Wednesday, June 29, 2016

Nursing home bribery case details suspect judicial fund-raising

Posted By on Wed, Jun 29, 2016 at 12:38 PM

click to enlarge MICHAEL MORTON: 'Greedy money man,' filing says of nursing home owner.
  • MICHAEL MORTON: 'Greedy money man,' filing says of nursing home owner.
Plaintiffs made their case in a court filing this week that a civil suit should continue to trial over then-Judge Mike Maggio's 2013 reduction of a $5.2 million jury verdict in a nursing home negligence case to $1 million, a reduction he has since said he made in return for campaign contributions from the nursing home's owner.

Maggio, who was removed from the bench for other ethical violations, pleaded guilty in federal court to taking campaign money from an unidentified nursing home owner arranged by an unnamed intermediary, but has since attempted to withdraw the plea and appealed a judge's refusal to allow that.

The 2008 death of Martha Bull occurred in a Greenbrier nursing home owned by Michael Morton of Fort Smith and Morton has been identified as the source of campaign contributions for Maggio arranged by former Republican senator Gilbert Baker of Conway. Both have denied any wrongdoing, but the estate of Bull has sued them in civil court for taking action that led to the reduction in the verdict after a jury trial in July 2013.

click to enlarge 'MASTERMIND': Gilbert Baker said in filing to lead 'bribery scheme.'
  • 'MASTERMIND': Gilbert Baker said in filing to lead 'bribery scheme.'
Morton and Baker have asked that the case be dismissed and the plaintiffs' attorney, Thomas Buchanan, responded to that in a 31-page answer filed Monday in Faulkner Circuit Court that became available on-line today. It is accompanied by more than 500 pages of supporting material, including pre-trial  depositions (sworn testimony) taken from Morton and Baker and others. The Buchanan filing says at the outset, "Michael Morton and Gilbert Baker, along with former judge Michael Maggio, have engaged and participated in a closed door tête-à-tête of electoral corruption, bribery and felonious abuses of public trust." In short, he alleges they conspired to achieve the verdict reduction.

click to enlarge JUSTICE RHONDA WOOD: Favored by Gilbert Baker and Micahel Morton with contributions. Morton wrote checks before legal fund-raising could begin for judicial elections.
  • JUSTICE RHONDA WOOD: Favored by Gilbert Baker and Micahel Morton with contributions. Morton wrote checks before legal fund-raising could begin for judicial elections.
The depositions repeat much from earlier press and federal court accounts. But they also detail meetings and scheming to pump money into the campaigns of both Maggio, seeking a seat on the court of appeals, and his hometown close friend and then-Court of Appeals Judge Rhonda Wood, who made an unopposed race for Supreme Court in 2014, powered by early money from Morton and other nursing home owners. A persistent theme in the depositions is Morton's and Baker's desire to do something to bring "tort reform" to Arkansas to stem damage awards similar to that in the Greenbrier case.

The political giving extended to other judges, the depositions indicate, and material found there also shows Republican Baker's chummy connection with other powerful Republicans in the legislature, including Michael Lamoureux, who would go on to be Gov. Asa Hutchinson's chief of staff and now a lobbyist for class action lawyer John Goodson, who is husband of Supreme Court Justice Courtney Goodson; Sen. Eddie Joe Williams  and Johnny Key, a former senator who now heads Hutchinson's Education Department.

The depositions indicate Baker solicited and Morton wrote checks for Maggio's and Wood's judicial campaigns before the law allowed money to be raised for their races. Baker testified in the case of Wood that he had not told her about the early money when he received it from Morton, though they were frequent communicators via text and phone calls. Baker raised money for Wood and others, including Stacy Hurst's unsuccessful race for state House. The depositions also quote Baker as saying Wood had communicated her surprise at the jury verdict in Maggio's court. At that time, she would have been commenting on a pending case that conceivably could have ended before her at either the Court of Appeals or Supreme Court.

I've sent Wood an e-mail for comment. UPDATE — HER RESPONSE:
My campaign received and deposited all checks after the start of the fundraising period. As I have stated previously, I did not authorize nor do I have any knowledge of Baker raising money prior to this. I was always explicitly clear with him on the date he could begin raising money for my campaign. He knew the rules and he knew I expected him to follow the rules. If he ignored this, I am deeply disappointed because he has contributed to mistrust of the judiciary.

I do not remember discussing the nursing home verdict with him and I cannot imagine doing so as I did not discuss cases with him.

I had a standing recusal order at the court of appeals of all Maggio cases. Maggio's office was across the hall from mine at the circuit court and he dropped in on occasion and we often covered each other's court in emergencies. I could not reliably recall which cases of his that I heard so thought it was safer to recuse off all of his cases, regardless of when he heard them. So nothing he ruled on would come before me on the appellate bench.

I also recused off nursing home cases, without regard to whether anyone associated with that particular nursing home ever made a contribution, following my first court of appeals race in 2010. I have now lifted this recusal as sufficient years have passed.

I will note there were exceptions in nursing home workers comp cases and unemployment cases. Given the nature of the claim and the standard of review in agency cases, I did go ahead and rule on a few of those at the court of appeals to assist my colleagues. I believe the few that I heard resulted in rulings against the nursing homes.
The facts of the players, the verdict, the reduction of the verdict by Maggio and the campaign contributions are undisputed,  Buchanan argues. Then, he continues in an opening that broadly hints that the effort to elect Maggio was part of a broader effort to reshape the Arkansas bench:
Gilbert Baker is the mastermind of this bribery scheme to place conservative jurists who favor tort reform on the appellate courts in this State. Baker recruited Maggio to run for a seat on the Arkansas Court of Appeals and made sure that he had the financial resources necessary to do so. The plan, of which Morton and Maggio were also aware, was to create a means for getting Morton’s money to Maggio’s campaign.
The filing outlines 10 PACs set up by Baker's lawyer, Chris Stewart, to which Morton steered $30,000 for Maggio and whose disbursements Baker controlled. Buchanan says Baker had multiple meetings with Morton and Maggio. By Morton's account, Baker first enlisted him to help elect Maggio and Supreme Court Justice Rhonda Wood in a meeting in Russellville in June 2013. From the filing, with citations of exhibit pages edited:
Baker was helping Maggio raise money during summer of 2013. He solicited money from Morton for Maggio’s benefit during the Bull trial and after the verdict was handed down. Baker asked Morton to meet in Russellville to discuss getting money to (1) Judge Maggio; (2) Judge Rhonda Wood [she ultimately received more than half of the $132,000 she first reported in an unopposed race for Supreme Court from Morton and still more from other nursing home owners, for a total of $80,000]; (3) Arkansans for Tort Reform [a lobby led by former Republican legislator Marvin Parks]; and (4) UCA.  .... Baker solicited money from Morton to insure that Maggio’s campaign was funded. Baker requested that Morton’s donations to Maggio be put in PACs, rather than sent directly to the judicial candidate like he normally did. To effectuate this plan, Baker sent a fax to Morton with the PAC names and donation amounts specified. When Baker received the FedEx package containing these checks, Baker contacted both Morton and Maggio.  In his conversation with Maggio, Baker told him that the first 50k is on the way; Maggio understood this to mean the money from Morton.

Buchanan described Morton as the "greedy money man" and says Morton called Baker the night of the verdict and said there was a pressing need for tort reform because the verdict was greater than the value of his nursing home.

(Here's some background on the various ways supporters of tort reform — or limiting medical damage suits — have funneled money to various politicians, including then-Sen. Michael Lamoureux.)

For support of his bribery allegation, Buchanan quotes testimony from Baker's attorney, Chris Stewart about the multiple PACs. He "testified that his gut reaction was that the timing and facts indicated bribery; 'it just didn’t – did not look right and didn’t smell right, just as an attorney looking at it.' "

Maggio, whom Buchanan's motion describes as the "corrupt judge," met with Baker about campaign financing and knew he could count on Morton money before he announced for Arkansas Court of Appeals, which also would have been before the six-month window for judicial fund-raising had begun for the May 2014 election on Nov. 22.

Buchanan argues the estate of Bull is due damages for the bribery of a sitting circuit judge and for the emotional anguish caused by that action. He said the survivors are entitled to damages for felonious actions, specifically abuse of the public trust by effectively bribing Maggio. He includes in this allegation Morton's contribution (since refunded) of $100,000 to the University of Central Arkansas where Baker worked as a lobbyist. Buchanan termed this a "payoff to Baker for funneling the money."

The defendants have offered testimony from former federal Judge James Moody that there was no evidence to support a verdict of more than $1 million because Bull died only two days after failure of the nursing home to hospitalize her. But Buchanan said this case is not about medical negligence but about felonious conduct by Morton and Baker to influence Maggio.

Buchanan also argued against summary judgment against his clients because he said plaintiffs' due process right to a fair trial had been abridged by the bribery scheme. Maggio cannot be sued for an official act, but Buchanan said the others can be sued for a "corrupt conspiracy" to influence Maggio.

Buchanan also argued there's sufficient ground for trial on the tort of civil conspiracy to harm plaintiffs and because the defendants had acted in concert.

The lawsuit, he argued, is not a collateral attack on the Bull verdict as entered by Maggio.  And, finally, he argues that a summary judgment is premature, because discovery is ongoing. Many other questions are raised by the facts in this case that require further explanation.

I was particularly interested in Buchanan's frequent allusions to campaign money to Justice Rhonda Wood. She reported $80,000 in nursing home contributions, almost $50,000 from Morton and his homes but also from a Conway-based nursing home chain, on Nov. 22, 2013, the very first day money could be raised for a May 2014 judicial race. Had she really had no contact with anyone about campaign money before that date and no concerted fund-raising of which she was aware to get a bundle of checks delivered? She says not.  Baker's phone records include calls between him and Wood during the critical period of time. She also signed her campaign finance report in January, at least a surface indication of her awareness of the contributions.

Here's Buchanan's motion to oppose a summary judgment.
Also: Here's all 500 pages of exhibits filed by Buchanan with his pleading against dismissal. It includes transcripts of depositions of Michael Morton and Gilbert Baker and others, plus various court and state Ethics Commission documents, plus the plea agreement with Maggio. Interesting reading. Most of those deposed indicated they had been cooperating with a federal investigation into the matter, an investigation that reportedly has spread beyond the Maggio case.

Morton testified that he wrote checks for Maggio and other recipients on the same day of Maggio's hearing on whether to reduce the nursing home verdict. Those checks included 24 $2,000 checks from his various companies to Rhonda Wood's campaign. This was in July, four months before judicial candidates were legally able to raise money themselves. He also wrote a $100,000 check to UCA and two $25,000 checks to Arkansans for Lawsuit Reform, the lobby for limits on negligence lawsuits.

Morton's deposition reveals also a meeting with Baker, nursing home owner Jim Cooper;  an executive associated with Morton, David Norsworthy; Baker's lobbying associate Linda Flanagin, and lawyer John Goodson at Sonny Williams' Steakhouse. Baker told Morton that Goodson wanted to meet him. Goodson said Sen. Jeremy Hutchinson was "doing some work for him" and was concerned Morton might support a potential opponent, Ann Clemmer (who eventually ran instead for Congress). He also described helping with a nursing home appearance for now Lt. Gov. Tim Griffin, who told Morton he wanted a "long-term care purview."

Morton insists throughout his testimony that his actions weren't intended to influence Maggio in the Greenbrier case. He said he just gave money to judges who "followed the law."

Baker's deposition includes his assertion that UCA President Tom Courtway had no objection to his working to raise money for political candidates, including judges, though when discussions about his activities moved from "online" to print newspapers, Courtway  decided it was time for Baker to stop being a UCA lobbyist. Those efforts included fund-raising for Rhonda Wood, Sen. Tom Cotton and Stacy Hurst, the unsuccessful candidate for a Little Rock House seat who's now in the Hutchinson administration. Hurst returned PAC money Baker had engineered, but she kept other money he helped bundle from individual contributors.

Baker confirmed that he'd asked for support for Wood outside the 180-day fund-raising window for judges, but said he did not "articulate" that to her and he also contended that asking for support was not asking for contributions. This, despite the fact that Morton testified he got a fax from Baker in July specifying a desire for $50,000 for Wood and that he sent checks in a Fed Ex package to Baker on July 8. Baker said he also had raised money for Wood's race for Court of Appeals in 2012, but during the legal time period. Wood reported the receipt of the money on Nov. 22, 2013, the first day money could legally be raised. The depositions are unclear about where the checks were lodged in the 4.5 months between receipt by Baker and acknowledgment by Wood. She presumably would say she didn't receive them until the legal date. But did she know about them?

Baker said that in addition to consulting work, he'd been working on a book, "Lessons Learned from the Gingko Tree," which he described as being about fund-raising and "naivete" in higher education.

Baker also disclosed that in the days after the verdict against Morton's nursing home, Maggio had expressed shock to him at the size of the verdict, as had Rhonda Wood, then sitting on the Court of Appeals, either in a text message or conversation. Baker, in response to questions, said he didn't know if Wood had communicated with Maggio about the case, but he said, "my impression was they were close and had communications on a regular basis." Baker said he communicated often with Maggio by phone, including about his potential race for Court of Appeals. Baker said he'd encouraged Maggio not to run because it wasn't a "free shot" or occuring in the middle of his term as circuit judge. He said Maggio had texted him about the Bull verdict the day it was delivered and Baker perceived Maggio's opinion was that it was too high. He said he couldn't give a definite answer on how many times he'd communicated with Maggio and Wood about the Bull case.

Baker said he learned of Maggio's negotiated guilty plea from tort reform lobbyist Marvin Parks and said it was a surprise to him. Baker also said he couldn't remember sending a text to Maggio two days after he announced for office, on June 29, 2013, saying his "first $50,000 is on the way." This action is ascribed to Baker in Maggio's indictment. He contended that this was not the same as raising money, despite the specific figure, because he said he didn't have the money. He said he was just referring to "support." He disputed the suggestions in the federal indictment that Baker's continuing communication with Maggio before his verdict reduction July 8 were meant to persuade him. 

Buchanan tried, but was unable, to get a clear answer from Baker on why Morton would give money directly to Rhonda Wood but run $30,000 intended for Maggio through 10 PACs. Morton expressed some indication, however, that his support might be harmful to Maggio. You can see where PAC contributions, anonymous on the surface, would lead to fewer immediate ill conclusions than money sent directly to Maggio from a beneficiary of one of his rulings.

Baker admitted receiving the Morton contributions in July, but rather than send back those made out directly to Wood he decided to hold them but not pass them on because of the "hassle." He also admitted he'd changed the dates on the check to a date in November, but explained that he merely intended that only to note the date Wood actually received the checks, the day of her first big fund-raiser. Baker said he'd continued in communicate with Wood, but he couldn't recall discussing the Maggio plea or the contributions. He said he'd tried to dissuade Stacy Hurst from returning money she'd received from the PACs Baker had formed, because the money was legally contributed and disbursed, but she sent that back.

Chris Stewart, who set up the multiple PACs that effectively multiplied the amount Morton could funnel to candidates, testified that he'd given $6,000 to Maggio's campaign in the name of himself, wife and law firm, but said that Baker had arranged for him to have that money covered in the form of a "bonus" paid for his legal work for Arkansans for Lawsuit Reform, the tort reform lobby that Morton helped finance. Stewart put all the responsibility for spending money in the PACs he created on Baker. He said he terminated them after news articles began questioning them and people listed as officers by Baker said they had no knowledge of the PACs or their own roles as officers. He said he hadn't known about Morton's contributions until the articles were written. Such contributions were legal, he said, but, with the "timing," he said it was like a "punch in the gut." Stewart also said he'd talked with the FBI.

SIDELIGHT: A deposition from Linda Leigh Flanagin, a lobbyist who worked with Baker, reveals that his two consulting companies, LRM and MEJ, have roots in the name of important legislators. The first consists of initials of Michael Lamoureux backwards. The second is, she said, for Michael Lamoureux, Sen.  Eddie Joe Williams and former Sen. Johnny Key. Flanagin said these were all just friends of Baker, but as far as she knew, not involved in ownership or employment by the firms. But they worked well together. Eddie Joe Williams' PAC enjoyed a contribution from Michael Morton, too.

Flanigan testified about her campaign work for Rhonda Wood. It included, she said,  being provided Wood's log-in so that she could access the membership information for the Arkansas Bar Association for fund-raising work. She also talked about doing paid work for Lamoreux and Baker after leaving a job in the state Senate and detailed meetings with Morton and others about tort reform over meals at Brave New Restaurant.  She also met with Rhonda Wood and Baker at Mike's Place to discuss judicial races.She also mentioned meeting with Lamoureux to discuss races to "target."  Her consulting firm gave money to Wood and also to Troy Braswell, a candidate who won a circuit court seat in Conway and was among a cadre of local candidates with close ties. She, too, said she provided information to the FBI investigation. And she said in response to questions that she had believed she was targeted by the FBI. She made a proffer of information for which she was given use immunity by prosecutors, according to the transcript. Flanagin delivered a FedEx envelope to Chris Stewart in July 2013, presumably with the Morton checks for the PACs. She said she couldn't recall if there were other checks in the package, perhaps for Rhonda Wood, or whether she had mailed checks to Wood then. She said she was paid $10,000 for fund-raising by the Wood campaign in 2014.

Among other depositions:

* Lobbyist and former legislator Bruce Hawkins testified about how he'd used Chris Stewart to set up two PACs and another lawyer had set up seven more for him, presumably to do as Baker had done to provide a legal way to multiply contributions from the same entities. But Hawkins got tied up through news articles in the effort to specifically aid Maggio, in part by a contribution made by Stewart from one PAC without Hawkins' approval. He said he was not happy about it and moved to distance himself. 

* Ancil Lea, listed as an officer in the PACs created to help Maggio, essentially reiterated earlier remarks that he had not given consent to Baker to be an officer.  And he told Buchanan he "despised" Maggio because of a bad experience with Maggio years before — Maggio, then running a collection agency, had gone after a doctor who owed Lea's software company some money, but Lea had not authorized him to do so or even talk to the doctor.

* Don Thomas of Conway, another listed PAC officer, said he also wasn't informed in advance about the PACs. He said Baker had gotten him to donate $10,000 to UCA, which had not been returned as Morton's gift was. He also said Baker had infuriated his secretary, Cheryl Oliger, by using her name without permission. She leaves the office now whenever Baker appears. "She hates him like a yard dog," Thomas said.Her deposition affirmed her unhappiness. She disputed Baker's statement that he had contacted Oliger about being an officer. She said she didn't know what a PAC was.

Thomas said he didn't consider Baker a bad person. "I just think he got his butt in over his head."

* There was extensive questioning of retired federal Judge Jim Moody about his opinion, presented by Morton's attorney as a paid expert witness, that the jury verdict was excessive. That was countered by a brief affidavit from retired state Supreme Court Justice Donald Corbin who said he'd read the transcript and concluded Maggio's reduction of the verdict would have been reversed on appeal because the $5.2 million award did not  "shock the conscience." The jury didn't think so. And it's worth noting that they deliberated for five or more hours and asked questions that the judge dealt with instructions. Defendants tried to argue that the jury had been inflamed by the plaintiffs' emotional closing argument, but Maggio instructed the jury that the closing argument is not evidence.

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