Tuesday, April 13, 2004

SEAGOVILLE, Texas — President Bush soon will be asked to commute the 20-year federal prison sentence of a conservative businessman who supporters say was convicted with tainted information.

A petition destined for the White House says that the lead prosecutor in William R. Kennedy Jr.’s 1993 trial in Denver was guilty of prosecutorial misconduct and perjury. The petition is expected to be filed by Fredericksburg, Va., lawyer Craig L. Parshall in two weeks.

The prosecutor — Assistant U.S. Attorney Steve Peters — is accused of receiving information from a law clerk at a firm representing Kennedy and using it to gain a conviction in defiance of attorney-client privilege.

“I pray the truth will eventually come out,” Kennedy said last week from the federal correctional facility here, about 30 miles southeast of Dallas. “It’s not very comforting to realize that hundreds of murderers have served less time than I have — and they were guilty.”

Kennedy, who was president of Western Monetary Consultants Inc., was convicted of one count of racketeering, nine counts of aiding and abetting mail fraud, and seven counts of aiding and abetting money laundering. At his indictment in 1992, the grand jury found that Kennedy was involved in a “scheme to defraud numerous precious-metals investors.”

According to documents and affidavits from Keith Danley, the former law clerk who once worked for Kennedy, Mr. Peters contacted him for assistance when building his case.

“He told me I wouldn’t be indicted if I helped them,” said Mr. Danley in an affidavit on Feb. 2, 2001.

When some information known only to Kennedy and his attorneys emerged in the prosecution’s case, Kennedy’s court-appointed attorney, David A. Lane, asked Mr. Peters whether the prosecution had talked to Mr. Danley.

According to an affidavit from Mr. Lane, Mr. Peters denied having approached Mr. Danley.

“I received no information, notice or knowledge from the prosecution that the prosecution had interviewed or received documentary or other information from Mr. Danley,” Mr. Lane said.

Mr. Lane has said if he had known, he would have filed a motion to dismiss the case.

Mr. Danley, in his affidavit, said he delivered several boxes of information and a 10-page “report” to Mr. Peters in 1991 outlining Kennedy’s operation at Western Monetary Consultants, including a lengthy portion detailing why he thought Kennedy was innocent of any wrongdoing.

Mr. Danley said he met Mr. Peters often during an 18-month period. He said when he mentioned several times that Kennedy was innocent, Mr. Peters “got very upset.” The Danley “report” later turned up missing.

Mr. Danley said he asked Mr. Peters at their first meeting, Sept. 27, 1991, whether he was a target of a federal investigation.

“He would only answer that I was not a target ‘at this time.’ I thus had a fear of possible prosecution in the future if I did not cooperate,” Mr. Danley said.

Later, Mr. Danley said he asked the prosecutor to give him immunity.

“Mr. Peters told me he could not give me formal immunity because it might have an effect on my credibility as a grand jury witness,” according to Mr. Danley’s affidavit. “However, he indicated that I would just have to ‘trust’ him not to prosecute me and that he would make good on his promise as long as I cooperated in providing information to him that he needed.”

Mr. Peters, now a leading white-collar crime defense lawyer in Denver, replied by e-mail to The Washington Times: “Mr. Kennedy’s conviction for racketeering comported fully with due process and did not result from any prosecutorial misconduct. I respectfully refer you back to the Justice Department if you require further information.”

Mark Carallo, a Justice Department spokesman, said the department’s Office of Professional Responsibility (OPR) had investigated the Kennedy case in 1997 and again in early 2001 and concluded there was no validity to Mr. Parshall’s claim of prosecutorial misconduct.

A letter to Congress from the OPR in 2001 said in part:

“This office informed counsel for Mr. Kennedy that we found no basis for a finding of prosecutorial misconduct. We also informed him that we are aware that additional appeals had been filed with the court of appeals, and that, pursuant to our general policy, we would refrain from further review of the matter absent a finding of misconduct by a court or other extraordinary circumstances not present in Mr. Kennedy’s case.”

Kennedy, 56, has spent about 10 years in federal prisons and unsuccessfully has appealed his conviction.

Turning down one appeal, the 10th U.S. Circuit Court of Appeals said the defense had not proved how the use of Mr. Danley had injured the defendant. In a defense attempt to get an evidentiary hearing on prosecutorial misconduct, the court ruled Kennedy’s attorneys had not proved his defense was prejudiced.

After Mr. Danley’s confession, Mr. Parshall, the lawyer filing the petition with Mr. Bush, went back to try to amend the appeal record with the newly obtained evidence, but the government fought it. And the appeals court denied it — saying the facts were not “sufficiently outrageous to support granting a new trial or dismissing the indictment.”

Kennedy — who once ran unsuccessfully for Congress in Colorado and later published the Conservative Digest in Washington — has received considerable attention about his case.

Tim LaHaye, an author and evangelist, wrote in his book, “How to Study the Bible For Yourself,” about his interaction with Kennedy over the years. This week, he told The Washington Times of his efforts to help Kennedy, whom he called “a political prisoner.”

Kennedy, Mr. LaHaye said, has helped many prisoners with Bible studies.

“I have seen what he has done with his life — and it is impressive.”

Kennedy’s company began in Denver in 1980. It went from doing $1 million in sales in 1981 to $87 million five years later.

By March 1988, it entered Chapter 11 bankruptcy, and by November 1989, a reorganization plan was approved by a bankruptcy court to pay back 630 creditors all their losses within 10 years.

A New England businessman, Robert Korpi, who lost more than $100,000, was named chairman of the creditors’ group. He supports Kennedy, and his name will be one of those on the upcoming petition to the president.

Mr. LaHaye and Mr. Parshall, who has represented Kennedy since 1996, said investors did lose money buying precious metals from Kennedy’s company, but they said it wasn’t because Kennedy was stealing from the firm.

It was, they agreed, because Kennedy hired incompetent employees and lacked adequate knowledge about such a fast-paced business.

Kennedy spends his days walking the spacious grounds, picking up trash. His wife of 37 years and three children have moved to the area so they can visit as often as possible.

“I’m not angry,” he said last week. “I don’t hate anyone. But I do think there have been some unfair occurrences in my case.”

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