Judge Says High Court Ruling Doesn’t Cancel Telink Charges

U.S. District Judge Earl Gilliam ruled Wednesday that the trial should proceed for five defendants charged with fraud in connection with a county telephone contract, despite defense attorneys’ arguments that a recent U.S. Supreme Court opinion exonerated their clients.

On trial are two former San Diego County officials and three executives of telecommunications firms. All are charged with fraud and conspiracy in the award of a $24.5-million county contract for a microwave telephone network to Anaheim-based Telink Inc. Gilliam ordered that the five men be tried on mail fraud charges, the federal law that was the subject of the Supreme Court last week.

Attorneys for the defendants had requested that the federal court dismiss the charges, after 16 weeks of trial, in the wake of the high court’s ruling that a conviction under federal mail fraud charges requires that public funds or property be lost, not just intangible damage, such as improper conduct by government employees.

Loss of Public Funds

Gilliam ruled that a federal grand jury indictment handed down in the San Diego County case, while not specific about the dollar amount of kickbacks allegedly received or paid by the five defendants, was specific enough about the loss of public funds to fall within the Supreme Court’s redefinition of mail fraud. The high court had ruled that mail fraud laws could not be used in cases when only “intangible” losses were suffered by a public agency.

Gilliam recessed the jury trial last week, after the Supreme Court decision. The trial is scheduled to resume July 21.

On trial are Hilario (Larry) Gonzales, former general services chief for the county; Abraham Stein, former county director of communications; Don Woodaman, president of a now-bankrupt consulting firm, Telecommunications Design Corp.; Don Linder, a former marketing director for Telink, and Bob Schreiber, a former official of Telecomm Consultants Inc., the company hired by the county to evaluate the bids on the microwave telephone system.

The men were among 13 individuals and two corporations charged with conspiring to rig the bids so that Telink would receive the county contract. According to testimony of Robert St. Pierre, former vice president of the TDC consulting firm, $378,000 was earmarked in kickbacks to the consultants and officials involved in the 1982 bid award to Telink.

St. Pierre pleaded guilty and testified to receiving kickbacks and to paying them to assure that the Anaheim-based Telink firm would be awarded the bid.

Soliciting of Kickbacks

Attorneys for the five defendants argued Wednesday that the high court’s ruling decimated prosecutor Lantz Lewis’ case because no evidence could be shown that the county lost money because of the firms’ alleged soliciting of kickbacks for the county officials and for officials of the consulting firms. Lewis argued that the Supreme Court ruling “does not, in any significant fashion, affect the prosecution of this case.”

Telink, the firm awarded the multimillion-dollar contract to install the telephone system, and the defendants “deprived the citizens of San Diego County of substantial amounts of money” because of the bid-rigging scheme, Lewis argued.

Mario Conte, attorney for Stein, contended that the county was going to pay the consultant fees, which included so-called kickbacks to his client and others, no matter who received the telephone system contract.

Stein is now in the Metropolitan Correctional Center, serving a sentence on an unrelated conviction for conspiring to import heroin from Nepal.

Conte argued that the testimony heard by the jury during the 3 1/2 months of trial dealt almost exclusively with non-monetary losses and alleged misconduct of county employees recruited into the bid-rigging scheme through offers of prostitutes, drugs and kickbacks.

‘Cannot Go On’

John Mitchell, attorney for Linder, argued that the Supreme Court opinion “dictates that we cannot go on” with the Telink case and estimated that at least 50% of the estimated 7,000 pages of testimony heard so far in the trial could be challenged and thrown out under the high court ruling because it dealt with “intangible” harm to a governmental body, not with the loss of public money or property.

Gilliam said he would entertain motions from the attorneys in support of dismissal of the indictment or for a mistrial during the three-week period before the jury is scheduled to return.

Both defense and prosecution lawyers were placed under a gag order last week by Gilliam, prohibiting them from talking to the public or press about the case. The gag order was continued Wednesday until the trial resumes.