Posted on 08/23/2005 10:24:31 AM PDT by SmithL
NASHVILLE - John Stamps, longtime friend of former Gov. Don Sundquist, was sentenced to two years in prison Monday for lying to keep a government contract and for dodging taxes on income that included $2.6 million from lobbying.
"I think your offense has really harmed the integrity of Tennessee state government," said U.S. District Court Judge Todd Campbell in imposing the two-year term that is at the top end of what is authorized under federal sentencing guidelines.
Assistant U.S. Attorney Zach Fardon had asked the judge to deviate from the guidelines and impose a harsher sentence, an indication that Stamps refused to cooperate in the long-running investigation into state contracting while Sundquist was governor.
But Stamps' attorney, Robert S. Peters, asked for a lighter sentence to be spent in home confinement. He said tax evasion was the most serious charge and about half of defendants in such cases get probation.
Campbell rejected both motions and stuck with the sentencing guidelines that call for a sentence of 18 to 24 months.
The judge went with the high end of that guideline after accepting the prosecution's argument that Stamps used "sophisticated means of concealment" to avoid paying $127,467 in taxes.
After the investigation got under way, Stamps paid most of the taxes due in 2003. Campbell said he still owes $21,549 and ordered that amount be paid to the government when Stamps begins serving two years of supervised probation that will follow his two years in prison.
Under the guidelines, the judge could also have ordered Stamps to pay $40,000 in fines. But he said the repayment of taxes, a $500 mandatory fine and a 24-month prison term "amount to sufficient punishment."
The false statements - Fardon characterized them as "bald-faced, aggressive lies" - came in a memo Stamps sent to Warren Neel, then state commissioner of finance, dated July 25, 2002. It was sent, Fardon said, after Neel raised questions about renewing a state contract with Workforce Strategists, a company Stamps established in 1999.
Earlier this year, Joanna Ediger, a former official in the state Department of Labor, was sentenced to three years in prison on fraud charges for her role in arranging the award of the original contract with Workforce Strategists. The company was paid a total of $1.9 million - federal funding funneled through the state.
Fardon argued that Stamps, founder of the company, deserved at least as long a sentence as Ediger. Peters said such things were irrelevant.
"To sentence a man on the basis of his ties to Gov. Sundquist, Alex Fischer, Joanna Ediger, the job of lobbying or the Republican Party is not appropriate," Peters told the judge.
Fischer served in Sundquist's cabinet and his name has come up in dealings with some questioned contracts, though he has not been charged with any wrongdoing.
The judge said the charges against Ediger and Stamps involved "completely different crimes" and that Ediger was convicted after a trial, rather than pleading guilty.
Still awaiting trial is Al Ganier, another Sundquist friend and business associate of Stamps, who faces charges related to a contracts with Education Network of America (ENA), a company founded by Ganier.
IRS investigator David Martin testified at the hearing that Privatization Strategists, another firm that Stamps established as "a lobbying entity," had income of $2.6 million from its start in 1997 through 2002.
To avoid taxes, Martin said Stamps had taken Privatization checks from lobbying clients and deposited them in his stock brokerage account or cashed them and use the proceeds for personal expenses. He mentioned one check of $20,000 from ENA.
Stamps also claimed business deductions for Privatization that were actually for personal expenses, putting some of those expenses on a credit card in the name of "Trademark Insurance," which Fardon said was a "shell company."
Stamps also put an unnamed "close relative" on the payroll to cover college expenses. Stamps wife was also on the payroll as "social director for the lobbying function" of Privatization Strategists, Fardon said.
After Stamps' sentencing, Fardon and U.S. Attorney Jim Vines declined to discuss whether Stamps had cooperated with investigators as anticipated when the guilty plea was negotiated.
Peters said that Stamps "has told all that he knows" and that "the government has made a decision that apparently concludes things."
Surely Sundquist is eventually going to get it. The lady that worked for him that set it up (under his directive) goes to jail, and the person on the receiving end (Stamps) goes to jail. The only logical connection is Sundquist.
I guess he is busy sitting on the Medicaid board (or whatever it is he was appointed to)... ridiculous.
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