Wednesday, August 13, 2003
Copyright © Las Vegas Review-Journal

POLITICAL CORRUPTION INVESTIGATION: Kenny faces charges

Source: Ex-official tells friends she pleaded guilty

Erin Kenny -- As an assemblywoman, in January 1993. As county commissioner, in July 1997. As lieutenant governor candidate, in October 2002.

Former County Commissioner Erin Kenny is a defendant in a sealed criminal case filed in July, U.S. District Court records show.

Kenny has previously acknowledged she is among the targets of an ongoing FBI political corruption investigation. Federal prosecutors have not announced any charges in connection with that probe.

However, the Review-Journal on Tuesday located a federal court record of a criminal case that names Kenny as a defendant. Because it was sealed, the charges contained in the document could not be determined.

A source told the Review-Journal that Kenny was calling friends and clients Tuesday night to say she had pleaded guilty in connection with the political corruption investigation.

"She doesn't want any of her friends to be surprised when they read it in the paper," the source said Kenny told those she called.

She also said "many, many indictments will follow very soon and she expects she'll be involved in this for the next two or three years," the source said.

On May 14, dozens of FBI agents raided Las Vegas and San Diego strip clubs owned by Mike and Jack Galardi. They also searched the offices of three San Diego city councilmen.

Since that time, federal authorities have tried to find a cooperating witness to bolster the phone and surveillance tapes made during the 2-year-old investigation.

For instance, a source said in late May that prosecutors offered Mike Galardi a chance to plead guilty prior to his indictment and serve about five years in prison. He rejected the offer, which would have required he cooperate with prosecutors.

A pre-indictment plea allows federal prosecutors to negotiate sentences that are more lenient than those imposed by federal sentencing guidelines. The guidelines are in effect after an indictment is returned.

Authorities have not announced any indictments in the public corruption case, in which witnesses have testified before grand juries in Las Vegas and San Diego.

A search of Nevada's federal court records system Tuesday turned up no other criminal cases involving those who have been identified as targets of the political corruption investigation. These include Mike Galardi and County Commission Chairwoman Mary Kincaid-Chauncey.

Court records show the criminal case against Kenny was filed between July 9 and July 17. The exact date could not be determined.

The case was assigned to U.S. District Judge Kent Dawson, who held some sealed hearings during that period, including one on July 14.

Former federal prosecutor Stan Hunterton said federal authorities typically seek to seal a criminal case because they are worried a defendant will try to flee.

"That's obviously not the case here," said Hunterton, a prominent Las Vegas criminal defense attorney who does not represent anyone involved in the FBI probe.

He said another reason for sealing a criminal case is to prevent other defendants from learning that someone has become a cooperating witness. This gives investigators time to gather evidence supporting the witness' anticipated testimony.

"In public corruption cases, you typically want to have some corroboration by electronic surveillance tapes, pictures or bank records. By definition, you are using someone as your chief witness who was involved in improper and illegal behavior on their own part," Hunterton said.

Douglas McNabb, a criminal defense attorney in Houston who specializes in white-collar federal cases, echoed Hunterton's explanation of why federal prosecutors might seek to seal a criminal case.

In the Kenny case, he said the most likely explanation is that the former commissioner, believing an indictment was imminent, "has gotten in early" and is cooperating with authorities in an effort to reduce her potential sentence.

"Based upon my experience in this area, I would say that defendant is probably cooperating with the government, and they don't want it made known," said McNabb, who has defended clients in public corruption cases.

Attorney Frank Cremen, who represents Kenny, said neither he nor his client would comment Tuesday. Federal prosecutors also had no comment.

Attorney Peter S. Christiansen, who represents Mike Galardi, said late Tuesday that "if she is cooperating, my client only hopes she'd be truthful in the information she relates to the government."

Kenny, a Democrat, earned a reputation as a ruthless campaigner and an activist commissioner who fought to ban Sunday new-car sales, prohibit drivers from using hand-held cell phones and block the expansion of Wal-Mart supercenters.

Kenny, 42, earned her law degree in 2002, but subsequently failed the bar exam.

Michael Bowers, chairman of the UNLV political science department, said Kenny's public persona might not make her an ideal witness.

"It is certainly one of feistiness, antagonistic, and sharp-tongued when she was on the commission. And that sometimes does not play well, particularly when pressed under cross-examination. She certainly has the capacity to turn the jury off very quickly."

But he also suggested that if she does take the stand at future trials, "there would definitely be a new and improved, kinder, gentler Erin Kenny."

In July, sources said the FBI was investigating ties between developers and Kenny, specifically her connection to Triple Five Development Corp.

In 2000, Kenny and two other commissioners voted to approve a controversial zoning request by Triple Five to permit a hotel-casino in Spring Valley.

Last week, a source told the Review-Journal that federal authorities have a taped conversation in which Kenny and a relative discuss how to hide $200,000 in an off-shore account.

Another source familiar with the contents of the phone call said the money was not coming from the adult entertainment industry, but from another type of business.

On Tuesday, a source said that FBI agents on May 14, the day of the strip club raids, played Kenny another tape and told her she had "two choices."

"One is to cooperate with us and you get to see your kids grow up. Or the other is not to cooperate with us and they'll all be grown by the time you see them," the source said. "She was absolutely stunned."