A federal judge sentenced former state House Speaker Pete Kott to six years in prison on Friday for his role in a corrupt scheme to push an industry-backed oil tax.
In a courtroom crowded with Kott's family, friends, reporters, defense lawyers, prosecutors and FBI agents, U.S. District Judge John Sedwick said that Kott should serve a longer than typical sentence because of the seriousness of the matter. The judge also ordered a $10,000 fine and three years' probation.
In addition, Sedwick found that Kott lied on the witness stand during his trial in September and factored that in too.
A federal jury in September convicted Kott, 58, of bribery, conspiracy and extortion for his role in advocating an oil tax pushed by Veco Corp. executives and favored by North Slope oil producers. He received nearly $9,000, a political poll for his re-election campaign and the promise of a lobbying job, all from Veco executives, according to testimony.
The stakes in Juneau during the 2006 legislative session were huge. Kott and other Veco allies were trying to keep the proposed new oil tax on profits at 20 percent, as the industry wanted. But others were pushing for a higher rate. Even a 1 percent change in the tax rate meant tens of millions to the state, if not even more.
"What we have here is an offense that has caused the entirety of the population of this (statewide judicial) district and a few kibitzers from Outside to question the integrity of the very political system here in Alaska," Sedwick said.
Kott's behavior "causes all of us to wonder what really does go on in Juneau," the judge said.
Kott's trial was packed with revelations. Prosecutors played for jurors FBI telephone wiretaps and surveillance videos that exposed a seamy world of heavy drinking, foul language and political deal-making.
"What we saw here, and what the jury convicted Mr. Kott of, was an unusual and extraordinary, outrageous, egregious pattern of self-serving conduct," said prosecutor Nicholas Marsh, of the U.S. Justice Department's Public Integrity Section in Washington, D.C.
But defense lawyer Jim Wendt argued that Kott is a hardworking man with an exceptional character who served 14 years in the state House and 22 years in the U.S. Air Force.
"It's not the mere fact that he's been a public servant for so many years. It's the fact that he's a thoroughly decent human being that will treat the garbageman and the governor the same. He treats them fairly," Wendt said.
In all, the bribes to Kott were worth nearly $30,000, counting the $2,750 for the poll paid for by Veco and an estimated $18,000 that Kott could have made lobbying during one legislative session for Veco, Sedwick determined.
Former Veco chief executive Bill Allen and a former company vice president, Rick Smith, pleaded guilty to bribing Kott and other lawmakers, and are cooperating with the government. Both testified against Kott.
The judge said he didn't know whether the tax rate Veco so fiercely wanted was best for Alaska. Allen testified oil producers wanted to lock in a rate before they would move forward with a natural gas pipeline. Allen was motivated by greed, the judge said. Veco could have made millions off a pipeline contract. The company was sold in September.
Sedwick said he also had to consider the five-year sentence handed to former Rep. Tom Anderson. Anderson was convicted of taking bribes that he thought were from a private prison company.
"I think Mr. Marsh is correct in pointing out that although Mr. Anderson's conduct was bad, Mr. Kott's was even worse," Sedwick said.
Kott, a Republican from Eagle River, was someone with real stature, a former House speaker, a leader whom others turned to for advice, Sedwick said. The judge said Anderson struck him "as basically a lightweight."
Kott must serve more time, the judge said.
Assistant U.S. attorney James Goeke said that Kott lied on the stand about several matters, including $7,993 paid by Allen to Kott's hardwood flooring business. According to Allen and Smith's testimony, and to surveillance recordings, they came up with a phony invoice and paid the money to free up Kott's son in the summer of 2006 to work on his father's re-election campaign. Kott lost in the Republican primary.
Kott concocted stories that the work was actually going to be done at Smith's house or maybe Allen's, Goeke told the judge. He co-opted his son and girlfriend to testify that way, too, prosecutors said.
Wendt said Kott did not lie about anything material to the case and could have done the work.
Sedwick said Kott knew what he was doing when he took the stand.
"Having listened to that testimony, I am utterly convinced that at the trial, with respect to this payment, Mr. Kott gave false testimony under oath," Sedwick said.
Kott wasn't confused, the judge said. He didn't have a bad memory.
"The testimony appeared to me to have been carefully crafted to deceive the jury," Sedwick said.
In court Friday, Kott spoke for less than 80 seconds, reading from something he wrote ahead of time. His voice shook. He sounded nervous.
He said he was sorry.
"However, all my actions that I took while a member of the Legislature on the House floor, I took and truly felt that I did so in the best interests for the citizens of Alaska and the state of Alaska," Kott told the judge.
He appeared to refer to the drinking and scheming shown on FBI surveillance recordings from Suite 604 of the Baranof Hotel, Veco's Juneau's headquarters.
"For my statements, my association, my behavior away from the floor of the Legislature, I do deeply regret and apologize," Kott said.
He said he hopes people's opinion of him softens over time.
"It's always been my goal to be involved with bringing out the great potential of this state and the people, and I believe I'll continue to do so to the best of my ability," he said.
Kott did not specifically admit any guilt. He still may appeal, Wendt said after the hearing.
Kott's attorney had argued that he should receive 33 months in prison -- a little less than three years -- while prosecutors had sought at least 10 years before Friday's hearing.
The judge did not set a date for Kott to report to prison. He said he'll recommend that Kott serve his time at the federal prison in Sheridan, Ore., the same place where Anderson is incarcerated. With time off for good behavior, Kott will serve more than five years.
"Disappointed," was all Kott would say as he left the courtroom, his daughter Pamela and his lawyer by his side. His son, his brother, his girlfriend and other friends all came to his sentencing.
A crush of reporters surrounded Kott as he walked away in the dark morning light on a slippery downtown sidewalk.
Find Lisa Demer online at adn.com/contact/ldemer or call 257-4390.