[Congressional Record (Bound Edition), Volume 146 (2000), Part 13] [Senate] [Pages 18120-18122] [From the U.S. 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 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 [[Page 18121]] 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. 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 [[Page 18122]] 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. ____________________