The Wall Street Journal has joined the fun with a blog devoted to law and legal topics, written by Peter Lattman (here). It looks like it will cover all parts of the legal world, and with the Journal’s resources it should be a good place to get information and links to their stories. (ph)
Category: Media
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Former HealthSouth CEO Richard Scrushy and his wife, Linda, filed libel suits against the Birmingham News and Alabama radio personality Paul Finebaum for comments regarding their decision to switch churches during the government’s investigation of fraud at the company. The Scrushys changed congregations from one in the suburbs to a largely African-American church in Birmingham in 2003, after he was terminated from HealthSouth and the U.S. Attorney’s investigation obtained the cooperation of all five CFOs regarding the accounting fraud. The Scrushys allege that the Birmingham News quoted a law professor as stating that the change was to gain an advantage in the expected criminal prosecution and made them appear to be "like a devious hypocrite and heathen," while Finebaum is accused of making unflattering comments about Linda Scrushy. Both defendants are challenging the suits on First Amendment grounds, and it will be interesting to see if the case can survive a summary disposition. An AP story (here) discusses the libel suits. (ph)
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Former broker David Pajcin was arrested in New York for insider trading based on receiving advance copies of issues of Business Week and trading in stocks touted in the magazine’s "Inside Wall Street" column. This is a type of scheme that has been tried with alarming regularity since the 1980s, particularly with Business Week, although it also was the underlying misconduct in the well-known Carpenter v. U.S. decision by the Supreme Court that upheld the conviction of defendants who traded in advance of "Heard on the Street" columns in the Wall Street Journal. An AP story (here) notes that Pajcin is accused of trading in shares of ten companies, including Alltel, thestreet.com, Arbitron, and Spectrum Pharmaceuticals.
This is not Pajcin’s first brush with insider trading allegations. He was named in an SEC amended complaint on Aug. 18 alleging insider trading in Reebok stock options immediately before the company announced it agreed to be taken over by adidas, trades that generated over $2 million in profits. According to the SEC’s Litigation Release (here), some of the trading took place through an account in the name of Pajcin’s aunt who lives in Croatia. Look for the U.S. Attorney’s Office to pursue criminal charges against Pajcin (and others) in this case, too. (ph)
UPDATE: Bruce Carton has an interesting post on the Securities Litigation Watch blog (here) noting how Pajcin’s trading fits a transparent pattern of insider trading that will (usually) be noticed by the SEC.
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According to the Washington Post here, Dow Jones went to court seeking some of the documents in the Libby case. It seems that Special Prosecutor Patrick Fitzgerld wants a protective order from some of these documents being released to the media.
It is likely that issues of balancing the public’s right to know versus insuring the defendant a fair trial, continuing an ongoing investigation, and protecting the secrecy of grand jury material may be some of the issues at stake here.
Defense counsel is entitled to receive immediately all exculpatory material or what is commonly referred to as Brady material. Ultimately, when and if the case goes to trial, the defense is also entitled to receive Jencks material, or any prior statements made by a witness. According to statute and a federal rule of criminal procedure, Jencks material does not have to be turned over to the defense until after the witness has testified. In reality, most prosecutors provide Jencks material to defense counsel prior to trial so that the trial does not need to be placed on hold while defense counsel reads and further investigates the defense case based upon the Jencks material that is just received.
Prosecutors often, as they should, provide all discovery material to defense well before trial. The benefit of defense counsel receiving this material pre-trial is that upon seeing the prosecution’s case it may be more likely that a plea agreement will avoid the necessity of the cost of trial. It is also a question of basic fairness. Shouldn’t defense counsel have the same ability to prepare for trial the prosecution has had in the many months that it has been investigating its case?
But giving discovery material to the media is another matter. What if this were an ongoing investigation and someone is still providing information to the government – – would that individual be protected? Would the government be able to continue to obtain information from someone once their identity is disclosed?
But on the other side, will defense counsel be able to properly prepare for trial under the constraints of a protective order? When police want information, they often use the press to publicize the matter. Police have the ability to put bulletins out to the public seeking information on an alleged crime. Shouldn’t defense counsel have this same ability? If the defense want more information on events, shouldn’t they also have the right to use the media? But if that’s the case, wouldn’t it be defense counsel arguing against this protective order as opposed to Dow Jones?
Obviously the defense counsel needs to receive discovery material to properly prepare for trial, but when does the public’s right to know prevail over prosecutorial needs in a continuing investigation? Defense counsel often struggles with prosecutors to obtain all the discovery material they need to prepare for trial. Perhaps now the media will understand the difficulties faced by defense counsel in their preparation for trial.
(esp)
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Kenneth Tomlinson, whose tenure as chairman of the Corporation for Public Broadcasting was controversial, resigned from the CPB’s board recently after a critical inspector general’s report, and now is under investigation for possible criminal violations. A New York Times story (here) states that the investigation focuses on the use of federal funds for personal expenses, and the hiring of ghost or unqualified employees. As a federal enterprise, directors and officers of the CPB are subject to the federal anti-corruption statutes. (ph)
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Accroding to the St. Pete Times, SOCom, the United States Special Operations Command, has had its share of white collar related problems within its ranks. In this past month alone, the St. Pete Times reported on the "widening" of a bribery scandal. (see post here) Yesterday, the St. Pete Times provided a listing of some of the titles of articles they have published on SOCom, "the military arm that overseas the nation’s elite commmandos such as the Green Berets and the Navy SEALS." The titles of these articles included "SOCom Target of Bribery Investigation," and "SOCom Hides $20-million from Congress." (see article here – titled "Despite Problems, SOCom Carries On). Paul De La Garza of the St. Pete Times provides an in depth report in this article of investigations, responses by SOCom, etc.
(esp)
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On Meet the Press, in the context of discussing possible charges from the grand jury investigation of the leak of the status of Valerie Plame, Senator Kay Bailey Hutchison stated that a perjury charge would be a "technicality" and any such charge would be an attempt by Special Counsel Patrick Fitzgerald to justify a two-year investigation — see the Reuters story here. As an earlier post (here) notes, this may well be the week in which Fitzgerald decides whether to seek a grand jury indictment. The Reuters article also notes that Fitzgerald may inform one or more officials in the administration that they are targets of the investigation, a final step toward seeking an indictment.
If a perjury (or Section 1001 or obstruction of justice) charge were to be returned by the grand jury, is that just a technicality, particularly if the underlying subject matter of the investigation — whether there was a violation of federal law from the disclosure of Plame’s position as a cover intelligence agent — is not also charged? Lying is hardly a technical violation of the law, particularly when a person has sworn an oath to testify truthfully before a federal grand jury, and trying to diminish perjury as a "collateral" violation or otherwise unimportant denigrates the integrity of the investigative process. As the Eighth Circuit noted in U.S. v. Lasater, 535 F.2d 1041, 1049 (8th Cir. 1976): "The grand jury performs an important function in our judicial system, as the device by which criminal investigations are conducted and criminal proceedings instituted . . . Any false testimony before a grand jury, which tends to impede its investigation, should be diligently prosecuted." Interestingly, a claim of perjury was the basis for the first article of impeachment (here) against President Clinton, which stated:
[I]n violation of his constitutional duty to take care that the laws be faithfully executed, has willfully corrupted and manipulated the judicial process of the United States for his personal gain and exoneration, impeding the administration of justice, in that: On August 17, 1998, William Jefferson Clinton swore to tell the truth, the whole truth, and nothing but the truth before a Federal grand jury of the United States. Contrary to that oath, William Jefferson Clinton willfully provided perjurious, false and misleading testimony to the grand jury . . . .
That does not sound like a "technicality" to me. (ph)
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Judith Miller testified before the Senate Committee on the Judiciary. Her testimony found here was to "urge [Congress] to enact the Free Flow of Information Act so that other journalists will not be forced, as [she] was, to go to jail to protect their sources." The protection of reporters sources is clearly important to the public obtaining information that might not be forthcoming by the government. (see post here)
But in one passage of her testimony she discusses the BALCO case. She says "[t]he leakers in the Balco case in San Francisco violated grand jury secrecy rules or laws, but their information about steroid use in professional baseball gave Congress the facts and impetus to start hearings and make needed reforms."
Is she suggesting that leaks from the grand jury are good and sometimes necessary? Wouldn’t Congress have eventually received this information without this leak? It is one thing to allow reporter’s to protect sources, and for reporters to bring out information that might not have been disclosed absent the confidentiality being provided to the source. But this seems different than saying it is OK for someone to violate the grand jury rules as long as they tell the information to a news reporter.
Grand jury leaks should not be tolerated. This is especially true when the leak is to a newspaper reporter who then may be disclosing it to the world. The importance of grand jury secrecy is undermined when individuals covered by the grand jury rules will be able to tell reporters anything and be protected by this process.
In finding a fair balance between confidentially of news sources and grand jury secrecy, it is important to factor in both values and not just protecting the sources.
(esp)
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An AP report (here) discusses various conflicts in the testimony of Karl Rove and I. Lewis Libby that indicates Libby may have contacted reporters about the status of Valerie Plame as a CIA operative and not the other way around. Rove also testified that he may have learned about Plame from Libby, although as with everything else in this investigation, the recollection is hazy, at best.
Almost like the pieces of a giant puzzle, the information coming together points to some serious inconsistencies in the testimony of Libby, the chief of staff to Vice President Cheney, about his contacts with the press and the source of his knowledge of Plame. Whether they are enough to pull together into an indictment for false statements, perjury, or obstruction is a different matter, however. While contradictory statements are wonderful for cross-examining a witness, proving a person lied (as opposed to being nonresponsive) in the grand jury is much more difficult. "Might" and "may have" do not make for the types of falsehoods usually prosecuted. As more information leaks out about the grand jury testimony of witnesses, I wonder whether claims of prosecutorial violation of the secrecy requirements of Rule 6(e) will surface. (ph)
UPDATE: An extensive Washington Post story (here) discusses the role of various administration officials in the investigation. (ph)
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One aspect of New York Times reporter Judith Miller’s case, presented in great (although sometimes slippery) detail in the newspaper (here), includes some hotly disputed interchanges in 2004 between Joseph Tate, the lawyer for the Vice President’s chief of staff, I. Lewis Libby, and Miller’s then-lawyer, Floyd Abrams. According to the Times, Tate described to Abrams part of Libby’s grand jury testimony in which Libby said he did not give Miller the name or status of Valerie Plame as a CIA operative. According to Miller, Abrams told her that when he told Tate that there could be no assurances that Miller’s testimony would be consistent with Libby’s, Tate allegedly responded "Don’t go there, or, we don’t want you there." Special prosecutor Patrick Fitzgerald ultimately examined Miller about whether she believed Libby wanted her to conform her testimony to his.
The role of the lawyers has been crucial in the investigation. Miller’s new lawyer, Robert Bennett (former lawyer for President Bill Clinton in the infamous Paula Jones deposition), negotiated her release after Libby provided assurances of his waiver of confidentiality. Fitzgerald even played a key role in that process, sending a letter to Tate stating that any contact with Bennett regarding Miller testifying (or not) would not be viewed as being an obstruction of justice. But, could Miller’s (and Abrams’) recitation of the conduct of Tate — who vehemently denies telling Abrams "Don’t go there" or even implying that –constitute obstruction of justice? Interestingly, lawyers receive special treatment under the obstruction of justice statutes because legal counseling can often involve telling a client to do things that could be viewed as impeding an investigation. 18 U.S.C. Sec. 1515(c) (here) provides: "This chapter does not prohibit or punish the providing of lawful, bona fide, legal representation services in connection with or anticipation of an official proceeding." Tate’s statement, if made to Abrams, would likely fall within the "safe harbor" as bona fide legal services. "Don’t go there" is not a request that Miller change her testimony, and "we don’t want you there" is even vaguer. Communicating with a lawyer, and not the witness, would likely take the conduct even further away from obstruction, unlike a case where a lawyer meets with a witness and suggests testimony.
In the hail of information on the investigation of the Plame leak, it is getting more difficult to separate out who said what to whom, and when. Ultimately, that’s the challenge that Fitzgerald and his staff faces in deciding whether there has been any criminal conduct that can be proven. (ph)
MattBray.net 