A federal jury handed independent counsel Donald C. Smaltz a setback yesterday, acquitting two former executives of a large crop insurance company of making illegal contributions to Henry Espy's failed congressional campaign to curry favor with his brother, then-Agriculture Secretary Mike Espy.
The jury of three men and nine women deliberated eight hours before finding defendants John J. Hemmingson, 46, the former chief executive officer of Crop Growers Corp., and Gary A. Black, 50, the firm's former chief financial officer, not guilty of charges that they conspired to circumvent the legal prohibition on corporate campaign contributions.
Hemmingson and Black also were acquitted of falsifying business records to disguise the corporate contributions and causing the Henry Espy campaign to file false contribution reports with the Federal Election Commission.
The defendants and their attorneys hugged and cried when the verdict was announced in U.S. District Judge Gladys Kessler's courtroom. "This case took us from Montana to Mississippi to Louisiana to the District of Columbia," said attorney Theodore V. Wells Jr., who represents Black. "But we fought the government in every state, and we're so happy that we've been vindicated."
The jury foreman, Ervan Pearson, said jurors were not comfortable with the independent counsel's accusations. "Our verdict was the way it was because of the way the government worded the charges," he said. "We just felt there wasn't enough evidence. There was a lot of reasonable doubt."
Smaltz said in a statement that he was disappointed in the jury's verdict. "However, in our system of justice, that ends the matter and we now move on to other aspects of our investigation," he said.
Before the trial, Crop Growers, once based in Montana and now headquartered in Kansas, pleaded no contest to conspiring to make illegal contributions, and agreed to pay a $2 million fine. Its attorney, Barry William Levine, said the jury's verdict was a rebuke of Smaltz. "This case shows what happens when there's an agenda that's untethered to Department of Justice policy and has a literally infinite bankroll," he said.
Smaltz was appointed in September 1994 to investigate Mike Espy's acceptance of gifts from companies he was supposed to regulate. The prosecutor has been accused of going too far afield, summoning people from Vernon E. Jordan Jr., head of the 1992 Clinton transition team, to CBS newsman Mike Wallace before a federal grand jury. So far, he has brought nine cases, getting convictions or guilty pleas in four. The rest are awaiting trial.
Hemmingson, who lives in Idaho, and Black, who resides in Great Falls, Mont., were accused of secretly reimbursing 23 people who gave $26,000 to Henry Espy's failed campaign for the Mississippi congressional seat once held by his brother. Hemmingson also was accused of funneling $20,000 through a Louisiana lawyer to Henry Espy.
It was the second time in less than three months that a jury heard testimony about Hemmingson and New Orleans attorney Alvarez Ferrouillet Jr., who was chairman of Henry Espy's campaign. In December, both men were convicted in New Orleans of money-laundering.
Hemmingson's attorney, William J. Mauzy, said Smaltz was "playing games" with the same events, calling them money-laundering in New Orleans and campaign contribution fraud in Washington. "It gave them two bites at the apple," Mauzy said. "It's extremely rare to see two federal prosecutions proceeding simultaneously in two jurisdictions on the same set of facts."
Practically from the start of the two-week trial, the defense had prosecutors Joseph Savage Jr. and Jacob Frenkel off balance. Wells and Mauzy simply argued that Hemmingson and Black had no "criminal intent" and had made an honest mistake in not understanding convoluted federal election laws.
The defense attorneys turned nearly every government witness into one of theirs. As a result, Frenkel, in his closing argument, backed away from his witnesses.
In his closing, Wells asked jurors to put themselves in the defendants' place. "Pretend they took you out of D.C. and set you at a table in Montana," he said. "You'd think you were in the twilight zone."
Mauzy held up a blowup of a snapshot of Hemmingson and Mike Espy at one of their two meetings. "This is not a partnership in crime," he said. "This is a partnership in good government."