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How earlier case affected latest verdict

01:00 AM EDT on Monday, June 2, 2008

By Mike Stanton

Journal Staff Writer

Once upon a time, two executives from a familiar Rhode Island company hired a state senator named John Celona as a consultant.

They claimed they were paying Celona to promote their company on his cable-access television show, and among senior citizens, with whom the senator was very popular.

But then the FBI and federal prosecutors came along, and charged the executives with giving Celona a sham job as a bribe for political influence.

The two executives wound up on trial for a crime called “honest services” mail fraud –– namely, using the federal mails to deprive Rhode Islanders of the honest services of one of their elected officials.

The executives wound up being convicted, after the jury deliberated for seven days.

If that sounds like the wrong ending to a script that played out in federal court last week with the acquittal of two former CVS executives, that’s because it was a different trial.

In October 2006, two former executives of Roger Williams Medical Center were tried and convicted of similar charges stemming from their hiring of Celona as a consultant.

But a flawed instruction by the judge to the jury in the Roger Williams case may have helped set the stage for a different jury instruction –– and a different outcome –– in the CVS trial.

In January of this year, with the case of former CVS vice presidents John R. “Jack” Kramer and Carlos Ortiz bound for trial, the U.S. 1st Circuit Court of Appeals, in Boston, overturned the convictions of former Roger Williams executives Robert A. Urciuoli and Frances P. Driscoll.

Lawyers for the Roger Williams defendants argued that some of the alleged crimes were not really crimes –– that Celona was not compromising his role as a senator, for example, when he lobbied local cities and towns to direct municipal ambulance runs to Roger Williams.

The appellate court didn’t challenge the Roger Williams convictions where the evidence showed Celona acting on legislation. But it sent the case back for a new trial, ruling that the trial judge, Ernest C. Torres, had improperly instructed the jury to consider Celona’s actions regarding the ambulance runs.

In its 25-page decision, the appellate court discussed the unsettled state of the law governing honest-services mail fraud.

“The central problem,” said the decision, “is that the concept of ‘honest services’ is vague and undefined. … This court has wrestled with the statute in a number of cases.”

Not all “legal or ethical abuse” constitutes a theft of honest services, the 1st Circuit noted. And defining the crime is even more difficult in Rhode Island, which has a part-time legislature.

“In Rhode Island’s ‘citizen legislature,’ legislators serve part time, are modestly paid and ordinarily have other jobs,” the decision said.

Indeed, the 1st Circuit said, even the “legitimate” promotional work that Celona did for Roger Williams “traded in part on the reputation, network and influence that comes with political office. That much is an unavoidable result of Rhode Island’s decision to retain a system of government in which legislators hold outside employment without very stringent restrictions.”

And in a telling statement for the coming CVS trial, the 1st Circuit warned that the judge who hears the new trial for Roger Williams should take care to consider Rhode Island law when instructing the jury.

Like the CVS defendants, the Roger Williams defendants asked the judge to instruct the jury that Rhode Island law permitted Celona to vote on legislation affecting Roger Williams, even though he was a paid consultant, so long as the legislation affected all hospitals equally.

The judge, Torres, rejected that the request.

But last Friday, in the wake of the 1st Circuit decision, Chief U.S. District Judge Mary M. Lisi instructed the jurors in the CVS case that it was permissible under Rhode Island law for Celona to be a paid consultant to CVS and to consider legislation affecting the drugstore chain, as long as the legislation affected all drugstore companies equally.

Furthermore, Lisi instructed the jury that CVS executives could communicate with Celona regarding such legislation. And she said that it was Celona’s duty, as the elected official, to recognize when a conflict arose and to deal with it, including seeking guidance from the Rhode Island Ethics Commission — which he told Kramer and Ortiz he had done.

With Torres retired from full-time status, the Roger Williams retrial has been assigned to Lisi.

THE CVS and Roger Williams cases grew out of Operation Dollar Bill, the wide-ranging federal corruption probe of influence peddling at the Rhode Island State House.

Celona and former House Majority Leader Gerard M. Martineau pleaded guilty to selling their office, agreed to cooperate and are in prison. Prosecutors also reached a deferred prosecution agreement with Roger Williams Medical Center and struck a deal with Blue Cross & Blue Shield of Rhode Island forcing internal reforms and requiring the insurer to pay $20 million for affordable health care in Rhode Island.

Several other politicians have become the subject of investigations by a task force that includes the FBI, the U.S. Department of Labor and Rhode Island State Police.

Investigators have asked questions about Senate President Joseph A. Montalbano’s legal work for banks and former Senate President William V. Irons’ insurance work involving Blue Cross and CVS. They also have looked at the investment-advice business of Senate Finance Committee Chairman Stephen D. Alves and Senate deputy majority whip Daniel DaPonte, as well as the dealings of former senator and Blue Cross lobbyist Thomas Lynch. And they have looked into the relationship of two state representatives, John DeSimone and Robert Flaherty, to the Beacon Mutual Insurance Co.

All of those officials have denied any impropriety, and no charges have been filed.

Last winter, when he announced the Blue Cross settlement, U.S. Attorney Robert Clark Corrente said, “People are just sick of this culture in which legislators take money from entities.”

While that may be true, Darrell West, a Brown University political science professor, says the CVS case illustrates the challenges of prosecuting corruption in Rhode Island.

“In a citizen legislature, it’s perfectly legal to have jobs on the side,” he said. “You can’t prevent them from earning a living.”

What West would like to see, however, is a tightening of the so-called “class exception,” which allows lawmakers to vote on bills affecting their livelihood as long as it affects everyone in their profession, or class, the same.

Under the class exception, for example, legislators who belong to a public employees union can vote on matters affecting unions.

“It’s something the state should think about tightening up,” said West. “There are a lot of financial conflicts involving large classes of people that may represent a larger dollar amount than an old-fashioned bribe.”

To secure a corruption conviction, said West, “you would have to find a smoking gun –– that a legislator accepted money for a concrete action. And even then, it’s not a slam dunk. The rules allow a defendant to say that the money was paid for legitimate duties.”

Still, West said he believes the jury got it right in the CVS case, given Celona’s credibility problems and the paucity of evidence that Kramer and Ortiz had directed Celona to act on legislation specifically benefiting CVS.

Ironically, for all the lies and contradictions that defense lawyers attacked during Celona’s testimony, it was something that Celona didn’t say that also undermined the charges. He never said that Kramer and Ortiz asked him to support CVS on pharmacy-choice legislation.

The absence of any such testimony, coupled with the judge’s instructions on the law governing Rhode Island’s “citizen legislature,” left the jury with little choice but to swiftly acquit, which it did after just 90 minutes of deliberations.

During his closing argument, Kramer’s lawyer, David B. Fein, alluded to the taint of Rhode Island corruption and asked jurors not to let it unfairly color their deliberations.

“You may not like the system of government in Rhode Island,” said Fein, who is from Connecticut.

But, Fein said, that was a debate for another day — and not for the jury room.

mstanton@projo.com

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