The legal fate of a former utility regulator, the head of a utility and a lobbyist facing bribery, conspiracy and fraud charges could depend on whether jurors believe the lobbyist’s former wife.
And that presumes they get to hear from Kelly Norton, the woman who appears to be the mystery “unidentified co-conspirator” in last year’s indictment.
In new legal filings, lobbyist Jim Norton contends Kelly, his former wife, cannot legally testify in the criminal case playing out in federal court here.
Ivan Mathew, his attorney, acknowledges that Kelly made a series of statements to the FBI ahead of the indictment. Those statements involve the allegations by federal prosecutors that Jim Norton funneled money to former commissioner Gary Pierce by creating a job for his wife, Sherry.
Mathew contends that, in at least one case, a conversation Kelly mentioned to FBI agents never actually occurred.
But the heart of what Mathew is arguing is that anything that occurred between Kelly and Jim when no one else was present is protected by “marital privilege.” And Mathew said that privilege belongs to Jim and he is exercising his right to preclude his former wife’s testimony.
Mathew is not relying solely on keeping Kelly Norton’s testimony out of court to keep his client — and the others — out of prison.
He also is telling U.S. District Court Judge John Tuchi that any payments from Johnson to others, including Sherry and Gary Pierce, were simply all parties exercising their First Amendment rights of free speech. He said Jim and Kelly Norton and Sherry Pierce were simply assisting Johnson “on marshaling support to maintain parts of the East Valley as unincorporated towns.”
The indictment charges that Gary Pierce, a former member of the Arizona Corporation Commission, was given the opportunity to purchase land from George Johnson for below-market price in exchange for pushing through a new policy to allow owners of small utilities regulated by the commission, including Johnson Utilities, to pass on the cost of their personal income taxes to ratepayers.
That, according to the indictment, was only part of the deal.
Pierce’s wife, Sherry, was given what the indictment claims is essentially a do-nothing job for $3,500 a month by an unidentified and unindicted co-conspirator, with the money going into the couple’s joint checking account.
According to the indictment, the ultimate source of those payments, laundered through that unnamed and unindicted conspirator’s consulting firm, was Johnson, owner of Scottsdale-based Johnson Utilities. That firm provides water and sewer service in Pinal County.
Johnson also was indicted on the same charges of conspiracy, bribery, mail fraud and wire fraud.
The indictment also says that Norton, who was a lobbyist for Johnson Utilities, acted as a go-between for his client and Pierce. Norton also is accused of trying to hide that transfer of property from Johnson to Pierce: It would be Norton’s name listed as buyer of what Johnson was selling, not that of Pierce.
In his new legal filings, Mathew effectively verified that Kelly Norton was the unnamed person in the indictment who was the conduit of the money. And he detailed key elements of what Kelly Norton told the FBI.
“George was going to put up the money, and then were going to buy it so that Gary and his son could run it to help Gary,” the new legal papers quote Kelly as telling agents.
“I threw an absolute fit when he did that,” she continued according to Mathew’s transcript of the FBI interview. “Because it was like $400,000.”
In another conversation, Kelly told the FBI she “put my foot down” in refusing to go along with being a conduit for the sale.
“What Jim told me was that George was gonna’ put up the money, because I threw a total fit when I saw that Jim was gonna’ buy this land for Gary, and Jim said don’t worry, George is putting up the money,” she said. “I mean I have my real estate license, you know, you can’t just do stuff like that, when you have your real estate license you have to follow all the rules and everything.”
As to that money for Gary Pierce’s wife, Kelly said she had done some work for George and was getting $6,000 a month.
“And then he told me that I needed to pay Sherry $3,500 a month,” Kelly told the agents.
“I was upset because I’m perfectly capable of doing whatever work I thought it was,” she said. “I didn’t realize at first what was going on, so I said, why am I hiring Sherry when I am perfectly capable of doing this?”
What makes much of what Kelly Norton told the FBI important is that the privilege against one spouse testifying against another does not apply if both are involved in a crime.
“In this particular circumstances, Kelly Norton states that she did not want to be part of an alleged crime of purchasing land with Commissioner Pierce,” Mathew wrote. Anyway, he said, the land deal did not go through.
“Thus, neither husband nor wife were participants in a criminal transaction,” he said of the part of the indictment involving that land deal.
As to those payments to Sherry Pierce, Mathew said there is no crime, saying all the parties were simply exercising their constitutional rights of free speech.
He said Jim Norton had been working for R&R Partners, a lobbying and public relations firm and that Kelly had a contract to assist with projects as needed.
At the same time, Mathew said Sherry Pierce is “a moving force in the East Valley political circles” and “entitled to work as a political consultant and get paid.”
What all three were doing, Mathew said, is assisting George Johnson in generating political support to keep parts of the East Valley unincorporated.
“This is protected speech,” the attorney said.
“Furthermore, that fact Sherry Pierce (or for that matter, Gary Pierce) merely received benefits for their work is not a crime,” Matthew continued. “The government has not shown that any payments to Sherry Pierce are in violation of federal law.”
The trial is currently set for May 30.