7th Circuit affirms bribery, IRS obstruction convictions against ex-Indiana mayor

(IL file photo)

A former northwest Indiana mayor convicted of bribery and obstructing federal revenue laws failed to convince the 7th Circuit Court of Appeals that, among other things, his rights were violated when the government seized communications between him and his attorney.

James Snyder, who took office as mayor of Portage in 2012, was convicted of federal funds bribery for soliciting and accepting $13,000 in connection with the city’s purchase of garbage trucks. He was also convicted of obstructing the administration of federal revenue laws for concealing assets and income from the Internal Revenue Service.

Snyder was sentenced to 21 months and one year of supervised release.

The issue started in November 2013, when his administration announced it would purchase garbage trucks through public bidding. Two contracts were awarded to Great Lakes Peterbilt, a truck company owned by two brothers.

Snyder put his longtime friend, Randy Reeder, in charge of the bidding process, and Reeder testified at trial that he drafted the bid specifically to favor the truck company.

Less than three weeks after the second contract was awarded, the company paid Snyder $13,000.

Years before becoming mayor, Snyder’s business, First Financial Trust Mortgage, failed to pay its payroll taxes in full for a span of three years, and the IRS levied the business’s bank accounts.

After that, Snyder made an arrangement with another mortgage company, GVC Mortgage, where he would manage and operate First Financial as a division of GVC. He sent invoices to GVC for costs ostensibly incurred in operating First Financial. And rather than having GVC reimburse First Financial, Snyder had GVC send reimbursements to a different company Snyder created called SRC Properties.

Snyder was also behind on his personal taxes, and the IRS levied his personal bank accounts in 2010 and 2011.

In trying to negotiate a settlement or installment plan with the IRS on his personal taxes, Snyder submitted documents in which he didn’t report that he owned SRC Properties. He also omitted his employment with GVC Mortgage.

A federal grand jury indicted Snyder in November 2016.

While he was convicted of one count of federal funds bribery and one count of obstructing the IRS, a jury acquitted Snyder on a separate bribery charge involving the city’s towing contracts.

Snyder moved for a judgment of acquittal or a new trial on the counts of conviction. The U.S. District Court for the Northern District of Indiana, Hammond Division, denied the motion for acquittal but granted a new trial on the bribery charge.

The jury again returned a guilty verdict in March 2021.

On appeal, Snyder challenged the district court’s denial of his motion to dismiss the indictment or disqualify the prosecution team after the government seized communications between him and his attorney.

He also challenged the IRS obstruction conviction on the grounds that the prosecution was barred by the statute of limitations and that there wasn’t sufficient evidence.

Finally, Snyder made several challenges to his bribery conviction, including that his right to a speedy trial was violated by the delay between the first and second trials.

But the 7th Circuit wasn’t persuaded.

Regarding communications seized between him and his attorney, Snyder argued his Fourth and Sixth Amendment rights were violated when, pursuant to a warrant, the government got access to his personal and city email accounts.

Though he hadn’t yet been indicted, the government knew Snyder had retained counsel, so it developed a filter process to prevent the prosecuting team from receiving privileged communication.

Eventually, the prosecuting team had access to about 600 emails between Snyder and his attorney that weren’t considered privileged communication. Snyder argued the team ended up with access to about 40 emails that he said were privileged.

Though the district court concluded one email containing financial information prejudiced Snyder, his motion to dismiss was denied.

The 7th Circuit denied Snyder’s Fourth Amendment challenge, ruling the remedy for such violations is suppression of the evidence, not a dismissal of the indictment or disqualification of the prosecution team.

In disagreeing with Snyder’s Sixth Amendment argument, the 7th Circuit ruled seizing and filtering emails didn’t violate his right to counsel because the right hadn’t been attached yet. The government completed its filter process in early 2016, and Snyder was indicted in November 2016.

“To be sure, where law enforcement has reason to expect that a search (electronic or otherwise) will sweep up privileged communications, it should take appropriate measures to avoid intruding on attorney‐client relationships,” the opinion says. “We are not convinced, however, that the filter process used here would have been rejected by other circuits, nor do we agree that the Constitution required earlier participation of defense counsel or oversight by the district court.”

The 7th Circuit also disagreed with Snyder’s argument that the statute of limitations barred prosecution for obstructing the IRS and that the evidence wasn’t sufficient.

The 7th Circuit ruled the six-year statute of limitations meant the government needed to allege Snyder engaged in an act to obstruct the IRS on or after Nov. 17, 2010, which it did.

Snyder argued the district court erroneously intertwined his payroll tax and personal tax misconduct, but the 7th Circuit said he “misreads” the court’s order.

The 7th Circuit also ruled there was sufficient evidence to support the jury’s verdict.

“The jury could reasonably conclude that misrepresenting assets and income in settlement and installment‐plan negotiations with the IRS could have the effect of impeding the IRS’s collection efforts,” the opinion says.

The 7th Circuit also ruled the jury could have concluded Snyder acted with the intent to gain an unlawful advantage.

Snyder’s challenges to his bribery conviction included that his right to a speedy trial was violated, that 18 U.S.C. § 666(a)(1)(B) applies to bribes but not to gratuities and therefore does not apply to his case, and that the evidence wasn’t sufficient at either trial.

The district court, in denying Snyder’s motion to dismiss under the Speedy Trial Act, excluded a 45-day continuance from its calculation.

But the 7th Circuit ruled review is foreclosed because Snyder and his counsel said they would not “push the point” of the 45-day continuance.

“Snyder agreed to exclude the 45 days, and the continuance furthered the interests of justice by giving supervisors overseeing Snyder’s prosecution time to review transcripts and to make a considered choice regarding his retrial,” the opinion says.

The 7th Circuit also noted that some of the delay resulted from consideration of Snyder’s motions and that the pandemic disrupted proceedings.

In arguing 18 U.S.C. § 666 doesn’t apply, Snyder said the payment made to him was at worst a gratuity rather than a bribe.

But the 7th Circuit ruled it would follow its precent in holding the statute doesn’t require evidence of a prior quid pro quo agreement.

Lastly, the 7th Circuit disagreed with Snyder’s argument that there wasn’t sufficient evidence at either trial to convict him.

The 7th Circuit noted that when questioned by the FBI, Snyder claimed the $13,000 was payment for health care and IT consulting he performed, but he couldn’t identify any work he actually provided.

Because of “irregularities” in the bidding process, combined with the timing of the payment and “dubious explanations,” the 7th Circuit ruled a reasonable jury could conclude he accepted the check as a bribe or gratuity.

The 7th Circuit also disagreed Snyder is entitled to a judgment of acquittal, ruling his argument was incorrect as a matter of law and fact.

The case is United States of America v. James E. Snyder, 21‐2986.