Posted on 05/28/2004 3:39:45 PM PDT by blam
Grand jury indicts Siegelman, 2 others
Siegelman characterizes charges as 'baseless' attack by Republicans against him and other Democrats Friday, May 28, 2004
By SALLIE OWEN, JOE DANBORN and JEFF AMY
Staff Reporters
Former Alabama Gov. Don Siegelman and his former chief of staff were indicted with a third person by a federal grand jury in Birmingham on charges they illegally rigged bids for medical services, prosecutors announced Thursday.
The 25-page indictment alleges that while he was governor, Siegelman and his chief of staff, Paul Hamrick, manipulated the bid process to help Dr. Phillip Bobo of Tuscaloosa win a multimillion-dollar Medicaid contract.
The contract allowed Bobo's Neighborhood Health Services to handle the Maternity Care Program -- which provides medical services to poor, pregnant women -- in parts of the state.
According to the indictment, Siegelman and Hamrick funneled $550,000 from the state's education budget to the State Fire College in Tuscaloosa in order to create a pool of money that Bobo could use to pay off his competitor. The competitor was to receive separate, fraudulent contracts using the Fire College money, the grand jury charged.
The former governor and Mobile native called the charges "baseless" and repeated his claims made during the preceding investigation that they were crafted by Republicans eager to damage him and other Democrats.
Alice Martin, U.S. attorney for the northern district of Alabama, and Alabama Attorney General Troy King announced the indictments at a 9:45 a.m. news conference in Birmingham Thursday. Officials from the FBI and the U.S. Department of Health and Human Services also participated.
"When people try to rig bids to go to them, that's an offense," said Martin, a Republican appointee.
"I realize this has shaken people's trust in government," said King, adding that citizens should be "encouraged" that lawbreakers will be held accountable.
Siegelman, Hamrick and Bobo all were indicted on one count each of conspiracy, health care fraud and program fraud. In addition, Bobo is charged with two counts of witness tampering and single counts of wire fraud, making a false statement to the FBI and making a false statement to the court.
All charges were federal. No state charges have been filed.
King declined to discuss the possibility of related state charges. In a separate scandal surrounding Siegelman, state ethics charges weren't filed until well after federal ones.
By 1 p.m. Thursday afternoon, Siegelman had released a statement through his attorney, Doug Jones of Birmingham. "This is nothing more than Republican politics at its worst, nothing more than character assassination," Siegelman said in the release.
The former governor has been living in Birmingham and practicing law since he left office in 2003. In the statement, Siegelman said he was scheduled to fly to New York to raise $10 million for Democrats. He and two other ex-governors had organized a fund-raiser for the evening with former President Clinton as one of the headlining guests.
"The charges against me are baseless," Siegelman said. "As the facts come out, I will be proven innocent. At the end of the day, I believe that even the most skeptical -- perhaps even the Republicans who brought these charges -- will be convinced of my innocence."
Martin and King disputed Siegelman's contention that the case is politically motivated.
"It doesn't make any difference to me whether someone is a Democrat or Republican," said King, Gov. Bob Riley's former legal adviser. Riley, a Republican, appointed King to the vacant attorney general's office in March.
Hamrick was out of his office at the Matrix Group, a Montgomery-based political consulting firm, and could not be reached for comment. His attorney, Ron Wise of Montgomery, said he had not seen the indictment because he had been in trial all day. He confirmed that he spoke with Hamrick about it but declined to comment on any aspect of the case.
Bobo's attorneys, William N. Clark and L. Drew Redden of Birmingham, called the new charges "outrageous."
In 2001, jurors found Bobo guilty of fraud for trying to bribe a competitor for a Maternity Care Program contract. But the 11th U.S. Circuit Court of Appeals reversed Bobo's conviction in 2003, saying the prosecution never clearly stated what law Bobo broke. The federal government didn't appeal the reversal, and Bobo quickly regained his doctor's license.
"The indictment primarily follows the same script and scenario used previously, which the 11th Circuit rejected on appeal," said Clark and Redden's statement, noting that they believe the new charges amount to double jeopardy.
Martin said double jeopardy, which prevents people from being tried twice on the same charges, would not apply to Bobo because when the appeals court threw out his conviction, it erased it from the record. "I equate it to the annulment of a marriage," she said. "Legally, it's as if it didn't occur."
"Dr. Phillip Bobo is a dedicated physician who has meant much to his community and this state," the attorneys said. "When the law is re viewed and the evidence heard, we fully expect Dr. Bobo to once again be completely exonerated."
During a 2:30 p.m. news conference at his attorney's Birmingham office, Siegelman said he was "blindsided" by the charges.
The grand jury, King said, finished its work Wednesday afternoon or Thursday morning. The timing, he said, was driven in part by federal statutes of limitation, meaning that prosecutors were running out of time to pursue some of the charges.
The indictment cites things that happened as long ago as 1998, with many of the key events occurring in 1999.
Siegelman was elected governor in November 1998 and took office in January 1999.
A botched bid:
The indictment mentions nine unindicted co-conspirators without naming them directly. The co-conspirators are described as lobbyists, a lawyer for the state Medicaid agency, a member of Siegelman's transition team, the acting Medicaid commissioner, the governor's executive assistant, an Alabama state senator with influence over the education budget, an administrator at the University of Alabama and a business partner of Bobo's.
Citing statements from those figures, the indictment describes a scheme that is alleged to have started in the earliest days of the Siegelman administration.
Bobo, the state's emergency medical director, supported Siegelman's campaign, then helped him select the state's new Medicaid commissioner. Bobo also served as a director of the emergency medical services program at the Fire College. In addition to his positions within state agencies, Bobo owned a string of clinics and was majority owner of Neighborhood Health Services, a separate company.
Bidding for the Maternity Care Program contract opened in October 1998, a month before Siegelman won election, and bids on the program in each of the Alabama Medicaid Agency's 13 districts were due that December.
The indictment charges that Siegelman aides halted the bidding until the new administration "had time to review the matter," and delayed the bid deadline until February 1999, a month after Siegelman took office.
Meanwhile, the indictment states, Hamrick called two different state lawyers to try to convince them that the Maternity Care contracts should be considered professional services contracts that would not be subject to the bid process.
Neighborhood Health bid on the work, as did the Alabama Health Network, which is affiliated with the University of Alabama. That March, the state awarded federally funded contracts to Neighborhood Health for five districts, including District 4, which contained Tuscaloosa County.
But according to the indictment, "Based on the number of projected births in District 4, Neighborhood Health Service's bid would have cost over $1 million more than the bid of Alabama Health Network."
Officials at the Alabama Health Network immediately notified the state they planned to challenge the District 4 award, the indictment states, and four days later, the state declared that all of the awards were merely preliminary. In May 1999, the state reopened the bidding for District 4.
"The stated reason for the re-bid was 'confusion in the awarding process,'" the indictment reads.
With bids in flux, Siegelman, Hamrick and Bobo set about trying to fix the process so that Bobo's company would win the contracts it wanted, the grand jury charged. Bobo asked that Siegelman move $550,000 into the Fire College's budget, the indictment states, adding that the money would be used to buy off Alabama Health officials.
In exchange, Alabama Health was to drop its challenge to the District 4 bid and back out of its contract for District 7, the indictment alleges. Bobo, Siegelman and Hamrick are alleged to have made the overtures through a network of lobbyists, politicians and administration officials, including former Siegelman aide Nick Bailey, who pleaded guilty to accepting bribes in a warehouse construction project.
Thursday's indictment mentions Bailey in its final paragraph, in which it charges that Bobo perjured himself during his 2001 trial when testifying about whether Bailey flew from Montgomery to Bobo's home in Tuscaloosa to pass along inside information about the bids.
Bailey's sentencing has been postponed repeatedly, while he has cooperated with prosecutors. Bailey's attorney did not return a call seeking comment.
Among the officials approached about the alleged Maternity Care scheme, prosecutors contend, were former University of Alabama President Andrew Sorensen, Fire College Executive Director Bill Langston and a doctor and administrator at Alabama Health.
The indictment alleges no wrongdoing on the part of those four men. The fact that the document names them is a strong indicator that they are not among the unindicted co-conspirators, whom prosecutors cannot name because they could still bring charges against them.
Additionally, the grand jury accused Bobo of tampering with two government witnesses: Amy Herring, a Montgomery lobbyist who had worked for him, and Boolus Boohaker, a Baton Rouge, La., lawyer.
Five years of digging:
Alabamians have known of an investigation into Siegelman's administration since at least July 1999. The Democrat's administration was hounded by numerous allegations of unethical conduct, which played prominently in opponents' efforts to defeat him in the 2002 elections.
In 2001, GH Construction, a firm secretly owned by Montgomery lobbyist and landfill developer Lanny Young, was picked by the Siegelman administration to oversee a plan to build two state warehouses. After questions posed by the Mobile Register, the project was halted days before the planned sale of $20.7 million in bonds to finance the project.
Top Siegelman aide Bailey, according to his plea deal, took the bribes in exchange for influencing state contracts and, in Young's case, for a favorable ruling on taxation of hazardous waste. The ruling netted a $500,000 fee from Waste Management Inc. for Young.
Young admitted his involvement and is scheduled for sentencing June 9. His attorney indicated the sentencing date could be delayed, but refused to explain.
Four other men were convicted in the Goat Hill deal.
Questions have also arisen about a number of other actions by the Siegelman administration, including:
The purchase of stock by Siegelman and Bailey in a company that was targeted for a takeover shortly after by Anthony Fant. Fant, a former Alabama Democratic Party treasurer and longtime Siegelman supporter, also received $100,000 from proceeds of the GH Construction deal from Bailey to pay off debts.
The 1999 sale of Siegelman's former Montgomery house at twice its appraised value.
The award of lucrative state contracts to a number of politically connected computer companies.
Spending from Siegelman's contingency fund.
No criminal charges have been brought against Siegelman as a result of any of those matters and Siegelman has said he did nothing wrong in each case. He did, however, repay the state $33,791 after a contingency fund audit.
Next steps:
Jones, Siegelman's attorney, did not return calls seeking comment Thursday. A Democrat, Jones preceded Martin as U.S. attorney in Birmingham, and held that post at the time the Medicaid scheme is alleged to have taken place. It was un clear whether federal investigators were looking into the case while Jones was U.S. attorney.
Court officials were set to issue a summons either late Thursday or today for each of the three to appear in U.S. District Court for their arraignment, which was set for June 10. As a matter of routine, the defendants are expected to plead their innocence at the arraignment.
By statute, a conviction on any of the health care fraud, theft and witness tampering charges is punishable by up to 10 years in prison and fines up to $250,000. Each of the other charges carries a potential sentence of up to five years and fines. If found guilty of stealing public funds, the defendants could be ordered to pay restitution.
King declined to answer a number of specific questions about the investigation and the resulting indictment, though he did not rule out that the investigation is continuing on other fronts. "There are always ongoing investigations," he said.
BTW, Goat Hill is the name for the Alabama Capitol.
Nobody has to be eager to "Damage the Democrats". They are perfectly capable of doing that to themselves.
MY wish now is to see him in federal prison greens picking up trash, mowing the lawn, or painting the building in which I work on Maxwell-Gunter
Do you think Nick Bailey will turn on Siegelman? Or, has he already?
Always felt the need to clean off my TV screen after every appearance.
This is a purely political attack on Siegelman. It's been quite well established by now that democrats aren't responsible for any laws that they break, so politics is the only motivation left for these charges. The prosecutor should drop them immediately and put himself to good use raiding the nearest conservative radio host's doctor's office. </DU>
I'm coming home this summer. This is going be good! Alabama politics at its best. I knew Sigelman was a crook. A more smarmy person I have yet to meet.
Easy answer: it's even in the article!
"Bailey's sentencing has been postponed repeatedly, while he has cooperated with prosecutors."
In truth, Siegelman should have gone down when he was caught fixing speeding tickets for his staff early on in his tenure.
Disclaimer: Opinions posted on Free Republic are those of the individual posters and do not necessarily represent the opinion of Free Republic or its management. All materials posted herein are protected by copyright law and the exemption for fair use of copyrighted works.