An irreverent Wall Street Blog
by Bill Singer
by Bill Singer
Lap Dances, The World Series, And A Highway Bill
August 20, 2014
And now for the seamy side of government and politics. Enter one Fraser Verrusio, the former policy director for the House Committee on Transportation and Infrastructure, and in that role, an advisor to both the Committee and its Chair Don Young on strategy and policy.
The New Highway Bill
When the Committee began considering a new Highway Bill, United Rentals, a nationwide construction equipment company in the business of construction equipment rental, hired lobbyists Todd Boulanger and James Hirni. The lobbyists primary contact at United Rentals was James Ehrlich.
A Bit Of Lopsided Statutory Construction
United Rentals wanted the new federal highway bill to provide, in part, incentives for state transportation departments to contract with builders that rented rather than bought equipment; and to impose a liability insurance requirement that would prove beyond what most competitors would have. Nothing wrong with jacking up certain conditions and terms so that there are very few, if any, viable contractors left standing other than United Rentals, right? Well, I mean, you know, if you're a lobbyist paid to implement those onerous terms and you're in Congress with a somewhat empty pocket and a dry palm in need of greasing.
Games For Boys And Men
Now, kids, let's examine how our Congress works and how a proposal becomes a Bill and then a Law. Afterwards, let's all head for the showers with lots of soap. By way of spoiler alert, Verrusio winds up getting prosecuted and convicted. Consider this extract from the federal appellate court Opinion about the case:
In October 2003, after the above-described discussions had taken place, United Rentals' Ehrlich told lobbyist Boulanger that he had tickets to the first game of the 2003 World Series, and he asked "if there were any government officials that [United Rentals] would be interested in taking that could be helpful" in advancing its legislative agenda. App. 188 (Boulanger Test.). Ehrlich and Boulanger, in conjunction with Hirni, decided to invite Blackann and Verrusio. According to Boulanger, they decided to invite them because "they were in positions to be helpful . . . [s]pecifically" with "[t]he United Rentals' amendments that we were seeking to include in the highway bill." Supp. App. 19-20 (Boulanger Test.). Boulanger knew that Verrusio "was close to the chairman" of the House Transportation Committee, and he hoped "to influence" Verrusio "to do some things for our clients." App. 188 (Boulanger Test.); Supp. App. 21 (same). At trial, Hirni similarly admitted that he had used the "tickets in [an] attempt to influence the Congressional staff for legislation." Supp. App. 85.As planned, Hirni invited Blackann and Verrusio to the World Series game and made clear that United Rentals would cover the costs. App. 251-52 (Hirni Test.). Both men accepted the invitation. Id. at 250-51. Hirni and Blackann flew to New York together and met Ehrlich there. Over drinks, Blackann described the airmail strategy that he, Verrusio, and the two lobbyists had agreed was "the best course of action." Supp. App. 26 (Blackann Test.). Shortly thereafter, Verrusio joined them for dinner. According to Hirni, the four men "talked a lot about United Rentals" and "got into a conversation about concepts and ideas United Rentals had for federal legislation." 6 Id. at 64 (Hirni Test.). Verrusio was "the senior guy at the table," Blackann testified, and was "leading the conversation." Id. at 27. Verrusio "walked them through" the airmail strategy, indicating that it had "the best chance for ultimate success." Id. Ehrlich paid for the dinner and drinks. Id. at 65-66 (Hirni Test.).On the way to Yankee Stadium, the chauffeured car carrying the four men stopped at a convenience store, where Hirni bought several small bottles of liquor for the group. The men then went on to the game. On their way out of the stadium, Verrusio signaled to Hirni that he and Blackann wanted souvenir jerseys. Hirni paid for them with his corporate credit card. Id. at 27, 29 (Blackann Test.); id. at 70 (Hirni Test.).After leaving the stadium, the group went to a strip club called Privilege. Hirni paid the cover charge and the cost of drinks, while Ehrlich paid for several lap dances. Hirni also bought Verrusio and Blackann t-shirts from the club. When the group left, they stopped for pizza before returning to their hotel. The next morning, Hirni paid the hotel expenses, and Verrusio, Blackann, and Hirni took a car to the airport and flew to Washington, D.C. Id. at 71-74, 76-77 (Hirni Test.); see App. 225 (stipulated facts).At trial, the parties stipulated to the value of what Verrusio received during the New York trip: The round-trip plane ticket cost $228.50; his hotel and room service costs were $301.27; the face value of the World Series ticket was $110; the World Series jersey cost $130; and Verrusio's pro rata share of the costs for other transportation, dinner, drinks, and the strip club was $490. The total cost of Verrusio's trip, paid by United Rentals, was $1,259.77. See App. 225; Verrusio Br. 53-54.Three days after the trip, Hirni forwarded Verrusio an email from Boulanger that "listed a series of legislative items and 7 some legislative text that United Rentals was now pushing," and asked whether Verrusio had time to discuss it. Supp. App. 79- 80 (Hirni Test.). Verrusio responded that the language "needs a lot more work for anyone to be able to help with progress." App. 262-63 (Hirni Test.).
Pages 5 to 7 of the Circuit Court Opinion
Best Laid Plans?
So, you ask, how did all of the behind the scenes lobbying and lap dancing work out? Alas, there was so much opposition to United Rentals' proposed language that the company pulled its lobbyists and failed to obtain the desired provisions.
When it came to disclosing his 2003 finances (which included disclosure of certain travel payments and reimbursements over $285 from private sources), Verrusio did not include information about the World Series trip. When the FBI started to investigate some aspects of the lobbying efforts, Verrusio lied to an agent about the trip; but, when confronted with the facts, he tried to equivocate by claiming that it wasn't an "official" trip. All of which led to Verrusio being indicted on March 6, 2009 for:
- Conspiracy to receive illegal gratuities in violation of 18 U.S.C. § 371.
- Violation of the gratuities statute, 18 U.S.C. § 201(c
- Violation of the false statement statute, 18 U.S.C. § 1001
In USA v. Verrusio (DC Circuit, 09-cr-00064-1, August 12, 2014), the United States Court of Appeals for the District of Columbia Circuit affirmed the judgment of the District Court for the District of Columbia, which convicted Verrusio on three counts relating to his receipt of illegal gratuities.