A federal investigation initiated when West Virginia Supreme Court Justice Allen Loughry brought his concerns about Supreme Court spending to federal investigators has culminated with Loughry himself being indicted on 22 federal charges alleging fraud, witness tampering and lying to investigators.
A federal grand jury handed up the indictment against Loughry late Tuesday charging him with 16 counts of fraud and swindles, three counts of making false statements, two counts of fraud by wire, radio or television and one count of witness tampering.
U.S. District Magistrate Judge Dwane Tinsley released Loughry on a $10,000 personal recognizance bond following his initial appearance Wednesday morning at the Robert C. Byrd U.S. Courthouse.
He is subject to the standard terms and conditions of bail for defendants in federal criminal cases, including surrendering his passport and firearms and remaining within the geographic boundaries of the Southern District of West Virginia for the duration of proceedings in his case.
Loughry, 47, left the courthouse with his attorney, John Carr, just before noon. Loughry is scheduled to be arraigned and answer the charges against him Friday afternoon.
Carr would not comment on the case.
If Loughry is convicted of all of the charges against him, he faces a maximum sentence of 395 years in prison and up to $5.5 million in fines.
Loughry is accused of improperly using state vehicles and purchasing gas with a state credit card to travel for personal trips, including visits to his native Tucker County and signing events for his book, ironically about political corruption, at The Greenbrier resort.
He also is accused of having state-owned property at his home and lying to federal investigators about his knowledge of the property and about his involvement in high-cost renovations at the Supreme Court.
U.S. Attorney Mike Stuart held a news conference after the indictment was unsealed Wednesday morning.
"These are supposed to be the wisest and the most unbiased, the fairest, the most impartial in the land," Stuart said. "Our citizens deserve that here in West Virginia, and I think, on West Virginia Day, we deserve a Supreme Court, for goodness sake, that we can look at and know that it is untarnished by any blemish."
The federal criminal charges are separate from a 32-count statement of charges against Loughry from the West Virginia Judicial Investigation Commission issued on June 6. Those charges allege that Loughry violated the West Virginia Judicial Code of Conduct.
Teresa Tarr, general counsel for the commission, said Loughry abused the prestige of his office and lied to the news media, state lawmakers and the public in general about his personal use of state resources, including furniture, computers and cars, all in violation of the Judicial Code of Conduct.
A Supreme Court consisting entirely of specially appointed members on June 8 suspended Loughry from the bench without pay while the commission's case is pending. The court did not rule on whether Loughry's law license would be suspended.
It is standard practice for the commission to halt its proceedings if a judge is facing criminal charges, but commission officials weren't available for comment Wednesday, which was a state holiday.
The commission's statement of charges and the federal indictment deal with a lot of the same allegations, but the focus on the events differ in regard to what laws or codes Loughry is accused of violating.
Rumors have swirled throughout Charleston for weeks about possible criminal charges against current or former Supreme Court justices, but Loughry is the only person to face charges so far.
Stuart said public officials throughout the state had heaped their condemnation on Loughry after the commission released its statement of charges, and he suggested that public confidence in the court might not be best served by focusing on Loughry alone.
He declined to comment on whether any other justices or Supreme Court employees are under investigation.
Stuart said investigators' work "continues on many fronts, including additional areas of corruption."
"I'm sure there are a whole lot of people that would like Justice Loughry to be indicted and go down in a great ball of flames and, somehow, the rest of the court escapes uncharged," Stuart said. "I don't know whether there will be charges in the future, but I can tell you that we're interested in public corruption. ... We'll let the facts lead us to where the facts lead us."
Assistant U.S. Prosecutor Phillip Wright prepared the indictment, which doesn't indicate exactly how much money Loughry is accused of costing taxpayers by using the state vehicles, purchase cards and E-ZPass transponders and other state resources for personal use.
Stuart said there's no indication that Loughry misused federal dollars.
Loughry is accused of using state vehicles to take personal trips, at no personal cost, mostly between July 2013 and August 2016.
On at least two occasions, he is accused of using the state vehicles for personal trips, but he also was reimbursed by institutions to which he traveled for mileage and other expenses, according to the indictment.
Loughry is accused of defrauding American University, in Washington, D.C., one of his alma maters, and the Pound Civil Justice Institute, in Baltimore, by accepting reimbursement for his personal travel to those institutions even though he traveled to those places using state vehicles at no personal cost.
Loughry's book on political corruption in West Virginia, "Don't Buy Another Vote, I Won't Pay for a Landslide," and his promotion of that book reportedly are what led to a part of his alleged scheme.
He attended at least three book-signing events at The Greenbrier resort using state resources, according to the indictment.
By August 2016, Wright said, Loughry began taking steps to cover up his fraudulent conduct, an effort Wright said lasted at least through March 2 of this year.
Wright said Loughry's "pattern of concealment, misdirection, and deception" began in late August 2016 in a dispute with another Supreme Court justice about vehicle usage.
On Aug. 25, 2016, the justice, who isn't named in the indictment, sent a memo to the administrative director of the Supreme Court asking very specific questions about instances when Loughry reserved state vehicles between 2013 and 2016. All of the justices, Loughry included, received copies of the memo, Wright said in the indictment.
The next day, Loughry responded to the memo with his own memo, in which he questioned the vehicle usage by the other justices.
"I unhesitatingly assure each of you that on the dates mentioned in [the other justice's] various memoranda to [the administrative director], I was acting in my capacity as a Justice of this Court in utilizing a Court vehicle," Loughry wrote in his response memo, according to the indictment.
The indictment, however, alleges that the statement Loughry made to his peers was not true.
After the exchange of memos, the justices met in September 2016 to establish a formal written policy for using state vehicles, and Loughry stopped using the Supreme Court's vehicle reservation system even though he continued to use state vehicles, Wright said in the indictment.
When news reports came out in fall 2017 regarding excessive spending on renovation in the Supreme Court offices, Loughry "continued the pattern of deceit and misdirection by misrepresenting to members of the media his role" in the renovation, Wright said.
He said that's when Loughry attempted to influence a Supreme Court employee's potential testimony in a federal grand jury investigation about the extraordinary spending by the Supreme Court, according to the indictment, which doesn't indicate how Loughry tried to influence the person or reveal the identity of the witness.
In its separate investigation, the state Judicial Investigation Commission found that Loughry lied to reporters and West Virginia lawmakers who questioned him about the $3.2 million in renovations to the court's offices, which included a customized West Virginia county map embedded in the floor of Loughry's office, as well as a $32,000 couch for his office.
None of the charges in the federal indictment relate directly to the renovations, but the renovations are a catalyst for Loughry's alleged scheme to lie to investigators.
In November 2017, Loughry returned the keys for both state-owned vehicles he had used to the Supreme Court's director of security, according to the indictment.
The indictment also includes allegations that Loughry's use of state-owned furniture was another catalyst for him to lie to federal investigators.
Stuart noted that the announcement of the indictment against Loughry came the day before the 5-year anniversary of when Loughry was alleged to have moved what's called a "Cass Gilbert desk" from the Capitol to his house in Charleston.
The Cass Gilbert desks are a set of five desks that were original to the Supreme Court offices when they were dedicated in 1932.
In the indictment, Wright said Loughry arranged for a state-contracted moving company to move the Cass Gilbert desk and a leather couch to his home on West Virginia Day 2013, costing the state $836. The indictment states that Loughry acted under the false pretense that the had the authority to order such a move.
"[Loughry] did not inform the other Justices or any Supreme Court employee that he planned to take the Cass Gilbert desk. Nor did he tell them that he had in fact taken a Cass Gilbert desk to his home," Wright said in the indictment.
On Nov. 27, 2017, Loughry arranged for Supreme Court employees to remove a leather couch from his home and take it to a state warehouse after a Gazette-Mail column questioned the location of the couch and a Cass Gilbert desk.
Three days later, Wright said, Loughry arranged to have the Cass Gilbert desk removed from his home, where it had been for about four years.
Loughry told Supreme Court employees he was permitted to have the furniture, as well as computers to furnish his home office, as part of a court policy, according to the indictment.
However, Wright said no such policy, written or oral, exists to allow justices to have such furnishings in their homes.
Loughry's state furniture moving days took place roughly one week after he met with an FBI agent and a representative from the U.S. Attorney's Office for the Southern District of West Virginia "to report his own concerns about spending by other Justices of the Supreme Court and the former Administrative Director that he believed was unauthorized or otherwise inappropriate," the indictment says.
That meeting led to the opening of a federal investigation into the "possible misuse of state funds by members of the Supreme Court to determine if any federal crimes had been committed" and who committed them.
Part of the investigation used the grand jury process to obtain records and information, Wright said.
On March 2 of this year, Loughry, with his attorney present, spoke with a FBI special agent and other investigators.
During the interview, the indictment alleges, Loughry lied about his use of state vehicles, when the Cass Gilbert desk was moved into his home and his understanding of the significance of the desk, telling investigators he didn't know it was a Cass Gilbert desk.
"The statement was false, and defendant Loughry knew it was false at the time he made it," Wright said in the indictment.
Loughry was elected to a 12-year term on the Supreme Court in 2012. In 2017, he was named chief justice for a term of four years. Previously, justices served in the role for one year. He stepped down from chief justice as public scrutiny began to increase.
During the 2018 legislative session, Democratic lawmakers called for impeachment proceedings against Loughry, which some renewed Wednesday.
Multiple political leaders in both parties called for Loughry to resign after the Judicial Investigative Commission's report came out. Gov. Jim Justice said at the time that Loughry should resign if the allegations against him are true.
(c)2018 The Charleston Gazette (Charleston, W.Va.)
