Appeals Court Vindicates Zucchet

Tuesday, Sept. 1, 2009 | After an agonizing wait, former San Diego City Councilman Michael Zucchet was vindicated by the Ninth U.S. Circuit Court of Appeals in a ruling issued today, but his former colleague Ralph Inzunza was one step closer to prison.

A three-judge panel upheld Zucchet’s stunning and controversial acquittal by U.S. District Judge Jeffrey T. Miller, noting “there is simply nothing in the record to confirm Zucchet’s participation” in a scheme with a strip club owner to trade campaign contributions for political action.

“Six years after we first presented the government with the reasons why the case should not be brought, after this city lost one of the best city councilmen it has ever had during a time when it desperately needed his services, Mr. Zucchet has been vindicated once again,” said a statement released by Zucchet’s lawyers, Jerry Coughlan and Dennis Riordan.

“He and his wife are tremendously gratified by this result, although it is a tragedy for his family and for this city that they were put through this long and excruciating ordeal.”

At the same time, the judges upheld the guilty verdicts against Inzunza, rejecting one by one his lawyer’s numerous arguments and emphasizing there was clear evidence he promised to help get a no-touching law abolished at strip clubs in exchange for campaign contributions.

“There was no absence of very explicit promises, made directly to the person delivering the contributions, regarding actions Inzunza would take toward repealing the No-Touch ordinance,” the judges wrote.

Still, the case isn’t over.

Defense lawyers and federal prosecutors huddled in their respective offices this morning, digesting the justices’ findings and crafting new legal strategies, while family members and friends of the ex-councilmen alternately celebrated and fretted over the decisions.

The decision will not be official until the U.S. Supreme Court rules in an Alaska political corruption case that deals with the same controversial statute used against Zucchet and Inzunza. That case, regarding honest-services fraud, isn’t expected to be decided until next year, and the outcome may or may not change the 9th Circuit’s decisions regarding the former councilmen. It’s the same case that has delayed progression of the federal corruption case against San Diego municipal pension officials.

Once that matter is resolved and today’s ruling becomes final, both Inzunza’s lawyers and the government may request an en banc hearing — which is a review by the full roster of 9th Circuit judges rather than a three-judge panel. Failing that, both sides may seek U.S. Supreme Court review, which is rarely granted, particularly when there is no dissent among the lower-court panelists, as in this case.

For Zucchet, who was acquitted of seven corruption counts and granted a new trial on two counts, there is a chance the government could decide to pursue a new trial on those remaining counts of honest-services fraud and conspiracy. U.S. Attorney Karen P. Hewitt was reviewing the ruling with her prosecutors this morning, a spokeswoman said.

Hewitt’s office released this statement: “We have reviewed today’s unanimous opinion in United States v. Inzunza and United States v. Zucchet.  In consultation with the Justice Department, we are currently weighing all legal options with respect to these cases. According to the panel’s decision, no activity is expected in the district court until the Supreme Court decides United States v. Weyhrauch (the Alaska case).” 

But things could get complicated because the decision would likely fall to the yet-to-be selected new San Diego U.S. attorney. One of the frontrunners is one of Zucchet’s attorneys, Coughlan.

So the drama continues.

“Everyone should stop holding their breath because they’re going to turn blue waiting for this” to be over, said former San Diego U.S. Attorney Charles La Bella, who is not involved in the case.

“Given that time frame it’s more likely than not that this will fall in lap of new U.S. attorney,” La Bella said. If that person were Coughlan, he would have to recuse himself from the decision. In that situation, either someone within the office would be appointed acting U.S. attorney for that case, or the decision would be made by Justice Department officials in Washington, La Bella said.

The odds are statistically remote that the appeals court or the Supreme Court will agree to hear the cases, since they grant review to very few cases. And, whether the Justice Department would even seek review is a big question mark, considering the decision makers are all new to this case with the new administration.

“More likely than not, this case has been settled by this decision,” La Bella said.

Zucchet and Inzunza were convicted by a jury in July 2005 of accepting money from strip club associates — including Cheetahs owner Michael Galardi and his consultant Lance Malone — in exchange for efforts to repeal a law banning touching between nude dancers and patrons. The law was putting a damper on tips and profits.

Inzunza was sentenced to 21 months in prison and has been free on bond pending appeal; Zucchet was acquitted by Judge Miller, and the government appealed.

The 9th Circuit ruling is certainly validation for Judge Miller, who made the bold move to overturn a jury’s verdict in a high-profile case that divided the community. The appellate judges frequently referred to their concurrence with Miller in the ruling.

In their decision regarding Inzunza, the judges noted their concern that campaign contributions can sometimes be mistaken for illegal bribes if jurors are allowed to speculate on the connection between contributions and a quid-pro-quo promise for official action.

“Our review of the record in this case, however, leads us to conclude that Inzunza’s conviction raises no such concerns,” the justices wrote. “The jury could properly find that Inzunza’s conduct met the quid pro quo requirement. There was no absence of very explicit promises, made directly to the person delivering the contributions, regarding actions Inzunza would take toward repealing the No-Touch ordinance.”

The judges added: “The circumstances of the promises, including their covert nature, their detail, and the deception in carrying them out, were such that the jury could connect them to campaign contributions …”

Neither Inzunza nor his lawyer returned calls seeking comment.

Regarding Zucchet, the judges agreed with Judge Miller on several points, in particular that the time between the receipt of campaign contributions and any action taken by Zucchet was too great to amount to a quid-pro-quo agreement; that Zucchet never seemed to be on board with the plan to repeal the no-touch law; and that testimony by Galardi that he gave the councilmen $10,000 in cash was suspect. A retrial would focus on that issue.

“Large gaps exist in the government’s case against Zucchet,” the judges said. “The evidence suggested a deal between Inzunza and Malone, but no such express understanding involving Zucchet.

In fact, several pieces of evidence suggest that Zucchet was not “on board” or aware of Malone’s bargained-for expectations of him.”

The court continued: “In granting a new trial, the district court necessarily reasoned that the two campaign contributions solicited by Inzunza in early 2002 were too far removed in time to relate to Zucchet’s ultimate agreement to refer the matter to the Committee at the end of April 2003. Therefore, Galardi’s testimony about the $10,000 cash payment in 2003 was the linchpin of the government’s case on these counts. The district court declined to let the verdict stand on Galardi’s unreliable, surprise testimony regarding this payment, a late recollection uncorroborated by recordings where other payments were freely discussed.”

As for a meeting in which Zucchet does seem to take action on behalf of Galardi and Malone by referring the no-touch matter for committee consideration, the judges said:

“The government relies heavily on Inzunza’s dealings with Malone as circumstantial evidence of Zucchet’s guilt, but there is simply nothing in the record to confirm Zucchet’s participation in their bargain. Zucchet’s referral of the matter to the Committee may have been the execution of an obligation to Malone, but it could just as easily have been an innocent political act.”

At that now infamous meeting, Malone had arranged for a strip club employee to pose as a concerned constituent and address the committee.

Friends were alternately happy for Zucchet and troubled about the implications for Inzunza. Both are married fathers of young children.

“I think his friends are extraordinarily happy for [Zucchet], and I count myself among them,” said political strategist John Kern. “I never believed he did anything wrong. I told that to the FBI, the U.S. attorney and anybody else who cared to listen. I think this shows the correctness of the judge’s decision and I hope the U.S. attorney will now see the wisdom of dropping the remaining two charges.”

Friends were calling both men with congratulations and condolences. Kern put it this way: “We feel bad for Ralph and glad for Michael.”

Kelly Thornton is a San Diego-based freelance writer. Please contact her directly at kellythornton7407@yahoo.com with your thoughts, ideas, personal stories or tips. Or set the tone of the debate with a letter to the editor.

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