Young’s Mail Fraud Conviction Overturned : 1987 U.S. Supreme Court Ruling Cited in Case Tied to Moriarty Fireworks Kickback Scheme

The U.S. 9th Circuit Court of Appeals overturned on Friday the mail fraud conviction and 18-month prison sentence of once-powerful former Assemblyman Bruce E. Young, who had been accused of accepting concealed payments from fireworks manufacturer W. Patrick Moriarty.

The federal appeals court issued a one-sentence order in San Francisco saying that Young’s conviction was invalidated by a subsequent U.S. Supreme Court decision that limited the definition of mail fraud. The high court held in June, 1987, that mail fraud laws cover only property crimes and do not include violations of “the intangible right of the citizenry to good government.”

U.S. Atty. Robert C. Bonner said he hopes to refile charges against Young.

Young, who represented the Norwalk-Cerritos area in the California Legislature from 1976 to 1984 and who became chairman of the Assembly Transportation Committee, was the first state legislator to be convicted in a political corruption scandal in more than 30 years.

He was convicted of using the mail to accept illegal political payments from Moriarty and concealing these payments in required legislative financial disclosure statements.

Young has not served any of his prison sentence and has been free on bond during his appeal.

He was charged with 28 counts of mail fraud and was convicted on five. He also was ordered to perform 1,500 hours of community service and to pay a $5,000 fine.

During Young’s trial, Bonner contended that Young misused his position as a legislator to accept unreported money from Moriarty when both were promoting legislation to prohibit local bans on his “safe and sane” fireworks.

Young contended throughout his 1987 trial in Los Angeles, before U.S. District Judge Dickran Tevrizian, that he had done “absolutely nothing illegal.”

Reached at his home in the suburban Sacramento community of Orangevale, Young, 41, said he was elated at the decision.

“It’s an answer to our prayers,” he said. “It’s been a long, tough ordeal. It’s been really tough trying to survive professionally. I just want to get on with my life.”

Young said he wants to go back to work as a Sacramento lobbyist, the job he held after he quit the Legislature, in an effort to pay off his legal bills. “I’m in hock well in excess of six figures,” he said.

Moriarty, who pleaded guilty to mail fraud charges relating to kickbacks he paid to bankers to obtain loans and bribes paid to City of Commerce officials to obtain a license for his poker club, was sentenced to five years in prison in 1986. He was released three weeks ago, having served 29 months. His sentence was reduced because of the Supreme Court ruling that redefined the scope of mail fraud statutes.

‘Not . . . Unexpected’

Bonner said that in light of the high court’s ruling, which came four months after Young’s conviction, “the decision was not entirely unexpected.” However, he said, “if there’s any way we can retry the case, there’s no question we’ll attempt to do so.”

Bonner had argued before Tevrizian that Young was guilty of “crimes that strike at the very heart of the political and governmental process in the state of California” and had urged a stiffer sentence.

“What is painfully clear from the evidence, your honor, is that Mr. Young was Mr. Moriarty’s man in Sacramento,” Bonner said in court.

Moriarty, founder of Anaheim-based Pyrotronics Inc., funneled more than $260,000 in laundered campaign funds to a variety of state and local government officials between 1980 and 1983, much of it spent as part of the effort to fight local fireworks bans.

All told, 11 men, including Moriarty, Young, local government officials and a banker, were convicted of bribery, fraud and other charges in connection with the Moriarty investigation.

Of the nine others, only one was charged solely under the mail fraud statute--Long Beach City Councilman James Wilson, convicted of taking more than $50,000 from Moriarty in return for helping win approval of a fireworks law. Wilson died before beginning his prison sentence.

The eight others either had no mail fraud charges filed against them or were convicted of additional charges that will keep them in prison.

The Moriarty investigation spurred calls for reform of California’s campaign finance laws and caused consternation among legislative leaders as disclosures mounted about Moriarty’s providing prostitutes to elected officials and donating and laundering more than $150,000 in campaign funds to win approval of a 1982 fireworks bill that would have benefited his fireworks company.

Two counts on which Young was convicted involved the alleged misuse of his office and concealment of payments from Moriarty in the establishment of his private consulting business.

The other three counts involved the laundering of $18,500 in campaign contributions to six candidates, which Young allegedly solicited and received from Moriarty and paid from his own campaign fund to the unknowing candidates.

In instructions to the jury, Tevrizian invoked a longstanding legal theory when he said Young could be convicted of mail fraud for using the mails to further a scheme that would defraud the state and its citizens of “intangible rights,” such as the right to honest government.

The U.S. Supreme Court ruled in June, 1987, however, that the mail fraud statute is directed at the loss of money and property and is not intended to cover “intangible rights.” The ruling was made in the case of a Kentucky businessman, Charles J. McNally, and a top government official accused of funneling state insurance commissions to a business they controlled.

Refinement of Ruling

It was the McNally case that was cited by the California appellate court on Friday as the basis for reversing Young’s conviction.

(Five months after the McNally decision, the Supreme Court backtracked somewhat. In the case of a former Wall Street Journal reporter accused of profiting in the stock market on the basis of inside information, the court said that mail fraud could include such “intangibles” as information--in this case the Journal’s “property right” to its own articles and publication schedules.)

This year, Congress approved language that in effect overrode the Supreme Court’s McNally decision and restored the concept of “intangible rights” to the mail fraud statute. The language was signed into law last week by President Reagan as part of the 1988 Anti-Drug Abuse Act.

Bonner said, however, that the new law could not be applied retroactively to Young and that he would have to file new charges. He did not elaborate.

Before last year’s Supreme Court rulings, the mail fraud law had been used since 1872. It had been one of the most important and commonly used tools available to prosecutors for pursuing a wide range of crimes not necessarily vulnerable under state law.

Originally aimed at con artists who use the U.S. mails to defraud, the law in the last decade has been increasingly used in the area of defense industry kickbacks, insider stock market trading and political corruption.

By tracing payment checks sent through the mails, an erroneous campaign contribution statement mailed to a county registrar or a fraudulent document posted to unsuspecting investors, authorities have prosecuted a wide range of frauds as federal crimes.

Since the high court ruling, more than 130 mail fraud cases have been overturned throughout the nation, according to Young’s attorney, Donald Heller.