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Feds face obstacles in Vegas Strip Club corruption probe

Las Vegas- The government says its investigation into political corruption has not ended with the prison term handed to former Clark County Commissioner Erin Kenny, the last of the elected officials sentenced on charges of taking bribes from one-time strip club operator Michael Galardi.

But some former federal prosecutors familiar with how the government puts together criminal cases don’t expect to see much more coming out of the high-profile investigation, which led to the convictions of Galardi and four county commissioners.

“I’d be surprised if we see any more,” said Stan Hunterton, once the chief of the Justice Department’s Organized Crime Strike Force in Las Vegas. “The public has Erin Kenny fatigue, and I think law enforcement does, too.”

If that is true, one of the most widely publicized investigations in Las Vegas history may be remembered as much for those who were not charged as for those Kenny soon will be joining in federal prison – fellow former Commissioners Dario Herrera, Mary Kincaid-Chauncey and Lance Malone.

In the wake of their cooperation with FBI agents and federal prosecutors the past four years. Galardi and Kenny left a list of tarnished names in Las Vegas officialdom much longer than the government’s conviction list.

Galardi claimed to have provided favors and cash under the table to an array of local politicians, judges, prosecutors, police officers and even FBI agents.

Kenny, who maintained close relationships with big-time developers during her tenure on the County Commission, backed up Galardi’s claims against Herrera, Kincaid-Chauncey and Malone and added a few other names, including real estate consultant Don Davidson, to the mix.

A federal jury this month could not convict Davidson of bribing Kenny, but did convict him of trying to bribe former Las Vegas Councilman Michael McDonald, who was never charged in the Galardi corruption probe. The bribe attempt occurred in 2002 while McDonald was on the council.

Federal prosecutors have either dismissed Galardi’s allegations of wrongdoing against other officials as false or have failed to corroborate them.

“The fact that nobody else has been charged suggests to me that there isn’t any corroboration,” Hunterton said.

But former U.S. Attorney Daniel Bogden, who oversaw the investigation until he left office in February, said that doesn’t mean that federal authorities, who have made political corruption a top priority, will stop trying to build new cases.

“I’m confident that with what the FBI has put together with its public corruption unit and with the resources the U.S. attorney’s office is putting into it, things are going to move forward,” Bogden said.

Finding corroborating evidence, however, is the key to taking the investigation to its next level, especially with the credibility of its two chief witnesses called into question.

“You’re bailing water with a hole in your bucket if you’re relying on Galardi or Kenny as witnesses,” said Charles Kelly, another former federal prosecutor.

Galardi made inconsistent statements to FBI agents four years ago and was caught in lies on the witness stand during the trials of Herrera, Kincaid-Chauncey and Malone. Galardi and Kenny contradicted each other during the trials, and Kenny claimed to have a memory loss because of a vertigo condition that conveniently allowed her to duck key questions during cross-examination.

What helped federal prosecutors persuade jurors to convict the three former commissioners who stood trial – Kenny pleaded guilty without going to trial – was the use of court-approved wiretaps catching the defendants discussing the illegal acts.

“Proving a political corruption case is very difficult,” FBI spokesman Dave Staretz said. “Jurors often like to hear and see the criminal activities taking place.”

That was evident during the recent Davidson bribery trial.

Jurors who convicted Davidson of trying to bribe McDonald had the benefit of hearing McDonald discussing the attempt on secretly recorded FBI wiretaps.

In that same case, however, the jurors deadlocked on whether to convict the real estate consultant of bribing Kenny. Prosecutors did not play wiretap evidence to corroborate Kenny in that part of the case.

Kelly and Hunterton said the government likely would have made it known by now if it had wiretap evidence to back up Galardi’s and Kenny’s accusations against the public officials not charged in the corruption investigation.

Also holding back the government is the five-year statute of limitations on the corruption charges. The latest wrongdoing by others alleged by Galardi and Kenny is said to have occurred in early 2003. But most allegedly took place more than five years ago, which means the government couldn’t pursue those claims now if it wanted to .

Kelly described the uncharged officials as victims, “collateral damage” in the government’s effort to put away Herrera, Kincaid-Chauncey and Malone.

“Where do the others go to get their reputation back?” he said.

A quarter century ago there was a similar occurrence in the aftermath of an undercover FBI political probe that ensnared well-known state lawmakers and county commissioners. Only a handful of public officials were indicted, but videotapes and other electronic surveillance gathered by FBI agents called into question the reputations of other politicians who were never charged.

“Some of the lesser cases usually fall by the wayside,” said B. Mahlon Brown, who was U.S. attorney during that investigation. “You have to set your priorities and go after what you think you can prove in court.”

In the latest corruption case, some of the names that surfaced – including McDonald and developers Eskandar Ghermezian and Jim Rhodes – were mentioned so frequently that it has left many wondering about their fates.

Federal authorities still are actively pursuing McDonald, one of the corruption probe’s original subjects, but on criminal tax charges. The case is being handled by Assistant U.S. Attorney Eric Johnson, who oversees the Organized Crime Strike Force.

To Kelly, the tax case against McDonald, initiated by the Internal Revenue Service, is another sign that the government has soured on the original corruption allegations.

“They’re saying they couldn’t get him on the substantive counts, so they’re going to stick him with a tax charge,” Kelly said.

McDonald, who served on the City Council from 1995 to 2003, has maintained a close friendship with Galardi since their days in high school. During his time on the council, McDonald was a paid Galardi consultant.

When agents raided Galardi’s two Las Vegas strip clubs, Cheetahs and Jaguars, in May 2003, they were looking for evidence of payments to McDonald, Herrera, Kincaid-Chauncey and Malone.

Agents, however, later learned that McDonald had reported his consulting fees to the IRS and had abstained from voting on any matters involving Galardi.

So when the government obtained a corruption indictment later that year, McDonald was not among the defendants charged. But prosecutors had subpoenaed all of McDonald’s financial records during the investigation, and his business dealings have become the subject of the tax probe. He did not return phone calls.

Ghermezian’s name first surfaced publicly in the investigation at the trial last year of Herrera and Kincaid-Chauncey.

Kenny testified that she had received $3,000 monthly from Ghermezian’s Triple Five Nevada Development Corp., a retail mall developer, from early 2000 to May 2003. She said the payments, which began after she voted in favor of the company’s never-built proposed casino in Spring Valley, initially were compensation for editing company brochures, but she continued to receive money after she stopped doing the work.

Kenny testified that Ghermezian felt he owed her a “life debt” because of her casino vote and funneled the payments through Davidson, then an executive with Triple Five.

The company’s attorneys strongly denied Kenny’s allegations – the same allegations that deadlocked jurors in Davidson’s trial.

In the aftermath of Davidson’s trial, it has become clear that there are several obstacles blocking the government’s path to Ghermezian, who could not be reached for comment.

Prosecutors have no wiretaps to support Kenny’s claims, and the one witness who could corroborate her, Davidson, has refused to cooperate. At the same time, the five-year bribery statute of limitations on the allegations is closing in on prosecutors.

Prosecutors face more serious corroboration problems in pursuing a case against Rhodes, one of Southern Nevada’s most recognizable and politically active homebuilders .

Kenny has had a long-standing friendship with Rhodes, who built her a home. Rhodes was a huge campaign contributor to Kenny, donating $190,000 alone through his companies to her unsuccessful 2002 bid for lieutenant governor. Kenny returned the favors by frequently doing his bidding in matters involving Rhodes that came before the County Commission.

When Galardi was debriefed by FBI agents, he alleged that Rhodes paid Kenny $20,000 a month during her term on the County Commission, which ended in January 2003.

But Kenny denied taking bribes from Rhodes while in office, leaving prosecutors with little other evidence against the developer, who has denied bribing her. Rhodes’ attorney, Richard Wright, declined comment.

Kenny, however, has acknowledged that Rhodes paid her $16,800 a month as a consultant after she left office – payments that were being made until this month, long after she pleaded guilty to taking cash from Galardi.

The payments, described as “hush money” by Davidson’s attorney, Dominic Gentile, have raised new questions about the relationship between Kenny and Rhodes. But without Kenny’s help and other corroborating evidence, including wiretaps, the government has an uphill battle putting a criminal case together against Rhodes.


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