Court Awards $22,390.86 to Fed for Fees Incurred in Independent Counsel Investigation

By on July 20, 2006 in Current Events with 0 Comments

Have you ever wondered what would happen if you, as a federal official, found yourself caught up as a possible subject in an independent counsel’s investigation of wrongdoing? Clean living and keeping the bar as high as possible in your personal ethics should keep one from ever finding out. But, as the following case illustrates, never say “never.” Here is what happened when one official found himself in the middle of the Cisneros investigation.

The facts are taken from In Re: Cisneros (Needle Fee Application), C.A.D.C. Division No. 95-0001c (Division for the Purpose of Appointing Independent Counsels Ethics in Government Act of 1978, As Amended), Filed 7/18/06.

Remember Henry Cisneros, one-time Secretary of Housing and Urban Development? Readers may recall that an independent counsel (IC) was appointed to investigate the HUD Secretary for various problems. The IC looked first into allegations that Cisneros had made false statements to the FBI during his confirmation process. The IC petitioned to expand the investigation to look into possible tax violations by Cisneros for four specific tax years. However, based at least in part on a recommendation from the IRS, the expansion petition was granted for only one of the four tax years.

As the IC investigated the possible tax violations, he uncovered an internal IRS memo that charged that the Washington, DC IRS office, in making its recommendation not to prosecute Cisneros for the other three years in question, had engaged in “impropriety.” (Before you ask, the court does not elaborate as to just what the alleged “impropriety” was.) This led the IC to open up a separate investigation into the actions of the IRS District of Columbia office as well as certain parts of the Department of Justice to see if anyone had obstructed justice.

Martin Needle, an IRS attorney who had reviewed the Cisneros case, found himself in the middle of the firestorm. He was told he was a subject of the investigation and called by the IC to testify before the grand jury, which he did under a grant of immunity. He was never indicted. Needle now has asked the federal appeals court—in accordance with the Independent Counsel statute in the Ethics in Government Act of 1978—to order that his attorneys’ fees be reimbursed. (Opinion pp. 3-4)

The appeals court quotes the following pertinent provision of that law (28 U.S.C. §593(f)(1)):

“Upon the request of an individual who is the subject of an investigation conducted by an independent counsel pursuant to this chapter, the division of the court may, if no indictment is brought against such individual pursuant to that investigation, award reimbursement for those reasonable attorneys’ fees incurred by that individual during that investigation which would not have been incurred but for the requirements of this chapter.” (Opinion p. 5)

In deciding to grant Needle’s petition, the court addressed whether he had been a “subject of the investigation.” The government argued that since he was granted immunity, he did not meet the “subject” test. Needle argued that in fact he had been told he was a subject and that as a result he worked out an agreement to testify in exchange for immunity. This was enough to persuade the court, which said: “…it appears that the OIC never definitively retracted Needle’s ‘subject’ status. Consequently…he ‘reasonably believed that there was a realistic possibility that he would become a defendant.'” (Citations omitted; Opinion p. 9)

Clearing the way to grant Needle’s petition, the court further found that “but for” the appointment of the IC, the Department of Justice would not have investigated Needle or the alleged impropriety at IRS (p. 13); and that fees he incurred in the amount of $22,390.86 were “reasonable” (p. 14). The court ordered that Needle be reimbursed this amount.

© 2016 Susan McGuire Smith. All rights reserved. This article may not be reproduced without express written consent from Susan McGuire Smith.

About the Author

Susan McGuire Smith spent most of her federal legal career with NASA, serving as Chief Counsel at Marshall Space Flight Center for 14 years. Her expertise is in government contracts, ethics, and personnel law.