Court Ruling Is Appealed by Moriarty

Convicted political fixer W. Patrick Moriarty on Thursday appealed a district court judge’s refusal to set aside his criminal convictions, claiming that the bank loan kickbacks he paid and secret payments he made to city officials can no longer be considered mail fraud.

In a brief filed with the U.S. 9th Circuit Court of Appeals, Moriarty’s attorney, Jan Lawrence Handzlik, cited recent Supreme Court decisions which have held that intangible rights, such as the rights of citizens to honest government, do not fall within the reach of the mail fraud statute.

Moriarty, a former Anaheim fireworks manufacturer who was accused of making a wide variety of illegal contributions to political officials throughout California, pleaded guilty in 1985 to seven counts of mail fraud and was sentenced to seven years in prison.

In connection with the plea, Moriarty admitted that he laundered campaign funds in an attempt to unlawfully influence elected officials, made secret payments and promised hidden interests to Commerce officials in exchange for a license to operate a card club and paid kickbacks to a California Canadian Bank official who approved loans for his business associates.

Sentence Reduction

U.S. District Judge William J. Rea subsequently reduced the sentence to five years in recognition of Moriarty’s cooperation in helping to convict a variety of elected officials, including former Assemblyman Bruce Young (D-Norwalk).

Then the U.S. Supreme Court, in a decision that set aside decades of case law, ruled that the mail fraud statute applies only to losses of “tangible rights,” not the kind of intangible rights that had formed the basis of political corruption prosecutions for decades. A subsequent decision made it clear that a scheme must involve some kind of tangible property in order to be covered under the mail fraud statute.

Based on that McNally decision, Rea dismissed two of the seven original counts against Moriarty, those dealing with secret campaign contributions. But the judge ruled that the statute still applied to the other counts.

Court’s Ruling

In the card club case, the court held that the city had been deprived of full and accurate information about the licensee, due to conflicts of interest on the part of city officials.

But Handzlik argued in his appeal brief that the card club license is not property. “While the city officials involved may have had conflicts of interest, their actions did not result in the loss of any property or money of the city,” the brief says.

Similarly, any kickbacks paid by Moriarty to bank officials were losses out of loan proceeds, not losses to the bank, Handzlik said.

“The District Court ruled that the city and the bank had been defrauded of property. We disagree and hope that the appellate court will see it differently,” Handzlik said in an interview. “We feel that the McNally decision as well as recent cases interpreting McNally apply directly to Mr. Moriarty’s situation.”

Richard Drooyan, the former chief assistant U.S. attorney who is still handling the case, said he had not seen the appeal brief and was not familiar with the most recent decisions that Handzlik cited to support Moriarty’s case, including a Tennessee case in which an appeals court decided that a bingo license is not state property before it is issued.

“I continue to believe that those schemes involved money or property, and therefore they are protected by the mail fraud statute,” Drooyan said, adding that government lawyers don’t need to prove that any property was lost, but merely that the fraudulent scheme involved an attempt to acquire money or property.

The government has 45 days to file a reply brief, and the appeals court is not likely to rule until a few months after that. Moriarty has served 24 months in prison and becomes eligible for parole after 42 months.