Donald C. Smaltz, Independent Counsel In Re Espy, today made the following statement:
A federal jury in the United States District Court for the Northern
District of California yesterday found defendant Richard Douglas guilty on one count of
giving $7,600 in illegal gratuities to and for the benefit of Secretary Alphonso Michael
(Mike) Espy. Douglas committed these offenses while he was a Senior Vice President for
Corporate Affairs for Sun-Diamond Growers of California (Sun-Diamond).
Douglas gave Espy the illegal gratuities on behalf of Sun-Diamond,
one of the largest agricultural cooperatives in the United States. Sun-Diamond was
regulated by and did business with the United States Department of Agriculture when
Douglas gave these illegal gratuities to Secretary Espy. The gratuities included a new set
of luggage worth $2,427; tickets, limousine rides and meals for Secretary Espy and his
girlfriend to attend the 1993 U.S. Open in New York valued at $4,590; and approximately
$655 in meals.
The jury was unable to reach a verdict on Count Two which charged
Douglas, on behalf of Sun-Diamond, with giving a $3,100 airplane ticket to Espy so his
girlfriend could accompany him on a trip to Greece.
Douglas was acquitted on one count of mail fraud carried out for the
purpose of concealing illegal corporate campaign contributions by Sun-Diamond to help
retire the campaign debt of Henry Espy, Mike Espy's brother. Douglas also was acquitted on
five misdemeanor counts of making $4,000 in illegal corporate campaign contributions to
the Henry Espy for Congress Campaign Committee.
The counts in the indictment were the subject of previous cases
prosecuted by this Office. In United States v. James Lake (awaiting sentencing),
Lake pled guilty to a three count information charging him with one felony count for wire
fraud; one misdemeanor count for an illegal corporate campaign contribution; and another
misdemeanor charge for making an illegal campaign conduit contribution to the Henry Espy
for Congress Campaign Committee.
In United States v. Sun-Diamond Growers of California (fined
$1.5 million), Sun-Diamond was convicted of giving illegal gratuities to Secretary Espy;
engaging in a wire fraud scheme to make illegal corporate campaign contributions; and
violating the Federal campaign contribution laws - illegal corporate and conduit campaign
contributions to the Henry Espy for Congress Campaign Committee.
Independent Counsel Donald C. Smaltz stated:
I want to thank the jury for its time, attention, and full and impartial consideration
of all of the evidence presented. This case is one of a series of three cases prosecuted
by this Office involving illegal gratuities by Sun-Diamond Growers, its Senior Vice
President for Corporate Affairs, Richard Douglas, and its Washington lobbyist, James Lake,
to then Secretary of Agriculture Espy. This verdict confirms that businesses may not,
under the law, give things of value to senior government officials who regulate them.
Douglas has also been charged and is awaiting trial on nine counts of
wire fraud in a scheme against Union Trust Mortgage Services of San Francisco and PHH U.S.
Mortgage Company of New Jersey to obtain a mortgage loan.
At the time of this release, the Court had not set a sentencing
date. Douglas faces a maximum two year sentence on the gratuity conviction as well as a
fine of $250,000.
The Independent Counsel's investigation is ongoing.