Corruption—Paul H. Richards II

The former mayor of Lynwood, California, along with two associates, has been convicted on more than 20 corruption-related charges.^[1] Paul H. Richards II, who served as mayor for seven terms, was found guilty of “honest services” mail fraud, mail fraud, extortion, money laundering and making false statements.^[2] Mr. Richards set up a consulting firm, which was ostensibly owned by his sister, that was awarded a series of unnecessary and exorbitant consulting contracts that had the potent ional to cause the City of Lynwood to lose over $2.5 million.^[3]

Also convicted were Mr. Richard’s sister, Paula Cameo Harris, and Bevan Atlee Thomas, a former consultant to the city of Lynwood.^[4] Ms. Harris was convicted of mail fraud, money laundering, and perjury; Mr. Thomas was convicted of mail fraud, money laundering, bribery, and perjury.^[5] The three individuals constructed a scheme in which the consulting firm, Allied Government Services [hereinafter AGS], received three lucrative contracts initiated and approved by Mr. Richards.^[6]

In the first contract, Mr. Thomas obtained a “nuisance abatement” consulting contract, under which he would be paid up to $25,000 per month for performing consulting services for the city.^[7] However, Mr. Thomas secretly subcontracted his work to AGS, which then subcontracted to other friends of Mr. Richards; taxpayers ultimately paid five times what they should have for the work performed.^[8]

In the second contract, Mr. Richards forced the city’s trolley operator to retain AGS as a “transportation consultant” in exchange for receiving a five-year extension on its contract with the city^[9] AGS ultimately did little or no work for the trolley operator under the contract, yet still received more than $60,000.^[10]

In the third contract, Mr. Richards orchestrated a deal between the city and AGS in which AGS became the city’s exclusive representative to negotiate the construction of billboards along Interstate 105.^[11] AGS received a 20% contingency fee and the city paid all its expenses; AGS stood to earn $960,000 for no actual work except for hiring one of Mr. Richards’ friends as an attorney.^[12] No competing bids for the project were sought.

Honest Services Fraud
When a person is convicted of some type of “honest services” fraud, it really means that 18 U.S.C. § 1346 is being used. Under section 1346, the term “scheme or artifice to defraud,” as found in the mail fraud statute, is understood to include a scheme or artifice to deprive another of the intangible right of honest services.

Mail Fraud
Under 18 U.S.C. § 1341, it is a crime for a person to devise a scheme or artifice to defraud, and then use the nation’s mail system to carry out that scheme. The punishment for a violation of section 1341 is a fine, imprisonment for up to 20 years or both. If a financial institution is harmed in the scheme, the fine can be as high as $1,000,000, and the prison sentence can be as long as 30 years.

Extortion
Under 18 U.S.C. § 875(d) it is a crime for a person, with intent to extort anything of value from a person, to transmit in interstate or foreign commerce any communications threatening to accuse the addressee or any other person of a crime. The punishment for a violation of this section is a fine, imprisonment for up to two years, or both.

Money Laundering
Under 18 U.S.C. § 1957(a), it is a crime for a person to engage in a monetary transaction in criminally derived property worth more than $10,000 which is derived from specified unlawful activity. The unlawful activity in question here is mail fraud.^[13] The punishment for this type of money laundering violation is a fine, imprisonment for up to 10 years or both.^[14]

False Statements
Under 18 U.S.C. § 1001(a)(2) it is a crime for a person to make any materially false, fictitious, or fraudulent statement or representation in any matter within the jurisdiction of the executive, legislative, or judicial branches of the United States government. The punishment for a violation of this section is a fine, imprisonment for up to five years, or both.

Perjury
Under 18 U.S.C. § 1623(a), it is a crime for a person who is under oath to make any false material declaration to a grand jury. The punishment for a violation of section 1623(a) is a fine, imprisonment for up to 5 years, or both.

Bribery
Under 18 U.S.C. § 201(b)(1)(C), it is a crime for any person to corruptly give anything of value to any public official with the intent to induce the official to do any act in violation of that person’s lawful duty. The punishment for a violation of this section is a fine, imprisonment for not more than 15 years, or both.

All three individuals are expected to be sentenced on February 13, 2006.

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[1] US Attorney’s Office, Press Release: Former Mayor of Lynwood and Two Associates Found Guilty of Federal Corruption Charges, Nov. 1, 2005, available here.
[2] Id.
[3] Id.
[4] Id.
[5] Id.
[6] Id.
[7] Id.
[8] Id.
[9] Id.
[10] Id.
[11] Id.
[12] Id.
[13] 18 U.S.C. § 1956(c)(7)(A) (incorporating the definition of an offense as found in 18 U.S.C. § 1961(1)).
[14] Id. § 1957(b)(1).