Case 2:10-cr-00186-MHT-WC Document 2452 Filed 07/09/12 Page 1 of 13

UNITED STATES DISTRICT COURT MIDDLE DISTRICT OF ALABAMA NORTHERN DIVISION UNITED STATES OF AMERICA v. RONALD E. GILLEY, Defendant. ) ) ) ) ) ) )

CR. NO. 2:10cr186-MHT

UNITED STATES SENTENCING MEMORANDUM Defendant Ronald Gilley is before the Court for sentencing, having pled guilty to a long running bribery conspiracy that is unparalleled in scope in both the number of public officials it targeted as well as the sheer value of the bribes. The facts of his crimes are not in dispute Gilley has signed a detailed factual basis, and has testified on two occasions, describing the corruption scheme at length in separate trials. All told, Gilley has admitted offering bribes to seven different state legislators and, in one instance, attempting to launder the bribe payments so as to hide their illicit purpose. The enormity and seriousness of Gilleys crimes merit a lengthy term of imprisonment. The United States agrees with the Probation Offices calculations under the United States Sentencing Guidelines, which provide a Total Offense Level of 39 with a sentencing range of 262-327 months. Gilley, however, has offered substantial assistance in the investigation and prosecution of others, and the government hereby moves for a downward departure. Based on the relevant factors under 18 U.S.C. 3553, balanced against the totality of Gilleys cooperation, the government recommends a sentence of imprisonment of 131 months.

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I.

Background In the mid to late part of the last decade, Gilley was a man of substantial financial means,

who owned and operated entertainment and development businesses. In his quest for more, Gilley decided to invest in the electronic bingo business and the unparalleled profits it would bring him. When the Alabama state government began to challenge the ability of Gilley and others to operate electronic bingo machines, Gilley resolved to protect his investment in electronic bingo, including by bribing state legislators when necessary. In 2009 and 2010, Gilley conspired with Milton McGregor1, Jarrod Massey, Jennifer Pouncy, and others to commit bribery to pass pro-gambling legislation, which in 2010 took the form of Senate Bill 380 (SB 380). Had SB 380 become law, its effects would have been extraordinarily far reaching a state-wide referendum to amend the Alabama constitution. Not only could the corrupt scheme have changed the bedrock of Alabama law, but it likely would have led to limitless profits for Gilley and McGregor. Their joint financial motive meant they and their coconspirators were prepared to pay colossal sums of money to buy the votes they needed, promising millions of dollars of bribes to public officials.

Although McGregor and many of Gilleys other coconspirators were acquitted by a jury, it is appropriate for the Court to consider their conduct in sentencing Massey. First, as the Court found on two separate occasions, the evidence at trial proved by a preponderance the existence of a bribery conspiracy involving all of the acquitted defendants. (See, e.g., Doc. No. 1916 (Courts conclusion that the evidence established a conspiracy among the charged defendants). The same preponderance standard governs the Courts factual determinations at sentencing. United States v. Whitesell, 314 F.3d 1251, 1255 (11th Cir. 2002). Moreover, Gilley himself has admitted conspiring with McGregor, Thomas Coker, Jarrell Walker and others to bribe Larry Means, James Preuitt, Quinton Ross, and Harri Ann Smith. 2

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A.

December 2009 - March 2010: Bribery of Senator Harri Ann Smith

Gilleys bribery of legislators essentially began when he funelled two $20,000 checks through Jarrod Massey to Senator Harri Ann Smiths Congressional campaign in the summer of 2008. Smith came to Gilleys office after receiving the fruits of this $40,000 contribution in the form of conduit campaign contributions and declared, Im yours. From here on you just tell me what you want and Im yours. (Gilley Test., 6/23/11 Trans. at 282). From that point forward, Gilley understood and intended to give Smith campaign contributions in return for her official action and assistance, including her yes vote on SB 380 as well as her assistance in recruiting other legislators to support the proposal. Ultimately, Gilley pled guilty to Count 13 of the Indictment, a substantive count of 666 bribery arising from Gilleys promise to give Senator Smith at least $400,000 in campaign funds to influence and reward her in connection with an upcoming vote on SB 380. B. March 2010: Money Laundering of $200,000 in Bribe Payments to Smith

On March 11, 2010, Smith solicited an enormous sum from Gilley - $400,000 in campaign contributions. (Ex. J-172). To hide the true nature of this money (i.e., that it was a bribe payment from Gilley), Smith and her campaign manager dictated a series of maneuvers. At Smiths request, the first installment of $200,000 was broken up into four separate $50,000 checks, each of which was directed to a different political action committee (PAC). (See Ex. 1066 (email from Heartsill to Gilley with names of four PACs)). Then, Smith directed that those PACs pass the money through yet another series of PACs. (See Ex. J-197 (Smith telling Gilley not to worry about the $50,000 payment to the Real Democrat PAC cause what were gonna do is put it through another). In the end, the money laundering was interrupted when the

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investigation went overt, and the $200,000 remained with the intermediate PACs rather than being paid out to Smiths campaign. Gilley pled guilty to Counts 34-37 of the Indictment, charging him with a substantive count of money laundering for each of the four $50,000 checks. C. March-April 2009: Attempted Bribery of Representative Benjamin Lewis

Gilley used Smith to identify other legislators that might be receptive to exchanging their votes on pro-bingo legislation for bribes. In 2009, Gilley attempted to bribe Representative Benjamin Lewis. Unbeknownst to Gilley, Lewis was cooperating with the governments investigation and secretly recorded a call during which Gilley assured Lewis that the level of support Lewis had been getting aint but a drop into the bucket to what you will get ... all wed ask you to do is give to people opportunity to vote on it. (Ex. J-16 at 4). As part of his agreement, Gilley pled guilty to Count 2, a substantive count of 666 bribery involving the offer of $200,000 to Lewis to influence and reward Lewis in connection with a vote on the 2009 pro-gambling legislation. D. February 2010: Attempted Bribery of Senator Scott Beason

In February 2010, Smith led Gilley to believe that he could purchase a yes vote from Senator Scott Beason on SB 380. On February 18, 2010, Gilley, McGregor, and Massey met with Beason. Unbeknownst to all three, Beason was cooperating with the governments investigation and tape recorded the meeting. During that meeting, the group discussed giving Beason public relations consulting work, with Gilley telling Beason, Well tie you in our, well tie you into our ... our entertainment ... PR firm, which is the biggest in the country. (J008 at 47:14-15). In the days that followed, Massey with Gilleys knowledge and consent met with

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Beason to expand on the details of the PR firm bribe, offering a million dollars of business that is going to come through that PR entity, one way or the another [sic], you know, annually. (Docket No. 300, Massey Fact Basis at 16). As a result, Gilley pled guilty to Count 4, a substantive 666 bribery count stemming from Gilley and Masseys promise to Beason of $1 million annually as income from, or an equity interest in, a public relations entity, to influence and reward Beason in connection with his vote on SB 380. E. March 2010: Bribery of Senator Preuitt

On March 2, 2010 the day before the initial Budget Isolation Resolution (BIR) vote on SB 380 Gilleys attention focused on Senator James Preuitt. During an intercepted phone call with Massey, Gilley essentially endorsed Masseys suggestion that they purchase trucks from Preuitts automobile dealership if necessary to secure Preuitts vote. (Ex. J-024 at 2). After the failed BIR vote, Gilley approved Masseys idea to have Pouncy communicate to Preuitt (1) that Gilley would fund Preuitts reelection campaign, and (2) that Gilley had $1 million to $2 million to play with. (Doc. No. 300, Massey Fact Basis at 32). On March 22, in a 22minute call from a drop phone, Gilley himself confirmed to Preuitt that, in return for Preuitts yes vote, Gilley would provide (1) significant in-kind campaign contributions (in the form of a country music concert fundraiser); (2) free campaign assistance from political consultant Jarrell Walker; and (3) a free political poll. Gilley pled guilty to Count 8 of the Indictment, a substantive 666 bribery count involving the global offer of at least $2 million in direct and in-kind campaign contributions to Senator Preuitt to influence and reward Preuitt in connection with the upcoming vote on SB 380.

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F.

March 2010: Bribery of Senator Means

Late in March, 2010, Senator Larry Means asked Jennifer Pouncy for $100,000 in campaign contributions, a request that Pouncy, Massey, and Gilley all viewed as the solicitation of a bribe. On March 24, Massey called Gilley to tell him, with regard to Means ... Hes asking for $100,000, if he votes for this bill. (Ex. J-75). True to form, Gilley immediately disconnected the call, switched to his drop phone, called Massey back, and told Massey that Means can 100% count on our support. (Ex. J-76). As a result, Gilley pled guilty to Count 5, charging him with a substantive count of 666 bribery involving the offer of $100,000 in campaign contributions in return for Means yes vote on SB 380. G. December 2009 - March 2010: Bribery of Senator Ross

In late December 2009 or early January 2010, Senator Quinton Ross called Pouncy to solicit $5,000 to $10,000 in campaign contributions, telling Pouncy that he felt he deserved the contribution because he had sponsored the pro-gambling legislation in the 2009 legislative session and was no longer feeling the love. (Pouncy Plea Agreement at 23). On March 14, 2010, Massey told Gilley that Ross was seeking an additional $20,000 in campaign contributions, over and above the $15,000 Gilley and Massey already had provided. (Ex. J-44). Ultimately, Gilley pled guilty to Count 10, charging him with 666 bribery for the offer to Ross of $25,000 in campaign contributions in connection with his yes vote on SB 380. H. Uncharged Conduct Involving State Representative Terry Spicer

In a separate uncharged bribery conspiracy, Gilley and Massey gave things of value to Representative Terry Spicer. In particular, Spicer solicited a $20,000 bribe payment from

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Gilley, which Gilley paid. Gilley also provided between 200 and 300 Bama Jam tickets to Massey for Spicers use, and Spicer in turn gave them away. The total value of the tickets exceeded approximately $22,500 (Spicer Plea Agreement at 20). In return for these and other things of value given by Massey, Spicer steered lobbying business to Massey and agreed to use his official position to assist Gilley. (See id. at 15-20). II. Guidelines Calculations The goal of sentencing is to achieve a sentence that is sufficient but no greater than necessary. 18 U.S.C. 3553(a). A district court should begin all sentencing proceedings by correctly calculating the applicable Guidelines range. United States v. Gall, 128 S. Ct. 586, 596 (2007) (citation omitted). The Sentencing Guidelines represent a heartland for a particular criminal offense a set of typical cases embodying the conduct that each guideline describes. See U.S.S.G., ch. 1, pt. A, comment 4(b). Imposing a sentence within this heartland promotes fairness by helping to ensure that individuals who engage in similar conduct are treated similarly in the federal criminal justice system. As noted above, the Presentence Report contains an accurate calculation of the defendants offense level. In addition, Gilley has stipulated that these calculations and enhancements are correct. Finally, the facts supporting these calculations were the subject of testimony (from Gilley, Massey, Pouncy, and others), court authorized interceptions of telephone calls, consensual recordings, and other additional evidence, all of which is familiar to the Court after two jury trials.

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Pursuant to Sentencing Guidelines 3E1.1, the government hereby moves for an additional one-level reduction of Mr. Gilleys offense level due to his timely notice of his intent to enter a plea of guilty. In sum, Gilleys Sentencing Guidelines Range should be calculated as follows: 2C1.1(a)(1) Base Offense Level 2C1.1(b)(1) More than One Bribe 2C1.1(b)(2) and 2B1.1(b)(J) Value of Amount Offered Between $7,000,000 and $20,000,000 2C1.1(b)(3) Payment Was for Purpose of Influencing an Official Act of An Elected Official 3B1.1(a) Organizer or Leader of Criminal Activity that Involved Five or More Participants or was Otherwise Extensive 3E1.1 Reduction for Timely Notice of Intent to Plead Guilty Final Sentencing Guidelines Level III. 12 +2 +20

+4

+4

-3 39 (262-327 months)

Motion for a Downward Departure Pursuant to 5K1.1 for Substantial Assistance The Sentencing Guidelines identify a non-exhaustive set of five factors as an aid to the

Court in considering the amount of a departure to be granted on the governments substantial assistance motion. U.S.S.G. 5K1.1. As explained below, Gilleys cooperation - as measured against those factors - merits a significant departure, and the government recommends a 50% reduction from the low end of the final guidelines sentencing level. (1) The significance and usefulness of the defendants assistance. The significance and usefulness of Gilleys cooperation was substantial. He was the only witness to have regular, direct conversations with McGregor, and he was a very important witness in the case against Smith. In addition, Gilley met with the government on numerous 8

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occasions, explaining evidence that the government already had in its possession and suggesting other avenues of investigation. Moreover, Gilley regularly assisted the government in identifying additional calls that had not been initially identified as exhibits.2 Unfortunately, Gilleys usefulness was somewhat reduced by the difficulty he initially displayed in following government instructions. For instance, he occasionally became combative on cross examination during the first trial, notwithstanding clear instructions to remain polite and respectful. Similarly, at the time of his guilty plea, the government admonished Gilley not to say anything to the press or otherwise make a statement. Gilley, however, made a long, self-serving statement during his change of plea hearing, to the effect that he had started with virtuous, naive intent, but the closer I got to the flames, it seems as if I became engulfed in that fire as opposed to putting it out. (Apr. 22, 2011 Trans. at 24). To make matters worse, Gilley then lied about this incident to his wife in a recorded call from jail, claiming that the government had asked him to make the statement, a lie which provided unnecessary fodder for cross examination. All told, however, the significance and usefulness of Gilleys cooperation weighs in favor of a departure.3

Gilley also has cooperated in an ongoing corruption investigation by the Alabama Attorney Generals Office. The undersigned have been unable to obtain an assessment of the value of Gilleys cooperation to the state investigation, so the instant recommendation does not include additional consideration for his cooperation with the state. The government does not discount its departure recommendation based on the jurys conclusion that there was not evidence to convict Gilleys co-conspirators beyond a reasonable doubt. Gilley did what was asked of him, and he deserves credit irrespective of the jurys verdict. 9
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(2) The truthfulness, completeness, and reliability of any information and testimony provided by the defendant. Gilleys information and testimony uniformly was truthful, complete, and reliable. His information and testimony consistently was corroborated by other evidence in the case, including recorded conversations and bank records. Indeed, unlike many cooperators who often deny and obfuscate when first questioned by investigators, Gilleys initial debriefings were notable for the candor he displayed in admitting his own misconduct. The truthfulness, completeness, and reliability of Gilleys information and testimony weighs in favor of a departure. (3) The nature and extent of the defendants assistance. The nature and extent of Gilleys assistance also was substantial. He made himself available at the convenience of the government, driving more than an hour each way to meet the government in Montgomery for numerous debriefings and trial prep sessions. Gilley also devoted a significant amount of time to preparing for the retrial in this case, including by spending dozens of hours listening to recorded conversations and then helping the government to understand the context and background for each. Further, Gilley testified in two trials, spending all or part of 11 days on the witness stand, cumulatively. The nature and extent of Gilleys assistance weighs strongly in favor of a generous departure. (4) Any injury suffered, or any danger or risk of injury to the defendant or his family resulting from his assistance. Other than the reputational and economic injuries regularly suffered by white collar cooperators, there was nothing unique about Gilleys circumstances that should affect the Courts analysis of the appropriate departure.

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(5) The timeliness of his assistance. Gilleys cooperation was timely, but significantly later than the cooperation of two other witnesses, Jennifer Pouncy and Jarrod Massey. On April 13, 2011, roughly two months prior to the start of the first trial, Gilley first met with investigators and began a series of debriefings. On April 22, Gilley changed his plea to guilty and entered his cooperation agreement with the United States. Because Gilley began cooperating in time to provide useful information but much later than two of his coconspirators, this factor merits only slight consideration in terms of a departure. IV. Application of the 3553(a) Factors The factors set forth in 18 U.S.C. 3553(a) support the governments recommendation of a lengthy sentence of imprisonment, even after crediting Gilley for the substantial assistance he provided. The nature and circumstances of Gilleys crimes compel a sentence of incarceration. See 18 U.S.C. 3553(a)(1). Gilleys crimes were not crimes of necessity. He was not forced to offer millions of dollars in bribes out of fear, or because he was a victim of corrupt public official extorting bribes from an innocent businessman. Rather, Gilley was a willing partner in these crimes. He was motivated by greed, by a base desire to maintain and increase his wealth. Moreover, the corruption offenses committed by Gilley and his coconspirators were serious, and Gilley deserves substantial punishment. See 18 U.S.C. 3553(a)(2)(A). Bribery strikes at the heart of our system of government, which depends on the participation of citizens. When wealthy businessmen purchase the votes of public officials, democracy is undermined because ordinary citizens become disenchanted and less likely to participate in the system. A

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lengthy sentence of imprisonment will properly promote respect for the law, serving as a reminder of the seriousness with which our system of government treats threats to its integrity. V. Conclusion For the foregoing reasons, the government respectfully recommends a sentence of 131 months imprisonment, combined with such other conditions as the Court deems necessary. Respectfully submitted, LANNY A. BREUER Assistant Attorney General Criminal Division Attorney for the United States Acting Under Authority of 28 U.S.C. 515 JACK SMITH Chief

By:

/s/ M. Kendall Day M. Kendall Day E. Rae Woods Marquest Meeks Public Integrity Section U.S. Department of Justice 1400 New York Ave., NW, 12th Floor Washington, DC 20005 (202) 514-1412 m.kendall.day@usdoj.gov

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CERTIFICATE OF SERVICE I hereby certify that on July 9, 2012, I provided, via the CM/ECF system, a copy of the foregoing to David Harrison, counsel of record for Ronald Gilley.

/s/ M. Kendall Day M. Kendall Day Deputy Chief Public Integrity Section U.S. Department of Justice 1400 New York Ave., NW, 12th Floor Washington, DC 20005 (202) 353-2248 m.kendall.day@usdoj.gov

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