WisPolitics Courtwatch Blog

MILWAUKEE--Prosecutors told a federal judge today a real estate agent sought a kickback in the proposed sale of a state office building to cover his gambling losses and other financial troubles.

But Larry Lupton's defense attorney downplayed his financial troubles while insisting the real estate agent was operating within his contractual obligations and abiding by the law in negotiating a commission split.

Lupton is charged with soliciting an illegal $75,000 kickback and sharing confidential bid information with a broker representing a potential buyer of the Department of Administration building in Madison. He is also charged with lying to an FBI agent.

The building was valued at about $30 million. Lupton represented Equis, the commercial real estate firm that had the contract to sell the building for a 4.3 percent commission.

The government was to wrap its case up today. It was unclear in court today when the defense would present its side, but it could be as soon as Tuesday afternoon or as late as Thursday, depending on scheduling and other issues. The parties have agreed to proceed without a jury and U.S. District Judge Lynn Adelman is hearing the case.

Assistant U.S. Attorney Gregory Haanstad said today Lupton attempted to arrange for buyer's broker Gabrielle Silverstein to pay him 0.25 percent of the sales price from Silverstein's commission and then shared information to ensure Silverstein's buyer would be able to make a winning bid. Silverstein immediately contacted the FBI regarding the initial conversation and assisted in the investigation, according to Haanstad.

Haanstad said Lupton then lied about whether he revealed confidential information regarding bids to an FBI agent investigating the complaint. Haanstad said that despite the agent telling Lupton not to contact any potential witnesses, Lupton immediately phoned Silverstein after the interview.

Haanstad worked to establish Lupton's financial difficulties prior to meeting with Silverstein in April 2007 by noting that a foreclosure judgment on Lupton's home was issued in November 2006 and that he showed only $281 in adjusted income on his 2006 tax return.

Haanstad also pointed to a string of roughly $20,000 in gambling losses Lupton incurred from Dec. 26, 2006, through April 3, 2007, of which $2,000 came the day before his initial conversation with Silverstein. Lupton had been receiving $6,000 each month since November 2006 in advances from Equis, and the firm would have recouped that money before paying Lupton his remaining share of the commission.

But Lupton's defense attorney, Joseph Owens, painted a different picture of Lupton's finances and the nature of the bidding process and commission arrangement.

Pointing to the same casino records the government used, Owens showed that Lupton won almost $31,000 over the four occasions he visited the casino prior to the losses detailed by prosecutors. He also noted that Lupton showed little income in 2006 because he was unemployed for part of the year and then was paid in the form of advances he didn't need to report. Owens said the government failed to mention the bank reconstituted Lupton’s mortgage five weeks after it foreclosed.

Owens said Lupton was free to share bid information in negotiating the sale with other brokers. Owens noted that a confidentiality clause at the end of the template Lupton provided bidders was meant to prevent bidders from talking together to drive the price down, not to limit what Lupton could share. He also noted that the information Lupton provided Silverstein about a competitor's bid came from phone conversations and was provided to Silverstein two hours before the competitor sent the letter of intent to Lupton with the confidentiality clause in it.

Owens agreed that Lupton told the FBI investigator that he did not reveal confidential information, but that the two were "talking past each other" and what the FBI thought was confidential was, in fact, not confidential.

Owens pointed out that the letters of intent from many of the bidders had buyer broker commissions of up to 1.5 percent. This figure was based on the 4.3 percent commission the state was going to pay, Owens said.

The state however, was in the process of attempting to change its contract with Equis to offer only 1.75 percent commission. This, Owens said, would have left Equis with virtually no commission if the buyer broker commissions weren't negotiated lower. Owens said Lupton was instructed to renegotiate commissions as a contingency plan. Disclosure of the commission split would have been required during the closing, Owens said, which never occurred because the state scuttled the contract when the government announced it would seek charges against Lupton.

Gov. Jim Doyle proposed selling the DOA building on West Main Street in downtown Madison in his 2007-09 budget. The governor did not propose making a second attempt at selling the building in the budget he unveiled last month.

By David Wise

Labels: Larry_Lupton

Former Milwaukee Ald. Michael McGee Jr. in a hand-written motion is requesting a 20-day extension so he can review a pre-sentence report from the prosecution. McGee was found guilty in June on nine federal charges.

See the notice of motion here.

See the motion here.

Labels: Michael_McGee

U.S. District Judge Charles Clevert today ruled that certain evidence from former Ald. Michael McGee's trial could be released to the public, including wiretap recordings played during the trial.

In allowing the release of wiretaps, Clevert would not release CDs and DVDs containing body-wire recordings or those that weren't entered into evidence. He also withheld bank records and other documents that could be used for identity theft purposes.

The defense had argued that all the records should be held at least until another federal hearing could be held after McGee's appearance in state court next week, arguing that the immediate release of recordings could taint a potential state jury pool. Prosecutors argued that the state case is irrelevant to the federal case and said the public had a right to access the information.

A lawyer for the Milwaukee Journal-Sentinel also appeared before the court and argued that the guilty verdict was already the most prejudicial information that a potential jury could hear and said the public should have access to the underlying evidence that was the basis for that verdict.

Prosecutors made a CD of audio recordings available today. Other documents are expected to be released after Clevert's staff reviews them.

Download a .zip file of the audio recordings (21 MB)

Labels: Michael_McGee

By David A. Wise

MILWAUKEE -- A federal jury in Milwaukee has found former Ald. Michael McGee Jr. guilty on nine federal charges, including five counts of bribery, three counts of extortion and one count of attempting to avoid reporting requirements for a $15,000 wire transfer. The verdict was announced shortly before 9:30 p.m. Tuesday night, after roughly six hours of deliberation.

McGee, who looked straight ahead as the verdict was read, faces up to 30 years in prison. He will remain in custody until his sentencing, which is set for Oct. 24.

U.S. Attorney Steven Biskupic said afterwards that he was pleased with the verdict and said it was the result of excellent law enforcement work.

McGee's younger brother, Jonathan McGee, expressed disappointment in the verdict but said it was not unexpected. He also said he believes Michael McGee was targeted because of his family's controversial nature.

"He's a McGee," Jonathan McGee said. "Y'all haven't forgotten [Michael McGee] Senior," he said, addressing a group of reporters.

In closing arguments earlier today, federal prosecutor Joseph Wall laid out each of the nine counts facing McGee. Wall said the informant in the case, Jack Adel, came forward because he was "tired of being used and exploited" by McGee, who Wall said had "almost complete power" over whether Adel could continue to keep his liquor license for his grocery store.

Wall recounted witness testimony about McGee demanding money from numerous business owners for support on license and zoning decisions and pointed to various recordings of McGee himself asking for money.

He recounted a tape in which McGee said "I'm the gatekeeper" on licensing decisions and suggested McGee's power was such that when it came to decisions for the district, "it starts and stops with Mike McGee."

Meanwhile McGee's attorney, Calvin Malone, painted McGee as the target of plot by Adel to remove him from office because he opposed Adel's sale of his store to a man who did not live in the district.

Malone tried to raise doubts about tapes the prosecution did not play and cases in which taped evidence or paperwork did not exist, suggesting there was evidence there that Adel plotted to remove McGee.

He attempted to portray Adel as deceitful for secretly recording conversations he had with others while serving as an informant. He also pointed to Adel taking money from others in his own unsuccessful bid for McGee's Common Council seat even though he said he did not intend to win the seat as further evidence of Adel's deceitful nature.

Given that, Malone said that any evidence linked to Adel is insufficient to convict McGee.

"The deception and manipulation and ambition is in the evidence," Malone said.

To those who believe such a deceptive plot cannot exist, Malone pointed to the case of the Tuskegee syphilis experiment in which African-American males were told they were receiving treatment for the disease, although none had been given.

In his rebuttal, Wall reiterated that Adel was motivated out of being tired of being forced to pay McGee money and provide him free food and cell phone minutes. He noted that during his defense Malone did not choose to play the tapes that he suggested showed McGee was the victim of a conspiracy.

Wall said he did not play complete tapes because they would be gibberish and irrelevant

As for Adel's credibility, Wall said he did not just put Adel on the stand alone, but called up 25 witnesses, 65 wiretapped phone calls, 16 body wire recordings and numerous documents.

To close his rebuttal, Wall played a six-minute slide show of McGee's alleged victims with audio of McGee allegedly demanding money and planning and discussing extortion activities with others.

The tape ended with McGee telling an associate that he could be called Michael, Mike, or "thug Mike."

Labels: Michael_McGee

The lawyer for Michael McGee Jr. called just three witnesses in his federal corruption case trial Monday before resting, a decision the former alderman initially took issue with when questioned by the judge overseeing the trial.

Asked whether he agreed with the decision not to call more witnesses, McGee replied, "No, your honor, not really."

Following those remarks, a conference was called to discuss how to proceed with the case. U.S. District Judge Charles Clevert again asked McGee if he agreed with the decision not to call any more witnesses, and he said he did.

Both sides will work on jury instructions before Tuesday morning, when the jury will be called back for closing arguments.

McGee attorney Calvin Malone spent last week trying to chip away at the government's case while the prosecution presented its witnesses, focusing on the credibility and memory of informant Jack Adel. Malone called only former acting Mayor Marvin Pratt, FBI agent George Strong and Bill Arnold, who works in the Milwaukee Common Council's media office, to the stand.

Pratt, who served on the Common Council before becoming acting mayor, testified that he was allowed to receive payment for assisting business owners with license issues as a lobbyist but would not have been allowed to accept such compensation while on the council.

Strong testified about a phone call from Adel about whether he should help a gas station attendant translate for a media interview regarding McGee's arrest. Malone questioned Adel about a recording of the phone call last week, and Adel could not remember which George was on the tape.

Arnold testified about a press release from McGee's office about a reward that was offered for tips in a rape case. Adel's money was used to put up the reward, though he was not mentioned in the press release. Malone questioned Adel about the reward last week.

Labels: Michael_McGee

The prosecution's key witness in the federal corruption case of Michael McGee Jr. spent Thursday testifying about numerous incidents in which he supplied McGee with money and goods and helped arrange meetings with other business owners and McGee.

Jack Adel's testimony was punctuated by prosecutors playing dozens of recorded phone calls, body wire recordings and several video tapes in which McGee either demanded money or other goods from Adel, or of Adel helping arrange payments from business owners who needed support for license renewals or transfers.

Adel, who served as an FBI informant in the case and owned Mother's Foods, told jurors that McGee began demanding money and goods from him starting in 2004. Adel said McGee demanded free cell phone minutes for pre-paid cell phones for him, his wife and his associates, food, money and sponsorship of fundraisers.

Adel said McGee’s demands increased over time, and Adel estimated McGee siphoned as much as $30,000 worth of money and goods from his store.

"Always his need was increasing," Adel said. "It came to the point where I got sick going in to the store."

"For what? What am I working for?" Adel said. "It is not profitable to me."

He discussed one case in which he said McGee called him before the store even opened to have more minutes put on his cell phone.

"I didn't even have my lights turned on yet and already I have expenses," Adel said.

But Adel said he kept paying McGee in order to keep his beer and liquor licenses, which he said brought in sales of over $200,000 per year.

"He was my alderman. The alderman has the power over my license," Adel said. "What can I say, no?"

Labels: Michael_McGee

Jurors heard wiretap recording of former Milwaukee Ald. Michael McGee Jr. allegedly soliciting money for the approval of a liquor license as his federal corruption trial continued today.

Mohammed Abdul Rahim, a businessman from McGee's district, took the stand Wednesday afternoon and recounted a meeting with McGee at a Sam's Club to discuss a beer license for the store he manages, Family Super Saver. During the encounter, Rahim said that McGee told him, "You owe me for it." The amount he said he and McGee agreed upon was $5,000.

Several days later Rahim gave an associate of McGee's, identified by prosecutors as Dennis Walton, the money. The beer license was green-lighted during the next common council meeting.

Prosecutors played recordings that included McGee and Rahim discussing an additional $5,000 that the Rahim had agreed to pay.

Labels: Michael_McGee

Former Milwaukee Ald. Michael McGee was the target of a campaign to remove him from office by a local businessman-turned informant, his defense attorney argued during opening statements in his federal trial today.

McGee faces nine counts alleging bribery, extortion and attempting to evade reporting requirements for a $15,000 cash transaction.

Federal defender Calvin Malone said the government's main witness, Jack Adel, had initially supported McGee by hosting fundraisers, contributing to programs McGee supported, and introducing him to local business owners. The two had developed "what one could describe as friendship," Malone said.

But that friendship dissolved when McGee opposed a plan by Adel to sell his liquor and grocery store to a person outside of the district, Malone said. It was then that Adel contacted former Ald. George Butler, who set Adel up with the FBI. Adel then waged a campaign of "manipulation" and "deception" to remove him by convincing federal prosecutors to charge him with bribery and extortion. Adel then ran for McGee's seat.

"This case is about the efforts of a local businessman who waged a campaign to remove his alderman," Malone said. "He was so pleased with that effort that he decided to wage another campaign once the alderman was arrested."

Federal prosecutor Joseph Wall, however, said Adel came forward because he "was tired of paying money to the defendant" and providing him with free food for fundraisers and "hundreds of thousands" of free cell phone minutes in exchange for McGee's support.

Wall said that he would play recordings gathered through body wires and phone taps of McGee, in his own words, planning and carrying out bribery and extortion activities. Wall said McGee extorted and accepted bribes from "vulnerable people who needed his support," and detailed eight cases in which he said McGee did so for those needing support on licensing matters.

Wall also detailed McGee's offense of trying to evade reporting requirements when he sent $15,000 to a concert promoter in New York, saying the prosecution would show there are "reasons why he did not want his name attached to that money."

Among the witnesses Wall said the defense would call is Ald. James Bohl, who chairs the licensing committee. Wall said his testimony would in part be a discussion of the practice of "aldermanic privilege," an unwritten rule in which the Council defers to the wishes of aldermen regarding licenses and permits within the district.

-- By David Wise

Labels: Michael_McGee