LEXINGTON, KY - Jim Rummage walked into the office of FBI agent Clay Mason and confessed while working at the state Transportation Cabinet, he had leaked confidential information to a road contractor in exchange for cash.
Rummage said he got the information at the request of the man in charge, Transportation Secretary Bill Nighbert, during 2006 and 2007. He said at first, Nighbert leaked the information to Leonard Lawson, owner of several companies that build roads for the state. Later, Rummage said he gave information directly to Lawson and in return, Lawson gave him $5,000 at four different meetings.
The confession came in March 2008. Mason believed Rummage. Assistant U.S. attorney Ken Taylor believed Rummage. They convinced a grand jury to indict the Lawson and Nighbert on charges of conspiracy, bribery and obstruction of justice.
But after a three-week trial in U.S. District Court, a jury on Friday found the defendants not guilty on all counts. How did prosecutors lose this case? Here is how:
No motive
The eight contracts where cheating allegedly occurred were all single-bid contracts, so Lawson would likely have gotten them anyway, as he had successfully done on more than 100 other contracts in one of the busiest periods of road paving in Kentucky history. And while $130 million in contracts may sound like enough money to make cheating worthwhile, the contracts in question were not nearly the largest that Lawson companies bid on that day. In one bid letting, prosecutors said Lawson cheated on two contracts, one for $3.8 million and another for $5.7 million. But prosecutors could not explain why, in that same letting, Lawson would not want inside information on a contract won with a $24 million bid that was 5.9 percent under the engineer's estimate, nearly $2 million.
Another possible motive hinged on "the 7 percent rule" The unwritten rule- of-thumb in the Transportation Cabinet is that if a bid is within 7 percent of the engineer's estimate, it is close enough to win the contract. With the inside information, Lawson could ensure he would "leave no money on the table." But one of the eight suspect bids was only about 3 percent over the estimate, which on a multi-million dollar contract can be a lot of money. As FBI agent Mason said: "He missed on a few."
And because contractors were already very busy at that time, they were often winning bids at more than 7 percent over the estimate, so why not bid more than 7 percent?
A big loser
The key prosecution witness was supposed to be Rummage, the Transportation Cabinet engineer who initially denied being involved in a conspiracy but later told the FBI that Lawson had given him $20,000 in cash and some frozen fish -- which Lawson had caught at his Florida home -- in exchange for inside information. But there were just too many holes in his story -- even the fish story.
Prosecutors portrayed him as a man so wrought with guilt before deciding to confess that he couldn't eat and had lost so much weight that his pants didn't fit. The defense countered with a list of people in a "biggest loser" weight-loss contest at the Transportation Cabinet's Lexington office that included Rummage.
And one project about which Rummage told investigators had channeled information to Lawson wasn't included in the prosecution's list of suspect bids. "If they don't believe Jim Rummage," defense attorney Larry Mackey told the jury, "why should you?"
No star power
Mackey said calling Gov. Steve Beshear, a Democrat, and Senate President David Williams, a Republican, as witnesses was a "desperation move" by prosecutors.
Beshear testified that he called Lawson just as the investigation was beginning, but did not assert that Lawson tried to use his considerable influence to undermine the investigation.
Williams, who hired Nighbert to work in the legislative branch after Beshear had replaced Nighbert as cabinet secretary, said he never doubted the honesty of his longtime friend. Defense attorney Guthrie True called Williams the best character witness their team had. "The fact that he was called by the government made it even better," True said.
Another prosecution witness was Marc Williams, who held the No. 2 post in the cabinet under Nighbert. The government flew Williams in from Texas only to have him contradict Rummage's testimony that Marc Williams, Nighbert, Lawson and Rummage discussed information leaks at a 2006 meeting. "No such meeting," Williams testified.
Rocks unturned
Defense attorneys hammered Mason's investigation for failing to thoroughly examine bidding information, phone records and bank records, at one point getting Mason to say: "You can't look under every single rock."
The defense brought in experts they had paid to analyze bidding data and Rummage's bank records to undermine the prosecution's theories. For example, while prosecutor Ken Taylor demonstrated that the Rummage's checking and savings accounts had ballooned from a combined $3,000 to $4,000 to a combined $30,000 to $40,000 in 2006-2007, a defense expert witness uncovered a deposit of nearly $30,000 into Rummage's savings account that had come from a pension fund.
The biggest Rock
Perhaps the biggest stone the investigation failed to overturn was Central Rock -- a contracting company they said Lawson owned during the alleged cheating. A Central Rock bid was $50 million of the $130 million in dirty contracts. But Lawson didn't buy Central Rock until a year after that bid. Why would Lawson help a competitor win a contract that would only increase it in value and make it more expensive for Lawson to buy? The prosecution team couldn't answer that one.
No cold cash, just frozen fish
In one recording a worried-sounding Rummage tells Lawson that the FBI has his bank records. And while Lawson denies giving Rummage any cash -- "Jim, I can honestly say I never gave you a nickel" -- he also tells Rummage "they can't prove cash."
He was right. Rummage says he had burned through all $20,000 by the time he began cooperating with the FBI. And while prosecutors were able to show a decrease in activity in Rummage's debit/ATM card use, there was little to show what he spent the money on other than an an air compressor and a dryer.
With no cash to examine for fingerprints, the FBI was left examining packages of frozen fish. They couldn't find Lawson's prints there, either.
Paper, phone trails went cold
Rummage did not keep a record or copies of the information he leaked. One of the cabinet employees he got information from kept an incomplete record that was proven to be unreliable.
The testimony of Lawson's wife, Bonnie, took some of the air out of the phone records that showed numerous calls between the two defendants. Bonnie described a friendship with Bill and Susan Nighbert that went beyond road contracts. Bill helped Bonnie diagnose the cause of her back trouble: spinal stenosis, which also afflicted Nighbert's father and brother. "I talked to Bill Nighbert more than my doctor," Bonnie testified.
Charmed, I'm sure
You could almost feel the hearts of the jury melting as Bonnie Lawson testified about their humble beginnings in Eastern Kentucky and the work that went into building Lawson's business. She contradicted Rummage's testimony about his visit to the Lawson home. And when Taylor tried to paint the Lawsons as greedy by asking her about the size of their Lexington home, she responded with a folksy "probably too big" -- drawing grins from the jurors.
Tale of the tapes
Rummage secretly recorded conversations with Lawson, Nighbert and others and prosecutors held them up as their strongest evidence. But there was no smoking gun. And more than once Lawson denied giving Rummage money: "Jim, I can honestly say I never gave you a nickel."
The obstruction of justice charges hinged largely on Rummage's recording of a phone call with Lawson in which prosecutors say Lawson offered to pay for an attorney if Rummage refused to cooperate with the investigation. In the tape, Lawson repeatedly tells Rummage to call a lawyer, and suggests he call his attorney "and that ain't gonna cost ya nothing."
Prosecutors interpreted that as sign Lawson would pick the tab. When Rummage did call Jon Woodall's firm, Rummage was told a conflict of interest would keep them from handling the case and referred him to another lawyer. As Woodall pointed out in testimony, that first call is always free.
Rummage testified that he "took it as a threat" when Lawson said he would be "splattered all over the world" if the bid-rigging case were to go to trial. But the defense, pointing to a stack of news articles about a different Transportation Cabinet investigation, sad Lawson was only referring to bad publicity.
And in a recording Rummage says he made by accident, FBI agent Mason tells Rummage that in the next call, he needs to "ram it at them." But apparently Rummage had very little to ram them with.