Was a proposed $4-million payment to former House Speaker John B. Harwood's law firm a bribe, a bonus or just compensation? That's the focus as testimony begins in U.S. District Court.

10:42 AM EST on Tuesday, February 1, 2005

BY MICHAEL CORKERY
Journal Staff Writer

PROVIDENCE -- It was a good year for Lincoln Park in 2000. Revenues were up, and the biggest threat to business -- a proposed Narragansett Indian casino -- died again in the General Assembly.

But the time had come for payback, according to a company memo presented yesterday in U.S. District Court.

"I'm now wondering if it's incumbent upon us to reflect our gratitude." Lincoln Park's former general manager Daniel Bucci wrote in the memo. "A wink is as good as a nod to a blind man."

In the opening day of the bribery conspiracy trial, the prosecution portrayed Bucci as a man convinced that continued success at his gambling operation depended on bribing then-House Speaker John B. Harwood.

According to the federal indictment, Bucci proposed paying $4 million to the speaker's law firm, McKinnon and Harwood.

Defense lawyers argued in opening statements yesterday that the proposed payment was not a bribe, but a bona fide legal payment to Harwood's law partner, Daniel V. McKinnon, who served as general counsel for Lincoln Park, as well as its political consultant.

"Mr. McKinnon was a person who had done great work for Lincoln Park, and he deserved credit for its success," said C. Leonard O'Brien, who represents the former chief executive of Lincoln Park's British parent company, Wembley plc.

McKinnon did not accept the proposed payment, and Assistant U.S. Attorney Craig Moore told the jury yesterday the prosecution's evidence will not address whether Harwood knew about the idea.

Nonetheless, the trial is a window into how former executives at Lincoln Park believed business was conducted at the General Assembly. It sheds light on the nexus of Rhode Island's gambling industry and state government, and how one company allegedly sought to influence public policy.

Company memos and faxes, presented to the jury yesterday, detailed the political strategy at Lincoln Park.

Francis "Skip" Sherman, a former Wembley USA executive who was based in Colorado, took the stand yesterday for the prosecution and described company discussions in 2000.

That year, Lincoln Park executives wanted to expand the number of lucrative video lottery terminals and gain permission to run coin-drop slot machines.

But they also worried about the threat of the Narragansetts' proposed casino, which they thought could reduce revenue at Lincoln Park by 50 percent to 75 percent.

According to a confidential company memo, "the continuation of strong political relationships is essential to the current market conditions and minimizing efforts of expansion into our gaming market."

Bucci -- Sherman testified yesterday -- had his own ideas for how to maintain those market conditions.

In preparation for a company meeting, Bucci wrote a memo dated Aug. 21, 2000, describing what he believed to be the mood among Lincoln Park's supporters:

"I'm sensing a yet unspoken undertone that we are acquiring the perception of being ungrateful. I wonder if it's reasonable to assume that we are expected to be grateful."

Four days later, company executives met in Boston. Sherman said Bucci raised the idea of a payment to McKinnon, explaining that it was necessary to maintain relationships. "I told him I thought it was inappropriate," Sherman said.

On Oct. 5. 2000, Bucci sent a fax to Sherman detailing a "5 year strategy for Lincoln Park."

According to the fax, presented to the jury yesterday, Bucci said anyone who "champions" coin-drop machines and additional video lottery terminals at Lincoln Park would be in the "firing line."

Bucci mentioned again the idea of a "six figure" payment to the firm McKinnon and Harwood.

"My eggs are in the coin basket. I honestly believe it is achievable if a reward incentive component is introduced," Bucci wrote, according to the memo.

And again, Sherman said he voiced his opposition to the proposed McKinnon payment.

"I thought it would be improper and illegal," Sherman testified yesterday.

Sherman was the first of many witnesses expected to take the stand in the Lincoln Park trial. His testimony will resume today.

"It's essential that you know there is another side to this story," O'Brien, a defense lawyer, told the jury in his opening statement.

O'Brien said that his client Nigel Potter, the former CEO of Wembley plc, never believed that the proposed payment to McKinnon was meant as a bribe to the House speaker. Potter is charged with Bucci in conspiring to bribe a public official.

O'Brien said the discussion about the proposed payment was not a secret. When considering the proposal, the Wembley board of directors in the United Kingdom obtained the opinions of an accountant and independent gambling expert.

The board never approved the proposal, and neither did McKinnon. Lincoln Park's lawyer, John A. Tarantino, said McKinnon would not accept the offer because he was concerned that, "when the bonus was made public, it would be criticized as being excessive."

McKinnon himself may take the stand, along with several Wembley board members and the company's current chief executive officer, Mark Elliott, who was granted immunity, Tarantino said.

Defense lawyers would not say yesterday whether Harwood would be called to testify.

U.S. District Judge Mary M. Lisi is presiding over the trial.