United States v. Geddings , 278 F. App'x 281 ( 2008 )

UNPUBLISHED
UNITED STATES COURT OF APPEALS
FOR THE FOURTH CIRCUIT
No. 07-4544
UNITED STATES OF AMERICA,
Plaintiff - Appellee,
v.
KEVIN L. GEDDINGS,
Defendant - Appellant.
Appeal from the United States District Court for the Eastern
District of North Carolina, at Raleigh. James C. Dever III,
District Judge. (5:06-cr-00136-D)
Before NIEMEYER and SHEDD, Circuit Judges, and Patrick Michael
DUFFY, United States District Judge for the District of South
Carolina, sitting by designation.
Argued: January 31, 2008 Decided: May 19, 2008
Affirmed by unpublished opinion. Judge Shedd wrote the opinion, in
which Judge Niemeyer and Judge Duffy joined.
ARGUED: Jonathan I. Edelstein, New York, New York, for Appellant.
John Stuart Bruce, OFFICE OF THE UNITED STATES ATTORNEY, Raleigh,
North Carolina, for Appellee. ON BRIEF: Abraham Abramovsky,
FORDHAM UNIVERSITY, School of Law, New York, New York, for
Appellant. George E. B. Holding, United States Attorney, Anne M.
Hayes, Assistant United States Attorney, Dennis M. Duffy, Assistant
United States Attorney, OFFICE OF THE UNITED STATES ATTORNEY,
Raleigh, North Carolina, for Appellee.
Unpublished opinions are not binding precedent in this circuit.
2
SHEDD, Circuit Judge:
A federal jury convicted Kevin Geddings of five counts of mail
fraud in violation of 18 U.S.C. §§ 1341 and 1346 based on his
failure to disclose a conflict of interest as a North Carolina
lottery commissioner. The district court sentenced Geddings to 48-
months’ imprisonment, and he now appeals his conviction and
sentence. We affirm.
I.
Viewing the evidence in the light most favorable to the
government, see Glasser v. United States, 315 U.S. 60, 80 (1942),
the following are the facts. Geddings has long been involved in
the promotion of lotteries. In 1998, South Carolina gubernatorial
candidate Jim Hodges hired Geddings’ public relations/political
consultant firm, Geddings and Phillips Communications, LLC
(“Geddings/Phillips”) for his campaign. Whether South Carolina
should adopt a lottery became a focus of that campaign, and
Geddings created advertisements highlighting incumbent Governor
David Beasley’s opposition to the lottery. After Hodges defeated
Beasley, Geddings served as his chief of staff and later
participated in his reelection campaign.
During South Carolina’s lottery debate, Geddings developed a
business relationship with lottery vendor Scientific Games
3
International, Inc. (“Scientific Games”).1 Geddings received
$163,545 from Scientific Games over the course of their
relationship, which extended from 2000 to 2005. In 2000,
Scientific Games hired Geddings to create advertisements supporting
a referendum to amend the South Carolina Constitution and allow the
creation of a lottery. On October 5, 2001, Scientific Games
contributed $35,000 to South Carolinians for an Effective Lottery,
LLC (“SC Effective Lottery”), a for-profit organization formed by
Geddings. On October 22, 2001, Geddings emailed a negative
article regarding GTech’s operation of the Texas lottery to the
chairman of the South Carolina Lottery Commission and noted:
“[j]ust wanted you to be ready for an onslaught of bad press if
Gtech [sic] wins SC contract.” J.A. 3996. Three days later, SC
Effective Lottery distributed $29,500 to Geddings/Phillips. On
October 30, 2001, Scientific Games received the on-line portion of
the South Carolina lottery contract.
Geddings moved to North Carolina in 2003, and he continued his
relationship with Scientific Games. In 2004 and 2005, Scientific
Games retained Geddings to promote a lottery in North Carolina.
Geddings prepared elected officials for debates and produced
advertisements in support of the lottery. In July 2005, Alan
1
According to the record, Scientific Games holds the market-
leading position in scratch or instant lottery tickets and is
second in online lottery games. Its primary competitor, GTECH
Corporation (“GTech”), leads in online lottery games.
4
Middleton, Scientific Games’ vice president for government
relations, notified his accounting department that Scientific Games
would likely pay Geddings $5,000 per month for the next 6-18
months.2 North Carolina adopted a lottery in August 2005.
In September 2005, Geddings sought appointment to the nine-
member North Carolina Lottery Commission (“Lottery Commission”).
He emailed Scientific Games’ lobbyist Meredith Norris and told her
to keep him in mind if she wanted “a foot soldier to serve [on the
Lottery Commission] who will be loyal to the Speaker.” J.A. 3224.
Norris had formerly worked for James B. Black, Speaker of the North
Carolina House of Representatives. On September 23, 2005, Speaker
Black appointed Geddings to the Lottery Commission.
The executive order establishing the North Carolina Board of
Ethics (“Ethics Board”) requires public officials to “fully
disclose any potential conflict of interest or appearance of
conflict.” N.C. Exec. Order No. 76 (2005). After his appointment,
Geddings submitted a “Long Form” Statement of Economic Interest
(“Ethics Form”) to the Ethics Board. Geddings provided no
response to Question 16, which is a broad catch-all question
requiring the disclosure of conflicts of interest. Specifically,
Question 16 states:
Having read the Order in general and the ‘Rules of
Conduct for Public Officials’ in particular, provide any
2
Middleton is a close friend of Geddings who previously worked
for Scientific Games in South Carolina as a consultant.
5
other information which a reasonable person would
conclude is necessary or helpful either to carry out the
purposes of the Order or to fully disclose any potential
conflict of interest or appearance of conflict. Identify
any conflicts or potential conflicts you may have that
are not fully or adequately covered elsewhere in this
form. Include an explanation of how you would propose to
resolve any conflicts or potential conflicts.
J.A. 3218. After the Ethics Board requested additional
information, Geddings supplied the following answer, which
indicated his friendship with Middleton, but omitted his financial
relationship with Scientific Games:
I have a longstanding friendship and previous business
relationship with Mr. Alan Middleton, a vice president
with Scientific Games Corp. a potential N.C. Education
Lottery vendor. Mr. Middleton and I have been friends
since 1987. Between 2000 and 2001 Mr. Middleton’s
company, Carolina Public Affairs sublet office space from
me. In 2002, he joined Scientific Games. I currently
have no business relationship with Mr. Middleton,
although he remains a friend.
I should note as well, that as a former chief of staff to
the Governor of South Carolina, I helped with that
state’s lottery start-up and enjoyed several
opportunities to meet privately with GTech staff and
representatives, including Mr. Don Sweitzer, Mr. Ted
Riley and Mr. Chris Shaban. I have learned much from
listening to the ‘lessons learned’ by executives from
both major lottery system companies.
In 2000, my company, Geddings & Phillips Communications,
LLC also conducted focus groups of potential lottery
customers in South Carolina for a lottery vendor company
known then as IGT-Anchor Gaming. IGT-Anchor Gaming was
later purchased by Scientific Games.
My company, Geddings & Phillips Communications, along
with my two radio stations WXNC-AM in Monroe, NC and
WKMT-AM in Kings Mountain, NC have no current business
relationships with any lottery vendor. Although I am in
the process of selling my two radio stations, I pledge to
6
not accept any lottery advertising contracts for these
stations or any others I may own during my term on the
Education Lottery Commission.
In addition, to avoid even the “appearance” of unfair
vendor consideration, I will not vote on any final vendor
contract award that involves Scientific Games or GTech.
J.A. 3229. Based on the revised Ethics Form, the Ethics Board
reported on October 12, 2005, to Speaker Black and to the Lottery
Commission that Geddings did not have an actual conflict of
interest but had “the potential for a conflict of interest.” J.A.
3221-22. Had Geddings disclosed his financial relationship with
Scientific Games, the Ethics Board would have concluded that he had
an actual conflict of interest. J.A. 1178.
After his appointment as a commissioner, Geddings continued a
relationship with Scientific Games. He emailed his secretary on
September 26, 2005, and instructed her never to acknowledge by
phone that Scientific Games “is a client.” J.A. 3856 (emphasis
added). On October 7, 2005, Scientific Games paid him $9,500.
Three days later, Geddings’ secretary forwarded him the invoice for
the month of October for submission to Scientific Games.
Geddings kept in almost daily contact with Middleton. He
communicated with Middleton even after the Lottery Commission
adopted a policy proposed by Geddings that prohibited lottery
commissioners from meeting individually with lottery vendors.
Geddings was appointed to the Lottery Commission personnel
committee on October 4, 2005. On that same day, when such
7
information was confidential, Geddings informed Middleton of the
membership of the personnel committee. The composition of the
committee did not become publicly available until October 6, 2005.
Although Geddings had recused himself from lottery vendor
selection, he circulated negative articles regarding GTech, as he
had done in South Carolina.3 He sent one article regarding
allegations of corruption against GTech in Pennsylvania to the
Chairman of the Lottery Commission, Dr. Charles Sanders, with a
note: “The press everywhere loves these stories.” J.A. 3896. He
sent another article detailing allegations of corruption in GTech’s
operation of the Texas lottery to Chairman Sanders’ assistant, with
a note: “It’s worth reading just to see what ‘ugly’ issues can
emerge with lottery operations over time.” J.A. 4201.
The United States Attorney’s Office for the Eastern District
of North Carolina began an investigation related to the passage of
the North Carolina lottery and requested certain records from
Scientific Games around October 26, 2005. In response to that
inquiry, Scientific Games collected records of all payments made by
Scientific Games to Geddings over the course of their relationship.
Ira Raphaelson, outside counsel to Scientific Games, asked Geddings
if he had informed the Lottery Commission of his receipt of these
payments. Geddings stated that he had not disclosed receiving the
3
The Executive Director of the Ethics Board, Perry Newson,
stated to the Lottery Commission that such a recusal prohibited
indirect lobbying.
8
payments and that if he had, he would not have become a lottery
commissioner. Furthermore, Geddings told Raphaelson that if
Scientific Games turned over records of the payments that he would
be “done” as a lottery commissioner. J.A. 1090. Raphaelson stated
that Scientific Games intended to provide records of the payments
to the United States Attorney’s Office. Four days later on
November 1, 2001, Geddings resigned from the Lottery Commission.
Geddings was indicted for using the mails and wires to execute
a scheme to defraud the citizens of North Carolina of his honest
services in violation of §§ 1341 and 1346. The indictment charges
that Geddings concealed his conflict of interest with Scientific
Games and aided that company’s efforts to obtain a contract from
North Carolina to operate the state’s lottery. The jury convicted
Geddings of five counts of mail fraud,4 based on the following five
mailings: (1) a letter, which the Governor of North Carolina mailed
to appoint Geddings to the Lottery Commission; (2) Geddings’ Ethics
Form, which he sent to the Ethics Board; (3) a copy of the Ethics
Board’s finding that Geddings had no actual conflict of interest,
which the Ethics Board mailed to Chairman Sanders; (4) a copy of
the Ethics Board’s finding that Geddings had no actual conflict of
interest, which the Ethics Board mailed to Geddings; and (5)
Geddings’ oath of office, which he sent to the Governor of North
Carolina.
4
The jury acquitted Geddings of wire fraud.
9
At sentencing, the district court used U.S.S.G. § 2C1.1 to
determine Geddings’ base offense level of 14. Geddings received a
four-level enhancement for being a high-level public official and
a two-level enhancement for obstruction of justice, resulting in a
total offense level of 20. See U.S.S.G. § 3C1.1; U.S.S.G. §
2C1.1(b)(3). Because Geddings’ criminal history placed him in
Category I, the advisory Sentencing Guideline range was 33-41
months. After considering the 18 U.S.C. § 3553(a) factors, the
district court applied a seven-month upward variance, for a total
sentence of 48 months.
II.
Geddings first argues that the government presented
insufficient evidence to support his conviction for mail fraud. In
reviewing such a claim, “[t]he verdict of a jury must be sustained
if there is substantial evidence, taking the view most favorable to
the Government, to support it.” Glasser, 315 U.S. at 80.
Substantial evidence is “evidence which a reasonable finder of fact
could accept as adequate and sufficient to support a conclusion of
a defendant's guilt beyond a reasonable doubt.” United States v.
Newsome, 322 F.3d 328, 333 (4th Cir. 2003) (quotation omitted).
The federal mail fraud statute prohibits using the mails5 for
the purpose of executing “any scheme or artifice to defraud.” §
5
Geddings does not contest the mailings in this case.
10
1341. Congress defined “scheme or artifice to defraud” to include
“a scheme or artifice to deprive another of the intangible right of
honest services.” § 1346. Here, Geddings executed such a scheme
by concealing his conflict of interest with Scientific Games and
acting for its benefit as a lottery commissioner.6
Geddings’ conflict of interest resulted from a substantial
financial relationship with Scientific Games, which he concealed
when submitting his Ethics Form. Scientific Games paid Geddings a
total of $163,545, including $24,500 the year he became a lottery
commissioner, including $9,500 after he was appointed to the
Lottery Commission. As a lottery commissioner, Geddings instructed
his secretary to never acknowledge that Scientific Games “is a
client.” J.A. 3856 (emphasis added). Regarding the concealment of
his conflict of interest, Geddings stated to Raphaelson that he
“did not disclose [his] work for Scientific Games” on his Ethics
Form because if he had made such a disclosure he “wouldn’t have
gotten the position [on the Lottery Commission].” J.A. 1090.
6
Geddings argues that the government must demonstrate that he
received personal gain to sustain his conviction under §§ 1341 and
1346. Neither the statute nor our case law requires that a
defendant receive personal gain. See generally United States v.
Bryan, 58 F.3d 933 (4th Cir. 1995) (upholding a conviction with no
evidence of personal gain) abrogated in part on other grounds by
United States v. O’Hagan, 521 U.S. 642, 650 (1997). To the extent
Geddings bases his argument on the panel opinion in United States
v. Mandel, 591 F.2d 1347 (4th Cir. 1979), on rehearing, 602 F.2d
653 (4th Cir. 1979)(en banc), that panel opinion has no legal
effect. Under Fourth Circuit rules, “[g]ranting of rehearing en
banc vacates the previous panel judgment and opinion.” 4th Cir. R.
35(c).
11
After becoming a lottery commissioner, Geddings took actions
benefiting Scientific Games. Before the Lottery Commission awarded
North Carolina’s lottery vendor contract, Geddings distributed to
Chairman Sanders articles critical of Scientific Games’ primary
competitor, GTech.7 He kept in almost daily contact with
Middleton, and continued to communicate with him even after the
Lottery Commission adopted a policy prohibiting members from
individually meeting with lottery vendors. Furthermore, he
provided confidential information to Middleton identifying the
membership of the Lottery Commission’s personnel committee.
In short, a reasonable jury could find beyond a reasonable
doubt that Geddings deprived the citizens of North Carolina of his
honest services in violation of §§ 1341 and 1346.8
7
Geddings argues that the articles were not negative, but
Chairman Sanders testified that he interpreted them to be negative.
8
Geddings contends that §§ 1341 and 1346 are
unconstitutionally vague as applied to him. We find that the
language of the statute provides notice of the wrongfulness of
Geddings’ conduct and adequately prevents arbitrary enforcement.
United States v. Klecker, 348 F.3d 69, 71 (4th Cir. 2003).
(explaining that the constitutional vagueness inquiry examines both
public notice and arbitrary enforcement).
Geddings also challenges the district court’s admission of
testimony for the government, and the district court’s denial of
Geddings’ request for surrebuttal. We review these rulings for
abuse of discretion and find no error. See United States v.
Achiekwelu, 112 F.3d 747, 753 (4th Cir. 1997).
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III.
Geddings next challenges the reasonableness of his 48-month
sentence. We review a district court’s imposition of a sentence
for abuse of discretion. United States v. Pauley, 511 F.3d 468,
473 (4th Cir. 2007)(citing Gall v. United States, 128 S. Ct. 586,
596 (2007)).
We first review for procedural errors, such as “failing to
calculate (or improperly calculating) the Guidelines range,
treating the Guidelines as mandatory, failing to consider the §
3553(a) factors, selecting a sentence based on clearly erroneous
facts, or failing to adequately explain the chosen sentence --
including an explanation for any deviation from the Guidelines
range.” Gall, 128 S. Ct. at 597. Next, we consider the substantive
reasonableness of the sentence. Id. “Substantive reasonableness
review entails taking into account the totality of the
circumstances, including the extent of any variance from the
Guidelines range.” Pauley, 511 F.3d at 473. While we may presume
a sentence within the Guidelines range to be reasonable, we may not
presume a sentence outside the range to be unreasonable. Id.
Moreover, we must give due deference to the district court's
decision that the § 3553(a) factors justify imposing a sentence
outside the Guidelines range and to its determination regarding the
extent of any variance. Id. at 473-74. Even if we would have
reached a different sentencing result on our own, this fact alone
13
is not sufficient to justify reversal of the district court. Id.
at 474.
The district court used U.S.S.G. § 2C1.1 to determine
Geddings’ base offense level of 14. Geddings argues that the
district court should have applied § 2C1.3 because that section
applies to conflict of interest offenses. We find no error
because the Guidelines’ statutory index lists § 2C1.1 as the
section corresponding to a violation of § 1341.
The district court notified the parties that it was
considering an upward variance from the advisory 33-41 month
Guideline range. In its 30-page order imposing a seven-month
upward variance, the district court analyzed all the § 3553
factors, including the fact that Geddings’ wife has type I diabetes
and that his son suffers from autism. Based on the record, the
district court determined that two factors in particular supported
an upward variance: (1) the need for deterrence, and (2) the harm
caused to the lottery. In light of all the facts of this case, we
conclude that the district court did not abuse its discretion in
applying a seven-month upward variance and sentencing Geddings to
48-months’ imprisonment.
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IV.
We affirm Geddings’ conviction for five counts of mail fraud
and his 48-month sentence.
AFFIRMED
15