The seemingly simple-minded blue-collar man who amassed a multimillion-dollar fortune by building a powerful oil services company from the ground up will footnote his rags to riches saga with a three-year jail term.
Bill Allen, the 72-year-old former chief executive of VECO Corp., must also pay a $750,000 fine, according to the sentence handed down Wednesday by U.S. District Judge John Sedwick. That's the maximum allowed under sentencing guidelines, and Sedwick said he would have assessed a higher fine if possible.
"Democracy doesn't work when it is corrupt," Sedwick said. "From time to time, that democracy is threatened, as it was here, so this is a very serious offense."
AUDIO: Allen apologizes to Alaskans{mp3}Allen_apology{/mp3} AUDIO: Allen's complete statement to the court{mp3}Allen_statement_full{/mp3} |
Allen's right-hand man, Rick Smith, received a lighter sentence -- 21 months -- and he will pay a $10,000 fine. The sentencing disparity reflects the judge's finding that Allen was the mastermind, whereas Smith was merely a lieutenant wrongfully carrying out the corrupt bidding of his employer.
In urging the court for leniency, friends and family members cast Allen as a true American hero, one whose great acts of kindness and generosity far outweigh his once-influential hold on Alaska politicians. But the sentencing judge was unmoved, saying there was evidence that as early as the 1980s Allen recognized, and acted upon, the vulnerability of the political process to the injection of money.
Allen and Smith have been key federal witnesses in the government's sweeping public corruption probe in Alaska. In May 2007, they pleaded guilty to bribery and corruption charges, admitting they gave cash and other gifts to Alaska state lawmakers to entice them to support oil and gas legislation that would help his former company and its clients, including BP, Exxon Mobil Corp., and ConocoPhillips.
Allen and Smith admitted to throwing $394,267 at lawmakers to curry favor and, ultimately, to try to obtain the necessary votes on a new rate structure for oil taxes. Hundreds of millions, if not billions, of dollars were at stake for Allen, VECO and its oil company clients -- "the three big boys," as Allen called them.
Ben Stevens' name surfaces during sentencing
But at today's sentencing the lion's share of the money paid to people influential in state government was called into question. Was $243,250 in payments to then-state Sen. Ben Stevens truly a series of "bribes"? Or were they a different class of crime -- "gratuities"? The difference would determine, in part, the severity of Allen's sentence.
But it also raises questions about the case against Stevens, the son of former U.S. Sen. Ted Stevens, and whether Ben will ever face charges in the government's long-running corruption probe. The younger Stevens, identified as "State Senator B" in Allen's plea deal, remains an unindicted, but clearly implicated, co-conspirator in Allen's scheme to buy political influence.
On Wednesday, prosecutors argued that Stevens' consulting contracts for VECO were a sham motivated by greed and resulting in bribery. During Smith's hearing, Assistant U.S. Attorney M. Kendall Day argued the relationship amounted to "course of conduct bribery." He explained that oftentimes payments are made without the trading of defined things, yet a crime still exists. In the case of "State Senator B" and Allen, Day argued, there was an implied understanding that when needed, Stevens, who was on the VECO payroll as a consultant both before and during his term in office, would vote in a manner favorable to VECO.
"That's still bribery," Day told the court.
But defense attorneys for Smith and Allen argued the government needed to prove the Stevens bribery allegations, and that as of yet, they hadn't. Sedwick agreed, and for the purposes of sentencing Allen and Smith he chose to regard the money paid to Stevens technically as a "gratuity." The finding blocked prosecutors from successfully seeking an upward calculation in the criminal profiles of both men. Those calculations -- which take into consideration things like the severity of crimes, criminal histories of the defendants and any cooperation with the government -- are used to determine sentencing ranges.
Attempts to reach Stevens' attorney for comment about the implications of the government's statements about Stevens at Wednesday's sentencings were unsuccessful.
'An effort to increase his influence'
According to an expert hired by the defense, Allen may only have seven years left to live, nearly half of which will now be spent behind bars. And the defense believes that because of their client's head injury following a 2002 motorcycle crash, Allen's incarceration will take a higher toll on him than on the average person. He reads and does arithmetic at a fourth grade level, has sixth grade comprehension skills, and suffers from a variety of medical ailments. His brain injury, the defense also noted, made his extensive cooperation with the government exhaustively tedious.
Sedwick agreed that both Allen and Smith contributed exceptionally to the government's corruption investigations. They gave up information, made recorded phone calls, underwent surveillance, testified at trials and, more recently, have cooperated with the government's own investigation of itself for prosecutorial misconduct in the Ted Stevens case.
"The only thing that could have made his cooperation more impressive," Sedwick noted of Allen, "is if he or his family had suffered death threats."
Allen's lawyer, George Terwilliger III, a former Deputy U.S. Attorney General, urged the court to weigh Allen's generosity and charitable contributions against the crimes. And even Allen's crimes, Terwilliger argued, had a noble calling at their core. Allen was passionately committed to what he perceived was best for Alaska. For the self-made oil man, that meant bringing a new gas pipeline into reality, and creating tax certainty for the oil industry.
In fact, argued Terwilliger, pursuing legislative goals is an essential characteristic of citizenship. But, in an "insidious wrong," Allen allowed his dogged pursuit of that legitimate goal to overcome his judgment and duty to obey the law.
"He allowed himself to turn his inclination toward generosity into an effort to increase his influence," Terwillinger said.
In speaking directly to the court, Allen told the judge he was ready to be sentenced, but asked that the judge remember that he had tried to do some good. Allen viewed the relationship between the oil producers and the state as a marriage, and a good climate between all parties, which he had tried to facilitate, was good for everyone. But in pursuing his goals, Allen admitted at today's sentencing, he crossed the line.
"I would like to apologize to you, to the people here in Alaska," Allen said. "Instead of me really helping them, I pushed them down."
Smith also spoke to the court, telling the judge "I deeply regret and am ashamed for the actions which disgraced my family, my friends and Alaska. And these are all of things that I have loved for many, many years."
Including Allen and Smith, the government has scored 10 convictions since the public corruption investigation became public in fall 2006. Former U.S. Sen. Ted Stevens would have been an 11th conviction, but his case was tossed in April after the Justice Department admitted it withheld potential evidence from Stevens' lawyers during his fall 2008 trial.
Stevens went on trial for allegedly failing to publicly disclose more than $250,000 in gifts from Allen and others. U.S. District Judge Emmet G. Sullivan railed against federal prosecutors for their handling of evidence and a witness.
In April, the Justice Department admitted that prosecutors had made mistakes in the case and asked Sullivan to dismiss the conviction. Sullivan threw out the conviction on April 7.
In requesting that Steven's conviction be set aside, the U.S. Justice Department cited the prosecution's failure to turn over evidence that might have helped defense lawyers rebut the charges, including an interview with Allen that contradicted statements he made while testifying against Stevens.
Similar allegations have since come up in two cases involving former Alaska state lawmakers. In fall 2007, Allen testified for the government that he bribed former state Reps. Pete Kott and Vic Kohring, helping the feds win convictions against both men.
A federal appeals court ruled in early June that Kott and Kohring, who were serving prison sentences, should be freed and have their convictions reviewed. The Justice Department made the unusual request for Kott's and Kohring's release and reconsideration of their convictions because prosecutors withheld information from their lawyers.
In a September motion to have his conviction tossed, Kott claimed new documents and interviews turned over by the government show prosecutors cut corners and withheld information that would have helped his case.
Among the alleged misdeeds he says were committed by the Justice Department, Kott claims the government failed to disclose Allen's entanglement in a series of child sex and prostitution investigations. Kott argues that information would have been crucial during trial to help attack Allen's credibility and question his cooperation in the corruption investigation in the first place.
Federal prosecutors responded last week, saying in a motion that none of the newly released documents would erase the hours of video and audio tape that, they claim, prove the former lawmaker took bribes from Allen.
As the two sides battle over whether Kott deserves a new trial, six prosecutors and at least one FBI agent involved in the Alaska corruption probe are themselves under internal investigation for alleged misconduct. Sullivan, the judge in the Stevens trial, ordered an inquiry into whether any laws were broken during the prosecution of Stevens.
Four of the prosecutors involved in the Stevens case -- Joseph Bottini, James Goeke, Nicholas Marsh and Edward Sullivan -- were also involved in the Kott and Kohring cases.
Contact Jill Burke at jill_alaskadispatch.com.