NEW ORLEANS – Houston lawyer Todd Hoeffner, who gave more than $3 million to Hartford Insurance employees handling his silicosis claims, won't face double jeopardy in retrial of a mistrial, federal appeals judges ruled.
Judges of the U.S. Court of Appeals for the Fifth Circuit in New Orleans decided in November that although he beat a rap of paying bribes and kickbacks, he didn't defeat the whole indictment. The court ruled that prosecutors can try Hoeffner in district court at Houston on charges of money and property fraud.
However, they ruled prosecutors can't try him on a charge of honest services fraud that they abandoned at trial.
They wrote that abandonment decided that payments to claims supervisor Marie Rossow and claims handler John Prestage weren't bribes or kickbacks.
"Because the defendant did not contest the fact of the payments, we conclude that this fact was not decided in the defendant's favor," the Dec. 14 per curiam opinion states.
Judges Carolyn King, Patrick Higginbotham and Emilio Garza delivered the decision. They disappointed not only Hoeffner but also Rossow and Prestage, who pleaded guilty but could have withdrawn the pleas if the Fifth Circuit had set Hoeffner free.
Rossow and Prestage pleaded guilty in February, after U. S. District Judge David Hittner denied a motion to rejoin their case to Hoeffner's for his second trial. Hittner rejected a triple trial even though prosecutor John Braddock didn't object. In their plea deals, Rossow agreed to serve up to three years and Prestage agreed to serve up to two years. They agreed to cooperate in prosecuting Hoeffner.
Hoeffner has not given up on the Fifth Circuit, however, for he requested and received an extension to Dec. 16 to petition for rehearing before all judges of the circuit.
In 2002, Hoeffner settled silicosis claims with Hartford for more than $34 million, and settled with other insurers for about $22 million.
At a 40 percent fee, he collected about $22 million. He gave about $2.6 million to Rossow and about $600,000 to Prestage, plus BMW automobiles and trips to New York City and beaches in Florida and California. Grand jurors indicted all three in 2007, on charges of wire fraud, mail fraud, money laundering and conspiracy.
They found that, "Defendants would and did cause subsidiaries of Hartford to pay more than $34 million in settlement funds, knowing that more than $3 million of those funds would be used to pay bribes or kickbacks to Rossow and Prestage."
They found the three devised a scheme to defraud Hartford of its right to the honest services of Rossow and Prestage. Judge Hittner severed Hoeffner from the proceedings against Rossow and Prestage, and brought Hoeffner to trial last year.
Prosecutors presented evidence that Hartford wouldn't have discussed settlement with Hoeffner if it had known Rossow and Prestage would share the proceeds.
Hoeffner countered that the settlement amounts were fair, arguing he couldn't have bribed Rossow and Prestage because he didn't gain anything in return. He testified Rossow and Prestage extorted payments from him by threatening to stall settlement approvals indefinitely.
Hoeffner claimed he believed that David Cain, a higher Hartford executive in an affair with Rossow, directed or approved the extortion. As trial progressed, prosecutors retreated from honest services fraud and took a position that concealing the payments constituted a scheme to obtain Hartford's money.
Jurors deliberated three days and gave up.
Hoeffner requested a mistrial, and Hittner granted it. Prosecutors immediately sought to retry Hoeffner, who moved to dismiss the indictment on double jeopardy grounds. Hittner denied the motion and Hoeffner appealed.
He argued the indictment contained only an honest services fraud theory of liability, but Fifth Circuit judges disagreed.
"The indictment tracks the language of the mail and wire fraud statutes, which provide for at least two means of committing mail and wire fraud, and thus alleges at least two means of violating the statutes," the justices wrote.
They wrote that Hoeffner fixated on bribes and kickbacks but disregarded an allegation that he schemed to obtain money and property from Hartford through false pretenses.
They quoted the double jeopardy clause of the Constitution: "Nor shall any person be subject for the same offense to be twice put in jeopardy of life or limb."
The clause is not implicated when the state seeks a second trial after a jury fails to reach a verdict, they wrote. Justices quoted a precedent that a jury's inability to reach a decision permits continuation of the initial jeopardy.
They wrote, "Retrial on the money and property fraud theory is not precluded because the government need not prove that the defendant deprived Hartford of its right to the honest services of its employees or that the payments must be characterized as bribes or kickbacks."
Chris Flood of Houston represents Hoeffner. Dan Cogdell of Houston represents Rossow. Paul Nugent of Houston represents Prestage.
Fifth Circuit Case No. No. 09-20781