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IN THE UNITED STATES DISTRICT COURT
FOR THE DISTRICT OF COLUMBIA


UNITED STATES OF AMERICA
Office of Independent Counsel
103 Oronoco St., Suite 200
Alexandria, VA 22314,

 

V.

 

SMITH BARNEY INC.,

  Defendant.


 

CASE NUMBER 1:97CV01707
JUDGE: THOMAS A. FLANNERY
DECK TYPE: CIVIL GENERAL
DATE STAMP: 07/29/97

 

COMPLAINT

    Plaintiff, the United States of America, by and through its undersigned attorneys, and for its complaint alleges that:

  1. This matter involves defendant SMITH BARNEY INC.'s activities for one of its clients, Oglethorpe Power Corporation, a Georgia electric utility company. On or about January 28, 1994, defendant SMITH BARNEY, acting through one of its employees, purchased three tickets to the January 30, 1994 Super Bowl in Atlanta, Georgia from a ticket scalper for $2,200 per ticket. The SMITH BARNEY employee made the purchase at the request of a principal of the EOP Group, Inc. ("EOP principal"), a consultant/lobbyist hired by SMITH BARNEY and Oglethorpe. The EOP principal was at the offices of Oglethorpe on January 29, 1994 for a meeting with Oglethorpe officials and Secretary of Agriculture Alphonso Michael Espy ("Secretary Espy"). No one from Smith Barney was present. At the meeting, Secretary Espy discussed his support for Oglethorpe's proposal to secure from the United States Department of the Treasury ("Treasury"), the waiver of $286 million in prepayment penalties due to the United States on loans totaling $3.1 billion, which Oglethorpe received through a program administered by the United States Department of Agriculture's ("USDA") Rural Electrification Administration. While the EOP principal was at Oglethorpe, an officer of Oglethorpe gave the Super Bowl tickets to the EOP principal. Later that day, at a different location, the EOP principal gave Secretary Espy one of the Super Bowl tickets. Secretary Espy did not use the ticket paid for by Smith Barney for admission to the Super Bowl.
  2. Defendant SMITH BARNEY gave and Secretary Espy received a $2,200 gratuity. Defendant SMITH BARNEY's participation in and procuring of a violation of Secretary Espy's fiduciary duty to the United States and interference with his agency relationship with the USDA and the Executive Branch damaged the United States.

    JURISDICTION AND VENUE

  3. This Court has jurisdiction over this matter under 18 U.S.C. 216 and 28 U.S.C. 1331 and 1345.
  4. Venue in the District of Columbia is appropriate under 28 U.S.C. 1391 and 1395(a).

    PARTIES

  5. The Plaintiff in this action is the United States of America. At all times material to this civil action:
  6. Defendant SMITH BARNEY INC. ("SMITH BARNEY") was an investment banking and securities trading and brokerage firm registered with the Securities and Exchange Commission pursuant to the Securities Exchange Act of 1934, 15 U.S.C. 78, et seq., with principal offices in New York, New York. Defendant SMITH BARNEY was a wholly-owned subsidiary of The Travelers Inc., a publicly-held financial services holding company. The clients of defendant SMITH BARNEY included United States and foreign corporations, governments and institutional and individual investors. As an investment banking firm, defendant SMITH BARNEY underwrote debt and equity issues for United States and foreign corporations and for state, local and other governmental authorities. Defendant SMITH BARNEY maintained offices throughout the United States, including the District of Columbia. Defendant SMITH BARNEY was a member of the New York Stock Exchange and the National Association of Securities Dealers.
  7. Within SMITH BARNEY, the Public Power Group was a specialized banking group that was responsible for providing advice to and raising capital in the public markets for public power companies. Steven B. Carosso ("Carosso") at relevant times was a Managing Director of that group. Carosso and a co-employee were responsible for the Oglethorpe Power Corporation ("Oglethorpe") account.

    GENERAL ALLEGATIONS

  8. Following his nomination by the President of the United States and his confirmation by the United States Senate, Alphonso Michael Espy served as Secretary of Agriculture from January 22, 1993, until the effective date of his resignation therefrom on December 31, 1994. Secretary Espy performed the duties of his office related to the allegations in this Complaint in the District of Columbia, the Middle District of Georgia and elsewhere.
  9. The USDA was an agency and department of the United States of America. The Secretary of Agriculture was in charge of the USDA. On or about May 20, 1936, the United States Congress enacted the Rural Electrification Act of 1936, thereby creating and establishing as an agency in USDA, the Rural Electrification Administration ("REA"), to facilitate the providing of electric service to rural consumers. The REA was the principal guarantor of capital for the two types of electric cooperatives: the generation and transmission cooperatives ("G&Ts") and the distribution cooperatives. On or about November 1, 1993, the United States Congress amended the Rural Electrification Act of 1936 to authorize and empower the Secretary of Agriculture to make loans under the Act. Prior to November 1, 1993, these powers were vested in an Administrator, who served under the general direction and supervision of the Secretary of Agriculture.
  10. In addition to serving as the principal guarantor of capital, the REA administered the federal loan program in which Oglethorpe participated. The lender of the funds to the electric cooperatives was the Federal Financing Bank ("FFB"), an agency within the Department of the Treasury ("Treasury").
  11. As an official of the United States and employee of the Executive Branch, Secretary Espy owed a duty of loyalty to the United States of America and its citizens, upon which the Government and the people relied for an impartial decision-making process. The duty of loyalty included the obligation to perform his job as Secretary free from, among other things, the receipt of gratuities and conflicts of interest.
  12. In part, and among other things, Secretary Espy was required by law to adhere to the Standards of Ethical Conduct for Employees of the Executive Branch, 5 C.F.R. 2635, which were promulgated, in part, under the statutory authority of the President of the United States. In part, the Standards of Ethical Conduct provided that:
    1. "Public service is a public trust. Each employee has a responsibility to the United States Government and its citizens to place loyalty to the institution, laws and principles above private gain...." 5 C.F.R. 2635.101(a).
    2. "[A]n employee shall not, directly or indirectly, solicit or accept a gift (1) From a prohibited source; or (2) Given because of the employee's official position...."5 C.F.R. 2635.202.
    3. A "prohibited source," as defined in 5 C.F.R. 2635.203, includes:

      Any person who: (1) Is seeking official action by the employee's agency; (2) Does business or seeks to do business with the employee's agency; (3) Conducts activities regulated by the employee's agency; (4) Has interests that may be substantially affected by performance or nonperformance of the employee's official duties.

  13. Under the Standards of Ethical Conduct, SMITH BARNEY, Oglethorpe and the EOP principal and his firm, EOP Group, Inc. ("EOP"), and their officers and employees, were prohibited sources.
  14. Secretary Espy also was required by law to file, pursuant to the Ethics in Government Act, a Public Financial Disclosure Report, Form SF-278, which required disclosure of, among other things, "gifts of entertainment received by the reporting individual . . . totaling $250 or more from any one source." The Public Financial Disclosure Report, SF-278, is required to be filed by officials such as Secretary Espy for, among other reasons,

      those having responsibility for review of reports filed pursuant to the Act or permitted public access to reports [are ] given sufficient information by reporting individuals concerning the nature of their outside interests and activities so that an informed judgment can be made with respect to compliance with applicable conflict of interest laws and standards of conduct regulations.

    5 C.F.R. 2634.202.

  15. The gratuity provision of federal criminal law, Title 18, United States Code 201(c)(1)(A) prohibited a person or entity from directly or indirectly giving anything of value to a public official for or because of any official act performed or to be performed. Title 18, United States Code 201 (c)(1)(B) prohibited a public official from directly or indirectly receiving or accepting anything of value personally for or because of any official act performed or to be performed.
  16. Title 18, United States Code, 209(a) prohibited a corporation from supplementing the salary of an employee of the United States under circumstances which would make its receipt by the employee compensation for his services as an officer or employee of the government.
  17. . Title 5, United States Code, 7353(a) prohibited an employee of the executive branch from: solicit[ing] or accept[ing] anything of value from a person--

    (1) seeking official action from, doing business with, or (in the case of executive branch officers and employees) conducting activities regulated by, the individual's employing entity; or

    (2) whose interests may be substantially affected by the performance or nonperformance of the individual's official duties.

  18. Treasury was an agency and department of the United States of America. The United States Congress established the FFB as an agency of Treasury, inter alia, to provide funds to governmental lending agencies such as the REA. The FFB was subject to the general supervision and direction of the Secretary of Treasury, who also served as the Chairman of the Board of Directors of the FFB.
  19. The USDA, acting through the REA, guaranteed to the FFB all payments of principal and interest on mortgage notes entered into between the FFB and electric cooperatives. The REA issued the guarantees pursuant to the Rural Electrification Act of 1936, as amended (7 U.S.C. 901, et seq.), Section 6 of the Federal Financing Bank Act of 1973 (12 U.S.C. 2285), and Amended and Restated Loan Commitment Agreements between the REA and FFB.
  20. Electric cooperatives that would borrow capital from the FFB would enter into a Mortgage and Loan Contract or a Mortgage Note with the FFB. The REA guaranteed the FFB's loans to the electric cooperatives. Pursuant to the Mortgage and Loan Contracts, the electric cooperatives would enter into Notes to borrow particular sums, and, from time to time, draw sums of money against the Notes. The G&Ts experienced difficulty accessing the public debt market to refinance Notes entered into prior to 1983 because the terms of the notes prohibited prepayment for at least 12 years after the latest advance on a note, and carried substantial prepayment penalties. Unlike the older Notes, those entered into subsequent to 1983 contained less restrictive prepayment terms.
  21. Oglethorpe was a generation and transmission electric cooperative with principal offices in Tucker, Georgia, a suburb of Atlanta, Georgia. For the year ended 1993, Oglethorpe provided wholesale electric service to 39 of 42 Electric Membership Corporations in Georgia, serving approximately 2.3 million residents. For the year ended 1993, Oglethorpe had revenues of approximately $1.1 billion and assets of $5.3 billion.
  22. Commencing in or about the late 1970s, Oglethorpe was a client of defendant SMITH BARNEY. Oglethorpe hired defendant SMITH BARNEY in connection with financing the acquisition of assets, including pollution control equipment for power plants, structuring financing transactions, and accessing capital markets.
  23. Commencing in or about 1975, Oglethorpe entered into a Mortgage and Loan Contract with the FFB and, thereafter, borrowed funds pursuant to the terms of the contract and various Promissory Notes. By the early 1990s, Oglethorpe had loans outstanding with the FFB of approximately $3.1 billion. The REA was the guarantor of the FFB's loans to Oglethorpe.
  24. Commencing in or about March 1993, Oglethorpe entered into an arrangement with defendant SMITH BARNEY to pursue prepayment and refinancing of Oglethorpe's FFB loans and to seek a waiver from the REA and FFB of a substantial portion of the FFB prepayment penalties, which were estimated to total approximately $500 million.
  25. The REA favored permitting Oglethorpe to prepay the loans with substantially reduced penalties, because this would lower power costs to rural consumers and free up capital to permit the REA to make loans to other power cooperatives.
  26. It was the FFB's policy that borrowers pay 100% of the interest due if the loan went to its full term. Treasury concluded that:
    1. Approving Oglethorpe's request for a waiver of prepayment premiums would result in a substantial cost to taxpayers of approximately $286 million at a time of severe budgetary constraint;
    2. Granting the requested waiver would benefit only one particular group or class to the detriment of all taxpayers; and
    3. Granting the waiver sought by Oglethorpe would set an expensive precedent that all FFB borrowers would ask to follow.
  27. If the FFB had agreed to prepayment and refinancing of the loans, and Oglethorpe refinanced the loans by issuing debt securities, SMITH BARNEY would have expected to have a significant role in a possible future offering of debt securities as a lead underwriter, and could have earned approximately $10 million in gross revenues.
  28. EOP was a District of Columbia corporation with principal offices in the District of Columbia. EOP was a political consulting firm that provided analytical support and advice concerning agriculture and other issues to companies concerning business matters with the United States government. The EOP principal was the project manager for EOP in its relationship with defendant SMITH BARNEY and Oglethorpe.
  29. Commencing in or about June 1993 and continuing through on or about March 31, 1995, EOP employed the girlfriend of the Secretary of Agriculture, as a seminar planner and staff associate.
  30. In furtherance of its efforts to pursue prepayment of Oglethorpe's outstanding loans with the FFB, commencing on or about March 31, 1993, defendant SMITH BARNEY hired EOP and the EOP principal to lobby Secretary Espy and another USDA official on behalf of its client, Oglethorpe. Beginning in or about January 1994, Oglethorpe paid EOP directly.
  31. EOP, through the EOP principal, lobbied Secretary Espy to obtain and retain his assistance and support in agreeing that REA allow Oglethorpe to prepay and refinance its loans from the FFB, and to use his position as Secretary of Agriculture to convince the FFB, and the Secretary of the Treasury to permit the prepayment of Oglethorpe's loans; and, commencing in or about February 1994, to seek the assistance of the office of the Vice President of the United States in pressing Treasury to agree to said prepayment and waiver of approximately $286 million in prepayment penalties.
  32. Defendant SMITH BARNEY, Oglethorpe and EOP had a goal of reducing the prepayment penalties as quickly as possible.
  33. On or about June 15, 1993, Oglethorpe submitted a proposal to

    Treasury to prepay the REA loans, that included the following key provisions:

      Oglethorpe will prepay all of the $3.1 billion of debt owed to the Federal government plus a penalty estimated by FFB to be approximately $200 million. Oglethorpe will finance the prepayment and penalty in the capital markets without the REA guarantee. Oglethorpe will permanently exit the REA program. The Secretary of the Treasury will use his explicit statutory authority to waive prepayment penalties on Oglethorpe's FFB advances outstanding as of July 2, 1986 (approximately $300 million).

  34. On or about August 19, 1993, Secretary Espy wrote to Secretary of the Treasury Lloyd Bentsen that "[w]e strongly support the proposal and recommend that Treasury approve Oglethorpe's application for prepayment....[signed "Mike"]."
  35. On or about December 29, 1993, defendant SMITH BARNEY sent to the EOP principal 36 pages of background information that included talking points and briefing memoranda concerning the refinancing proposal.
  36. On or about January 4, 1994, the EOP principal requested that Secretary Espy write a letter to Treasury Secretary Bentsen. The EOP principal drafted the letter for Secretary Espy's signature.
  37. On or about January 4, 1994, Secretary Espy sent the following to Secretary Bentsen in the District of Columbia:

      Dear Lloyd:

      I am writing to follow up on my previous correspondence of August 19, 1993 to you regarding my support for the request of Oglethorpe Power Corporation (Oglethorpe) to prepay its Rural Electrification Administration (REA) loan. I reiterate my strong support of Oglethorpe's proposal and recommend approval of its application for prepayment. In particular, I wanted to bring to your attention that the Office of Management and Budget has also concurred with the support of the requested prepayment.

      I appreciate your attention to this matter. If you have any questions regarding the Department's recommendation, I would be pleased to discuss it with you or provide you with further details.

      Sincerely,

      [signed "Mike"]
      Mike Espy
      Secretary

  38. On or about January 7, 1994, Treasury, based upon the decision of the Secretary of the Treasury, rejected Oglethorpe's prepayment proposal. Specifically, the Vice President of the FFB wrote the following to the President and Chief Executive Officer of Oglethorpe:

      It is longstanding Treasury policy, however, to deny requests for waivers of prepayment premiums because such premiums inure to the benefit of all taxpayers. After careful analysis, Treasury has concluded that approving Oglethorpe's request for a waiver of prepayment premiums would result in a substantial cost to taxpayers (approximately $286 million) at a time of severe budgetary constraint. Moreover, granting the requested waiver would benefit only one particular group or class to the detriment of all taxpayers.

  39. Although Treasury rejected Oglethorpe's proposal, Oglethorpe, SMITH BARNEY and EOP continued to lobby Secretary Espy to persuade Treasury to reconsider its position and permit prepayment and refinancing of the loans.
  40. On or about January 11, 1994, the EOP principal spoke with Secretary Espy concerning Treasury's rejection of Oglethorpe's prepayment proposal.
  41. On or about January 12, 1994, Carosso and a co-worker, both employees of defendant SMITH BARNEY, and the EOP principal met with officials of Oglethorpe to discuss further efforts to reduce the prepayment penalties. During the meeting, the EOP principal represented that Secretary Espy would be in Atlanta, Georgia to attend the Super Bowl. The EOP principal also suggested that it would be productive for Oglethorpe officials to meet with Secretary Espy during his trip to Atlanta, Georgia for the 1994 Super Bowl, and proposed to arrange a meeting for Saturday, January 29, 1994, the day before the Super Bowl.
  42. At the January 12, 1994 meeting, or in a telephone call related to that meeting, the EOP principal, informed, among others, an employee or employees of defendant SMITH BARNEY, that the EOP principal wanted tickets to the 1994 Super Bowl in Atlanta, Georgia for Secretary Espy.
  43. During the conversation of on or about January 12, 1994, concerning Super Bowl tickets, the EOP principal stated to an employee or employees of defendant SMITH BARNEY that he needed four tickets. He intended to keep two for himself and to have two for Secretary Espy.
  44. On or about January 13, 1994, Oglethorpe assigned to EOP responsibility for coordinating, preparing and transmitting an appeal to Secretary Espy, to "facilitate a meeting between the CEO of [Oglethorpe]" and Secretary Espy to discuss the appeal, and to develop and implement further strategy to deal with Treasury.
  45. On or about January 14, 1994, defendant SMITH BARNEY sent a proposed outline for an appeal letter to Secretary Espy to Oglethorpe and the EOP principal.
  46. On or about January 25, 1994, Carosso met with the EOP principal and discussed Oglethorpe and the REA.
  47. On or about January 27, 1994, the President and Chief Executive Officer of Oglethorpe sent a letter to Secretary Espy confirming the meeting and lunch between senior officials of Oglethorpe, Secretary Espy and the EOP principal at the corporate offices of Oglethorpe. The letter was also faxed to defendant SMITH BARNEY.
  48. On or about January 28, 1994, Carosso had a telephone conversation with a vice president of a financial printer, during which Carosso requested that the vice president of the financial printer arrange for the purchase of three tickets to the Super Bowl. Carosso asked the vice president of the financial printer to advance payment in the amount of $6,600 for the 1994 Super Bowl tickets to an Atlanta-based ticket scalper, and to have the tickets delivered to Oglethorpe for the EOP principal to pick up at Oglethorpe.
  49. On or about January 28, 1994, the financial printer, acting on behalf of defendant SMITH BARNEY, paid a total of $6,600 to the ticket scalper for three tickets to the 1994 Super Bowl. The face value of each ticket was $250. Carosso understood that SMITH BARNEY would be billed for the cost of the tickets.
  50. On or about January 28, 1994, three tickets to the 1994 Super Bowl football game were delivered to Oglethorpe for the EOP principal.
  51. On or about January 29, 1994, Secretary Espy met with senior officials of Oglethorpe and the EOP principal at Oglethorpe's headquarters in a suburb of Atlanta, Georgia. No one from SMITH BARNEY was present. While the EOP principal was at Oglethorpe, an officer of Oglethorpe gave to the EOP principal an envelope containing three Super Bowl tickets.
  52. Later that same day, the EOP principal gave to Secretary Espy one of the three tickets to the Super Bowl, that defendant SMITH BARNEY purchased at the request of the EOP principal.
  53. On or about January 30, 1994, Secretary Espy attended the 1994 Super Bowl in Atlanta, Georgia. Secretary Espy did not use the ticket paid for by Smith Barney for admission to the Super Bowl.
  54. When the EOP principal gave the 1994 Super Bowl ticket to Secretary Espy, Secretary Espy was aware in part, and among other things, that the EOP principal was working for defendant SMITH BARNEY and Oglethorpe in its attempt to effect agreement between USDA and Treasury in the proposal to refinance Oglethorpe's debt.
  55. Secretary Espy contacted the Office of Management and Budget to seek the support of its Director for Oglethorpe's proposal for refinancing the REA loans, including waiver of approximately $286 million in prepayment penalties.
  56. On or about February 7, 1994, Carosso and another SMITH BARNEY employee met with the EOP principal and the Chief Executive Officer of Oglethorpe in New Orleans, Louisiana to discuss FFB financing.
  57. On or about February 16, 1994, the EOP principal submitted to Oglethorpe an invoice for services rendered in January 1994, in which EOP detailed certain services it had rendered, including the following:
    • Met with the Secretary of Agriculture and Oglethorpe Power Corporation executives in Atlanta to discuss the proposal for Oglethorpe to pay off all of its Federal Financing Bank loans.
    • Continued to work with USDA officials and White House Officials on our approach to the appeal.
  58. On an unknown date between February 1, 1994 and February 17, 1994, Secretary Espy discussed Oglethorpe's refinancing proposal with the Vice President of the United States. Secretary Espy discussed this meeting with the EOP principal. On or about February 17, 1994, Secretary Espy sent the following letter to Jack Quinn, then Chief of Staff to the Vice President of the United States:

      Dear Jack:

      I'm writing to follow up on the brief conversation I had with the Vice President after the last enterprise zone meeting concerning the Oglethorpe Power Corporation. Enclosed please find a copy of Oglethorpe's letter to me asking for a reconsideration of Treasury's pre-payment denial. Also, enclosed is a copy of FFB's letter to Oglethorpe.

      As you will remember, USDA under our REA loan guarantee program authority, approved Oglethorpe's proposal to ‘graduate' from the program after repaying @ $3B in accrued debt and interest and @ $200M in prepayment penalties. It seems to us that consistent with our ‘reinventing' philosophy, we should allow financially strong companies like Oglethorpe to ‘exit' this subsidy program and then turn our focus towards businesses with a greater need.

      Jack, I know you're busy -- but, I wish you would give this matter your close attention. This is the largest client in the USDA-REA loan program. I'd be pleased if they could be allowed a graceful exit."

      Sincerely,

      [signed "Mike"]
      Mike Espy

  59. On or about March 1, 1994, the financial printer issued an invoice in

    the amount of $6,600.00 to:

      SMITH, BARNEY, HARRIS, UPHAM & CO., INC.
      Attn: STEVEN B. CAROSSO

    with a description that stated, in pertinent part:

      PROVIDING 3 SUPERBOWL TICKETS @$2,200.00 EACH.

    This invoice was not processed for payment at defendant SMITH BARNEY.

  60. In or about February or March 1994, the EOP principal and an officer of Oglethorpe met with members of the staff of the Vice President of the United States.
  61. In or about March 1994, the EOP principal submitted to Oglethorpe an invoice for services rendered in February 1994, in which EOP enumerated certain services, including the following:
    • Met with the Secretary of Agriculture and REA officials to discuss the next steps concerning the reconsideration of Oglethorpe's proposal.
    • Met with Smith Barney officials in New York to evaluate the conceptual outline for the Exit Policy and reviewed the status of the Oglethorpe Exit Proposal.
    • Obtained assurances from the Vice President's office that the Oglethorpe proposal will be reconsidered.
  62. On or about April 12, 1994, Carosso met with a representative of EOP in the District of Columbia concerning the Oglethorpe refinancing.
  63. On or about April 17, 1994, Secretary Espy raised with the Vice President of the United States for the second time the Oglethorpe refinancing.
  64. Beginning on or about June 6, 1994, Carosso undertook to conceal the purchase of and payment for the Super Bowl tickets.
  65. On or about June 6, 1994, Carosso asked the vice president of a financial printer to delete the reference to the Super Bowl from the financial printer's invoice to defendant SMITH BARNEY. As a result of that telephone call with Carosso, a vice president of the financial printer completed an "Invoice Inquiry" to change the description on the invoice. The instructions on the Invoice Inquiry read: "CHANGE LANGUAGE ON INVOICE TO READ ‘PRINTING CONSULTATION FEE ON Oglethorpe POWER PROJECT.'"
  66. On or about June 14, 1994, Carosso asked the vice president of a financial printer to delete the word "consultation" from the financial printer's invoice to defendant SMITH BARNEY. As a result of that telephone call, the financial printer sent a new invoice to defendant SMITH BARNEY in the amount of $6,600 containing a false description as follows:

      SMITH, BARNEY, HARRIS, UPHAM & CO., INC.
      Attn: STEVEN B. CAROSSO

      PD
      PRINTING FEE ON Oglethorpe POWER PROJECT.

  67. On or about June 30, 1994, Carosso concealed the purchase of the Super Bowl tickets by submitting or causing to be submitted for payment the invoice containing the false description through a "Request for Payment" form submitted to his superiors and others, including accounts payable.
  68. On or about July 19, 1994, defendant SMITH BARNEY issued a check in the amount of $6,600 to the financial printer, in payment of the invoice containing the false description, and entered into its accounts payable detail ledger a payment of $6,600.00 to the financial printer for "printing expenses." In truth and in fact, the payment was for three tickets to the 1994 Super Bowl, one of which was given to Secretary Espy.
  69. On or about February 16, 1995, Secretary Espy signed and submitted to the USDA a Public Financial Disclosure Report, Form SF-278, covering the calendar year 1994 on which he certified that the statements made were "true, complete and correct" to the best of his knowledge and belief. The Public Financial Disclosure Report did not list the Super Bowl ticket that he received from the EOP principal.

    COUNT I (Tort)

  70. Plaintiff realleges and incorporates by reference paragraphs 1 through 69 as though fully set forth herein.
  71. Commencing on or about January 29, 1994, and continuing through at least December 31, 1994, defendant SMITH BARNEY, acting through Carosso, the Managing Director of the public power group, sought to procure and knowingly participated in Secretary of Agriculture Espy's breach of his fiduciary duty owed to the United States and interfered with his agency relationship with the USDA and the Executive Branch by giving him a $2,200 gratuity, specifically a ticket to the January 30, 1994 Super Bowl in Atlanta, Georgia valued at $2,200.

    COUNT II (18 U.S.C. 209 and 216(b))

  72. Plaintiff realleges and incorporates by reference paragraphs 1 through 69 as though fully set forth herein.
  73. On or about January 12, 1994, the EOP principal told an employee of defendant SMITH BARNEY, that he wanted and needed tickets to the January 30, 1994 Super Bowl for Secretary Espy.
  74. On or about January 29, 1994, the EOP principal offered and gave one of the three tickets to the 1994 Super Bowl, purchased for $2,200, to Secretary Espy.
  75. In consequence of the acts set forth in this Count, defendant SMITH BARNEY did supplement the salary of an officer and employee of the executive branch of the United States Government as compensation for his services, by providing to Alphonso Michael Espy, the Secretary of the United States Department of Agriculture, one Super Bowl ticket valued at $2,200 as compensation for his services in connection with the prepayment and refinancing of a $3.1 billion loan with the Federal Financing Bank and the Rural Electrification Administration, in violation of 18 U.S.C. 209.

    PRAYER FOR RELIEF

       WHEREFORE, plaintiff, the United States of America, prays that judgment be entered in its favor against defendant SMITH BARNEY and $1,000,000 damages be awarded to the plaintiff for Count I and the maximum civil penalty in the amount of $50,000 be awarded to the plaintiff for Count II.

     

Respectfully Submitted,

DONALD C. SMALTZ
INDEPENDENT COUNSEL

 

 



THEODORE S. GREENBERG
Deputy Independent Counsel
ROBERT W. RAY
Chief Associate Independent Counsel
JACOB S. FRENKEL
Associate Independent Counsel

Office of Independent Counsel
103 Oronoco Street, Suite 200
Alexandria, VA 22314
(703) 706-0010

 

 

 



THEODORE S. GREENBERG
Special Counsel
United States Department of Justice

 

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