W.D. Va. Sets Aside Jury Verdict in Corruption Case

On Monday, Chief Judge Jones (W.D. Va.) set aside jury verdicts against two corporate defendants totally $500,000 in Buchanan County v. Blankenship. In June, a jury found that Kenneth Stephens, acting as an agent of the two companies, had charged the county more than a reasonable value for flood relief work. The county also presented evidence that Stephens had paid bribes of as much as $300,000 to county officials (something he had been convicted of in a prior criminal trial). An article from today’s Richmond Times-Dispatch provides additional underlying facts of the case, which was part of a series of litigation:

The county’s attempt to collect money in a civil action followed the criminal
convictions three years ago of 16 people---among them county officials,
contractors and an employee of the Federal Emergency Management Agency---on
charges of bribery and fraud. The defendants were charged with swapping more
than $8 million in federally funded cleanup contracts for cash, guns, NASCAR
tickets and even prized coon hunting dogs. Although dog dealing was not a
central part of an investigation by the FBI and the Internal Revenue
Service, federal authorities came up with the name “Operation Big Coon Dog.”

In the civil suit, the county argued that two of the defendants were liable under Va. Code Ann. § 2.2-3123, which allows for the rescission of a government contract obtained through bribery. Under the statute, a contractor can only retain the reasonable value of property or services rendered, “with no increment for profit or commission.”

In granting the defendant’s motion to set aside the jury verdict, the court noted that:

While the undisputed payment of the bribes could have supported an inference
that the companies inflated their contract prices, there was no evidence by
which a reasonable jury could have determined the allocation of such amounts as
between the defendants. Although the companies shared a common agent, they
entered into separate contracts with the County, for separate services. The
evidence at trial could only have allowed the jury to speculate as to the proper
division of the bribes—and thus the proper division of damages—as between the
defendants.