The second EPA Shade Meeting -- full text
Page 3 of 4
-- posted to the web on 02/16/06

< Page 1 | Page 2 | Page 3 | Page 4 >

Got a comment? Make it here.

ANDERSON: I think that's a good assessment. Quite frankly, I think the path to take this criminal was determined by the powers that be long before Seth and Ron got involved in this. When I had my first meeting, when Jon Thomas and I, John Lane and George Hunt went to Tampa and met with the Assistant U.S. Attorney, Dan Green of the EPA, Ron Scateri (phonetic) of DEP, at that point in time, which was the first meeting that the legal side of this for the City of Venice had an opportunity to engage these people in a discussion, they had already made a determination that given our history of violations, given the difficulties that DEP perceived in working out problems with the City of Venice, concerns that the EPA had, their investigation and the information they had gleaned to date which continued to fuel their perception that we were this rogue operator, okay, and they were concerned that we didn't always report discharges outside the permit constraints, and then that was solidified by the city manager at that meeting telling the U.S. Attorney that we do that because that's just the cost of doing business and you fine us, we pay-the check; send you the check and we move on, and we continue to do that, that's how we operate our system.

I think the path was selected before we had an opportunity to present anything to steer them in another direction. Have we tried? Absolutely.

I remember that very first meeting we had a long discussion about you people have the discretion to bring this on different paths. You can take it administrative, you can take it civil, you can take it criminal, and we're here to say that we think it's more appropriate in the administrative and civil context. Why are you persisting to treat this as a criminal violation? And the response we kept getting back is because when we pursued it as an administrative situation and pursued it as a civil, you people didn't get the message and you didn't alter your protocols. Now all of a sudden -- and this is a two-edged sword -- all of those points you raised are very positive, it appears that the city has jettisoned the rogue employees, brought in a contract operator, changed the way we do business, changed the way we report spills, line breaks, and anything else. Well, that just fuels the U.S. Attorney because they're saying the only reason you changed that is because now you're staring at a criminal investigation and an indictment and, see, it does work, if we do step this up a degree we will get the appropriate response back from you.

And we are also being made an example. Again, just like Jon said, the system relies on self-reporting. Every once in a while they need to take somebody out, give them a good whoopin', and then be able to say you need to follow the rules or we'll handle you just like we handled the City of Venice.

THOMAS: And the unfortunate thing about that is the City of Venice may essentially be an example of what can happen if you don't behave. You may see quite a bit of media attention to it or publications in our profession talking about these consequences.

ANDERSON: So we tried --

MOORE: I disagree with one thing. I just don't think we -- I don't think we made these changes knowing they were going to pursue a criminal path rather than civil. I didn't know they were going to pursue criminal until we had our first shade meeting and you presented the plea agreement, and all of this had been done long before that.

ANDERSON: Again, that might be just a matter of perception. But I'm telling you the perception by EPA, DEP, and the U.S. Attorney's Office is the only reason the City of Venice has made these adjustments in how they do business is they're no longer looking at how much do we write the check for, they're now looking at the possibility of being indicted for criminal violations of the Clean Water Act. That's their perception. Our perception might be as soon as we became informed of the problems, we took the appropriate corrective action. Again, it's a matter of perception. I'm just saying it's a two-edged sword.

BLACK: Let me add something here historically, though, because I think with the new council members, and even for me, it's going back and looking at the city's history. We entered agreements and consent orders as late as 1999 where we committed as the city to the state, who even at that point in time was in conversations with the federal authorities, to make certain changes to our system. We performed mitigation, we entered into consent orders in '99. The state comes in, the EPA comes in not 10 years later, not five years later, literally almost the next year, 18 months, and we're back doing the same thing that we just told them we wouldn't do. That's what sets their mindset. This is not something that changed since last year, this is something that they saw and highlighted in '99.

We sat at a table with the state regulatories as the city and promised to change things and then we were back to doing things in violation of our permits from their perspective almost immediately.

SIMMONDS: I can't ignore the fact that Judge Moore is a retired circuit court judge that's been through a million trials of all kinds and if he's got a suggestion that maybe you should go back and ask them to review this, I think you ought to take that very seriously.

ANDERSON: Well, I don't want to leave you with the perception that we haven't pursued those discussions.

NOBLE: I probably ought to answer [Moore's] question with we have had those discussions. They have not been long discussions because we didn't get real far with those discussions. Part of the problem in the federal system, as you know, we are dealing with a certain side of the hallway that wears a criminal prosecution hat, unlike the state and local systems where those investigators and those prosecutors can wear one of several different hats. If the federal folks decide that they're not going to pursue this criminal, they're essentially done. They pack up their stuff and they either give it back to DEP.

EPA Criminal Investigation Division, the CID out of the Tampa office -- it's not a big office. It's Dan Green and a couple of assistants who y'all have been talking to. He has spent tremendous resources on this investigation. It, quite frankly, boggles even my mind that the federal government would expend the resources they have to prosecute this matter. With that expenditure of resources there is really no alternative path for the federal government to proceed at this point.

When they have the lay-down nature of the charges, they feel that they're being very generous simply by offering a plea agreement at the lower end of the sentencing range. I can tell you that based on Seth's and my recent discussions with them, the concept of a civil resolution didn't even form the basis of further discussions. We can go back and have that conversation again, but essentially we're --

WILLSON: Are we then not giving the appearance of saying, yes, we knew we did wrong? We didn't intentionally do it, but -and now we're going to try to make it right the best way we can. My concern is if you go back and question it yet again you're not looking .like you're really understanding, and I think we need to have that understanding.

THOMAS: The concept of bundling up these mitigating circumstances and presenting them in bulk instead of as they've occurred, which has been sequentially, it has some appeal. I think the truth of it is that when I got involved early on what I was hearing -- and this hasn't been brought out -- was that one of the whistle blowers had been involved in whistle blowing before. Supposedly -- and this is rumor because we really don't get straight communication from them. One of the things we heard was that Dan Green, the investigator, had worked with one of the whistle blowers on another matter, and that whistle blower's allegations in the other matter had proved to be 100 percent. So the phrase that this train had left the station, that was my perception.

We tried to talk to them. The prosecutors wouldn't really give us information. They basically said we got you dead to rights and we think there's a whole bunch of things that we're going to nail you on and you're just going to be lucky if we give you some easy way out of this, which is not likely, but it's going to be criminal. That was the message we got from the get-go. I think they felt that there was a lot there in terms of prior history and --

MOORE: Again, without ever really hearing from anybody on our behalf, an attorney, criminal lawyer going in and saying, yes, I understand where you're coming from, but do you realize this?

RODNER: Judge, just to echo Ron's comments with respect to your question. To address your question, sir, the very first thing Ron and I did when we talked with them and met with them -- and we had the benefit of being able to do this because we're coming in fresh and so there's no risk, as you were suggesting, of our asking about a non-criminal resolution being imputed to the city or somehow being viewed as inconsistent with the appropriate level of contrition. So Ron and I came in and said what are we talking about here, we all know the federal government doesn't have a tremendous appetite for criminally indicting municipalities when after all you can do is go after public coffers of money, why can't we resolve this. And we did recite for them exactly the subsequent remedial measures that you described. And as Ron said, it was a very short conversation.

We got the words out off our mouth, we raised the issue, and what you're hearing from Jon is exactly what we heard, and that is that there is a lot of history here, which I think we've put back on the table during this council meeting, but telling us there's a lot of history here and here's the reasons why we've made a decision to go criminal. And, in fact, we're so far down that road, they told us, that they've got the indictment drafted and they're ready to go to the grand jury and the city is either going to be cooperating or it's going to find itself on the other end of a formal charge. So I very much understand the desire to not leave any stone unturned even at this late stage of the game, but I can represent to you fully that those issues were vetted as recently as our engagement on this matter, and it just didn't gain much purchase.

MOORE: Would it be helpful for us to at least document that so that if this plea does have long range effects on the city in its relationship with the EPA in ways that we may not even understand, at least we went on the record and asked them to consider these things? Doesn't it strike you as --

THOMAS: Documentation in the plea agreement?

MOORE: Well, maybe it's already documented, I don't know.

THOMAS: No, I don't believe it is.

MOORE: Well, I mean, doesn't it strike you as strange, for example, that Dan Green spent such an extraordinary amount of time and money on what, frankly, you have described to us as a pretty simplistic case, and why did he do that? There may have been motivations here that we haven't even uncovered. I don't know.

BLACK: Let me share a couple of comments. A year ago we were facing charges at the state level and the federal level. Resolving the state issues with the Consent Order and voluntarily entering into that agreement, followed by the management contract changed our relationship with the regulatory agencies. We have had visits from regulatory officials that previously wouldn't talk to our folks.

We have had visits not just from DEP but also from water management district regulatory folks saying we are glad to see -- it's part of the reason water management staff came down to see you in the last couple of weeks. They don't do that unless they're coming to give you a reassurance that you're on the right track. That was part of the reason for their visit. They were very blunt with us -- they met with myself, city engineer, city utilities manager -- and they said we wouldn't come and be talking to the city about grant opportunities and funding and partnership issues had you not resolved these issues. So we're seeing that positive impact from the changes.

I think in this case those changes are too late for these charges. That's the message I had when I met with the District Attorney in Tampa was this is fine, it's great the city's finally changed it, but you've made these changes way too late for this particular purpose.

THOMAS: Let me add one other thing to this. As I mentioned earlier in this conference today, there was a disciplinary dispute or proceeding over hostile work environment. That division has flowed forward and so that when these issues came to light EPA's comments included why haven't you gotten rid of those people, the targets, their targets, why haven't you terminated their employment. On the heels of the hostile work environment matter, I don't think that the city could ever give that a real, full consideration, especially because EPA wouldn't share their evidence with us. They asked us essentially on faith to terminate these employees when the evidence was very -- at the time -- I mean, these charges could have been brought long ago, but the charges that EPA was pursuing were much broader. The charges they were pursuing, the broader charges are firable offenses, but they wouldn't come forward with the evidence.

So I think the city -- I think EPA might have given more consideration to other alternatives had the city immediately in sort of a knee-jerk reaction terminated a bunch of employees and immediately conducted a bunch of remedial steps that we really didn't even have the evidence that there was that kind of a problem requiring that kind of response, and they wouldn't give it to us.

TACY: But also the history of it -- I was one of the few that were still here and from the manager down it wasn't talk of correcting what the problems were out there, it was strictly that there was a Fifth Column in the city being stirred up by another outside organization and that we just need to close ranks and deal with the ones causing the trouble. As we go on -- that's what I was initially told. I was new on council at the time and you go with that. But as it started to unwind, exactly what you're talking about now, except that the position of the city was we got to close ranks, there's a Fifth Column and that there's people working against the city's interest, which we now find out was not necessarily the case.

At this point I think we're getting out pretty much in the best interest, and for those involved, we're getting out probably about as fair as we possibly could if we go along with the plea. Knowing the history now, I don't think -- I understand that the train was already out of the station because of our history, as Marty has pointed out, and the fact that we had a city manager openly talking that there was a Fifth Column, that was keeping us on his side and not really knowing what was going on. So I think we're actually getting off reasonably lucky.

ANDERSON: Let's not forget what the city's response was. The city manager, the utilities director, and all of the people involved from day one steadfastly said we've done absolutely nothing wrong, this is ridiculous, this is a conspiracy, this is a fabrication, there is no merit to these allegations whatsoever. And remember that that philosophy was the first response that the regulatory agencies and the U.S. Attorney's Office received from the City of Venice to the point that they considered filing charges for obstruction of justice. Don't forget how the first chapters of this played out. It was only after some remedial efforts, some involvement by people other than that executive group that was the focus of this investigation that got involved that turned this direction around, but by that point in time the decision to pursue this as a criminal matter had already been decided, not to be revisited no matter what we told them or how many times we told them.

Every remedial step taken by the City of Venice has been communicated to EPA and to the U.S. Attorney's Office, and I'm saying I believe that we've gotten the benefit of all that remedial work in the terms and conditions of the plea agreement being offered. Can we get anything more for it in the sense that we can divert this now from a criminal to a civil or administrative? I believe that no matter how many times we go and meet with them, no matter how many times we recite all the remedial things, it will not change the decided course as to how they're going to pursue this. But I want you to know those discussions have been had from day one on every occasion we had with the U.S. Attorney's Office that this should be pursued not as criminal but as a civil or administrative, and it's fallen on deaf ears. Continuing to have that discussion, I think, is going to start to be counter-productive.

SIMMONDS: You may be right. You four folks have had enough of this, you're ready to conclude it, so am I. Judge Moore comes in late, he thinks like a judge, and I wish sometimes he'd quit doing that. He thinks like a judge, he has some insight, and I'd like him to have a level of comfort that we ought to ignore it or that we should make a representation to the judge or do something different. I think the fact that he's coming in late and he hasn't made up his mind and he thinks like a judge and he's seen a lot of water under the bridge, he's been an attorney for a long time, too, and I want him to feel this is the way to go.

I'm not taking anything away from our own attorney. He's worked on this and he's got a lot more history than Judge Moore's got.

NOBLE: We came in late also.

WILLSON: I came in late, too. I just put myself there if I were in a jury trying to decide what to do and if I heard that history, I'd come down a lot harder. When you consider the history and look at that, I'd come down a lot harder than that.

MOORE: Frankly, you've convinced me that we probably won't change the U.S. Attorney's mind, but I'm hearing mixed messages here. As you said, Mr. Thomas, we were really kept in the dark so we didn't know they were pursuing a criminal investigation until the last hour.

THOMAS: No. I need to be more clear. I may have misled you. We were in the dark about what the actual violations were, what they perceived, and what the evidence of those violations was. The evidence they were willing to tell us was that they had city staff and other people reporting these things to them, reporting violations to them, but we always knew -- Dan Green, on his card, he's a criminal investigator.

When we met in 2003 with the prosecutor, there's no question she's a prosecutor. She's not an EPA agent who has decisions to make about criminal versus administrative or civil, she's a prosecutor. That case had landed on her desk, it was being criminally pursued. We knew they were pursuing criminal, we couldn't figure out why. Even as you sit here today and I sit here, I still once in a while say why is this criminal.

When I think about it, I come to the realization there's at least three good reasons for that. One is the prior history. Another one is their need to take the reporting issue very, very seriously and, frankly, to make sure that they punish somebody significantly for that. I think the third is probably just generally the city's response once it was in a criminal investigation stage. I think the term that was used by the prosecutor and the investigator at one point was to circle the wagons and be very defensive and less cooperative than EPA believed we should be. Those three factors and probably others, when I look through this whole situation, those are the factors that I come down to as making this a criminal matter.

RODNER: The other thing I wanted to mention just to put this issue of the subsequent remedial measures further into context -- something that Jon said a moment ago jogged my memory. The government continues to be wrangled in a rather passionate way about the fact that certain key individual targets of their investigation not only remained on the city payroll for a period after the investigation went overt, but were employed sort of at the heart of the city's efforts to comply with various subpoenas and other document requests. In other words, it was the individual targets that they had concerns about that were the ones that were charged with providing the information back.

I say that to say this: I think if you asked EPA and DEP and the U.S. Attorney's Office, not only would they not share the city's view that this is a great shining example of timely and forceful subsequent remedial measures, in fact I think they would say it's quite the contrary, it's a shining example of an organization failing to excise the cancer swiftly enough and leaving the cancer in a position where it could do further harm.

I'm sort of thinking as I'm speaking here, but reinforces my view all along that certainly I don't view there to be any realistic prospects for further relief in terms of dissuading them from criminal prosecution. And. I share the gentleman's view that, in fact, there could be some measure of counter-productivity in there because, again, I really think that they view this as perhaps at the other end of the spectrum in terms of those subsequent measures.

MOORE: Again, I don't want to beat this to death, but at the very least if we can't change the U.S. Attorney's mind it does seem to me that there is some benefit to be derived by the City documenting a lot of the things that it did do. Whether that's sufficient or not remains to be seen, but we have to live with this for a long time and the irony is not lost on me completely because I know a lot of federal judges.

ANDERSON: I think that's an excellent idea. I think what we'll do is we will make sure that we put together a document summarizing all the remedial efforts that we have undertaken to make sure that the sentencing judge and all of those who will give pre-sentencing reports will have the benefit of that at least in their assessment of what is the appropriate way to. go. Wouldn't that be a good idea?

RODNER: I think that's a very good idea.

THOMAS: Is there the potential to advocate for some recitation in the plea agreement incorporating some of those things?

RODNER: We can certainly advocate for it. I think that there's going to be a fair amount of resistance. I think that they're going to -- sort of the rule of completeness. I think they'll probably look to build out the statement of facts in other less helpful ways if we're looking to put a lot of self-serving language in there, but that's certainly something I can raise.

TACY: I would hope at least in the best case scenario if we do that when it gets to the judges we won't get that extra $25,000 and at least go with that because we have taken the remedial steps that hopefully we can keep it at $110,000 and not $135,000.

RODNER: I guess I share that hope, although, again, all bets are off with respect to the judicial discretion, not only in terms of the extra $25,000, but frankly in terms of the ceiling up to the $50,000 per occurrence statutory cap. We should all be going into this with eyes wide open that depending on which particular judge we get and how they view this particular situation, notwithstanding what the government says, notwithstanding what the probation office says there is the risk there, and everyone needs to go into this with that understanding.

MOORE: Well, and that brings me back to my earlier question. How much do we need to be expected to do at the time of the sentencing after the probation report has been completed and filed, and the plea agreement --

RODNER: I think that Bob hit on at least one element here, and that is that we should be prepared to file a brief with the court in response to the PSR, that Pre-Sentence Report. Even if the probation office lines up perfectly with the government's recommendation, I think that's a very good vehicle for articulating all of these favorable factors that would cut in favor of leniency. Typically there's not a tremendous amount of allocution in open court during a federal sentencing, but depending upon how the paper plays out in terms of these briefs we can revisit that issue. I guess the short answer to your question is we want to do everything possible by way of advocacy to make sure that the sentencing judge understands that the disposition recommended by the government is an appropriate one.

NOBLE: We find ourselves in a unique position. From the standpoint of the recommendation it's unique from the standpoint of as a Clean Water Act defendant we are starting out as lenient as it can possibly get in a criminal proceeding. It is extremely rare that you would be going into a plea agreement, going into a sentencing type proceeding starting out as light as it gets, which is one of the reasons we're advocating this plea agreement. Usually we find ourselves preparing these briefs of mitigating factors and circumstances that warrant downward departures. We're as down as we can get going in.

THOMAS: Isn't it true that many times these cases are at least initially put forward as multi-million dollar claims?

NOBLE: Well, and that was one of the things I wanted to close with on our computation. Agent Green has prevailed upon the folks at the U.S. Attorney's Office to go both sides as low as it is possible, number of days of violations and lowest amount on the penalty range. I've got a number of examples here in municipal cases where the math just gets absolutely ridiculous when you come in for -- and it could happen here -- violations that with some additional evidence from the government could play out over weeks or months. Even weeks at $5,000 a day gets up to a million very quickly. Weeks or months at $50,000 a day gets into the tens of millions of dollars very quickly, and unfortunately there is no ability to pay justification under the Clean Water Act even for a municipal defendant.

It's called a top-down sentencing approach. They take a calculator, they do the math, they start out at $60 million, which is the top, and then they'll add those mitigating and adjustment factors and get you down by about 50 to 85 percent. If they get to $50 million, though, even an 80 percent reduction has still got you paying $10-20 million.

MOORE: Then I guess this isn't top down because they've started here and there's nowhere to go below that.

NOBLE: It's down.

BLACK: The criminal investigators and Joe Sceteri [phonetic], who is the FDEP investigator who's worked through this as we worked on the Consent Order, I think you're seeing that goodwill reflected through that aspect of the plea agreement. Recall that in this Consent Order we can't ask the DEP to make a favorable comment on our behalf as part of this because we settled that out, and that may be an option we'll need to explore to see if that's worthwhile to add that. Some of these issues tie back to that FDEP Consent Order and maybe we could enlist their support to say, yes, the city's been supportive, they implemented the changes, they've done things to show compliance with that Consent Order from last year. Frankly, from that perspective they seem to have done more in that year than they'd done in the prior four years so they've been very positive about it.

ANDERSON: But for our remedial efforts and but for our negotiations we would not be looking at a plea agreement that is at the bottom of the spectrum, okay. We have gotten the benefit of excising the cancer in the terms and conditions contained in the plea agreement being offered to us. In the absence of all that remedial effort and in the absence of us making them aware of it, negotiating, cooperating, promising cooperation in the future if they want to pursue individual prosecutions, agreeing to some changes in some protocol and procedures, those are the things that got us to this plea agreement which is at the bottom rung of the spectrum. Therefore, it's not like we've got to go into Court in front of a sentencing judge and argue why it should be brought down, we've got them in agreement in a joint recommendation that it should be 22 days, which is the minimum, at $5,000 a day, which is the minimum. It's kind of like we've accomplished all of those things that you normally would be just getting ready to start arguing, and so we've gotten that benefit.

When you look at this as a global resolution of this dispute, none of us in this room are thrilled about the idea of the City of Venice signing a plea agreement admitting to felony violations of the Clean Water Act and paying a fine, but the alternatives are such that this is the best resolution that I think the City of Venice can hope for.

MOORE: On the other side, I would happily consider an enhanced monetary fine in exchange for the plea to a felony of the Clean Water Act. I mean, that's the bottom line.

BLACK: Let me go into the financial components.

NOBLE: Well, let me hit two quick issues here under the plea agreement that, again, I think are benefits to this plea agreement and global resolution. There's two things that are absent from this plea agreement that we would typically see in a Clean Water Act plea agreement. One are some restitution provisions. The plea agreement provides for restitution.

The good news is Sarasota County has been contacted and they have agreed that. they are not seeking any restitution primarily for the Knights Trail Park. So that's very good news because the county had engaged environmental consultants to go out and do some review work on Knights Trail Park. They came back with some fairly substantial damage assessments, some flooding and damage to wetlands and habitat that Sarasota County has agreed we are not seeking restitution. That is all verbal with the U.S. Attorney's Office, but it's fine since it is not in this agreement. To the extent there are other victims out there that come forward, restitution will always be imposed by the sentencing judge. At this point we're not aware of any other victims who are likely to come forward during that process.

The other component that is missing from this plea agreement is you typically have a federal requirement that the defendant will enter into a Consent Order with the State or with the local environmental regulatory agency. The good news is we're not looking at another Consent Order. There are some remedial requirements built into the plea agreement that are of a very technical nature, Marty and I can go after those if you want. They're essentially enhancements to the monitoring and the discharge criteria that are addressed in the permit, very technical in nature. Typically you would see those as a requirement to enter into a separate Consent Order with the permitting authority. They've agreed to go ahead and wrap this into this plea agreement so we have four or five what I will call outstanding action items that are of a capital improvement nature to the plant facilities that we'll go ahead and commit to in this agreement and save ourselves another Consent Order because a Consent Order would probably include additional fines.

SIMMONDS: Where are you with -- what I heard was some agreement that you could go with some language to the sentencing judge along the lines that Judge Moore suggested, and then it seemed later to be dismissed. Where are you with that?

ANDERSON: No, we're going to do that, Mr. Simmonds.

SIMMONDS: You're going to do it?

ANDERSON: We will do that. We thought that was an excellent idea and we'll make sure that that's plugged into the Pre-Sentencing Report and it goes to the sentencing judge so that he's aware of all the remedial efforts that we've undertaken to date.

SIMMONDS: Thank you.

ANDERSON: What I'd like to do is just a couple of things and then we're going to wrap up with Marty on the presentation.

Seth, did you have anything else in yours that you wanted to do?

RODNER: No.

ANDERSON: I'm going to ask Ron to talk about our recommendation to you, but I want to let you know that this has been a team effort from the time everybody's been brought onboard. Marty and I have been wrestling with this for quite a while. We've been -- Marty was Acting City Manager at the time that Dan Green first appeared at the City of Venice and interviewed the first City employee, and he and I met with that employee in my office that afternoon on a debriefing. John Thomas who's been brought in probably a year and a half or two years ago to assist us,- and he's been part of the team since then. As a result of one of the previous closed attorney-client sessions there was a -- we identified the need to bring in Seth and Ron, we have, and the five of us have worked as a team, different roles, different tacts, but every one of us has known what the other has been doing, we've kept everybody informed, and any decisions that we've made we've done as a group.

Now we've got a group recommendation we all are endorsing that I'd like Ron to go through regarding the plea agreement, and then Marty's got some administrative things he needs to discuss with you.

NOBLE: Thanks, Bob. That's a great summary and introduction.

COUNCILMAN FRED HAMMETT: Before you go there, you talked about potential criminal prosecution, I guess, of individuals. Given that that happens, is the City anywhere liable in any way to defend them, pay for their legal accounts or are they just on their own?

ANDERSON: Under our Code of Ordinances, and Lord knows I've been having to use this a lot more lately than I ever hoped to, what it provides is if, indeed, a former employee or an existing employee is charged with a criminal violation that is by definition outside the scope and duties of their employment, and therefore we will not provide them with a defense. But if, indeed, they retain independent legal counsel, they defend themselves and they're acquitted or exonerated then they will make application to the city for the reimbursement of their legal expenses because the charges were based upon actions as a city employee. Since they were criminal in nature we said those were beyond the scope and duty, but if they're acquitted or exonerated that means they discharged their responsibilities appropriately and we owe them a defense. It is nothing different than one of you being the subject of an ethics complaint where you retain independent legal counsel, you successfully defeat that ethics complaint, and then indeed you're entitled to reimbursement for your legal expenses. So that's the analysis we've always done, I believe that flows right from our Code of Ordinances, Section 2-162, and that's the way we will handle this.

SIMMONDS: I'm still concerned about the little guy that makes $30,000 bucks a year, him going out to get a $300-an-hour attorney defending --

BLACK: If he violated the law we shouldn't be defending him.

HAMMETT: I agree.

SIMMONDS: Wait a minute. I'm talking about the low level guy that's told to do something and he does it. Are they going to go after him?

NOBLE: I can tell you that right now based on our discussions with the U.S. Attorney's Office they have no intent to criminally prosecute that type of individual. As Seth cautioned, though, under this plea agreement we will be obligated to provide that assistance. We have a very good idea of who they intend to target for individual prosecution. They have finally become forthright with that as we began to discuss finalizing a plea agreement, and it does not involve low-level employees.

...continued on page 4 of 4