A federal judge, declaring he wants to send a message about white-collar crimes, ordered the former president of the Natural Gas Supply Association to a halfway house yesterday pending sentencing after the lobbyist pleaded guilty to mail fraud and tax evasion in connection with the embezzlement of about $2.8 million from the group.
U.S. District Judge Emmett G. Sullivan brushed aside objections from the lawyer for Nicholas J. Bush and directed the 54-year-old lobbyist to report immediately to a halfway house. Bush will be sentenced Oct. 25 and could face up to 41 months in prison.
Bush's case has had widespread implications throughout the national trade association world in Washington because it illustrates the potential financial and political risks a strong chief executive can pose to a trade group. Since Bush's abuses were discovered earlier this year, the gas association has installed new administrative procedures and has lobbied on Capitol Hill to restore its credibility.
Once considered a glib and self-confident petroleum lobbyist, the tall, balding Bush stood with his head bowed before Sullivan as a federal prosecutor outlined how Bush had embezzled about $2.8 million from the NGSA. Assistant U.S. Attorney Virginia Cheatham said he used phony consulting contracts and then squandered the money on a lavish lifestyle and on items "that do not retain their value."
Bush disclosed that he had been under psychiatric care and taking "anxiety" medication, but said very little in response to the charges. He acknowledged in a soft voice that he was pleading guilty because he had committed the crimes prosecutors alleged.
Prosectors said later that his plea ends their investigation--ruling out the possibility that Margaret Elizabeth Martin, a former Canadian diplomat with whom Bush had a brief extramarital affair, would also be charged. The gas association contended in a civil lawsuit that Martin had learned of Bush's scheme while living in a house he owned in Washington. Bush allegedly bought her an island home in Canada in return for her promise of silence.
In all, Bush's scheme lasted nearly 15 years. William J. Murphy, Bush's lawyer, conceded in court that it was serious enough to send him to prison, although Murphy and prosecutors were at odds over how much time Bush should spend behind bars for what the judge described as "pretty outrageous events."
Sullivan delayed sentencing pending the completion of a probation report, but he rejected defense arguments that Bush should remain free until then because of his extraordinary efforts to cooperate with prosecutors and help the trade group recover its losses. Bush has sold his home on Palisades Lane in the District and turned over about $250,000 in profits to the association.
"I don't think I'm being unreasonable," Sullivan said, citing the concerns of many Washington residents that white-collar criminals are allowed to "ride home on the Metro" after pleading guilty to serious crimes.
Murphy had argued that Bush had no criminal record, had immediately confessed to his crimes after the scheme was discovered and was not likely to flee from his McLean home if allowed to remain free on personal recognizance.
Cheatham said Bush could face up to 41 months in prison under federal sentencing guidelines, or more if the judge agrees that the lobbyist abused a position of trust and engaged in a complex embezzlement scheme. Murphy said he would contest those points and argued that the association's losses after restitution would be less than $2.5 million, an amount that would allow a lesser sentence under the guidelines.
Although the government could have sought fines as high as $5.6 million, Cheatham said it had agreed not to request the imposition of fines on Bush. Instead, Cheatham said the government wants the former trade executive to make restitution to the association.
The thefts were discovered earlier this year after a Colorado real estate agent, listed as one of Bush's consultants, complained that the Internal Revenue Service was demanding money on funds he supposedly received from the association. Until then, prosecutors said, Bush had headed off and voided the payment notices, Form 1099, that the trade group should have filed with the IRS.
CAPTION: Former Natural Gas Supply Association president Nicholas J. Bush leaves U.S. District Judge Emmett G. Sullivan's courtroom after entering a guilty plea.