April 1999

Behind Closed Doors
By David S. Rudolf; Thomas K. Maher
    David S. Rudolf, a Director of NACDL, is a principal in the firm of Rudolf & Maher, P.A., Chapel Hill, NC.

    Thomas K. Maher is a principal in the firm of Rudolf & Maher, P.A., Chapel Hill, NC. He is a member of The Champion Advisory Board.

Hubbell’s Ongoing Saga: Metaphysics of the Fifth Amendment — Independent Counsel’s Jurisdiction

Webster Hubbell, having already gone from powerful government lawyer to convicted felon, is now back in court as a result of Kenneth Starr’s pursuit of the Whitewater mess. Hubbell, his wife, lawyer and accountant were indicted for tax offenses, conspiracy, wire and mail fraud. Hubbell entered a plea agreement in 1994 to charges stemming from billing practices while he was with the Rose Law Firm. The plea agreement called for Hubbell’s cooperation. The current charges stemmed from Starr’s belief that Hubbell received consulting payments after he entered his initial plea agreement, and that those payments were meant as hush money. Independent Counsel, however, conceded that they could not prove that the payments were in fact part of an effort to obstruct the Whitewater investigation. The charges involved a complex tax evasion scheme, including payments from a book written by Hubbell and withdrawals from an IRA account. Interestingly, Independent Counsel sought to tie the tax charges to an effort to obstruct the Whitewater investigation despite the fact that Hubbell reported the most suspicious, and largest, consulting fees on his tax returns.

Hubbell and his co-defendant succeeded in getting the indictment dismissed by the district court on the basis that the indictment charged crimes beyond the prosecutorial jurisdiction of Independent Counsel. In addition, the district court found that the indictment was founded upon information derived from documents Hubbell produced under a grant of immunity, and that the indictment was therefore obtained in violation of Hubbell’s Fifth Amendment rights.

A badly splintered panel of the D.C. Circuit reversed. United States v. Hubbell, 1999 W.L. 26878 (D.C. Cir. Jan 26, 1999). After issuing a two-part per curiam opinion, authored by Judge Wald and Judge Williams, each judge then filed a separate opinion. Judges Wald and Williams agreed that the indictment was not beyond the jurisdiction of the Independent Counsel, while Judges Wald and Tate agreed that the district court was required to revisit the issue of whether the indictment was obtained in violation of Hubbell’s Fifth Amendment right not to incriminate himself.

From the standpoint of most practitioners, and targets of grand jury investigations, the court’s discussion of the Fifth Amendment issue is by far the most important aspect of the case. While it may seem that not being investigated by an Independent Counsel places one in a minority group, issues relating to the scope of Independent Counsel’s jurisdiction will have far less practical impact than a decision restricting the ability of the government to force a target to produce damaging documents and then use their contents against the target.

The Fifth Amendment issue arose from the government’s issuance of a subpoena to Hubbell seeking the production of 11 categories of documents. Hubbell asserted the Fifth Amendment as to the existence of any documents responsive to the subpoena. The government obtained an immunity order pursuant to 18 U.S.C. 6002, 6003. Hubbell then produced 13,120 pages of documents and testified that he had produced all responsive documents. Using these documents, Independent Counsel developed evidence that culminated in the present indictment. Specifically, the indictment charged Hubbell with failing to report $74,000 in consulting fees, in failing to pay taxes on an additional $375,000 in reported earnings, making premature withdrawals from an IRA without paying withholding taxes, and using various trusts and organizations to allow both he and his wife to spend assets without paying tax and other obligations. It was clear that much of the government’s case was derived from the documents produced by Hubbell under a grant of immunity.

The Fifth Amendment issue rests upon the act of production doctrine, articulated by the Supreme Court in Fisher v. United States, 425 U.S. 391 (1976) and United States v. Doe, 465 U.S. 605 (1984). These cases establish two important Fifth Amendment principles; the Fifth Amendment does not apply to the contents of voluntarily created documents, regardless of how incriminating to the author, and the Fifth Amendment does prohibit the government from compelling the production of documents or other pre-existing evidence when the act of production tacitly testifies to the existence or authenticity of the evidence, or the producer’s possession or control of the evidence.

The dissent, in an opinion that would have had terrifying consequences had it been the majority opinion, accepted the government’s argument that it could use documents produced under a grant of immunity to the same extent that it could use the same documents had they arrived as “manna from heaven,” unsolicited and unmarked. Under the “manna from heaven” theory, the government could use the contents of the documents against Hubbell as long as they did not refer to Hubbell’s production of the documents to authenticate those documents or prove his knowledge or control of the documents. The fact that the government would never have known of the existence of the documents, but for Hubell’s production of the documents, would be irrelevant; once the documents are produced, their existence is self-evident and the government would not use Hubbell’s act of producing them to prove that fact. The act of production doctrine, in short, would not shield the contents of incriminating evidence from use by the government even when the defendant’s act of producing the documents was the sole source of the government’s knowledge of those documents. Slip op at 43-49.

Fortunately, the majority rejected this view. Observing that the Supreme Court in Fisher v. United States, 425 U.S. 391 (1976) “repeatedly acknowledged that the act of production also communicates existence and possession,” in addition to authentication. In rejecting the governments plea for manna from heaven, the majority noted that:

    While the government may be able to establish the authenticity of the documents independently, whether in terms of their own self-reference or the testimony of a witness familiar with them, the magical appearance of the documents obviates the need for prior knowledge that the documents actually exist. Yet “Kastigar does not prohibit simply ‘a whole lot of use, or ‘excessive use, or ‘primary use’ of compelled testimony. It prohibits any use,’ direct or indirect.” United States v. North, 910 F.2d 843, 861 ((D.C. Cir. 1990). Once the documents appear and are examined, such that their existence enters the consciousness of the prosecutor, the United States has offered no means through which the government can establish that its evidence “is not directly or indirectly derived from such testimony as to their existence. United States v. North, 920 F.2d 940, 946 (1990)(emphasis in original).
Slip op. at pg 22. To demonstrate the breadth of the government’s manna from heaven argument, the majority posited a hypothetical in which a murder victim is found in an apartment building, stabbed to death. The police issue subpoenas to each resident for the production of any knife in their possession or control. Each resident is given immunity for the act of production, and sure enough one of the residents produces a knife with his fingerprints and the victim’s blood. Under the government’s reading of the Fifth Amendment, the prosecution could use the knife to indict and convict the hapless soul who produced it, as long as they link it to him without specific reference to his act of production. Given the fingerprints, this would be an easy task. Rejecting this possibility, the majority observed that Supreme Court precedents “teach that the scope of the Fifth Amendment’s protection cannot be measured by merely imagining that our knife appeared, like manna from heaven, in the grand jury room.” Slip. op. at 23. Unable to refute the notion that the government’s reasoning would lead to the majority’s result, the dissent simply complained that such a subpoena to the residents of an apartment would be quashed as unreasonable and oppressive. Hardly the ringing endorsement of the Fifth Amendment one would want from a federal court.

The majority also faced the issue whether the district court correctly determined whether the government had sufficient knowledge of the existence of the subpoenaed documents to avoid Hubbell’s Fifth Amendment claim. Under Fisher not every act of production that conveys information about existence, authenticity, knowledge or control of documents merits protection. When the government has sufficient knowledge of these facts, then “the question is not of testimony but of surrender.” Fisher, 425 U.S. at 411. In Hubbell’s case, the government attempted to take advantage of this holding by arguing that, as it knew that Hubbell, like most people, generally possesses ordinary income, financial and business records; hence, the existence of such categories of records is a foregone conclusion and the production of the records is not protected by the Fifth Amendment. Relying as much on philosophy as law or common sense, the majority rejected the notion that general knowledge of the existence of categories of documents is sufficient to overcome an assertion of a Fifth Amendment right not to perform the act of producing the specific records possessed by an individual. “The [government’s] argument makes the classical error in the field of logic of assuming that the occurrence of future events can be logically deduced from observations rooted in the past. Empirical knowledge, as David Hume and Betrand Russell teach, can only be a postiori, not a priori. See David Hume, Enquires Concerning the Human Understanding and Concerning the Principles of Morals IV (L.A. Selby-Biggs ed., 1980); Betrand Russell, The Problems of Philosophy, 60-69 (Galaxy 1959)(that the sun rose today and as far back as the mind remembers does not establish that it will rise tomorrow).” Slip op. at 13.
The court also made clear — or at least as clear as one can expect from a lengthy opinion filled with philosophical discourse — that the government would have to establish actual knowledge of the specific documents, and not general knowledge of categories of documents. “Supreme Court cases . . . require actual knowledge rather than mere inductive generalizations.” Rejecting the government’s attempt to claim sufficient knowledge based upon general knowledge of how business or individuals often operate, the majority observed:

    While a useful method of sorting information, categories do not present themselves as Platonic forms with inherent shape or universal meaning. Rather, defined by reference to the particular applications, they can be abstracted upwards or downwards (through varying levels of generality) in order to embrace or reject concrete instances. See generally Ludwig Wittgenstein, Philosophical Investigations (G.E.M. Anscombe trans. 3d ed. 1968) at 137-242 (general concepts do not dictate their concrete applications, but rather are defined by them). As Doe I well illustrates, the government cannot simply subpoena business records and then claim the requisite knowledge for purposes of the Fifth Amendment by pointing to the existence of a business. The Independent Counsel’s assertion that its knowledge of Hubbell’s status as a consultant and a taxpayer carried with it a concomitant awareness of the existence and possession of his consulting and tax records similarly falls short. The Fifth Amendment’s proscription against compelled self-incrimination does not hinge on tautology.
Slip op. at 19. The majority then held that the government must establish its knowledge of the existence, possession, and authenticity of subpoenaed documents with “reasonable particularity” before the testimonial content of the act of production can be deemed a foregone conclusion, and the protection of the Fifth Amendment ignored. This inquiry must focus only upon the government’s knowledge of the existence of the document, rather than the facts contained in the document, and must deal only with the government’s knowledge at the time the subpoena was served. Only when the government can establish with reasonable particularity that it possessed knowledge of the existence and authenticity of the documents, as well as the defendant’s knowledge of and control of the documents, can these issues be deemed a foregone conclusion.

Assuming that the government did not possess such knowledge, the majority had no problem in finding that the act of production would be not only testimonial, but incriminating. The government argued that the subpoena did not expressly call for the fruits or instrumentalities of criminal conduct, and the act of compliance with the subpoena would therefore not be incriminating. “[T]he Fifth Amendment’s protections cannot depend upon such trivial semantic distinctions that the government can sidestep its application by requesting ‘all income records’ instead of ‘all incriminating income records.’ Artful phrasing does not suffice.”

The majority’s willingness to ensure that the act of production doctrine did not become an empty formality is heartening. Had the government succeeded in its quest for manna from heaven, or its claim that general knowledge that people keep documents is sufficient to overcome a Fifth Amendment claim in the face of a subpoena for documents, the government’s investigatory power would have been greatly increased, at the cost of a weakened Fifth Amendment.

The court’s decision concerning the claim that the indictment went beyond the jurisdiction granted to Independent Counsel Starr will affect fewer defense counsel and citizens, but is worth noting nonetheless. Upon request of the Attorney General, the court’s Special Division for the Purpose of Appointing Independent Counsels appointed Starr and gave Starr jurisdiction to “investigate whether any individuals or entities have committed a violation of any federal law . . . relating in any way to James B. McDougal’s, President William Jefferson Clinton’s, or Mrs. Hillary Rodham Clinton’s relationships with Madison Guaranty Savings and Loan Association, Whitewater Development Corporation, or Capital Management Services, Inc.” The jurisdiction included the power to investigate allegations of violation of federal law “by any person or entity developed during the Independent Counsel’s investigation referred to above and connected with or arising out of the investigation.” This included investigation of alleged obstruction of the underlying investigation into Whitewater. Starr was empowered to seek referral from the Special Division of “matters related to the Independent Counsel’s prosecutorial jurisdiction.” Under this provision the Special Division made a referral relating to Hubbell’s billing practices at the Rose Law Firm, and Hubbell entered guilty pleas. After coming to the conclusion that Hubbell was not being forthcoming in his cooperation, and that this was tied to his receipt of consulting fees, Starr sought another referral. The Special Division complied, and referred to Starr jurisdiction to investigate Hubbell and any other individual’s participation in criminal tax violations, mail fraud, wire fraud, obstruction of justice, perjury and other offenses relating to Hubbell’s receipt of income.

The district court found the indictment to be beyond the scope of Starr’s jurisdiction. Although the indictment was within the scope of the most recent referral, the issue was the extent to which this referral could be used as a basis for independent counsel’s jurisdiction. Defendants, joined by the Department of Justice (DOJ), took the position that the referral was irrelevant as the only issue was whether the indictment was within the scope of the original grant of jurisdiction. This position was accepted by Judge Tatel in dissent from that portion of the opinion. Unfortunately, the majority viewed the Special Division as having the power to determine the scope of jurisdiction, and held that its referral was due deference in determining the scope of the jurisdiction of Independent Counsel.

The majority also took a very broad view of what crimes could be sufficiently related to Whitewater to fall within the scope of Starr’s jurisdiction, and justified tax charges against Hubbell on the basis that Starr suspected the payments were hush money to Hubbell, and tax evasion on such payments would increase the benefit received by Hubbell and increase the difficulty for the government of finding such payments. Tatel pointed out the absurdity of this position in light of the fact that the payments of which Starr was most suspicious were in fact reported on Hubell’s tax return. Although Hubbell failed to pay the taxes due, this could hardly have been said to have been the expectation of those who made the payments. Indeed, the indictment included Hubbell’s failure to pay taxes on book royalties and an IRA withdrawal, which have nothing to do with Whitewater.

Tatel’s larger point, and the one that should raise concerns in the era of independent counsel, is that the majority consistently sought to give independent counsel the same power as other prosecutors. However, the position of independent counsel derives its constitutionality from its limited jurisdiction; independent counsel simply is not like other prosecutors, and should not be treated as such. Under the majority’s analysis, however, there is little real limitation on independent counsel’s ability to investigate and prosecute anyone who passes across the radar.

Prosecutorial Misconduct

    The United States Attorney is the representative not of an ordinary party to a controversy, but of a sovereignty whose obligation to govern impartially is as compelling as its obligation to govern at all; and whose interest, therefore, in a criminal prosecution is not that it shall win a case, but that justice shall be done.
Berger v. United States, 295 U.S. 78, 88 (1935)

[Some federal prosecutions are] not just wrong, but willfully wrong . . . frivolously wrong. They [federal prosecutors] keep information from you that the law says they must disclose . . . they suborn perjury.

Henry Hyde, Chairman of the House Judiciary Committee

In 1997 Congress passed an amendment to 18 U.S.C. 3006A, known as the Hyde Amendment. Under the Hyde Amendment, a court in a criminal case may award to the prevailing defendant a reasonable attorney’s fee and other litigation expenses when the court finds that the position of the United States has been “vexatious, frivolous, or in bad faith, unless the court finds that special circumstances make such an award unjust.”

In one of the first cases to make an award under the Hyde Amendment, the United States District Court for the Western District of Michigan found that the government acted in bad faith in failing to disclose Brady material. United States v. Ranger Electronic Communications, Inc. 22 F. Supp. 2d 667 (W.D.Mi. 1998). The misguided prosecution of Ranger Electronic Communications [Ranger Taiwan] grew out of an investigation into the importation of Citizens Band and amateur radios. Ranger Taiwan manufactured radio equipment, which was imported into the United States. Ranger Taiwan was indicted for the illegal importation of radios. The radios were “prohibited by law” under 18 U.S.C. 545 because Federal Communications Commission (FCC) regulations require that radios be of a type accepted by the FCC. The FCC would not accept these radios as they broadcast on frequencies other than those approved by the FCC for CB broadcast. The FCC, however, does not require type-acceptance for amateur radios, which can only be operated with a license.

Prior to trial the court ruled that the government would have to prove that defendants knew that the law prohibited the importation of the radios. Defense experts were prepared to testify that the pertinent regulations were not understood within the industry as prohibiting these radios when they were marketed as amateur radios. During the trial one of the government’s main witnesses admitted lying to the government to get the government to assist him in quashing subpoenas that would have revealed his misuse of his company to pay personal expenses. This information had not been disclosed to the defense prior to trial. Following disclosure of this information, the government made plea offers to several defendants, and dismissed the charges as to Ranger Taiwan and its president.

Prior to trial, Ranger Taiwan’s attorney filed Freedom of Information Act (FOIA) requests for information relating to FCC regulations. The FCC denied the request as production of the information would interfere with the ongoing criminal investigation. Following dismissal of the charges, counsel obtained hundreds of pages of documents from the FCC. Among the documents were e-mail that revealed that the FCC was arguably aware of the confusion surrounding the regulations, and that the radios imported by Ranger Taiwan were not distinguishable from other radios that were arguably legally imported. Defendant, after examining these documents, filed a motion for fees and expenses pursuant to the Hyde Amendment.

The first issue faced by the district court was application of the 30-day filing requirement under the amendment. According to the statute, a motion for fees and costs must be filed within 30 days of “final judgment.” While a case in which there is, or at least could be, an appeal may raise an issue as to when the judgment is final, in a case in which the government dismisses the charges with prejudice after jeopardy has attached, the judgment is immediately final. Although defendant’s motion was filed more than 30 days after the dismissal of the charges, the court refused to dismiss the motion. Rather, the court found that when the prosecution’s bad faith included the failure to disclose exculpatory evidence, and the exculpatory evidence is not discovered until after the expiration of the 30-day period, the statute grants the defendant a reasonable period from the discovery of the exculpatory evidence in which to file the motion.

The court then found that the government’s failure to disclose exculpatory evidence prior to trial constituted “bad faith” within the meaning of the Hyde Amendment. The fact that other defendants named in the indictment plead guilty was not the type of “special circumstance” that would warrant refusing to award a fee. Finally, the court ordered the Assistant U.S. Attorney (AUSA) involved in the case to show cause why the matter should not be referred to the DOJ Office of Professional Responsibility for an investigation.

The district court’s willingness to make an award under the Hyde Amendment, and to read it in a manner that gave it teeth as opposed to requiring impossible compliance with an overly short filing period, should put prosecutors on notice that their power to indict carries with it a real obligation to do so only when all of the evidence justifies prosecution.

A desire to curb prosecutorial excess was also evidenced by the decision in People v. Hunter, 698 N.E.2d 230, 298 Ill. App. 3d 126 (1998). In Hunter, the defendants were removing a couch through a second-story window. The rope around the couch slipped, the couch fell and struck the victim, who later died. Hunter gave a written statement to the police explaining the accident. The officer who testified before the grand jury was questioned by a juror as to whether any of the defendants had made a statement that the couch slipped. The officer responded “no,” and explained that the defendants had said they were throwing the couch out the window. Defendants were indicted for involuntary manslaughter.

Defendants moved to dismiss the indictment on the basis that the perjury before the grand jury violated their due process rights. The indictment was dismissed, and the state did not appeal. The state subsequently re-indicted the defendants. The trial court again dismissed the indictment, finding that the state should have pursued an appeal from the earlier dismissal. On appeal, the court was confronted with an issue of first impression; whether the state may seek a new indictment when a prior indictment was dismissed due to a due process violation in the presentation of perjured testimony to the grand jury. The court held that the state may not seek a second indictment in that situation. First, the court noted that, in light of the grand juror’s question, there was a possibility that no indictment would have been returned had the question been answered truthfully. The court went on to observe:

    In addition to the public policy of protecting the public against the overreaching and oppression of the State, our determination provides the State with a strong deterrent against future uses of perjured testimony. Honesty and integrity are essential to the performance of the functions of the police and prosecutor in our criminal justice system and the maintenance of our freedom. . . . If the police and prosecution know that perjured testimony will lead to the dismissal with prejudice of their cases, they will be careful to use only truthful testimony.
698 N.E.2d at 233. The court recognized that the result might be different had the state alerted the court to the perjury on its own, or if the presentation of the false evidence could somehow be excused as inadvertent.


NACDL members aware of interesting grand jury cases should send pleadings to:

Behind Closed Doors
Rudolf & Maher, PA
312 West Franklin St.
Chapel Hill, NC 27516
Phone (919) 967-4900
Fax (919) 967-4953


National Association of Criminal Defense Lawyers (NACDL)
1660 L St., NW, 12th Floor, Washington, DC 20036
(202) 872-8600 • Fax (202) 872-8690 • assist@nacdl.org