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United States of America v. William Mitchell

June 13, 2012

UNITED STATES OF AMERICA, PLAINTIFF-APPELLEE,
v.
WILLIAM MITCHELL, JR., DEFENDANT-APPELLANT.



Appeal from the United States District Court for the Northern District of Ohio at Cleveland. No. 1:10-cr-502-1--Sara E. Lioi, District Judge.

The opinion of the court was delivered by: Ripple, Circuit Judge.

RECOMMENDED FOR FULL-TEXT PUBLICATION

Pursuant to Sixth Circuit Rule 206

Before: SUTTON, McKEAGUE, and RIPPLE*fn1 , Circuit Judges.

OPINION

A grand jury indicted William Mitchell, Jr., for his involvement in a long-running scheme to bribe the auditor of Cuyahoga County, Ohio, into awarding overvalued contracts for appraisal work to a company formed by Mr. Mitchell's law partners. The indictment included three counts: (1) conspiracy to commit bribery concerning programs receiving federal funds, in violation of 18 U.S.C. § 371; (2) bribery concerning programs receiving federal funds, in violation of 18 U.S.C. § 666(a)(2); and (3) conspiracy to violate the Hobbs Act, in violation of 18 U.S.C. § 1951. The district court granted Mr. Mitchell's motion for judgment of acquittal on the Hobbs Act charge, but a jury convicted Mr. Mitchell of the remaining two counts. The district court sentenced Mr. Mitchell to 97 months' incarceration and three years' supervised release. On appeal, Mr. Mitchell claims that the district court erred by instructing the jury that deliberate ignorance, in some instances, can constitute knowledge. He further asserts that the sentence imposed by the district court was procedurally and substantively unreasonable. Having reviewed the record, the parties' briefs and the applicable law, we now affirm the judgment of the district court.

I BACKGROUND

A. Facts

Mr. Mitchell was a partner in the Cleveland, Ohio, law firm of Armstrong, Mitchell, Damiani and Zaccagnini ("AMDZ") from the early 1980s until 2006. His partners in the firm were Timothy Armstrong, Lou Damiani and Bruce Zaccagnini. There was no formal partnership agreement at AMDZ; each partner practiced in a different area of law, and each represented his clients with essentially no oversight. However, each partner shared evenly in the firm's profits. Damiani was the closest person the firm had to a managing partner because he was responsible for taking care of AMDZ's finances.

1. The Government's Case*fn2

The AMDZ partnership structure was beneficial to Mr. Mitchell, who specialized in personal injury and medical malpractice cases. He would take these cost-intensive cases on a contingency-fee basis. By contrast, each of his partners billed by the hour. Because the partners split expenses and profits evenly, Mr. Mitchell was able to take on costly cases that he would not otherwise have been able to litigate while continuing to draw compensation regularly from his partners' fees during the pendency of such actions. In exchange, he would share his occasional "windfall" awards with his partners, who were effectively helping to finance his work. Mr. Mitchell often would admit to his partners that "but for the continuous payroll that w[as] coming from the other partners and associates in the firm, he wouldn't have been able to do that."*fn3

Frank Russo was the elected auditor of Cuyahoga County, Ohio, which includes the City of Cleveland. Part of Russo's job as auditor was to oversee tax appraisals on properties within the County. In 1997, Damiani approached his partners in AMDZ about forming a business to solicit lucrative appraisal work from Russo, whom Damiani had known before Russo became auditor. On Damiani's suggestion, all four partners traveled to Atlantic City to meet with Robert Scrivens, a real estate appraiser. Although Mr. Mitchell and Zaccagnini met Scrivens in Atlantic City, they did not attend the meeting between him, Damiani and possibly Armstrong. When the partners were driving back from Atlantic City, Damiani explained that Scrivens was going to ask Joe Beres, another appraiser, to be involved with the enterprise. Damiani also indicated that he would speak with Russo and Sandy Klimkowski, an employee from the auditor's office, to "express an interest in" securing this contract.*fn4 According to Zaccagnini, Damiani told the partners, including Mr. Mitchell, "that Frank [Russo] would want to, you know, be taken care of. You know, we're going to have to come up with cash for him as well," but that "'there is going to be plenty of money there and [that] it w[ould] still be lucrative for us.'"*fn5

Upon their return, Damiani told Zaccagnini that the State of Ohio maintained a list of approved contractors and that, while they needed to be on that list, they needed to do so by forming a company that could not be traced to them. Zaccagnini and Armstrong then filed articles of incorporation for Valuation Advisory Services, Inc. ("VAS"), which listed Scrivens as the company's incorporator and shareholder. VAS then submitted an application to be on the Ohio Tax Commissioner's list, which was approved. Thereafter, Armstrong set up an office for VAS in downtown Cleveland. VAS employed a general manager to handle administrative matters in the office and to sign blank checks for Damiani and Zaccagnini.

At about the same time, Damiani approached Russo and Klimkowski about contracting with VAS. Russo and Damiani agreed on the terms of a contract, which was approved by the county commissioners. After one or two years, however, Russo learned that he could award these contracts to VAS without putting them out for bid and without seeking the commissioners' approval, which he did from then on. Russo and VAS would enter into "base" contracts at about the same amount as the previous agreement, but would then issue addenda to increase the amount "[b]ecause [Russo] never liked entering into contracts with big numbers all at once."*fn6

The contracts between VAS and the County contained a fee schedule that called for VAS to be paid monthly. Zaccagnini, who drafted these agreements, testified that the amount VAS was to be paid was "[s]ignificantly more" than the legitimate expenses that VAS incurred in conducting appraisals and that the payment terms of the agreement had no "rational relevance or connection to the expenses of the contract."*fn7 Klimkowski, who served as "the middle person between Frank Russo and Lou Damiani," would hand deliver these monthly payments to Damiani.*fn8 Damiani and Klimkowski also would meet once a month so that Damiani could give Klimkowski an envelope containing $10,000 in $100 bills that was then passed on to Russo. This amount increased over time. In 2004, Damiani began to pay Klimkowski $3,000 per month as well, which eventually increased to $6,000 per month. When the scheme began, Damiani explained to Zaccagnini, Armstrong and Mr. Mitchell that they would need to come up with the money to pay Russo. Each partner was expected to put up one-fourth of this amount.

There was often a period of "drag time" between Damiani's receipt of the check from Klimkowski and Damiani's payments to Russo and Klimkowski.*fn9 In the interim, Damiani would give the Klimkowski check to Zaccagnini, who would move the funds through various accounts before depositing into AMDZ's account the substantial amount that was left over after VAS's minimal expenses were paid.

Mr. Mitchell's wife filed for divorce in 2001. AMDZ was named a party to the divorce, and Mrs. Mitchell's attorneys sought discovery of the firm's financial records. Zaccagnini testified that there was a great deal of concern at AMDZ that someone might learn of the scheme during the divorce proceedings. Damiani told Mr. Mitchell that he "was concerned that this put everything at risk" because it could lead to someone discovering that "this money was eventually coming to the firm."*fn10 Mr. Mitchell apologized and said, "[L]et's just do whatever we have got to do. Let's fight it."*fn11 The divorce was eventually resolved by settlement, and the documents in question never were disclosed.

In 2005, Damiani learned that he had cancer. In March of 2006, Damiani informed Mr. Mitchell that he was terminally ill and that the VAS contract would be over once he died. Nevertheless, in June of 2006, Damiani told Zaccagnini that the scheme would in fact continue after his death with Zaccagnini taking over Damiani's leadership role and with Damiani's wife and Zaccagnini as the only participants on the VAS side of the arrangement. In August of that year, Damiani brought Zaccagnini to his monthly rendezvous with Klimkowski. He told her, "What you did with me, you'll do with Bruce [Zaccagnini,] . . . [a]nd the conditions w[ill] stay the same with everybody."*fn12 Damiani passed away within the next week. Thereafter, Klimkowski would deliver the checks to Zaccagnini, and he would provide her, in turn, with the envelopes filled with cash.

Zaccagnini began distributing the partners' checks and collecting the bribe money in September of 2005, nearly a year before Damiani ultimately passed away.*fn13 When Damiani was still participating actively in the scheme, Zaccagnini would then deliver the bribe money to Damiani. Zaccagnini testified that, once he began collecting the bribe money, he would write the amount he needed from each partner on a Post-it note attached to each partner's draw check. Mr. Mitchell was typically prompt, and was often early, in providing his portion of the cash to Zaccagnini. On one occasion, Mr. Mitchell either had forgotten that he had received a draw check or had misplaced it, and he was accordingly late with his payment. Upon finding the check, he immediately paid his share to Zaccagnini.

After Damiani's death, Zaccagnini told Armstrong and Mr. Mitchell that the VAS contract was over. As we noted above, this was a lie; the contract was still in force with Zaccagnini and Damiani's widow. Indeed, Damiani had negotiated a new contract with Russo shortly before he died, and he instructed Zaccagnini to finish out that contract but not to negotiate a new one thereafter. Mr. Mitchell expressed an interest in continuing the contract, but Zaccagnini said that Russo and Klimkowski would not deal with him.

At around that same time, AMDZ was winding down its business; AMDZ had lost Damiani to cancer and was about to lose Armstrong to a solo practice. Zaccagnini then announced that he would be leaving the firm as well, and AMDZ dissolved at the end of 2006.

In November 2007, Mr. Mitchell called Zaccagnini. He expressed his displeasure with Russo for passing over his son-in-law for a job. Zaccagnini said he did not know anything about this, and Mr. Mitchell replied, "'Look, we all know all you got to do is pay Frank Russo and you can get a job.'"*fn14 The two then got together, and Mr. Mitchell said that Damiani "screwed up" by letting the VAS contract go.*fn15 When Zaccagnini lied and said that Scrivens--the appraiser from Atlantic City--was the one getting all the money now, Mr. Mitchell replied, "'He needs to help out. He shouldn't be getting all that money.'"*fn16 Mr. Mitchell said that he and his new wife were borrowing heavily on their credit cards and that they were "'zapped.'"*fn17

Zaccagnini continued the scheme until July of 2008, when the FBI searched the Cuyahoga County Administration Building in connection with an investigation into various crimes involving public officials and private contractors. Shortly thereafter, in August of 2008, Mr. Mitchell met with Zaccagnini. Mr. Mitchell suggested that Russo was "done" and that they should run Mr. Mitchell's son-in-law to replace Russo so that Klimkowski "would have job security and" so they could "'get the contract back with VAS.'"*fn18 Mr. Mitchell then suggested that if the FBI's investigation turned to VAS, they should "'blame it all on Armstrong,'" who had been involved with VAS's work.*fn19 Zaccagnini replied that ...


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