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U.S. Department of Justice
Office of the United States Attorney
Middle District of Tennessee
FOR IMMEDIATE RELEASE
CONTACT: Jim Vines
United States Attorney
Samuel G. Williamson
Deputy Chief, Criminal Division
Assistant U.S. Attorney
FRANKLIN ATTORNEY PLEADS GUILTY TO FEDERAL EXTORTION CHARGES
Nashville, TN - February 14, 2006- Walter Ray Culp III, an attorney from Franklin, Tennessee, entered a guilty plea to federal extortion charges, a violation of Title 18, United States Code, Section 1951. The plea was announced by Jim Vines, U.S. Attorney for the Middle District of Tennessee.
At the plea hearing, the Government entered the following statement of facts:
If there was a trial in this matter, the Government would offer evidence to establish the following facts:
In September 2004, the defendant, Walter Ray Culp III, was an attorney practicing in Franklin, Tennessee. As a part of his law practice, he represented a witness (the “Witness”) in a lawsuit between AIM Healthcare Services and Arbor Healthcare (the “AIM-Arbor lawsuit”), two corporations that were involved in interstate business. When the Witness hired the defendant, both he and the defendant believed that, if provided truthfully and in full, the Witness’s testimony in the AIM-Arbor lawsuit would be of significant benefit to AIM’s case against Arbor.
In early October 2004, the defendant approached a senior executive of AIM (the “Senior Executive”) and requested that they meet. During a series of meetings, the defendant informed the Senior Executive that he had a client (the Witness) who had valuable information for AIM in its suit against Arbor. However, the defendant informed the Senior Executive that his client would not provide this information nor testify truthfully, unless the founder of AIM (the “Founder”) entered into a cash and real property transaction with the defendant.
In these and subsequent meetings, the defendant made clear that the terms of the agreement would be as follows:
The defendant would convey property he owned in Perry County, Tennessee (the “Perry County property”), to the Founder. In exchange, the Founder would convey property that he owned in Williamson County, Tennessee, (the “Williamson County property”) to the defendant. In addition, the Founder would provide the defendant with $5.385 million in cash. The Founder was, at the time, listing the Williamson County property for sale for over $4 million. The defendant had purchased the Perry County property in 1998 for a total of $475,000, and this property was assessed for tax purposes in 2002 as having a total market value of $644,437.
When the Senior Executive inquired as to what would happen if AIM simply subpoenaed the Witness, the defendant stated that the Witness’s memory “would go to zero.”
The Senior Executive conveyed this proposal to the Founder and other senior management at AIM. After discussion, AIM management notified law enforcement of the defendant’s proposal. After discussing the situation with the Franklin Police Department, the Founder and other AIM executives agreed to cooperate with the Franklin Police Department investigation of the defendant’s conduct. As part of the cooperation, the Founder recorded two conversations that he had with the defendant. During these conversations, the defendant informed the Founder that if the Founder did not agree to the proposed cash and real property transaction, the Witness would “get a real bad memory.” The defendant also indicated that the Witness expected to be paid more than $3 million for his truthful testimony in the AIM-Arbor lawsuit. Finally, the defendant stated that the transaction must be structured as the land and cash swap, because “if my client tried to deal directly with you guys that y’all end up all goin' to jail 'cause you can't just go around buyin' testimony. I mean, that's, you just can't do it.”
Following the Founder’s recorded conversations with the defendant, the Franklin Police Department approached an individual they believed to be the Witness. This individual confirmed that he was, in fact, the Witness, and agreed to cooperate with law enforcement’s investigation of the defendant. As part of that cooperation, the Witness recorded a conversation with the defendant. During this recorded conversation, it was clear that the defendant proposed to provide the Witness with approximately $200,000 as a result of his participation in the defendant’s extortionate scheme, not the more than $3 million that the defendant had indicated to the Founder. In addition, the defendant stated that it was important to structure the payment from the Founder to the defendant and the Witness as a land transaction, because otherwise all of the participants would “go to jail.”
The Founder has since sold the Williamson County property for $4 million.
Mr. Culp agreed that he had committed the elements of the extortion offense.
Mr. Culp entered his plea before Chief U.S. District Judge Todd Campbell, who scheduled a sentencing hearing for May 26, 2006 at 10:30 a.m.
Extortion is a violation of Title 18, United States Code, Section 1951. This crime carries a maximum penalty of twenty years’ imprisonment and a maximum fine of the greatest of $250,000, twice the gross pecuniary gain derived from the offense, or twice the gross pecuniary loss to persons other than the defendant resulting from the offense, as well as a mandatory $100 special assessment.
The Federal Bureau of Investigation, Franklin Police Department, and the Internal Revenue Service investigated this case. Assistant U.S. Attorney Samuel G. Williamson is in charge of this investigation.