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Speech by Don Smaltz, Independent Counsel, at the "Corporate
Crime in America" conference presented by the Corporate
Crime Reporter, Washington, D.C., October 16, 1997

"Independent Counsel Matters Take Too Long" Compared to What?

   "Independent Counsel matters take too long" is a never-ending criticism made about almost every Independent Counsel. The statute creating the Independent Counsel directs him to perform four separate, but inter-related, functions: investigate, prosecute, handle appellate matters, and prepare a detailed Final Report. Which of these functions takes too long? Some? All? Intimately involved in each function are at least two other players — the subject/defendant, and the court. If Independent Counsel matters take too long, who , if anyone, should bear responsibility?

   "Independent Counsel matters take too long" is a criticism that's pregnant with condemnation, but short on specifics — like too long — compared to what? The only other institution I know that has a similar mission and offers a basis for comparison is the Department of Justice.

   I believe the Independent Counsel's investigators and prosecutors do not take any longer — or are any less efficient — than their DOJ counterparts. In fact, all things considered, you may find they are actually more efficient and take less time. I say "all things considered" because today I want to discuss some impediments to Independent Counsel investigations not encountered by their DOJ counterparts.

   One time clock setting the maximum limits for investigation and indictment of federal offenses is the federal statute of limitations which, for most federal felonies, is 5 years; although, for certain financial institutional crimes, the statute is 10 years.

   The Independent Counsel's usual focus is on public corruption — a species of white collar crime at the highest levels of government. This conference is discussing a variety of "white collar" crimes, and many of you are very experienced. Ask yourselves how long it takes just to investigate, and then to prosecute these offenses.

   In a Wall Street Journal story in May 1995, entitled "The Bad Guys Are Winning," the author concluded the Justice Department "takes far longer to bring white collar criminals to justice than perpetrators of other crimes." While the article did not quantify the entirety of the process, based on Justice Department statistics, it did note that "it takes more than 10 months for a white collar criminal case to be filed in court from the time it is referred to the federal prosecutor's office." Before referral to the prosecutor, there are three other pieces to the investigative equation that were not quantified in the article:

  1. The length of time to discover the alleged crime;
  2. The length of time to investigate; and
  3. The length of time after investigation to refer to the prosecutor.

   I know of no statistics that compute mean times for these other three periods, but your experience will confirm that the time to complete each will vary significantly depending upon the crime, the investigative agency, and a variety of other factors.

   I asked you earlier to reflect on how long, in your experience, it took to investigate white collar matters. What time-period came to mind? In my experience, from the inception of the investigation to the indictment a "generic" white-collar case runs from a minimum of about 12 months upward to 48 months, with the norm being about 3-1/2 years. Whatever your belief of the average length, is it inappropriate to expect an Independent Counsel to complete the investigation phases of public corruption cases any more quickly than DOJ ?

   While Independent Counsel investigations can often mobilize more investigative and lawyer firepower on particular factual issues than their DOJ counterparts, there are a variety of obscure statutory requirements and unique circumstances which lengthen the Independent Counsel investigations. These have received scant attention, but should be considered when deciding whether Independent Counsel matters really take too long.

   From the get-go, the newly appointed Independent Counsel encounters some real impediments to even starting his investigation. Consider that, upon assuming office, a newly-appointed United States Attorney steps into a fully-functional DOJ office, complete with security-cleared staff, agents and Assistant U.S. Attorneys possessing a base of institutional knowledge. Conversely, the Independent Counsel starts from ground zero. He has only the piece of paper evidencing his appointment and jurisdiction. He has no telephone, no office, no staff, no lawyers, no agents, no books, no computers — not even a FAX machine.

   While the 1994 amendments to the Act obligate GSA to "promptly provide office space for the Independent Counsel," that is easier said than done. If experience is any guide, the newly-appointed Independent Counsel is provided "temporary" space — a closet in the basement of some federal office building — from which he must begin the process of attempting to recruit qualified people. The conversation with the potential staffer will include:

Q. "How long will this job last?"
A. "I don't know."
Q. "Is this where you'll office?
A. "I don't know."
Q. "When will you know?"
A. "I'm not sure."

   The explanation to the experienced lawyer candidates is even more difficult. They aren't as concerned about where they'll be working as they are about how many cases they'll try.

Lawyer: "I graduated 5th in my law school class. I was editor of the Law Review; clerk to a federal circuit judge; served 10 years as an AUSA, the last 5 as head of the fraud unit, and tried 17 cases to verdict. For the past three years I've been in private practice doing litigation. How many trials can I expect to be assigned?"
IC: "I don't know — there may well be no indictments. Out of a total of 17 Independent Counsels appointed under the statute, 10 brought no indictments. Until we complete our investigation, we won't know about trials."

   Despite their unknown duration and destination, Independent Counsel investigations have been able to attract tremendously talented, able and experienced staff, agents and lawyers from private practice, U.S. Attorneys Offices, and DOJ.

   My intent is not to burden you with the Independent Counsel's travails of locating, equipping and staffing the office, or complying with never-ending inane GSA regulations. I simply note that, starting from ground zero, it generally takes anywhere from three to 12 months before the organization is integrated fully and adequately equipped to function efficiently.

   So, when do you start the clock on the Independent Counsel — when he is appointed, or when his office is effectively up and running? If your standard of comparison is his DOJ equivalent, consistency suggests you use the date the Independent Counsel is fully operational.

   A second impediment not encountered by DOJ in its prosecutions, and which has a dramatic impact on an Independent Counsel, are the unintended consequences of the Attorney General's "preliminary investigation."

   The Independent Counsel Act provides that when the Attorney General receives information sufficient to constitute grounds to investigate allegations of federal criminal conduct by a "covered person," she must conduct a preliminary investigation within 90 days. 28 U.S.C.  592(a)(1). If after the preliminary investigation she concludes "there are reasonable grounds to believe further investigation is warranted," she files an application for appointment of an Independent Counsel with the Special Division. 28 U.S.C.  592(c).

   In making the determination whether or not further investigation is warranted, the Attorney General may consider only the specificity of the alleged criminal conduct and the credibility of the source of that information. 28 U.S.C.  591(d)(1). This is a very low threshold, indeed, that Congress has set, tilting the process in the direction of appointment of an Independent Counsel. Moreover, in making the determination, she is limited to questioning witnesses who voluntarily agree to interviews, and reviewing documents voluntarily produced.

   The Attorney General does not have any of the basic prosecutorial tools so necessary for thorough investigation because she is statutorily forbidden "to convene Grand Juries, plea bargain, grant immunity, or issue subpoenas." 28 U.S.C.  592(a)(2). How in the world can you ever get to the bottom of things if you can't use compulsory process ?! If that's not bad enough, according to recent news reports, DOJ apparently construes its limited investigation charter so narrowly that "you can't ask someone if a covered person committed a crime."

   If, and I say if this "don't ask — don't tell" restriction is imposed by DOJ, it's small wonder that the press accurately reported long before an Independent Counsel was sought in the Espy and the Cisneros matters, that the Public Integrity Section was of the opinion there should be no Independent Counsel in either matter.

   While the Attorney General's "limited preliminary investigation" cannot, under the terms of the statute, meaningfully develop the facts underlying the accusations, it does, however, walk all over the supposed crime scene, leaving indelible footprints. Those prints portend a variety of mischief for the Independent Counsel. First, it alerts the subjects of the investigation where the investigation is coming from and who it's heading toward. Second, this alert causes them and others to "lawyer up," with the inevitable exchange of information among lawyers and their clients concerning whose client remembers what, whose client cannot recall what, and whose client believes he was absent that day. Third comes the lawyer's public espousal of his strategy — often complete with a public relations advisor, followed by statements from the subjects' surrogates in the media, to the effect "there was no intent to violate the law," "the law is too old," "the law has never been enforced," "he was only being treated as family," "there is no controlling legal authority," "this is a witch hunt," etc., etc.

   Thus, while few white collar criminal cases take on a public persona at the investigative stage, it is the exceptional Independent Counsel investigation that does not become a media curio, transforming the Independent Counsel into an instant political figure. Once this transformation is established, then by definition the investigation — according to some — becomes a political vendetta against the subject of the investigation. The media then no longer reports the matter as a government investigation, but rather as a political event which in turn causes the subjects, and those politically aligned with the subject, to deride the "vendetta." Clever and politically-astute defense counsel are keenly aware that investigations suffering public approbation are less likely to obtain evidence from reluctant or neutral witnesses. Some may ascribe great wisdom to the observation: "you can indeed fool all of the people all of the time if the P.R. is right and the budget big enough."

   So while the intent of the Act's provision for a limited preliminary investigation is understandable, the effect is to interject myriad problems that delay and impede the Independent Counsel's investigation.

   Other factors contributing to the length of Independent Counsel investigations not apparently encountered to the same extent in DOJ investigations are lying, perjury, and plain old obstruction of justice, which I'll collectively refer to as "false statements." If indeed conspiracy charges are the darling of the prosecutor's nursery, for Independent Counsel investigations "false statement" charges occupy a most-favored cradle there.

   When federal agents question a witness, the witness has only two choices: answer the question truthfully; or decline to answer. Lying is not an option and, if he lies, he is subject to — and should be — prosecuted. The false statement statute, 18 U.S.C.  1001, is a relatively straightforward statute. It provides, in essence: "whoever . . . knowingly and wilfully makes any materially false . . . statement" to a federal investigator is guilty of a felony.

    The regularity and frequency (more than one-third of all Independent Counsel prosecutions have been for false statements, perjury, and obstruction) with which these charges appear is not because they are easy to prove. Quite the contrary. False statements are often charged as violations of 18 U.S.C.  1001. These prosecutions are difficult to prove because, usually, it's the word of the investigator against the word of the defendant — usually a person who is well-educated, erudite and without apparent criminal blemish, who was lying to the investigator in the hope he could steer the investigation away from himself, or his boss, or his friend.

   Another difficulty with Section 1001 prosecutions is that, despite the plain language, since 1962, a number of federal courts have read the plain language of Section 1001 as containing an "exculpatory no" defense. So, when a witness provides false testimony, these courts say no crime was committed. The various courts that recognize this defense can't seem to agree with others on the rationale. However, according to the Ninth Circuit Court of Appeals, a "good investigator will expect the accused to lie . . . ." Therefore, the false statements "will not impair the agency's criminal investigation." United States v. Myers, 878 F.2d 1142, 1143 (9th Cir. 1989).

   This whole matter of countenancing lies to federal agents is fundamentally wrong and way out of hand. It now even extends, according to the Court of Appeals, to a due process right for federal employees to lie. King v. Erickson, 89 F.3d 1575 (Fed. Cir.), cert. granted, 117 S. Ct. 2506 (1997). The deleterious impact of a due-process right to lie is staggering!

   Remember, in the Attorney General's preliminary examination to determine whether to seek an Independent Counsel, she is limited to interviewing witnesses and reviewing documents voluntarily provided. If witnesses have a right to lie with impunity, the Attorney General's preliminary investigation is illusory and may defeat the appointment of the Independent Counsel.

   The bright spot on the horizon may be on December 2, 1997, when the Supreme Court will hear back-to-back arguments on whether there is an "exculpatory no" doctrine in 18 U.S.C.  1001, Brogan v. United States, 104 F.3d 350, cert. granted, 117 S. Ct. 2430 (1997) and on whether the due process clause gives federal employees a right to lie, King v. Erickson, 89 F.3d at 1575. I have high hopes that the Supreme Court will set it right.

   Lying not only misleads the investigation — it impedes and delays ongoing investigations. In a case I tried in New Orleans entitled United States v. Ferrouillet, et al., we were able to quantify the impeding effect of the defendant's lies. It was 8 months. Ferrouillet was a New Orleans lawyer who had managed the efforts to retire Henry Espy's campaign debt. Our investigators approached him about six months into our investigation to inquire about the source of $20,000 cash that had been deposited in the Henry Espy campaign debt retirement account.

   Ferrouillet told our investigators about some fundraisers he held, and said the cash came from various individuals who gave varying amounts of cash — between $250 and $500. He gave us a list of 46 names and amounts. We had no reason to disbelieve Ferrouillet, and accepted his explanation for the moment and turned our attention elsewhere. It was not until eight months later, after a considerable amount of effort looking into lots of dry holes, and while examining campaign contributions from Crop Growers Insurance Corp., a Montana-based company with matters before the USDA, that we learned the true source of the $20,000 cash was a $20,000 check from Crop Growers to Ferrouillet, recorded as a legal retainer. That "retainer" check did not appear on the law firm's books. Neither Ferrouillet nor his firm ever performed any legal services. Ferrouillet cashed this check at a grocery store in Algiers, Louisiana, which did not file a CTR, then "smurfed" the money into the campaign account in three separate cash deposits. We indicted Ferrouillet and Crop Growers' Chairman John Hemmingson for — and convicted them of — taking the $20,000 by fraud, and money laundering. Ferrouillet was also charged with — and convicted of — false statements to our investigators concerning the source of the cash.

    The career prosecutors and agents in my office, including those acting in an advisory capacity, are uniformly of the belief that there is more lying, perjury, and obstructive behavior in the investigative stage of Independent Counsel cases than in ordinary white collar cases. One can only speculate as to the reasons, but one explanation might be that, in Independent Counsel investigations, the witnesses are often people whose entire existence revolves around the swirl of politics, and in an environment where it is far too tempting to put a glib, self-serving spin on responses to questions. Whatever the reason, the lie translates to more delay, more false trails, and more and greater investigative effort and time.

   Another factor contributing to the delay of Independent Counsel investigations, absent from most DOJ prosecutions, is that persons resisting an Independent Counsel investigation see the question of the Independent Counsel's jurisdiction as a productive avenue for delaying tactics.

    DOJ investigations are rarely resisted on jurisdictional bases at the grand jury level, while Independent Counsel investigations are frequently challenged. Where the challenge is to a grand jury subpoena duces tecum, that means the documents are not produced until that challenge is resolved. Where the ruling is not made promptly, but lengthens into weeks and/or months, the ability to conduct an orderly and deliberate examination is destroyed. Without the documents, witness interviews are delayed. Agents and lawyers assigned to review the subpoenaed materials, and who were anticipating their immediate receipt, now need to turn their attention and efforts elsewhere. When, after court order, the documents are ultimately obtained, those agents who had the learning curve on this area may have been reassigned to some other project and not available. Now, new agents and lawyers may have to be assigned to start from ground zero. If there is a jurisdictional dispute between the Independent Counsel and DOJ, and that dispute becomes public, the problem is exacerbated.

   As the Special Division noted in its published decision in In re Espy, 80 F.3d 501 (D.C. Cir. 1996), in the space of about 14 months, through February 1996, my office's jurisdiction in grand jury matters had been tested by 43 jurisdictional motions. Since then, and through today, the challenges continue and number far beyond the 43 mentioned by the Court.

    Given the volume of such motions filed in the investigatory phase of an Independent Counsel's activities, it is not at all surprising that the district courts have experienced delays in deciding pending motions concerning the grand jury's investigation. The delays have averaged around 15 weeks.

   One example: Five weeks after my appointment as Independent Counsel, my office, on October 15, 1994, served a grand jury subpoena duces tecum on the White House. The White House issued a press release on the subpoena, saying "We will cooperate." Three years later, we still do not have all the documents, even those the Court of Appeals ruled on June 17, 1997 should be turned over to us.

    Up to this time, my observations have concerned exclusively the investigative stage. I would now like to briefly mention the prosecutive stage, which is the time between filing of the indictment through trial and completion of appeals.

   Once an indictment is returned, there is little the government attorney can do, whether DOJ or Independent Counsel, beyond requesting as early a trial date as the court's calendar permits. The prosecutor is captive to the court's calendar, and the court is usually deferential to defense counsels' requests.

   It is the rare white collar case indeed that meets the Speedy Trial Act's command for a trial commencing within 70 days of arraignment. Setting of the trial date is delayed at defense counsel's request because of his stated intention to file numerous dispositive motions. The trial court needs time to consider and decide these matters, and that means delay. The ultimate responsibility, however, for the elapsed time the delay creates, is beyond the control of the prosecutor. It is only in Independent Counsel prosecuted matters that responsibility is cast at the feet of the Independent Counsel. His DOJ counterpart is seldom, if ever, tagged with responsibility.

    Delays in trial exact another toll from the Independent Counsel which DOJ doesn't pay. Since the office of the Independent Counsel is a temporary one, its personnel are by definition temporary also. Some of the employees come from within federal service and some come from without. Virtually all the attorneys and investigative agents working on these cases have plans to return somewhere, and their desire is to return sooner rather than later. Consequently, if a case isn't tried expeditiously, there is likely to be turnover in personnel rendering the prosecution not only highly inefficient but significantly more costly. Sometimes the trial court's postponement of trial results in the Independent Counsel's trial team being disbanded. Restaffing the trial team requires redundancy of effort, which adds to the mounting expense. One example: We have a case on the West Coast that was indicted on October 18, 1996. Despite our requests for an early trial at the October 1996 arraignment, and again in February 1997, and again on April 9, 1997, it was not until April 30, 1997 that the court set a trial date — September 16, 1997. The September 16, 1997 trial date has since slipped to October 21, 1997 and, again, to October 28, 1997. Let me mention briefly the effect of these delays. First, the original lawyer who we sent to the West Coast in November 1997 to oversee the office we opened for the upcoming trial — which we then expected would be January 1997 — was subsequently married. She left the office in July of this year to raise a family. She was an integral part of the trial team in the companion case previously tried in September 1996 here in the District, and she was intimately conversant with the factual and legal issues in the West Coast case.

   Because of the trial delays, I had to recast the trial team on three different occasions. If the case delays another month, I may have to do it a fourth time because two different U.S. Attorneys from two different jurisdictions who consented to the detailing of their Assistants to this office want them back. This is understandable — at the time they consented to the detail, I stated the trials (there are two, as the court severed the indictment) would be finished in October. Now, they may not even start until November. In the meantime, since late July 1997, in preparation for the September trial date, we've had a team of lawyers, agents, and support staff standing at the ready in anticipation of the imminent trial date.

   Just as a prosecutor is unable to control the trial's duration and time of sentencing, he is similarly unable to control, or even meaningfully influence, the appellate process. Whether the prosecutor is DOJ or Independent Counsel — outside of moving for expedited treatment and promptly meeting the briefing schedules — the number of appeals defendants file and the time to resolve them is something over which the prosecutor has absolutely no control at all.

   The difference between DOJ and Independent Counsel is that the latter is charged with somehow being responsible for that time. This is a double-whammy because the Independent Counsel cannot prepare and release his Final Report until the appeals are resolved, and release of the Final Report can be a complicated and time-consuming process.

   The Final Report process adds another eight months to two years to Independent Counsel matters. I describe it as a process because the Independent Counsel's statutory obligation to prepare a "final" report setting forth fully and completely a description of the work, including the disposition of all cases brought, is only the first step. 28 U.S.C.  594(h)(1)(b)

   The Special Division is charged with reviewing that report and identifying those individuals who should have the opportunity to comment. 28 U.S.C.  594(h)(2). After comment, the Independent Counsel then revises the report — now in final, final form, and gives it to the Government Printing Office. After printing, it is released to the public.

   But the matter doesn't end there. After the Final Report is published and released, parties who wish to claim attorneys fees are given 30 days to file applications which, when filed with the Court, are served on the Independent Counsel and on the Attorney General, who separately consider, evaluate, and report their respective findings to the Court within 90 days. 28 U.S.C.  594(f)(1). Eventually, the issue of attorneys fees is resolved 28 U.S.C.  594(f)(2). Lastly, the Independent Counsel must package and transfer the office's records to the Archives of the United States in accordance with the procedures of 28 U.S.C.  594(k). Only then can the office be closed.

   When considering whether Independent Counsel matters really take too long, reflect on these additional tasks not encountered by DOJ before you automatically respond that Independent Counsel investigations take too long.

    Conspicuously absent from my remarks today is any discussion about costs of Independent Counsel investigations. The costs of these investigations are tracked and publicly reported on a six-month basis, and they produce some very, very substantial numbers. My topic is tough enough without also trying to explain the very substantial costs that accompany these investigations. That's for another day. I do want to note that costs are a linear extension directly proportional to the length of the investigation. The more delays, the longer the investigation and the greater the costs.

   Independent Counsel investigations explore alleged corruption at the highest levels of government because of the perception that the Executive Branch cannot be trusted to investigate itself. These are important investigations — and they do take a long time — but, given the myriad tasks required, and the number of players, do they take too long? In 1993, Attorney General Reno testified before the Senate in support of the reenactment of the Independent Counsel Statute, which had then lapsed. I agree with her observations:

    "The reason that I support the concept of an Independent Counsel with statutory independence is that there is an inherent conflict whenever senior Executive Branch officials are to be investigated by the Department and its appointed head, the Attorney General. The Attorney General serves at the pleasure of the President."

To Reauthorize The Independent Counsel Law For An Additional 5 Years, And For Other Purposes: Hearing on S. 24 Before The Committee On Governmental Affairs, United States Senate, 103rd Cong. 103-437 (1993) (Statement of Hon. Janet Reno, Attorney General, U.S. Department of Justice)

Thank you.


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