The trial of former Meadowlands EnCap chief executive William Gauger regarding an unrelated Asbury Park real estate deal has been postponed again, this time until Jan. 6, 2014.
But the legal maneuvering continues.
Last week, Gauger’s attorneys asserted that “the government’s recent submissions sink its arguments.”
The question seems to be about whether this case – about Gauger’s alleged extortion of a (presumably former) friend after the friend received a lucrative payout from a business partner following Gauger’s recommendation of the friend – mirrors the “mainstream bribery and kickback honest services fraud” cases permitted by the Skilling case (former Enron – not EnCap – CEO Jeffrey Skilling).
That case led to a U.S. Supreme Court ruling that reined in a “theft of honest services” concept that some experts had said was being overly exploited by prosecutor nationwide.
The argument by Gauger’s attorneys is that the first five counts in his indictment must be dismissed because that narrowed definition doesn’t apply here.
Ironically, of the several cases cited, one is the only verdict actually related to EnCap itself – United States v Bryant, with the latter being former New Jersey State Senator Wayne Bryant.
(Meadowlands EnCap was a failed golf course and condo project that was to be built atop the sort of garbage dumps you’d occasionally see as a makeshift graveyard in “The Sopranos.”
Bryant was acquitted of allegedly receiving a monthly retainer for a no-show job in exchange for his backing of legislation that would help the EnCap project and others of its parent company. The idea is that, sure, that one qualified because there was a public official involved – not the case in the Gauger trial.
Interesting footnote supplied for Meadowlands Matterers: “The Bryant case is the only other prosecution to have resulted from the government’s nearly half decade of investigation into the various Cherokee remediation projects in New Jersey.” That’s true – Bryant co-defendant Eric Wisler died before going to trial.
The argument continues to the U.S. District Judge, saying that the Third Circuit Court of Appeals is the only one that hasn’t clarified which test should be applied in an honest services case – “foreseeable harm” or “materiality.” And at any rate, says Gauger’s legal team, “under either of these tests, the Indictment fails.”
The prosecution’s response came the next day, alleged a “more than sufficient indictment.”
They say that the fact that similar case has been filed in this district since mid-2010 is irrelevant.
“Indeed, the defendant’s position in this regard would have absurd consequences,” they say.
The contention is that under the defense’s reasoning, if an individual who “owes a duty of honest services to the public or private entity merely requests or reaches an arms-length agreement with a third party to receive kickbacks from that third party, the individual could potentially be liable for honest services fraud. But if the individual instead extorts that third party for those same kickbacks, the individual could not be guilty of honest services fraud under any circumstances. Surely, Skilling does not compel such a result.”
The defense also cited a case called US v McGeehan which, the prosecution notes, was vacated after the Skilling ruling and is thus irrelevant, they note.
