There are ordinary sleazy years, and then there was Memphis 2006.
Between high-profile investigations of political corruption, drug dealers, and strip clubs, there was enough blue material to offend -- or satisfy -- just about everyone. And most of it was set out in graphic detail in trials, tapes, indictments, and affidavits of men and women behaving badly. It was like having Ludacris, Johnny Knoxville, and Borat over for drinks at Kathy Griffin's and turning on a tape recorder.
In fairness, not all of this happened in 2006. Some of it happened last year or the year before and just became public this year. Let's just say that Memphis, recognized this year as one of America's most violent and least healthy cities, has a leg up on more laurels in 2007. Test your knowledge with this little news quiz.
When Rickey Peete said "That's a good picture" to Joe Cooper, he was talking about: A) the "4K" Joe was writing on a piece of paper; B) Jackass; C) Jackass Number Two.
"Another shocking aspect of Tunica Cabaret's criminality is the role of management in the perpetration and obfuscation of the crimes," said a criminal affidavit. Most unspeakably shocking, however, was: A) the sex show featuring a daisy chain of naked girls on the dance floor; B) the guns and drugs in plain view; C) the food service.
"Nobody brings me funny stuff." So said: A) Willie Herenton; B) Roscoe Dixon; C) Flyer editor Bruce VanWyngarden.
"I did not feel strong enough about it to fight about it." Who said it? A) a MATA official explaining revisions to the FedExForum garage; B) Joe Frazier before getting in the ring with Willie Herenton; C) Herenton after realizing Frazier was drunk.
"'Can you get us a contract with the state of Tennessee?' I said, 'Well, shit, we may have to just create some law.'" This comes from A) Andrew Jackson's biography; B) the state constitution; C) Tim Willis posing as a representative of E-Cycle Management.
"Joe ain't the big juice. The big juice is Lois DeBerry, John Ford, Roscoe, and Kathryn Bowers. That's your heavy hitters right there." Juiceless Joe would be A) Joe Cooper; B) Joe Towns; C) Joe Frazier.
The statement "You don't come out of the Senate with 17, yo shit don't fly" is: A) what Barry Myers told E-Cycle Management; B) written on John Ford's old business card; C) so true.
Who got in big trouble for repeatedly saying "nigger"? A) government witness Barry Myers; B) domestic terrorist and white racist Van Crocker; C) comedian Michael Richards.
Watusi, Don Juan, and Sticky areA) nicknames of men indicted last week on federal gun charges; B) real names in obituaries in The Commercial Appeal;C) guys who hang with Lavender, Trinity, and Kitten at Platinum Plus.
"Free popcorn and tacos at the bar" is: A) a secret warning that undercover cops are raiding strip clubs; B) the holiday special at Huey's; C) seven words you will never hear at FedExForum.
When he said "I'll drum up seven or make somebody walk out," Edmund Ford meant seven: A) City Council members; B) dead bodies for his struggling mortuary; C) years of prison time if convicted.
"They were all smoking marijuana in the kitchen of the Tunica Cabaret, where Vega and Youngblood were cooking food for customers." This sworn statement should alarm: A) the DEA; B) the vice squad; C) the health department.
Who said, "I have done this world wide, and this is the wildest I have ever seen," and "That's the best show I've ever seen in my life"? A) an MPD officer working undercover at a strip club; B) a Grizzlies fan; C) a reporter who covers the City Council.
Before he said "Throw me one of them stacks, man," Roscoe Dixon was: A) watching a 400-pound wrestler on television; B) calculating the odds that Tim Willis was working for the FBI;C) concocting his alibi.
Happy &***@#!! New Year.
John Ford was United American Health Care's rainmaker.
Back in 2000-2001, the Detroit-based company that manages health care for Medicaid patients was in the ditch. Its publicly traded stock (symbol: UAHC) was selling for around $1. Business was lousy. It was about to lose its management contract with the state of Michigan. Then the company found financial salvation via a lifeline to Memphis and Nashville through Ford.
Using the time-tested Memphis practices of cronyism, strong-arming the state Senate, turning low-income Ford voters into revenue-generating customers, and -- according to a new federal indictment -- corruption, Ford helped turn UAHC around.
By 2002, UAHC was enrolling thousands of new members, most of them coming from Tennessee's TennCare plan. Its headquarters was still in Detroit, but its business was in Memphis and West Tennessee. Operating as OmniCare, the CEO was Ford's friend Osbie Howard, who was city of Memphis treasurer from 1992 to 1995 under Mayor Willie Herenton and Herenton's campaign treasurer in 1999. Another key executive was Stephanie Mebane Dowell, formerly Herenton's administrative assistant and later legislative director for Methodist Le Bonheur Healthcare until 2001.
Things were rosy for a few years. The stock soared to $7 a share. Howard was earning over $300,000 a year and had 83,000 shares of stock and options on 130,000 shares. Ford was secretly collecting "consulting fees" from UAHC of $10,000 a month, totaling more than $400,000 by 2005.
But that was the year the roof caved in. Two OmniCare employees, including in-house attorney Felicia Corbin Johnson, blew the whistle on illegal acts in civil lawsuits. Federal investigations targeted Ford's ties to OmniCare and other HMOs and, in a separate investigation, bribes he allegedly took from an FBI undercover company called E-Cycle Management.
Howard resigned, and UAHC publicly admitted he was "involved" with Ford in a partnership called Managed Care Services Group (MCSG) that was "not approved by UAHC and [was] not consistent with UAHC's code of conduct." The stock price plunged from $6 to $2. A few weeks later, Ford was indicted for the first time.
The new indictment, released Monday in Nashville, charges Ford with wire fraud and concealing his so-called consulting work for TennCare contractors. Howard is not mentioned by name, but the indictment refers to an "Individual B" described as "a high-level executive with UAHC, with United American of Tennessee and with OmniCare and also a 30 percent owner of MCSG."
Howard could not be reached for comment. In the 1999 Herenton campaign, he was pleasantly low-key and accurately predicted that the mayor would get about 46 percent of the vote. Among the losing candidates was Joe Ford, John's brother. That Herenton campaign, managed by A C Wharton, was notable for the amount of money spent -- more than $800,000 -- in a fairly short time in a race that was not close.
According to the indictment, John Ford, as an influential senator and a member of the TennCare Oversight Committee, was the key to the growth of OmniCare, and OmniCare was the key to the growth of United American Health Care. With Ford's help, OmniCare enrolled more than 100,000 uninsured West Tennesseans in its managed-care network.
"After November 1, 2002, substantially all of UAHC's revenues were derived from its ownership of, and provision of services to, OmniCare through UAHC's wholly owned subsidiary," the indictment says. U.S. attorney Craig Morford said it shows Ford's "appalling willingness" to use his public position for personal gain.
Ford was scheduled to make an initial court appearance this week.
According to recent financial filings, UAHC's business plan is basically unchanged. It plans to "grow business in Tennessee" where it has 115,000 members and relationships with 19 hospitals and 900 doctors. Dowell is chief executive officer of UAHC Health Plan, OmniCare's successor.
For the first quarter of fiscal year 2007, UAHC had revenues of $4.2 million. Last week, four days before the indictment was unsealed, UAHC successfully completed a private placement of new shares of stock, raising $6.5 million. The stock was selling this week at slightly under $9 a share.
The other company mentioned in the latest Ford indictment is Doral Dental. Again, the parent company is conveniently based out of state (Wisconsin) where its ties to Ford were less likely to be scrutinized. Doral Tennessee had the TennCare dental contract, thanks to Ford, and allegedly paid him more than $400,000.
Whether or not they knew all the details, Ford's senate colleagues were aware of his consulting business (he listed consulting as his occupation in the Tennessee Blue Book) and the fortunes being made in the stock market. Some were apparently envious. In secret tapes played at his bribery trial, former Senator Roscoe Dixon talks about the subtleties of steering business to certain dentists and HMOs and says "everybody got some semi-hustle."
The whole premise of phony E-Cycle Management and Tennessee Waltz was high-rollers using lucrative state contracts to boost their revenues and credibility and make a killing in the market. And the template was real companies such as UAHC and Nashville-based Corrections Corporation of America.
The Flyer erroneously reported last week that Southland Park Gaming and Racing is owned by Penn National Gaming. It is owned by Delaware North Company.
Everyone's guessing who's next in Tennessee Waltz and Main Street Sweeper.
Did Joe Cooper set up anyone else? Who did Michael Hooks give up to get such lenience? Did Roscoe Dixon drop any names before he checked into prison? And so on.
Going on two years after the first Tennessee Waltz indictments were handed up, this seems clear:
First, talk is cheap, but federal prosecutors and the FBI are going to make a case against a public official when they have tapes -- preferably both audio and videotapes and preferably of more than one incriminating meeting.
Second, cooperation and taking blame pays big time. And going to trial, testifying, and publicly questioning the government's case will cost you big time.
Tapes made by undercover cooperating witnesses Tim Willis and Cooper nailed Dixon, Hooks, John Ford, Kathryn Bowers, Edmund Ford, and Rickey Peete. The names of several other Memphis politicians and developers have come up. None of them has been indicted, although that could change when a grand jury meets next week with evidence gathered from the offices of Peete, Ford, and the Memphis City Council.
Maybe it's a function of reality television, cell-phone cameras, and the Internet, but the unofficial standard of evidence in corruption cases is "If you're not on tape, you might escape." It's easier to convince a jury and -- this is important given the disproportionate number of indicted officials who are black -- the general public when you have pictures and tapes of money changing hands. A complicated paper trail combined with the testimony of convicted felons like we saw in the 1993 trial of Harold Ford Sr. doesn't cut it these days. The government lost that case. And a jury isn't likely to convict solely on the testimony of Joe Cooper either.
On the second point, Hooks got 26 months while Dixon got 63 months. The underlying offenses were basically the same. Both took money for influence from representatives of the fictional E-Cycle Management company. In fact, Hooks took over $24,000, while Dixon only got $9,500, plus another $6,000 in bribes on other legislation that "predicated" him for the sting. Neither man had a criminal record.
So what's the difference?
Dixon went to trial, lied to the FBI in a last-chance interview, and testified falsely on the witness stand. He consistently said he was trapped and selectively targeted. (Predicated or not, he had a point. How does the FBI know that other politicians are not predicated?) On the tape where he fidgets in front of stacks of money on Willis' coffee table, he is Everyman, as tragic and conflicted as any creation of playwrights David Mamet and Arthur Miller. As a documentary film, Dixon on tape would win awards. Dixon's courtroom defense, however, was ineffective and inconsistent. After calling several character witnesses, he was sentenced by U.S. district judge Jon McCalla.
Hooks pleaded guilty. He blamed himself and stayed on message. He was woeful, abject, remorseful, self-critical, unflinching before the media. When he wants to, Hooks has the charm and expressive personality of an actor. He asked only his attorney, Steve Farese, to plead for lenience at his sentencing. He is the nephew of esteemed former judge and civil rights leader Benjamin Hooks, who was in court Wednesday. He was sentenced by U.S. district judge Daniel Breen.
Conclusions: Exercising your right to trial by jury, as violent criminals do at public expense every day, can cost you in a political corruption case -- financially and in prison time. Sentencing guidelines are just that, guidelines. And McCalla is a harsher sentencer than Breen, at least on the basis of these cases.
There is no constitutional foundation for punishing someone for not helping the government. After he was indicted, Dixon did not flee, hurt anyone, or tell others to break the law. Dixon got three more years -- not because he committed a more serious crime or had a different criminal history but because he exercised his constitutional right and did not say he was sorry as convincingly as Michael Hooks did. He was punished more harshly for being uncooperative and bumbling than he was for breaking the law.
As McCalla said in another context at Dixon's sentencing, "That's wrong. Somebody has to say it."
Joe Cooper always wanted to be a major player in local politics. After 30 years, he finally got his wish.
A county squire from 1972 to 1977 under the old system of county government, Cooper was convicted of bank fraud, went to prison for four months, and returned to the political arena as a frequent and unsuccessful candidate for various elected offices. He has worked at times as a restaurateur, an assistant to the late billboard magnate William B. Tanner, and a salesman at Bud Davis Cadillac. For several years, Cooper has also been a familiar figure at City Council meetings, where it was never clear whether he was watching or working as a lobbyist in his unique style.
Now a money-laundering rap has Cooper cooperating with the FBI to set up City Council members Rickey Peete and Edmund Ford on a bribery charge involving billboards and zoning. Cooper went undercover to secretly tape and record the councilmen as they allegedly took cash payments from him in their offices.
The investigation has further crippled a city council whose authority and prestige were already waning toward irrelevance. Quasi-public boards such as the Center City Commission, Riverfront Development Corporation, Industrial Development Board, and Sports Authority have the power to grant tax freezes and build signature projects. Peete is one of several members who used the council as a springboard to these and other boards. Other members, including Janet Hooks and TaJuan Stout Mitchell, have resigned to take full-time jobs with the city administration. Tom Marshall, the council's senior member, exercises his greatest influence not as a council member but as head of Memphis City Schools' long-range facilities planning committee. Recusals and absences often mean the council is voting with 10 or 11 members, as it did on an important annexation vote (now likely to be delayed indefinitely) in November, instead of 13.
When the Tennessee Waltz investigation broke, no council members were indicted. But there was a feeling that it was just a matter of time. Cooper is in a position to play a role similar to cooperating witnesses Tim Willis and Barry Myers in Tennessee Waltz. Cooper's cooperation could lighten his sentence and appears to be key to removing Peete and Ford from office, and he may also have set up others on the council and County Commission.
"Joe Cooper is probably looking at more prison time than Rickey Peete just because of the dollars involved in the money-laundering case," said former U.S. attorney Hickman Ewing Jr.
Joe Cooper's client
The applicant for the billboards and zoning change was Memphis attorney William H. Thomas. Thomas did not return calls seeking comment. Councilmen said he is more of a land investor and billboard buyer than a practicing attorney. He developed apartments (and billboards) on Interstate 40 near Appling Road. He also proposed a warehouse project in the airport land-buyout area that was opposed by Whitehaven residents and rejected by the City Council in 2004. In 2005, he came before the state bar's Board of Professional Responsibility on a complaint involving a billboard that he was ordered to remove but did not. Helen Chastain, spokeswoman for the BPR, said Thomas was held in contempt of court. Thomas is appealing, and the board is awaiting the results of the appeal before issuing a censure.
Thomas is not identified by name in the criminal complaint. He could have hired Cooper to lobby the council without giving him specific instructions or knowing what Cooper was going to do with any money he paid to him. Cooper knew the billboard business from working for Tanner, who was the local billboard king in the 1990s. But Cooper's reputation and criminal history were also well known and might have concerned a client in the wake of the Tennessee Waltz investigation.
The city planning staff regarded Thomas' proposed four-acre Steve Road Planned Development of mini-storage facilities as unsuitable for the neighborhood and mainly aimed at getting billboard permits. It unanimously recommended rejection even though Thomas' planning firm was Fisher & Arnold, a well-regarded firm with former city planners on its staff. Thomas then took his plan to the Memphis City Council, a common practice even after plans get a negative recommendation. On October 3rd, the council voted 9-2 to approve it, with Scott McCormick and Carol Chumney voting no.
More significantly, the council overturned a billboard moratorium passed years ago under the leadership of former Councilman John Vergos, who made opposition to new billboards a personal crusade. Billboard magnates Tanner and Jerry Peck were major political contributors in the form of cash and campaign advertising. They had a falling-out over the division of their company, Tanner-Peck Outdoor Advertising, and the case went to Chancery Court. Chancellor Floyd Peete decided it in Tanner's favor. Peete died shortly after that, but a 2005 indictment of Tanner alleged that Peete was on the take. Tanner died before that case could be resolved.
Cooper paid Rickey Peete at the councilman's office on Beale Street, leaving "the paper" in the bathroom. Ford's payments were made at his funeral home, according to the complaint. The affidavit says the FBI provided the $19,000 in cash. Ewing said that is standard practice in stings so that the serial numbers can be recorded and the money can be used as evidence.
Are indictments upcoming?
Yes, assuming Peete and Ford maintain their innocence. Ewing said the government will probably present the case to a federal grand jury for indictments within 30 days. The affidavits in the criminal complaints are long on detail to establish probable cause, but the indictments must rise to a higher standard.
"Typically, you go way beyond probable cause to sufficient evidence to obtain and sustain a conviction," Ewing said.
He said it is unusual for a federal case to start with a complaint instead of an indictment. The advantage is speed -- the arrest of the two council members froze everything and allowed their offices to be searched. The searches may produce new evidence for the indictment. The government says it has audio and videotapes of Peete and Ford taking money or discussing payoffs in veiled terms.
The tapes will have a big influence on both a future jury and, in the short run, public sentiment if Ford and Peete maintain their innocence. Tapes of John Ford taking money in Tennessee Waltz have been released although he has not been tried. Tapes of Roscoe Dixon taking money helped convict the former state senator and blunt criticism that the case amounted to entrapment.
Rickey Peete's prospects are not good
Peete has been convicted once before of political corruption. While he was a member of the City Council in 1989, Peete extorted money from Hank Hill, a homebuilder cooperating with the FBI. Ewing, who was U.S. attorney in Memphis at the time, remembers the case well. The government held its cards close. The FBI had audiotapes of a meeting at a Shoney's restaurant where Peete reached under a table and took $1,000 from Hill. There were no videotapes although there were two undercover federal agents sitting at a nearby table. The audiotape was played for the first time at trial, and Peete was convicted.
Peete served his prison sentence and was reelected in 1995. It says something about his resilience and Memphis political culture that Peete came back stronger than ever with constituents, colleagues, and the media and rose to leadership positions at the Beale Street Merchants Association, the Center City Commission, and the Riverfront Development Corporation.
Federal sentencing guidelines are no longer mandatory, but if Peete got three years before and Roscoe Dixon got five-and-a-half years earlier this year, Peete could get at least that much if convicted.
Who are the political winners and losers?
First Tennessee Waltz, now this. The pat response is that Memphis as a city and all Memphis City Council members are losers in the sense that this feeds the perception, fair or not, that Memphis politics is inherently corrupt. But it's not
that simple. On Tuesday, the council voted 6-6 on a non-binding resolution asking Peete and Ford to voluntarily resign. Council members Ford, Mitchell, Joe Brown, Dedrick Brittenum, E.C.
Jones, and Barbara Swearengen Holt opposed the resolution. Peete was absent
In other words, half the members of the City Council think it is perfectly fine for members arrested for taking bribes in the course of their public duties to continue to serve as public officials. Next year is a city election year. Tuesday's gut-check session began with Ford shaking hands and ended in a burst of tears, ovations, and Hallmark Card sentiments. But it is hard to imagine a city and a city council more seriously fractured than Memphis.