Justice fell off the track...again

Who is at fault...the judicial system and/or lawyers?

"Not guilty, but stuck with big bills, damaged career"

by

Kevin McCoy and Brad Heath

September 28th, 2010

USA TODAY

A judge had a warning for the Justice Department lawyers who accused Army Lt. Col. Robert Morris of conspiring to steal military supplies: The case could be "ill-advised." A nearly two-year Army probe had cleared him. And another U.S. attorney's office had declined to prosecute.

The cost of fighting federal charges could "take the guy's life savings away," the judge added.

Prosecutors went ahead, anyway. The judge's prediction was right — a jury needed only 45 minutes to find Morris not guilty. By then, though, his career had derailed. His parents had mortgaged their home to help with $250,000 in legal bills. He had drained his own savings.

The government he had served in uniform for decades could have compensated Morris for some of the losses. A 1997 law requires the Justice Department to repay the legal bills of defendants who win their cases and prove that federal prosecutors committed misconduct or other transgressions.

But Morris didn't get anything from Washington. It took a gift from a Texas billionaire to help the Morris family pay off part of the debts.

The law, known as the Hyde Amendment, was intended to deter misconduct and compensate people who are harmed when federal prosecutors cross the line. A USA TODAY investigation found the law has left innocent people like Morris coping not only with ruined careers and reputations but with heavy legal costs. And it hasn't stopped federal prosecutors from committing misconduct or pursuing legally questionable cases.

USA TODAY documented 201 cases in the years since the law's passage in which federal judges found that Justice Department prosecutors violated laws or ethics rules. Although those represent a tiny fraction of the tens of thousands of federal criminal cases filed each year, the problems were so grave that judges dismissed indictments, reversed convictions or rebuked prosecutors for misconduct. Yet USA TODAY found only 13 cases in which the government paid anything toward defendants' legal bills. Most people never seek compensation. Most who do end up emptyhanded.

The Hyde Amendment did nothing for Morris, whose claim was dismissed by a judge who nonetheless criticized prosecutors and said they had "lost sight of the objective — justice."

It did nothing for Daniel Chapman, a lawyer who lost his job and had to sell his house to pay $275,000 in legal bills fighting a securities fraud case a judge threw out for "flagrant" prosecutorial misconduct.

And it did nothing for Michael Zomber, an antiques dealer who spent two years in prison and paid more than $1 million in attorney fees before his fraud conviction was thrown out.

The Justice Department, which fought the Hyde Amendment from the day it was proposed, nearly always resists efforts to win compensation, no matter how egregious a prosecutor's conduct might have been. Defense lawyers contend that the scarcity of compensation wins, amid a rise in misconduct charges, shows the law's not working.

"The Hyde Amendment is practically a useless tool for dealing with prosecutorial misconduct," said Jon May, a Miami lawyer who co-chairs the National Association of Criminal Defense Lawyers' white-collar crime committee. For a defendant to win, "the standard is so high that a prosecutor practically has to know" in advance "that his case is so meritless that it is unlikely to get a conviction."

USA TODAY found the government is seldom forced to pay because:

• Many defendants don't apply. The wealthy and those so poor they had court-appointed lawyers don't qualify. Others hold back because they'd have to spend time and money in court and pursue a new civil action against the government after winning their criminal cases. The investigation identified just 92 Hyde Amendment compensation cases since the law's enactment.

• Some defendants are pressured by federal prosecutors to give up their right to seek repayment in exchange for lenient plea bargains or getting their cases thrown out.

• Even those who seek compensation face what an appeals court called the "daunting obstacle" of proving, sometimes in another trial, that prosecutors wronged them. Congress deliberately set a high legal standard to qualify for payment: To win, a defendant must prove a prosecution had been "vexatious, frivolous or in bad faith." But the House and the Senate never held committee hearings that could have defined that standard.

An anonymous tip

The case against Morris began in 1999 with an anonymous tip to a Department of Defense hot line. The caller said the infantry officer had diverted $7 million of surplus medical equipment from a Marine Corps base in Albany, Ga., just south of his own post at Fort Benning.

Morris, now 54, was a decorated combat veteran and logistics expert. Superiors often had praised his ability to work his way through complex military supply rules and get the job done. He played a role, for example, in ex-Panamanian dictator Manuel Noriega's 1990 surrender to U.S. troops. When commanders decided to use deafening music to force Noriega out of the Vatican Embassy in Panama City, Morris quickly found and set up a sound system.

Morris' defense team said the medical supplies were intended to help a charity he had founded open health clinics in Rwanda. The non-profit, Partners International Foundation, had been approved by Army brass and had never paid Morris.

The Army's Criminal Investigation Division and the Defense Logistics Agency probed the charges and gave a report to Army Maj. Gen. John Le Moyne, the Fort Benning commander. Le Moyne issued a February 2001 decision that cleared Morris, finding that he didn't violate military law, hadn't lied and didn't misappropriate government property. "There was no theft," the decision stated.

Dissatisfied, the Defense Logistics Agency took its findings to the U.S. attorney's office in Columbus, Ga., which declined to prosecute. The agency then turned to the U.S. attorney's office in Dallas. In March 2001, a grand jury there indicted Morris on a theft conspiracy charge.

U.S. District Court Judge Joe Kendall in Dallas voiced doubts about the case. He said it looked as if investigators had shopped it to prosecutors in several jurisdictions. Getting a guilty verdict from a Texas jury could be hard, he warned, and prosecuting Morris could be a mistake. The prosecutors went forward, and Kendall granted a defense motion to transfer the case to Georgia for trial.

Le Moyne also tried to head off the August 2002 trial. He reminded prosecutors the Army had exhaustively investigated Morris. In a letter to an Army officer panel, Le Moyne said he had met with the prosecutor, Assistant U.S. Attorney Candina Heath, and told her "she would lose … and be embarrassed in the process." In a separate memo sent to prosecutors before trial, Le Moyne wrote that Morris had made an "error in judgment" that "did not rise to the level of a criminal offense." It concluded: "Bob Morris is not a crook!"

During a nearly two-week trial, the prosecution called 38 witnesses. The defense called none. The jury acquitted Morris in 45 minutes, a "lightning fast" verdict that U.S. District Court Judge Clay Land tied to the government's "woefully inadequate presentation."

The Dallas U.S. attorney's office and Heath declined to comment.

Legal bills from Morris' criminal case totaled $250,000.He said he faced at least $40,000 more in related expenses — and had exhausted his savings and life insurance benefits during the earlier Army investigation. So Morris' parents took two new mortgages on their Connecticut home, and also cashed life insurance policies, to help pay the lawyers.

Morris filed a Hyde Amendment application. Despite Judge Land's criticism of the prosecution, he dismissed the case in 2003. The decision to prosecute hadn't been totally baseless, he ruled, because Morris' logistics skill and signs that he'd skirted military rules provided "sufficient circumstantial evidence" to infer "criminal intent."

The judge did not rule that the prosecutors committed misconduct. For that reason, USA TODAY did not include the Morris case among 201 misconduct cases the newspaper found in an extensive search of federal court records since 1997.

The prosecutors, Land wrote, "will likely lick their wounds and fully recover. Because of the strict requirements for recovering fees and expenses, Lt. Col. Morris, an innocent (and now financially poorer) man, may not."

The case put a three-year hold on Morris' previously approved promotion to colonel. He got the promotion after the trial, but his military career plateaued and he ultimately retired Aug. 31. The case didn't leave him destitute, but there seemed little hope of repaying his parents anytime soon.

Then Texas billionaire and former presidential candidate H. Ross Perot and his charitable foundation stepped in. Grants totaling $210,000 to Morris and his father arrived in 2003 after the court denied Morris' compensation claim, the foundation's tax filings show. The organization, which often requires beneficiaries to sign confidentiality pacts, declined to comment.

Morris said the money helped his parents pay off their mortgages. It did not, though, cover thousands in other debts related to the investigations and trial. His widowed mother, Lillian, 86, is his dependent; he took over paying most of her bills.

Said Jack Zimmerman, a Houston lawyer who represented Morris: "If Congress really intended to compensate innocent people who were put upon by the government, they've got to revisit the Hyde Amendment standard. … Any court is loath to penalize the government … if it's a judgment call."

A compromise in Congress

Illinois Rep. Henry Hyde spoke bluntly when he rose on the House floor and introduced the law that bears his name. "This simply says to Uncle Sam, 'Look, if you are going to sue somebody … and the verdict is not guilty, then the prosecution pays something toward the attorney's fees of the victim,' " Hyde said on Sept. 24, 1997.

As proposed, the legislation would have required the Justice Department to pay legal fees to vindicated defendants unless the government proved the prosecution had been "substantially justified." That provoked a veto threat from the Clinton White House.

Then-deputy attorney general Eric Holder, the Justice Department's leader, said defendants such as John Gotti, the mobster who beat the rap at his first trials, might get "big taxpayer checks."

Asa Hutchinson, a former House member from Arkansas who led the opposition, said critics feared the law could have a "chilling effect," making prosecutors shy away from worthwhile but difficult cases.

Hyde compromised. He agreed to require defendants to prove they had been wrongly charged. And to win, they would have to show not just that they were innocent, but that prosecutors had acted vexatiously, frivolously or in bad faith.

Congress approved the measure, which Hyde had attached to an appropriations bill, without defining those terms. As a result, federal trial and appeals courts in different parts of the country have issued conflicting and often confusing rules about when the Justice Department must pay.

A U.S. district court in Virginia in 1999 ruled the standard for vexatiousness should be whether a "reasonable prosecutor should have concluded" that evidence was "insufficient to prove the defendants' guilt beyond a reasonable doubt."

The U.S. Court of Appeals for the 9th Circuit in San Francisco explicitly rejected the standard used in Virginia. It adopted a two-step rule: To win, a defendant must prove that the case was "deficient or without merit" and the prosecutor "acted maliciously or with an intent to harass."

The U.S. Court of Appeals for the 11th Circuit in Atlanta used different language. It said defendants must show a prosecutor's "state of mind (was) affirmatively operating with furtive design or ill will."

The U.S. Supreme Court, which often resolves conflicting lower-court rulings, has not yet accepted any Hyde Amendment cases.

The legal threshold is so high that Joseph McKay, a Montana lawyer who won nearly $17,000 in a 1999 Hyde Amendment repayment, says the legal standard has become "un-meetable" since his win.

Law not a deterrent

Hyde Amendment awards are so infrequent and so small that the law "hasn't been a major remedy for bad prosecutions," said Bennett Gershman, a Pace Law School professor who examined the misconduct cases USA TODAY identified. "It's a very minuscule deterrent" to prosecutors.

Even courts that have ruled that prosecutors violated defendants' constitutional rights find their hands tied. That's what happened when the government brought securities fraud charges against Las Vegas lawyer Daniel Chapman. The case collapsed in 2006 because prosecutors failed to turn over more than 650 pages of records his lawyers could have used to discredit prosecution witnesses.

A series of judges berated prosecutors for violating Chapman's rights. U.S. District Judge James Mahan, who presided over the trial, said it was "not some slight oversight, but it strikes at the very heart of the government's obligation." He said prosecutors had offered no proof that Chapman broke the law and then dismissed the case.

An appeals court was even tougher, ruling that prosecutors had committed "misconduct in its highest form" and "conduct in flagrant disregard of the United States Constitution."

Chapman, now 57, has spent four years seeking repayment of his legal bills. That effort has so far failed, because the Hyde Amendment only allows payment to a "prevailing party." Courts ruled the dismissal Chapman won didn't qualify because it didn't decide his innocence or guilt.

He's now pursuing another long-shot appeal. Chapman said his continued battle is about vindication and discouraging government misconduct as much as a desire for repayment. Without a strong deterrent, Chapman said, federal prosecutors will "do this over and over again."

Defendants who win Hyde cases also say they doubt that repayment awards have any impact on the Justice Department.

Ali Shaygan, a Miami doctor, was charged in 2008 with 141 counts of illegally administering prescription drugs. Acquitted in 2009, he sought Hyde Amendment payment because the government had engaged in what the trial judge called "win-at-all-costs" conduct. Shaygan won compensation of $601,795; the government is appealing.

Even if he wins again on appeal, Shaygan said the money would amount to "a drop in the bucket" that wouldn't change prosecutors' "habits."

Payments in all the winning Hyde Amendment cases ranged from $8,722 to nearly $1.5 million, USA TODAY found, less than some of the defendants' total legal costs. The 13-year payout total was just under $5.3 million.

A bargaining chip

Michael Zomber already had served his two-year sentence when prosecutors agreed to throw out his conviction stemming from a 2003 conspiracy indictment. There was just one catch: He had to give up give up his right to seek government repayment of his $1 million legal bills.

Before agreeing to a dismissal, federal prosecutors used Zomber's right to seek government repayment as a bargaining chip.

A federal jury in Pennsylvania had convicted Zomber of conspiracy to commit mail and wire fraud for the sale of four antique Colt pistols to businessman Joseph Murphy. Prosecutors said the weapons were worth half of what Murphy paid for them, and that Zomber lied to increase the price.

Zomber, now 60, spent almost two years in a federal prison camp before the U.S. Court of Appeals for the 3rd Circuit threw out his conviction. It found that the prosecutor, Robert Goldman, had failed to give Zomber's defense the letters Murphy wrote to Microsoft Chairman Bill Gates offering to resell the pistols "at cost" — the same price Murphy paid.

Goldman said he did nothing wrong and warned USA TODAY that he would have any article about Zomber's case "reviewed by counsel for potential litigation." He said he regrets only that Zomber's conviction was overturned because of "an insignificant document." But the Appeals Court ruled the letters could have given jurors "reasonable doubt" about whether Zomber overcharged Murphy.

The court's decision meant Zomber faced the prospect of another costly trial. He was unlikely to go back to prison. But he could have been ordered to pay $1 million or more in restitution.

Instead, defense lawyer Gerald Lefcourt reached a deal in which prosecutors ended the case.

"They weren't going to consider dismissing" it "unless we agreed not to pursue a Hyde Amendment application," he said. Lefcourt, Hutchinson and other lawyers say prosecutors now automatically include such waivers in many plea agreements.

Zomber said he had little choice but to go along with the agreement, because prosecutors are "always going to make you sign a Hyde Amendment" waiver. Battling for repayment, he said, was "just not worth it."