[Congressional Record Volume 146, Number 108 (Thursday, September 14, 2000)]
[Senate]
[Pages S8571-S8574]
From the Congressional Record Online through the Government Publishing Office [www.gpo.gov]




         FEDERAL LAW ENFORCEMENT PROBLEMS DUE TO THE McDADE LAW

  Mr. LEAHY. Mr. President, I came to the floor on May 25 to speak 
about the pressing criminal justice problems arising out of the so-
called McDade law, which was enacted at the end of the last Congress as 
part of the omnibus appropriations law. At that time, I described some 
examples of how this law has impeded important criminal prosecutions, 
chilled the use of federally-authorized investigative techniques and 
posed multiple hurdles for federal prosecutors. In particular, I drew 
attention to the problems that this law has posed in cases related to 
public safety--among them, the investigation of the maintenance and 
safety practices of Alaska Airlines. The Legal Times and the Los 
Angeles Times recently reported on the situation regarding the Alaska 
Airlines investigation, and I ask unanimous consent to include these 
reports in the Record following my remarks.
  Since I spoke in May, the McDade law has continued to stymie Federal 
law enforcement efforts in a number of States. I am especially troubled 
by

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what is happening in Oregon, where the interplay of the McDade law and 
a recent attorney ethics decision by the Oregon Supreme Court is 
severely hampering Federal efforts to combat child pornography and drug 
trafficking.
  I refer to the case of In re Gatti, 330 Or. 517 (2000). In Gatti, the 
court held that a private attorney had acted unethically by 
intentionally misrepresenting his identity to the employees of a 
medical records review company called Comprehensive Medical Review 
(``CMR''). The attorney, who represented a client who had filed a claim 
with an insurance company, believed that the insurance company was 
using CMR to generate fraudulent medical reports that the insurer then 
used to deny or limit claims. The attorney called CMR and falsely 
represented himself to be a chiropractor seeking employment with the 
company. The attorney was hoping to obtain information from CMR that he 
could use in a subsequent lawsuit against CMR and the insurance 
company.
  The Oregon Supreme Court upheld the State Bar's view that the 
attorney's conduct violated two Oregon State Bar disciplinary rules and 
an Oregon statute--specifically, a disciplinary rule prohibiting 
conduct involving dishonesty, fraud, deceit or misrepresentation; a 
disciplinary rule prohibiting knowingly making a false statement of law 
or fact; and a statute prohibiting willful deceit or misconduct in the 
legal profession. In so doing, the court rejected the attorney's 
defense that his misrepresentations were justifiable because he was 
engaged in an investigation to seek evidence of fraud and other 
wrongful conduct. The court expressly ruled that there was no 
``prosecutorial exception'' to either the State Bar disciplinary rules 
or the Oregon statute. As a result, it would appear that prosecutors in 
Oregon may not concur or participate in undercover and other deceptive 
law enforcement techniques, even if the law enforcement technique at 
issue is lawful under Federal law.
  Gatti has had a swift and devastating effect on FBI operations in 
Oregon. Soon after the decision was announced, the U.S. Attorney's 
Office informed the FBI Field Office that it would not concur or 
participate in the use of long-used and highly productive techniques, 
such as undercover operations and consensual monitoring of telephone 
calls, that could be deemed deceptive by the State Bar. Several 
important investigations were immediately terminated or severely 
impeded.
  Because of the Gatti decision, Oregon's U.S. Attorney refused to 
certify the six-month renewal of Portland's Innocent Images undercover 
operation, which targets child pornography and exploitation. Portland 
sought and obtained permission to establish an Innocent Images 
operation after the work of another task force over the past two years 
revealed that child pornography and exploitation is a significant 
problem in Oregon. With that finally accomplished, and with the 
investigative infrastructure in place, the U.S. Attorney refused to 
send the necessary concurring letter to the FBI for Portland's six-
month franchise renewal. Since the U.S. Attorney's concurrence is 
necessary for renewal of the undercover operation, it now appears that 
Portland's Innocent Images operation will be shut down.
  Gatti has also had an immediate and harmful impact on Oregon's war on 
drugs. Last winter, there was a multi-agency wiretap investigation into 
the activities of an Oregon-based drug organization. To date, the 
investigation has produced numerous federal and state indictments. 
Recently, the post-wiretap phase brought to the surface a cooperating 
witness. During the initial briefing, the cooperating witness indicated 
he had information about other drug organizations in Oregon and another 
State. In an effort to widen the investigation, the FBI sought the 
AUSA's concurrence in the cooperator's use of an electronic device to 
record conversations with other traffickers. Citing the Gatti decision, 
the assigned AUSA refused to provide concurrence. Since AUSA 
concurrence is required for such consensual monitoring, the FBI cannot 
make use of this basic investigative technique. Thus, a critical phase 
of the investigation languishes because of the interplay of Gatti and 
the McDade law.
  These examples show how the McDade law is severely hampering federal 
law enforcement in Oregon. But as I made clear in my prior remarks, 
this ill-conceived law is having dangerous effects on federal law 
enforcement nationwide. Let me update my colleagues on the Talao case, 
which I discussed at some length in May.
  In Talao, a company and its principals were under investigation for 
failing to pay the prevailing wage on federally funded contracts, 
falsifying payroll records, and demanding illegal kickbacks. The 
company's bookkeeper, who had been subpoenaed to testify before the 
grand jury, initiated a meeting with the AUSA in which she asserted 
that her employers were pressing her to lie before the grand jury, and 
that she did not want the company's lawyer to be present before or 
during her grand jury testimony. The grand jury later indicted the 
employers for conspiracy, false statements, and illegal kickbacks.
  The district court held that the AUSA had acted unethically because 
the company had a right to have its attorney present during any 
interview of any employee, regardless of the employee's wishes, the 
status of the corporate managers, or the possibility that the attorney 
may have a conflict of interest in representing the bookkeeper. The 
court declared that if the case went to trial, it would inform the jury 
of the AUSA's misconduct and instruct them to take it into account in 
assessing the bookkeeper's credibility.
  When I last spoke about the Talao case, the Ninth Circuit was 
reviewing the district court's decision. The Ninth Circuit has now 
spoken, and although it found no ethical violation, it did so on the 
narrow ground that the bookkeeper had initiated the meeting, and that 
the AUSA had advised the bookkeeper of her right to contact substitute 
counsel. Thus, the court sent a message that AUSAs and investigating 
agents may not approach employees in situations where there is a 
possible conflict of interest between the employee and the corporation 
for whom the employee works, and corporate counsel is purporting to 
represent all employees and demanding to be present during interviews. 
Let me put that another way. If a corporate whistleblower in California 
told an FBI agent that the agent should speak to a particular employee 
who had important information, and the AUSA assigned to the case knew 
that the corporation was represented by counsel in that matter, the 
AUSA arguably would have to nix the interview.
  The need to modify the McDade law is real, and our time is running 
out. I introduced legislation last year that addressed the most serious 
problems caused by the McDade law, and I worked with the Chairman of 
the Judiciary Committee to refine and improve it. I described our 
approach when I spoke on this issue in May. Congress should take up and 
pass corrective legislation before the end of the session.
  I ask unanimous consent to have several articles printed in the 
Record.
  There being no objection, the material was ordered to be printed in 
the Record, as follows:

           [From the Los Angeles Times, Tues., July 18, 2000]

     Justice Dept. Faces Unexpected Roadblocks Due to Ethics Rules

                         (By Robert L. Jackson)

       Washington.--Consider it further proof of the law of 
     unintended consequences.
       Aiming to prevent unethical conduct, Congress last year 
     passed a law requiring federal prosecutors to abide by the 
     ethics rules of the state bar where they are conducting 
     investigations.
       Instead, the Justice Department says, the move has hampered 
     law enforcement in cases related to public safety--among them 
     the investigation of the maintenance and safety practices of 
     Alaska Airlines.
       In documents submitted to the Senate Judiciary Committee by 
     James Robinson, chief of Justice's criminal division, and 
     Assistant Atty. Gen. Robert Raben, the department has argued 
     that probes like this were ``stalled for many months'' by the 
     McDade law.
       The law blocked FBI agents and Justice Department lawyers 
     from interviewing airline mechanics in a timely fashion for a 
     grand jury investigation of whether Alaska's maintenance 
     records were falsified in Northern California, the department 
     says. And it reportedly is causing problems for prosecutors 
     looking into complaints from corporate whistle-blowers 
     elsewhere.
       While the law seems harmless on its face, California--like 
     many other states--has an ethics provision prohibiting 
     lawyers or government investigators from directly contacting 
     a person who is represented by counsel.

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       Federal officials say FBI agents who tried to interview 
     workers at the airline's Oakland maintenance facility were 
     blocked by company lawyers who claimed to represent all 
     airline personnel.
       When mechanics then were served with grand jury subpoenas, 
     attorneys lined up by the airline were able to delay their 
     appearances by insisting on grants of immunity from 
     prosecution, which slowed the inquiry by months.
       The federal investigation widened after the Jan. 31 crash 
     of an Alaska Airlines jet in the Pacific Ocean that killed 
     all 88 people on board. But FBI agents were similarly impeded 
     from questioning ground mechanics, according to the Justice 
     Department.
       ``Those interviews that are most often successful--
     simultaneous interviews of numerous employees--could not 
     be conducted simply because of fear that an ethical rule . 
     . . might result in proceedings against the prosecutor,'' 
     said Sen. Patrick J. Leahy (D-Vt.), a Judiciary Committee 
     member who is trying to amend the law.
       Alaska Airlines insists it has cooperated with the FBI and 
     denies wrongdoing in its maintenance practices. No criminal 
     charges have been brought. The Federal Aviation 
     Administration recently said it had uncovered ``serious 
     breakdowns in record-keeping, documentation and quality 
     assurance'' but that the airline has devised an acceptable 
     plan to correct them.
       Leahy said the airline case is only one example of the 
     hurdles erected by the McDade law, which was sponsored by 
     Rep. John M. McDade (R-Pa.), who retired from the House last 
     year. McDade had been the target of an eight-year federal 
     investigation into allegations that he accepted $100,000 in 
     gifts and other items from defense contractors and lobbyists.
       Cleared by a jury after a 1996 trial, McDade maintained he 
     was the victim of an investigation run amok.
       His sponsorship of the Citizens Protection Act was 
     supported by both the American Bar Assn. and the National 
     Assn. of Criminal Defense Lawyers.
       It was approved by Congress without any hearings.
       Leahy, in a bipartisan effort with Sen. Orrin G. Hatch (R-
     Utah), the committee chairman, is trying to amend the McDade 
     law.
       Justice officials say the statute has made them ``reluctant 
     to authorize consensual monitoring''--a body mike worn by an 
     informant, for example--in California and other states for 
     fear that state ethics rules could be interpreted to prohibit 
     this conduct and lead to disciplinary action against 
     department prosecutors.
       The law also is making officials reluctant to speak with 
     corporate whistle-blowers without a company lawyer present.
       Hatch would add a provisio to McDade saying federal 
     prosecutors should follow state standards unless they are 
     inconsistent with traditional federal policy, a qualification 
     that would effectively gut the law. It is doubtful whether 
     Congress will amend McDade this year.
                                  ____


                 [From the Legal Times, June 26, 2000]

                    Ethics Law Hurts Probe, DOJ Says

                           (By Jim Oliphant)

       The Justice Department says its criminal probe of safety 
     problems at Alaska Airlines has been severely hampered by a 
     controversial federal ethics law enacted last year.
       In documents provided to a Senate committee, the department 
     says that a measure that forces federal prosecutors to adhere 
     to state ethics rules has stymied the long-running 
     investigation into the airline's safety and maintenance 
     practices.
       Seattle-based Alaska Airlines has been the target of a 
     federal grand jury in San Francisco since early 1999, when a 
     mechanic claimed that workers at the airline had falsified 
     repair records for Alaska passenger jets.
       Earlier this year, after Alaska Airlines Flight 261 plunged 
     into the Pacific Ocean, killing all aboard, the Justice 
     Department, along with the Federal Aviation Administration, 
     widened its inquiry into the company's safety operations.
       Department officials, as well as lawyers in the U.S. 
     attorney's office in San Francisco, declined to discuss the 
     grand jury's investigation, which has yet to produce a single 
     indictment.
       But in a report prepared for the Senate Judiciary 
     Committee, the DOJ says the grand jury's work was ``stalled 
     for many months'' because of the so-called McDade Amendment, 
     a law implemented last year that forces federal prosecutors 
     to follow state ethics codes.
       California, like most states, has an ethics provision that 
     prohibits lawyers from directly contacting a party who is 
     represented by counsel. The Justice Department claims that 
     lawyers for Alaska Airlines used the rule to prevent the 
     Federal Bureau of Investigation and other investigators from 
     speaking with mechanics and other airline employees.
       In the early stages of the Alaska investigation, the 
     department's report says, attempts by the FBI to seize 
     documents and interview workers at Alaska Airlines' hangar 
     facility in Oakland, Calif., were blocked by lawyers for the 
     company who ``interceded, claimed to represent all airline 
     personnel, and halted the interviews.''
       Because of the California ethics law, the report says, the 
     federal prosecutor was forced to end the interviews and 
     recall the agents.
       The report explains that prosecutors then attempted to 
     subpoena the workers to the grand jury. Again, the request 
     was met with a response by company lawyers, who lined up 
     attorneys separate from the company to represent each worker 
     before they testified before the grand jury.
       ``Because the attorney for each witness insisted on a grant 
     of immunity, and because of scheduling conflicts with the 
     various attorneys, the investigation was stalled for many 
     months,'' the report says. ``When the witnesses finally 
     appeared before the grand jury, they had trouble remembering 
     anything significant to the investigation.''
       The Justice Department report also mentions the Jan. 31 
     crash of Alaska Airlines Flight 261, which crashed into the 
     Pacific Ocean, killing 88 people aboard. The National 
     Transportation Safety Board's investigation has focused on 
     defects in the plane's jackscrew assembly and 
     horizontal stabilizer, which controls the up-and-down 
     movement of the aircraft.
       In the wake of the crash, the report says, the FBI received 
     information that the plane had experienced mechanical 
     problems on the first leg of its flight from Puerto Vallarta, 
     Mexico, to Seattle.
       But agents could not interview the airline's employees 
     after the crash because of the ethics law, the report says.
       ``Those interviews that are most often successful--
     simultaneous interviews of numerous employees--could not be 
     conducted because of fear that they might result in ethics 
     proceedings against the prosecutor,'' the report says.
       Alaska Airlines maintains that it has fully cooperated with 
     FBI and FAA investigators during the government's 
     investigation. It has denied any wrongdoing at its Oakland 
     facility. The company has retained Los Angeles' O'Melveny & 
     Myers to represent it in the criminal investigation.


                            Change of Policy

       For years, as a matter of Justice Department policy, 
     federal prosecutors were told that they didn't have to follow 
     state ethics rules--particularly ones related to bypassing 
     lawyers and contacting potential witnesses directly.
       The policy was intended to aid prosecutions of organized 
     crime in the 1980s and was first detailed in a memo by then-
     Attorney General Richard Thornburgh in 1989. The department's 
     rule was clarified under Janet Reno in 1994.
       In October 1998, Congress passed a law that made federal 
     prosecutors subject to state ethics codes. The law was named 
     for former Rep. Joseph McDade (R-Pa.), who was the subject of 
     an eight-year federal bribery investigation. McDade was 
     eventually acquitted.
       The law went into effect last year, over strenuous Justice 
     Department objections. Since then, the department hasn't 
     given up the fight to overturn it. And its efforts have 
     support in the Senate Judiciary Committee, where bills 
     offered by the committee's chairman, Sen. Orrin Hatch (R-
     Utah), and Sen. Patrick Leahy (D-Vt.) would establish 
     separate ethical proscriptions for prosecutors.
       The Hatch bill would repeal McDade. The Leahy bill would 
     specifically allow prosecutors to contact witnesses 
     regardless of whether they were represented by counsel. 
     Neither bill has made it out of the judiciary committee.
       ``This law has resulted in significant delays in important 
     criminal prosecutions, chilled the use of federally 
     authorized investigative techniques and posed multiple 
     hurdles for federal prosecutors,'' Leahy said on the floor of 
     the Senate last month.
       Both the American Bar Association and the National 
     Association for Criminal Defense Lawyers lobbied Congress 
     hard for the McDade law. Kevin Driscoll, a senior legislative 
     counsel for the ABA, said that his organization is reviewing 
     the Justice Department's complaints about the law's 
     implementation. But, he added, the ABA's support of McDade 
     has not changed.
       William Moffitt, a D.C. criminal defense lawyer who is 
     president of the NACDL, says that the Justice Department is 
     ``looking for reasons to complain'' about McDade.
       ``They don't have the unfettered ability to intimidate and 
     they don't like that,'' Moffitt said. ``People ought to be 
     able to go to the general counsel (of a corporation) if they 
     are subpoenaed and they ought to be able to be told to get a 
     lawyer.''
       Few details of the grand jury's investigation of Alaska 
     Airlines have come to light. The airline says that it has 
     received three subpoenas for information related to 12 
     specific aircraft. In a filing with the Securities and 
     Exchange Commission last month, the airline's parent company, 
     Alaska Air Group Inc., said one subpoena asked for the repair 
     records for the MD-83 craft that crashed in January.
       Matt Jacobs, a spokesman for the U.S. attorney's office in 
     San Francisco, declined comment on the status of the 
     investigation, as did the press office for Justice Department 
     in Washington.
       The FAA conducted a separate probe of the Alaska Airline's 
     maintenance procedures and proposed a $44,000 fine, which the 
     airline is contesting. The agency recently threatened to shut 
     down the airline's repair facilities in Oakland and Seattle 
     if it did not provide a sound plan for improving its safety 
     protocols.

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