US v. Watt

• Citation: 911 F. Supp. 538
• Decision Date: 04 December 1995
• Docket Number: Crim. A. No. 95-0040 (RCL).
• Parties: UNITED STATES of America v. James G. WATT, Defendant.
• Court: U.S. District Court — District of Columbia

911 F. Supp. 538

UNITED STATES of America v. James G. WATT, Defendant.

Crim. A. No. 95-0040 (RCL).

United States District Court, District of Columbia.

December 4, 1995.

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Larry Thompson, Michael Sullivan, Robert Schroeder, Office of Independent Counsel, Washington, DC, for U.S.

William Bradford Reynolds, Collier, Shannon, Rill & Scott, Washington, DC, Francis Derron Carter, Carter & Varrone, Washington, DC, Martha P. Rogers, Jackson & Campbell, P.C., Washington, DC, for defendant.

MEMORANDUM OPINION

LAMBERTH, District Judge.

This matter came before this Court on October 27, 1995 for oral argument on a series of motions filed by the defendant challenging the indictment.¹ Upon careful consideration of the filings and arguments of counsel, and of the relevant statutes and legal authorities, the court shall grant some and deny some of defendant's motions for the reasons set forth below.

I. BACKGROUND

In May 1989, the Subcommittee on Employment and Housing of the Committee on Government Operations of the House of Representatives of the United States Congress ("House Subcommittee") commenced a series of hearings to investigate allegations of abuse, favoritism, and mismanagement in the administration of programs sponsored by the United States Department of Housing and Urban Development ("HUD"). These alleged improprieties were believed to have occurred during Samuel Pierce's tenure as Secretary of HUD, between the years 1981 and 1989. From approximately 1981 until 1983, James Watt served as Secretary of the United States Department of the Interior in President Ronald Reagan's Cabinet along with HUD Secretary Pierce. According to the government, Watt was allegedly paid over five hundred thousand dollars and promised additional sums after his departure for successfully approaching HUD Secretary Pierce and other high-ranking HUD officials between 1984 and 1986 in order to obtain HUD funding and benefits for private landlords and developers.

On June 9, 1989, Watt testified under oath before the House Subcommittee regarding his involvement with HUD during the administration of HUD Secretary Pierce. Following completion of the House Subcommittee hearings, the Committee on Government Operations of the House of Representatives of the United States Congress ("House Committee on Government Operations"), of which the House Subcommittee was a part, reported that during HUD Secretary Pierce's administration, "housing programs established to benefit the poor were abused," and that "in many housing programs objective criteria gave way to political preference and cronyism, and favoritism supplanted fairness." House Committee on Government Operations, Abuse and Mismanagement at HUD, H.R.Rep. 101-977, 101st Cong., 2d Sess. 3 (1990). The House Committee on Government Operations further reported that HUD's Section 8 Moderate Rehabilitation Program, which was intended to provide for the rehabilitation of low-income housing, had become "riddled with blatant favoritism, political influence, and abuse in the distribution of hundreds of millions of dollars of rent subsidies and tax benefits." Id.

In response to these findings, the Judiciary Committee of the House of Representatives of the United States Congress sought the appointment of Independent Counsel to investigate the merits of the HUD allegations. Independent Counsel was appointed in March of 1990, and began his investigation shortly thereafter with the assistance of a federal grand jury sitting in Washington, D.C. On November 21, 1990, Watt testified under oath before the grand jury about his involvement with HUD. The grand jury has now returned a twenty-five count indictment against Watt.

The indictment charges defendant Watt with five counts of perjury for making false statements before the House Subcommittee, in violation of 18 U.S.C. § 1621; six counts of perjury for making false declarations during testimony before a grand jury, in violation of 18 U.S.C. § 1623; five counts of concealment for falsifying, concealing, or covering up a material fact while testifying before the House Subcommittee, in violation § 1001; six counts of concealment for concealing or endeavoring to conceal a material fact while testifying before a grand jury, in violation of § 1503; two counts of making false statements to the Federal Bureau of Investigation ("FBI") and the Office of Independent Counsel ("OIC"), in violation of § 1001; and one count of obstruction of justice for concealing documents requested in a grand jury subpoena duces tecum, in violation of § 1503.

II. DISCUSSION

A. Motions Challenging the Indictment

1. Defendant's Motion to Dismiss Counts 2, 4, 12, 14, 18, 23, and 24 in light of the Supreme Court's Ruling in Hubbard v. United States

On May 30, 1995, defendant filed a motion to dismiss counts 2, 4, 12, 14, 18, 23, and 24. Counts 2, 4, 12, 14, and 18 charge defendant under 18 U.S.C. § 1001 with making false statements while testifying before the House Subcommittee.² Counts 23 and 24 charge defendant under § 1001 with making false statements, either personally or through an agent, in response to a federal grand jury subpoena duces tecum ("grand jury subpoena"). Defendant argues that these charges should be dismissed in light of the Supreme Court's recent ruling in Hubbard v. United States, ___ U.S. ___, 115 S.Ct. 1754, 131 L.Ed.2d 779 (1995). Hubbard involved a criminal conviction for false statements made in unsworn papers filed in Bankruptcy Court. The issue presented to the Court was whether § 1001 coverage extended to judicial proceedings. The existing doctrine, under United States v. Bramblett, 348 U.S. 503, 75 S.Ct. 504, 99 L.Ed. 594 (1955), construed the language of § 1001 broadly so as to apply to any proceeding conducted by the Executive, Legislative, and Judicial branches. See id. at 509, 75 S.Ct. at 507. The Hubbard Court, however, overruled Bramblett and construed both the text of the statute and the legislative history narrowly, rendering § 1001 applicable only to conduct within the Executive branch.³Hubbard, ___ U.S. at ___, 115 S.Ct. at 1764. Defendant maintains that all counts charged under § 1001 should be dismissed in light of the fact that none of the allegedly false statements made by the defendant in this case were made to an Executive branch department or agency.

After Hubbard, it is clear that the allegedly false statements made by defendant during his testimony before the House Subcommittee are no longer violative of § 1001. The Supreme Court's reasoning leads to the inescapable conclusion that § 1001 extends only to statements made to departments or agencies within the Executive Branch. Defendant's statements to a legislative body are simply beyond the scope of the statutory provision. Because the government concedes that Hubbard compels this conclusion, the five counts charging defendant with making false statements in testimony before the House Subcommittee (counts 2, 4, 12, 14, and 18) shall be dismissed.

The government, however, maintains that counts 23 and 24 are properly charged under § 1001 and should not be dismissed. See Govt.'s Opp. to Mot. to Dis., at 1. Count 23 is based on allegedly false statements made by the defendant in a letter dated June 6, 1990 that accompanied documents submitted to FBI Special Agent Hurlburt of the OIC pursuant to the grand jury subpoena. Although the grand jury subpoena indicated that the defendant was directed to appear before the grand jury with the documents, the OIC permitted the defendant to send the requested materials "in lieu of appearing personally before the grand jury." Letter of May 23, 1990 from Bruce Schwartz to James Watt. Count 24 is based on a letter sent by defendant's attorney to the OIC on January 17, 1995 — nearly five years later — that reiterated the allegedly false statements made in the earlier letter.

Defendant argues that counts 23 and 24 should be dismissed under Hubbard because the statements upon which these counts are based were made in response to the grand jury subpoena. Defendant maintains that the grand jury is an adjunct of the Judicial Branch, and that in light of the Hubbard decision, any allegedly false statements made in response to the grand jury's inquiries cannot be prosecuted under § 1001.

The government, however, contends that defendant's statements in the June 6, 1990 letter could not have been responsive to the grand jury subpoena because the subpoena called for the production of specific documents. Although defendant began the letter by stating "This letter is in response to the Subpoena Duces Tecum issued to me," the government contends that the letter does not constitute a subpoenaed document, but rather an unsolicited explanation of why so few documents were being produced. Because this letter was mailed to FBI Special Agent Hurlburt, an agent of a department of the Executive Branch, defendant concludes that defendant is properly charged under § 1001. Similarly, the government contends that the second letter sent to the OIC nearly five years later by counsel for the defendant largely repeated the allegedly false statements provided by defendant in the first letter. Like the previous letter, the government maintains that this letter was not responsive to the grand jury subpoena, but was submitted independently and voluntarily to an agent of the Executive branch for the purpose of obstructing justice.

It is axiomatic that the federal grand jury is an appendage of the Judicial branch. See Brown v. United States, 359 U.S. 41, 49, 79 S.Ct. 539, 546, 3 L.Ed.2d 609 (1958), reh. denied, 359 U.S. 976, 79 S.Ct. 873, 3 L.Ed.2d 843 (1959), rev'd on other grounds, Harris v. United States, 382 U.S. 162, 86 S.Ct. 352, 15 L.Ed.2d 240 (1965); Cobbledick v. United States, 309 U.S. 323, 60 S.Ct. 540, 84 L.Ed. 783 (1940); In re Report & Recommendation of June 5, 1972 Grand Jury, 370 F.Supp. 1219, 1222 (D.D.C.1...