floor

Dallas, Texas 75242

Telephone: 214.659.8600

Facsimile: 214.767.4104

/s/ Leigha Simonton

LEIGHA SIMONTON


Texas State Bar No. 24033193

1100 Commerce Street, Third Floor

Dallas, Texas 75242

Telephone: 214.659.8600

Facsimile: 214.659.8800



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CERTIFICATE OF SERVICE

I hereby certify that on September 20, 2009, I electronically filed the foregoing

document with the clerk of the court for the U.S. District Court, Northern District of

Texas, using the electronic case filing system of the court. The electronic case filing

system sent a Notice of Electronic Filing to all attorneys of record who have consented

in writing to accept this Notice as service of this document by electronic means.

I hereby certify that I have served the foregoing document by mailing a copy to the

following individuals: N/A.

/s/ Leigha Simonton

LEIGHA SIMONTON



Prosecution's Summary of Case Against Don Hill, Etc

Documents

Transcript of Prosecution's Summary of Case Against Don Hill, Etc