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United States v. Halloran

United States Court of Appeals, Second Circuit

April 28, 2016

United States of America, Appellee,
Daniel J. Halloran, Defendant-Appellant, Malcolm A. Smith, Vincent Tabone, Joseph J. Savino, Noramie Jasmin, and Joseph Desmaret, Defendants.

Argued: January 26, 2016

Defendant-appellant Daniel J. Halloran appeals from a judgment of the United States District Court for the Southern District of New York (Kenneth M. Karas, Judge) convicting him, following a jury trial, of wire fraud, violating the Travel Act, and conspiracy to commit both substantive offenses. The convictions arose from two bribery schemes, in which Halloran, a member of the New York City Council, (1) accepted bribes in exchange for promising the bribe payers access to City funding, and (2) arranged for bribes to be paid to Republican Party officials in exchange for a "Wilson-Pakula" authorization for his co-defendant to compete for the Republican Party nomination for mayor of New York City. We conclude that there was sufficient evidence that Halloran intended to divert city funds to sustain his convictions relating to the first scheme, that the payment of bribes in exchange for a Wilson-Pakula certificate violates the New York bribery statutes underlying Halloran's Travel Act conviction, and that the honest-services fraud statute is not unconstitutionally vague as applied to that conduct. We further hold that Halloran's sentence was reasonable and reject his remaining arguments.

Jonathan I. Edelstein, Edelstein & Grossman, New York, New York, for Defendant-Appellant.

Daniel J. Halloran, pro se, Ashland, Kentucky.

Jessica Feinstein (Karl Metzner, on the brief), Assistant United States Attorneys, for Preet Bharara, United States Attorney for the Southern District of New York, New York, New York, for Appellee.

Before: Calabresi, Lynch, and Lohier, Circuit Judges.

Gerard E. Lynch, Circuit Judge:

Defendant-appellant Daniel J. Halloran appeals from a judgment of conviction entered in the United States District Court for the Southern District of New York (Kenneth M. Karas, Judge) on two counts of wire fraud, 18 U.S.C. §§ 1343, 1346; two counts of violating the Travel Act, 18 U.S.C. § 1952; and one count of conspiracy to commit both substantive offenses, 18 U.S.C. § 371. Halloran, who was at all relevant times a member of the New York City Council, was found guilty by a jury of participating in two bribery schemes. In the first, Halloran accepted bribes in exchange for promising to funnel City funds to the bribe payers (the "Discretionary Funds Scheme"). In the second, Halloran was paid to help his co-defendant, Malcolm A. Smith, bribe Republican Party officials to obtain what is known in New York as a Wilson-Pakula certificate or authorization (a "Wilson-Pakula"), which would have enabled Smith, a Democrat, to compete for the nomination of the Republican Party in the New York mayoral election (the "Wilson-Pakula Scheme"). The district court sentenced Halloran to 120 months' imprisonment.

Halloran challenges his convictions on all counts. With respect to the Discretionary Funds Scheme, Halloran claims that the evidence was legally insufficient to support a finding that he actually intended to divert city funds to the bribe payers. With respect to the Wilson-Pakula Scheme, Halloran argues that brokering the payment of bribes in exchange for the issuance of a Wilson- Pakula does not violate New York's bribery laws, as required for his Travel Act conviction, and that the honest-services fraud statute is unconstitutionally vague as applied to that conduct. Halloran also challenges the reasonableness of his sentence and raises a number of additional issues in a supplementary pro se brief. Finding none of those arguments meritorious, we affirm the judgment of the district court.


Because the jury found Halloran guilty of all the charges against him, we view the evidence in the light most favorable to the government. United States v. Facen, 812 F.3d 280, 283 (2d Cir. 2016).

From 2010 to 2013, Halloran was a Republican member of the New York City Council, representing the 19th District, in Queens. The charges against him resulted from an investigation by an undercover FBI agent, who went by the name Raj and posed as a real estate developer from out of state who was trying to make inroads in New York.[1] Raj was assisted by Moses "Mark" Stern, a one- time aspiring real estate developer with ties to the Orthodox Jewish community, who was working with the FBI pursuant to a cooperation agreement. Recordings of conversations between Halloran, Raj and Stern formed the centerpiece of the government's case at trial.

I. The Discretionary Funds Scheme

In the Discretionary Funds Scheme, Raj and Stern bribed Halloran to divert $40, 000 to $80, 000 in "member items" – discretionary funding that is available to City Council members for distribution to nonprofit organizations in their districts – to a fictitious entity purportedly controlled by Raj.

Stern first met Halloran in August 2012. At a second meeting, on September 7, at a midtown steakhouse, Stern and Halloran discussed member items, and Halloran said it was "[n]ot an issue" to direct those funds to Stern, elaborating: "I give money to JCC, I give money to Chabad in Bay Terrace, I have lots of, you know . . ." Gov't Ex. 104-T at 4. Halloran, who was at the time running for Congress, explained that he needed funds for his campaign, and particularly that he hoped to raise enough money to reach the threshold at which the National Republican Congressional Committee would match his campaign contributions. Stern pledged a contribution of $15, 000, half of which he gave to Halloran then and there, in cash. Over the course of their meal, Halloran expatiated on the role of money in New York politics: "It's all about how much[.] Not . . . whether it will, it's about how much. . . . You can't do anything without the fucking money. How do you get around that? . . . You can't get around that." Id. at 19. Later, he opined that money was "[w]hat greases the wheels, good, bad, or indifferent." Id. at 24.

On September 27, at the bar of a midtown hotel, Stern introduced Halloran to Raj, and Raj offered Halloran another $6500. Stern was to arrange to have his "people, " Gov't Ex. 106-T at 3–4, contribute that money to Halloran in the form of several smaller checks, in order to satisfy federal campaign finance requirements. Halloran, in turn, guaranteed that it would be "no problem" to get discretionary funding to Raj and Stern. App'x 534. At that meeting and over the next two months, the three discussed how to achieve that goal. Raj and Stern made clear that they had no interest in following the usual channels for obtaining member items. Halloran suggested that Raj and Stern "set . . . up" an organization to receive the funds, and "get [him] the [tax] number, the name and address of the Corp." Gov't Ex. 106A-T at 9. That plan was rejected after they determined that starting a new charity that could not be traced to Stern or Halloran could take as long as nine months. The three considered redirecting funding that had already been allocated to organizations that were about to "go under, " App'x 459–60, or arranging for someone "on paper" to collect a salary from an existing organization without actually doing any work – a "no-show job." App'x 460–61.

Eventually, the discussion settled on a plan to have the City buy a YMCA building in Bayside for use as a community center by existing nonprofits, using capital funding allocated to Halloran's council district. A fictitious entity owned by Raj, "2Holdings, " would collect part of the funds allocated to the project by purportedly acting as a management company or as a consultant. Halloran assured Raj and Stern that the nonprofits would not object to the arrangement, explaining that "these are groups that are my groups, " and that, "[i]f I'm putting a deal together they know that they have got to use whoever I'm gonna send them." Gov't Ex. 109-T at 7. He maintained that there was "nothing untoward" about the scheme: "Nobody denies you're allowed to make money on it while you're running these things." Id. at 11, 18.

Raj requested a letter of commitment from Halloran. On October 23, Halloran forwarded to Stern's email account a letter on Halloran's official letterhead addressed to three different nonprofits, stating Halloran's "intention . . . to acquire the Bayside YMCA on 35th Avenue, " and "to allocate $1 Million in capital money to the acquisition and improvement of the facility. I will also allocate discretionary funding as needed up to our allotment of $80, 000 in fiscal year 2013 to get the project off the ground." Gov't Ex. 306. Concerned that the letter was not specific enough, Stern requested a second letter addressed to 2Holdings and confirming that it would be involved in the project. On November 15, Halloran forwarded another letter to Raj's email account. This letter was addressed to 2Holdings, requested its "assistance and consultation on the project, " and appeared to tie a discretionary funding "allotment of $40, 000–$80, 000 in fiscal year 2013–14" to 2Holding's "work[ing] with us in implementing the acquisition, renovation, and initial setup-operation of the facility." Gov't Ex. 308.

The next day, Raj met with Halloran at a pastry shop in Flushing and gave him $10, 000 in cash in a car outside the shop. (Because by that time Halloran had lost his race for Congress and was no longer disguising the bribes as campaign contributions, he no longer required them to be paid in checks and in small amounts.) In a later conversation, Halloran claimed that his agreed-upon fee for arranging for the diversion of the funds was "fifteen, " and stated that "if the other five could come in, I'd be appreciative." Gov't Ex. 214-T at 7. Raj agreed, and arranged for another FBI agent to give Halloran the remaining $5000, on January 25, 2013.

II. The Wilson-Pakula Scheme

Meanwhile, Raj and Stern were cultivating a relationship with Malcolm Smith, a Democratic state senator who was weighing a run for mayor of New York. Because the field of Democratic mayoral candidates was crowded, Smith was contemplating running as a Republican, without changing his party affiliation. Under New York's "Wilson-Pakula Law, " however, a candidate seeking the nomination of a party of which he is not a member must obtain the consent of the appropriate party committee – an authorization known in the New York political world as a "Wilson-Pakula" – before filing a designating petition allowing him to compete in the primary election. N.Y. Elec Law § 6-120(3). For candidates to citywide office in New York City, the "authorization must be by a majority vote of those present at a joint meeting of the executive committees of each of the county committees of the party within the city of New York." Id. In practice, according to testimony at trial, this meant that Smith needed the consent of at least three of the five Republican Party county chairs representing the five boroughs of New York City.

On the morning of November 16, 2012, before his meeting with Halloran at the pastry shop, Raj met with Stern and Smith at a hotel in White Plains. Smith expressed his desire to obtain a Wilson-Pakula and enlisted Raj's and Stern's help in swaying the vote of the Chair of the Brooklyn Republican Party, Craig Eaton – a vote he referred to as "huge" and "a game changer." Gov't Ex. 110A-T at 59. Later, at the pastry shop, Raj asked Halloran whether he knew Eaton and whether Eaton was "somebody we can work with" or someone who "can play with us." Gov't Ex. 111-T at 2, 3. Halloran answered in the affirmative and further agreed that the Chair of the Bronx Republican Party, Jay Savino, "can be in play too, " id. at 4, explaining that "he's a wild man . . . the evil twin of . . . Craig. . . . Craig likes to pretend like he's in control you know . . . . And when we go out, to strip clubs but, uh, Savino doesn't care, he has no pretensions, he's just like, out there." Id. at 5.

On December 4, Raj told Halloran that the person who was seeking Eaton's backing was Smith. Halloran immediately offered to help. "First thing we're gonna do is . . . I'm going to have a conversation with the Queens Executive Vice Chair [Vincent Tabone] and tell him that I'm leaning that way. . . . The second thing I'm going to do is, um, I'm gonna . . . pick up the phone . . . and call Eaton and tell him, uh, we need to sit down and just have a meeting and go over where we're at with everybody. . . . I'll peg him and Savino to come into the city with us so we can go down to a steakhouse, have a conversation in the ...

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