John Ford Could Be Home This Year

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John Ford and Michael Scholl
  • John Ford and Michael Scholl
John Ford could be released to a halfway house as early as late 2011, said Michael Scholl, the Memphis attorney who represented him in Ford's bribery case in Operation Tennessee Waltz.

Ford got a 66-month sentence in that case, plus another 14 years for a later conviction in a separate federal case in Nashville. But a three-judge panel of the U.S. Sixth Circuit Court of Appeals overturned the Nashville conviction this week because the federal court did not have jurisdiction.

"They're basically saying 'that's it,'" said Scholl, who did not represent Ford in Nashville. Ford was represented by a federal public defender.

Scholl said he was "a little bit surprised" about the jurisdictional ruling. Such issues are usually raised and argued in pretrial motions or at trial.

The appeals court also overruled, with the consent of prosecutors, two other counts against Ford based on "honest services" statutes that the Supreme Court has ruled only apply in bribery and kickbacks cases. Ford was convicted of failing to disclose a financial arrangement with a company that did business with TennCare while he was a state senator.

"I was very excited," said Scholl. "I have not talked to John but I'm happy for him."

He expects Ford, 68, to be released to a halfway house in late 2011 or early 2012.

The three appeals court judges who ruled on Ford's case were Damon Keith, Boyce Martin, and Gil Merritt. All were appointed by former President Jimmy Carter, a Democrat. An attorney who is not involved in either of the Ford cases said the composition of the panel was as good as Ford, a Democrat, could expect. Ford was represented by the Washington D. C. law firm that represented his brother Harold Ford Sr. in his 1993 federal corruption trial.

John Ford earned some $834,000 as a consultant working for United American Health Care (UAHC) and its Tennessee operating unit Omnicare and another company, Doral Dental, which had the TennCare dental contract. As a senator, Ford had a position on the TennCare oversight committee which recommended changes to TennCare.

Ford and Omnicare's CEO, Osbie Howard, and a third person had a partnership called Managed Care Services Group. Ford owned 40 percent of the partnership. Howard was city treasurer under former Memphis mayor Willie Herenton from 1992-1995. He resigned from Omnicare/UAHC in 2005 shortly before Ford was indicted on bribery charges in the Tennessee Waltz investigation. UAHC issued a statement then saying that the Ford-Howard partnership was "not approved by UAHC and (was) not consistent with UAHC's code of conduct."

No UAHC employees were indicted in the Nashville Ford case. The U.S. Attorney in Nashville at the time, Craig Morford, said the indictment revealed "an appalling willingness to violate (Ford's) duty by using his public position for personal gain." Before the Nashville Ford trial began, Morford moved to Washington D.C. as number-two man in the attorney general's office.

Ford was a rainmaker for UAHC when he was a powerful state senator. The Detroit-based company that managed health care for Medicaid patients was publicly traded, with a stock price of $1. It was about to lose its management contract with the state of Michigan.

After lining up with Ford, UAHC dramatically increased its managed care business in West Tennessee and Memphis by signing up more than 100,000 new members.

"After November 1, 2002, substantially all of UAHC's revenues were derived from its ownership of, and provision of services to, Omnicare through UAHC's wholly owned subsidiary," said the Nashville indictment of Ford.

The UAHC stock soared to $7 a share in 2005. It fell to under $2 a share when Ford was indicted in Memphis and UAHC issued its statement condemning the Ford-Howard relationship. The stock recovered to $8 a share by the end of 2007, but as it lost its TennCare and Medicare business, UAHC's revenue fell dramatically and the stock steadily declined to 25 cents a share this week.

The management team has been replaced since the Ford years. In 2010, UAHC announced that two executives with a venture capital firm in Chicago, John Fife and Robert Sullivan, would be running the company and that the headquarters would move from Detroit to Chicago.

According to its website, UAHC, founded in 1985 as a healthcare management company, is now a provider of contract manufacturing to the medical device industry.

The appeals court decision says the state Senate and state Registry of Election Finance "could have reprimanded Ford or exacted some equitable remedy, but no federal entity had similar authority in this situation."

Obviously, there is a big difference between a Senate reprimand or a notice of failure to file from the state election registry and a federal criminal prosecution leading to a conviction and 14-year prison sentence. The attitude of some of Ford's colleagues at the time of his indictment was summarized by former senator Roscoe Dixon who said, on a tape secretly recorded by the FBI, that "everybody got some semi-hustle."

The appeals court ruling doesn't go into the criminality of the underlying relationship between Ford and Omnicare. Other state legislators also set up shop as "consultants." This gray area is, if anything, ever grayer now because of the latest Ford ruling. The appeals court seems to be saying the disclosure solves all problems so long as one does not commit bribery or extortion.

"Although Omnicare had a contractual duty to not pay Tennessee officials and to prevent benefits from flowing to them, Ford was not bound by that duty. Therefore, Ford did not owe TennCare a contractual duty to report his financial interests with Omnicare. The only reporting duties owed by Ford in this case were owed to the senate and election registry."

I am not learned in the law, what this seems to say is that the supply-side — Omnicare — could not pay public officials, but if it did, then the public official did not have to report it. Whether or not the arrangement was legal or illegal is not made clear.

So John Ford — and Dixon — stand convicted and punished for taking money from a fake company set up by the FBI as part of a sting. But the "semi-hustle" relationship between a state senator working as a consultant for a real company may or may not be illegal, depending upon how you interpret "honest services" and how much information is disclosed and to whom.

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