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VOL. 126 | NO. 74 | Friday, April 15, 2011

Court Overturns Ford Corruption Conviction

By Bill Dries

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Former state Sen. John Ford’s federal TennCare fraud and corruption convictions were tossed Thursday morning by the Sixth U.S. Circuit Court of Appeals.

The court specifically found that Ford’s failure to disclose that he was working as a consultant for a TennCare contractor while he was a state senator voting on policies governing TennCare wasn’t a matter for the federal courts. It was instead a matter for state government, the court ruled.

A recent U.S. Supreme Court ruling on the use of the “honest services” federal statute also figured prominently in a ruling that could mean Ford will be released from prison sometime in 2012 or 2013 instead of 2025.

“The (state) Senate and (state) election registry likely could have exercised authority in this situation,” the ruling by the three-judge panel concluded. “They could have reprimanded Ford or exacted some equitable remedy, but no federal entity had similar authority in this situation.”

Ford worked as a consultant for Omnicare, a subsidiary of United American Healthcare Corp. Omnicare paid him $17,000 initially and $8,500 a month for what it and Ford said were regular consultations about business outside Tennessee. The monthly payment was upped to $10,000 in early 2004.

At the same time, Omnicare was a managed care organization providing health care services to TennCare recipients.

Ford was also 40 percent owner of Managed Care Services Group, which consulted for Doral Dental Services of Tennessee. Doral won a dental care carve out in the TennCare program.

TennCare is Tennessee’s version of Medicaid. It is funded mostly with federal dollars and the program is allowed to exist through a federal waiver. It was that federal connection that prosecutors in Nashville rested their case on.

The appeals court didn’t agree.

“Ford did not owe a duty to an entity directly contracted with a federal agency,” the ruling reads. “There was an intermediary – Omnicare – separating Ford from TennCare.”

The ruling seems to raise questions about the ability of state government to police conflicts of interest.

“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,” the court ruled. “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 (state) Senate and (state) election registry.”

The court also ruled that prosecutors’ use of the federal honest services statute was not in line with a recent U.S. Supreme Court decision that held the law can only be used to cover “bribery and kickback schemes.”

The appeals court ruled Thursday that Ford’s wire fraud conviction in the Nashville case doesn’t involve the honest services statute because the offense wasn’t corruption but a failure to disclose his financial interests.

Ford is serving a five-and-a-half-year prison term for bribery in an unrelated Memphis corruption case that stemmed from the 2005 Tennessee Waltz corruption sting. FBI agents posing as corrupt business executives recorded Ford taking money to sponsor and draft legislation.

That conviction is unaffected by Thursday’s appeals court ruling.

Ford’s indictment in the scandal that snared four other state legislators including two others from Memphis prompted Ford to resign the Senate seat he had held since 1975, as he awaited trial in Memphis.

The Memphis jury convicted Ford on one count of bribery and Ford began serving that sentence in early 2008.

As he was in prison on that conviction, Ford was tried in Nashville and convicted on all counts and sentenced to an additional 14 years in prison.

Ford’s storied and long political career is part of the saga of the city’s most powerful political family.

He is the brother of former U.S. Rep. Harold Ford Sr. and the uncle of former U.S. Rep. Harold Ford Jr.

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