A federal judge has unsealed dozens of documents in a bitter dispute between two key figures in former Mayor Ray Nagin’s corruption case that had been unfolding largely out of public view.
The crux of the spat is whether businessman Scott Sewell should be viewed as a courageous whistleblower who deserves to be compensated for millions of dollars in losses he suffered at the hands of a crooked business associate, Frank Fradella — or whether Sewell should accept his losses and be glad he wasn’t among those charged in the case.
So far, Sewell’s efforts to be recognized as a crime victim eligible for restitution from Fradella — who is now serving a one-year prison term for bribing Nagin — have been for naught. And that seems unlikely to change: Federal prosecutors, probation officers and a magistrate judge all have said Sewell doesn’t qualify, and U.S. District Judge Susie Morgan has agreed with their findings.
But Sewell likely will draw some measure of satisfaction from Morgan’s recent decision to unseal the documents, which at least will allow him to fully air his central allegation: that the government got way too cozy with Fradella in its zeal to nail Nagin.
“Prosecutors wanted so badly to help its (sic) prized witness that they mounted a ruthless attack against Sewell and argued that the victim was not a victim at all,” Sewell’s attorney, Tim Meche, wrote in an April brief seeking a hearing on the question.
Sewell’s claim to victimhood stems from his 2006 decision to sell his company, Associated Contractors, to Fradella’s Home Solutions of America for roughly $6.5 million in stock and cash. Sewell argues that he made the decision to sell based in part on a review of Home Solutions’ books, which, unknown to him, Fradella had been cooking.
Fradella and Sewell were soon at odds. Then Fradella fired Sewell, HSOA stock became worthless and Sewell never got most of his money. He has argued that he was defrauded by Fradella and thus deserves restitution under the terms of a federal law meant to make crime victims whole.
But Fradella and the government lawyers who prosecuted Nagin see the record differently. Although they don’t label Sewell an outright co-conspirator, they argue that he has “unclean hands” because he knew about some of Fradella’s misdeeds and didn’t immediately report them.
As an example, they point to Sewell’s knowledge in early 2007 that Fradella was using a corporate jet to whisk Nagin to Chicago and Las Vegas as he tried to gain the mayor’s good graces.
In one email exchange included in the government’s brief, between Sewell and Aaron Bennett — another business associate since convicted of bribery — Bennett writes: “I suggest you and Frank (Fradella) make the first part of the meeting a discussion of the granite business, discuss the new facility we are planning and come right out and ask how his (Nagin’s) family business might get involved. Once that runs its course, you should directly ask for his support for a large HSOA project.”
Those emails and the trip to Vegas, prosecutors argued, “began a corrupt, criminal venture with the mayor of New Orleans, C. Ray Nagin, that lasted several years.”
Sewell began blowing the whistle on Fradella months later, holding meetings with investigators from the FBI and the Securities and Exchange Commission. But that wasn’t soon enough for prosecutors, who noted that none of the information Sewell provided “was relayed to law enforcement at the time the corrupt activities were occurring at City Hall.”
Sewell strongly objects to the notion that he was slow to report wrongdoing, arguing in various pleadings that he would have had to be a fortune teller to realize sooner that Fradella and Bennett were up to no good.
“At the time of the emails, he was unaware of any attempt to bribe Mayor Nagin,” Sewell’s previous counsel, Peter Thomson, wrote in January. “Any delay between his receipt of the emails and his reporting of the same to the FBI does not indicate that he was complicit with the actions taken by Fradella and others, but instead indicates a lack of knowledge regarding the import of Fradella’s activities.”
While it’s not mentioned in the pleadings, Sewell also contemporaneously confirmed the mayor’s plane trip to Chicago to The Times-Picayune, which noted the junket in a story published in April 2007.
The arguments over Sewell’s victimhood were sealed with the consent of all parties — initially, at least — under common-law precedent that frowns on impugning the integrity of people who haven’t been charged.
But after Sewell got an adverse ruling, he sought to drag the dispute into the public square, and The Advocate joined in the case, seeking to have the matter unsealed in the public interest. He’s added some spice to his arguments, suggesting that the government wants to keep the whole unseemly mess under wraps because prosecutors don’t want the public to see how far they have gone to protect their witness.
Some of the newly unsealed documents show the government went pretty far indeed — such as prosecutors’ motion for a sentence reduction, which portrays Fradella as a “hard-working businessman” who made a mistake because he was fighting to “keep employees on the payroll.”
Though it once was purportedly for Sewell’s protection that the filings were kept under seal, lawyers for the government and for Fradella have continued to fight hard to keep the matter hidden even as Sewell sought to shine a light on it.
Prosecutors came up with new arguments for sealing, complaining in August that Sewell had “included unsupported claims of prosecutorial and judicial misconduct” in his most recent filings, and that his doing so appeared to be an effort “to trigger media interest” in his story.
The unsealing ordered by Morgan could be the last step in the matter. But Meche, Sewell’s attorney, said his client may not be ready to give up his quest for repayment.
“Now that it’s unsealed, we have the information we need to pursue other options to make Mr. Sewell whole,” he said. “We intend to pursue all available options.”
Even if this is the end of the road, Meche said, Sewell’s crusade hasn’t been in vain.
“We’ve been able to show the extremes the government went to in order to protect Fradella and prevent him from having to pay back a dime from his Texas profits,” Meche said. “I don’t recall a case where someone profited from criminal activity and was allowed to keep his profits to this extent.”
Follow Gordon Russell on Twitter, @gordonrussell1.