U.S. v. Hubbell, Webster (06/05/2000)

By: Heidi N. Morales, Medill News Service

Questions presented

(1) Whether the 5th Amendment privilege against self-incrimination protects information previously recorded in voluntary created documents that a defendant delivers to the government pursuant to an immunized act of production, and (2) whether a defendant's act producing ordinary business records constitutes a compelled testimonial communication solely because the government cannot identify the documents with reasonable particularity before they are produced?

Brief

On April 30, 1998, a grand jury alleged in a 10-count indictment that Webster Hubbell, a close friend and Justice Department appointee of President Clinton had committed fraud and tax evasion. Hubbell was indicted along with his wife Suzanna, his tax lawyer Charles Owen and his accountant Michael Schaufele.

The indictment claimed that Hubbell under-reported his 1994 income by approximately $74,000. The Hubbells owed nearly $900,000 total in taxes to the federal government, the state of Arkansas, and the District of Columbia.

The indictment was related to the Independent Counsel Kenneth Starrs investigation into whether Hubbell had received payment from entities associated with President Clinton for consulting work. That work was allegedly performed after Hubbells 1994 resignation from his position as the Associate Attorney General. In October 1994, Hubbell pled guilty to two felony tax evasion counts and was sentenced to a year-and-a-half probation.

In the plea agreement, Hubbell promised to cooperate ""by providing full, complete, accurate and truthful information"" to Starr.

Starr discovered in 1996 that Hubbell apparently had received substantial payments as consulting fees in 1994. It was alleged that the payments included $100,000 from Hong Kong China Limited controlled by the Riady family through the Lippo Group, and $62,775 from Revlon. Hubbells attorneys claimed, however, that the Riady and Revlon payments were in fact disclosed in Hubbells '94 tax return. Starr alleged, however, that Hubbell ""performed little or no work"" for the consulting fees he received in 1994 from friends of the president at a time when Hubbell was under investigation.

Starr set out to determine whether a relationship existed between those payments and Hubbells income since Jan. 1, 1994 and whether the payments were hush money to secure his silence in Starrs Whitewater investigation.

If payments Hubbell received beginning in '94 were indeed hush money to secure his silence in Whitewater, Hubbell's action could be considered obstruction of justice. Hubbell nevertheless argued that the tax charges here, as well as wire and mail fraud aimed at keeping the income from the IRS and others who would have resulting claims, are not like the ""arising out of"" crimes specified in the charges.

Hubbells attorney, John W. Nields Jr. moved to dismiss the charges arguing that the government had violated Hubbells 5th Amendment right against self-incrimination when a grand jury indicted him based on documents he produced under immunity promised to him by the independent counsel.

The district court dismissed the indictment, finding that Starr had developed his case solely on the basis of records that Hubbell produced under statutory use-immunity. As Starr had only discovered Hubbells alleged tax violations through his response to a government subpoena, the court concluded that Starr had improperly turned Hubbell into the primary witness against himself, in effect violating Hubbells 5th Amendment rights.

But a divided Circuit Court for the District of Columbia reversed, saying U.S. District Judge James Robertson had overstepped his authority when he threw out the tax charges against Hubbell, his wife and two others.

""The timing, sources, and extent of the payments make the belief that they were hush money reasonable,"" Appeals Judge Patricia M. Wald said. She disagreed with the dissent's conclusion that the Independent Counsels failure to bring an indictment on the hush money allegations, either first or contemporaneous with the tax violations, means that no ""credible evidence"" of any wrongdoing exists.

""Without credible evidence that Hubbell accepted hush money, there can be no ""demonstrable relationship"" between Hubbells tax crimes and the Independent Counsels original grant of jurisdiction,"" Appeals Judge Stephen F. Williams said in dissent.

Starr himself pointed out in oral arguments that ""we right now, as a matter of public record, dont know"" that Hubbells ""consulting"" income was hush money.

Hubbell worked for the Los Angeles Department of Airports, the Rose law firm and worked as a billing partner at a law firm in Little Rock, Arkansas before his Clinton appointment. During the period of time for which he was being prosecuted, Hubbell worked in Washington, D.C. as a consultant, and served out a term in prison for the mail and tax fraud counts to which he previously pled guilty.

In addition to the tax charge, Hubbell also pleaded guilty June 30, 1999, to one felony count of concealing information from federal regulators during his time at the Rose law firm.

The U.S. Supreme Court granted certiorari on Oct. 12, 1999.

According to accounts in the Arkansas Democrat-Gazette, during oral argument on Feb. 22, 2000, Ronald Mann conceded that prosecutors did not know the contents of Hubbell's financial and business records until after he turned them over. Mann argued the case on behalf of independent counsel Robert Ray, who took over after Kenneth Starr stepped down.

Mann acknowledged that prosecutors could not have shown the ""probable cause"" needed to get a search warrant. But he argued that ""having a hunch"" was enough to justify the sweeping grand jury subpoena sent to Hubbell.

If the contents of the documents could still be used against Hubbell, said Justice Ruth Bader Ginsburg, ""the immunity you gave him immunized nothing."" Such a scenario, she added, would involve ""a certain deception.""

Justice Anthony Kennedy wondered whether such broad subpoenas could be used in drug prosecutions and result in a ""very serious problem with prosecutors overreaching.""

Chief Justice William Rehnquist countered that using the contents of the documents produced by Hubbell was ""no different than if you'd found these documents on the steps of the Justice Department,"" and he pointed out that ""everyone has tax records.""

Justice Stephen Breyer asked Hubbell's attorney, John Nields, if the legal standard he was seeking could result in a ""revolution"" in the way people think of their 5th Amendment rights.

But Justice Kennedy interjected that ""the revolution is if we sustain a subpoena of this breadth.""

On June 5, 2000, an 8-1 Court sided with Hubbell and overturned his conviction.

In holding that prosecutors could not use financial documents against Hubbell that he was forced to produce under a limited grant of immunity, Justice John Paul Stevens wrote for the Court: ""We have no doubt that the constitutional privilege against [5th Amendment] self-incrimination protects the target of a grand jury investigation from being compelled to answer questions designed to elicit information about the existence of sources of potentially incriminating evidence.""

""The documents did not magically appear in the prosecutor's office like 'manna from heaven,'"" Stevens wrote. ""They arrived there only after [Hubbell] asserted his constitutional privilege, received a grant of immunity.""

Chief Justice William H. Rehnquist was the lone dissenter.