In re: Samuel R. Pierce Jr.

• Decision Date: 28 September 1999
• Docket Number: No. 89-5,89-5
• Parties: (D.C. Cir. 1999) In re: Samuel R. Pierce, Jr.(Abrams Fee Application) Division
• Court: U.S. Court of Appeals — District of Columbia Circuit

Page 586

190 F.3d 586 (D.C. Cir. 1999)

In re: Samuel R. Pierce, Jr.(Abrams Fee Application)

Division No. 89-5

United States Court of Appeals FOR THE DISTRICT OF COLUMBIA CIRCUIT

September 28, 1999

[Copyrighted Material Omitted] Division for the Purpose of Appointing Independent Counsels Ethics in Government Act of 1978, as Amended

Before: Sentelle, Presiding, Fay and Cudahy, Senior Circuit Judges.

ORDER

Per curiam

This matter coming to be heard and being heard before the Special Division of the Court upon the application of Philip Abrams for reimbursement of attorneys' fees and costs pursuant to section 593(f) of the Ethics in Government Act of 1978, as amended, 28 U.S.C. § 591 et seq. (1994), and it appearing to the court for the reasons set forth more fully in the opinion filed contemporaneously herewith, that the motion is in part well taken, it is hereby

ORDERED, ADJUDGED, and DECREED that the United States reimburse Philip Abrams for attorneys' fees and expenses he incurred during the investigation by Independent Counsels Arlin M. Adams and Larry D. Thompson in the amount of $229,949.80 this 28th day of September, 1999.

Division for the Purpose of Appointing Independent Counsels Ethics in Government Act of 1978, as Amended

Opinion for the Special Court filed Per curiam.

ON APPLICATION FOR ATTORNEYS' FEES

Philip Abrams petitions this Division of the Court under § 593(f) of the Ethics in Government Act of 1978, as amended, 28 U.S.C. § 591 et seq. (1994) (the "Act"), for reimbursement of attorneys' fees in the amount of $389,334.52. Abrams is entitled to reimbursement only if he establishes that these fees "would not have been incurred by him but for the requirements of [the Act]," and meets certain other statutory criteria. Because we find that Abrams has established his entitlement under the statutory criteria for reimbursement of a portion of the fees we will, for the reasons set forth more fully below, allow recovery of $229,949.80 under the Act.

Background

The Abrams application arises out of an investigation conducted by Independent Counsel ("IC") appointed by this Division under the provisions of the Act, to investigate allegations of abuses, favoritism, and mismanagement at the Department of Housing and Urban Development ("HUD") during the 1980s under the tenure of Secretary Samuel R. Pierce, Jr. We have recently set forth some details of the background of this investigation in our opinions disposing of two earlier applications from other persons whose conduct became the subject of the investigation. See In re Pierce (Kisner Fee Application), 178 F.3d 1356 (D.C. Cir., Spec. Div., 1999) (per curiam); and In re Pierce (Olivas Fee Application), 178 F.3d 1350 (D.C. Cir., Spec. Div., 1999) (per curiam). We will therefore not rehash the full account of the investigation, but will only discuss those facts necessary to the resolution of Abrams' petition, to which we will allude as we develop the law governing the disposition.

Abrams joined the Department of Housing and Urban Development in 1981 as a General Deputy Assistant Secretary. He thereafter was promoted to Assistant Secretary and subsequently became Undersecretary of HUD in 1983.During his tenure at HUD, Abrams' responsibilities included a program called the "Moderate Rehabilitation Program" ("MRP") guaranteeing a determined level of rental income to apartment building owners refurbishing apartments rented to persons within specified income limits. Independent Counsel's investigations of allegations, and ultimately prosecutions of wide-ranging corruption within HUD included allegations of unlawful favoritism and other illegalities in the disbursal of funds under the program. After Abrams returned to the private sector in 1984, he became involved in the development and operation of programs receiving funding under the MRP.

The Office of Independent Counsel ("OIC"), as part of its wide-ranging investigation, conducted inquiries into Abrams' involvement and allegations that he and his associates had been the beneficiaries of favoritism. Abrams incurred attorney fees as a result of the investigation by the OIC, as well as separate investigations by the HUD Inspector General, a House Subcommittee, and a Senate Subcommittee. Abrams was never indicted, but did receive a grant of immunity and did provide testimony pursuant to that grant. The application before us seeks reimbursement for attorneys' fees allegedly incurred as a result of the Independent Counsel's investigation. To establish eligibility for reimbursement, and entitlement to specific amounts, Abrams bears the burden of establishing his qualifications under specific statutory elements, as we discuss below.

Analysis

The Statutory Elements

A. Subject

By its terms, the statute provides reimbursement of fees only to "an individual who is the subject of an investigation conducted by an independent counsel." 28 U.S.C. § 593(f)(1) (emphasis added). Though the statute does not define "subject," we have previously held that status as a "mere witness" is not sufficient to meet the elemental requirement of "subject" designation for purposes of the Act; a fee applicant must establish that he is a person whose conduct was within the scope of the independent counsel's investigation in the sense that "the Independent Counsel might reasonably be expected to point the finger of accusation" at him. In re North (Dutton Fee Application), 11 F.3d 1075, 1078 (D.C. Cir., Spec. Div., 1993) (per curiam). Otherwise put, he must not merely have been a witness to the matters under investigation, but a potential defendant of indictments that might arise from that investigation. The filings of Abrams in this application, as well as the responses of the Independent Counsel and the Department of Justice establish that he was not only a subject, but was expressly notified by the Independent Counsel through his counsel that he was "a target of a federal grand jury investigation ... into possible violations of 18 U.S.C. § 371 (conspiracy to defraud the United States), and other provisions of federal criminal law, arising from or related to" HUD programs during the period under investigation. Letter of the OIC, dated September 27, 1991.

We therefore conclude that Abrams has met the "subject" requirement. There remains, however, a dispute as to the period of time and the portion of the investigation, during which Abrams was a "subject" and during which he would be therefore entitled to full or partial reimbursement of his legal expenses. Abrams asserts that he was a subject from the time of the appointment of the Independent Counsel until the completion of the investigation. The IC asserts that Abrams has the period too long on both ends. He argues that Abrams did not become a subject within the meaning of the Act until September 27, 1991, when the OIC advised Abrams' counsel that his client was a "target." He further argues that Abrams' status as a "subject" did not continue until the OIC issued his final report but only until May 5, 1994, when Abrams received his court ordered immunity. After reviewing the filings of the parties and relevant legal authorities, we conclude that Abrams is correct as to the commencement of his status as a subject but that the IC is correct as to its termination.

Our reasoning in reaching this conclusion focuses on the definition of the subject as a person "whose conduct was within the scope of the [Independent Counsel] investigation, in the sense that the [Independent Counsel] was examining conduct of his in a way that would lead a reasonably counseled person at the time of incurring the fees to believe that there was a realistic possibility that he would become a defendant." Dutton, 11 F.3d at 1079. In the real world, the reasonable apprehension of defendant status does not begin at the receipt of a grand jury subpoena, nor a target letter. When a person, such as Abrams, knows that a grand jury is investigating his conduct, and knows that he is or has been engaged in conduct likely to cause a prosecutor to suspect him of a crime, his objective apprehension of an accusation may commence long before his official designation as a target. Abrams knew that the IC was charged with investigating HUD programs in which he had participated in just such a fashion as to attract the prosecutorial attention of the IC. It was at least reasonable for him to believe that there was a realistic possibility that he would require a legal defense. Therefore, we can conclude that his status as a subject of the independent investigation began with the appointment of the IC. However, we also conclude that the IC is closer to the mark in defining the termination of Abrams' status as a subject. On May 5, 1994, at the conclusion of the negotiations between Abrams and the OIC, Abrams received court ordered immunity under 18 U.S.C. § 6002. Thereafter, he testified before the grand jury in furtherance of the IC's investigation, under the statutory assurance that his testimony could not be used against him in any prosecution for the matters as to which he testified. The IC argues, and we agree, that thereafter Abrams could not reasonably contemplate that he would become a defendant in any further prosecution arising from the Independent Counsel's investigation.

Abrams points out, correctly, that the immunity conferred upon him under the statute was not transactional. That is, it did not guarantee that he would not be prosecuted. The use immunity arising from compelled testimony under § 6002, "does not confer transactional immunity under which the witness could not be prosecuted at all for the transactions about which he testifies," United States v. Poindexter, 859 F.2d 216, 219 (D.C. Cir. 1988); see also Kastigar v. United States, 406 U.S. 441, 461 (1972), but only provides that his testimony would not be used in any such prosecution. He therefore argues that the issuance of the order did not terminate...