Judge drops Hubbell charge Tax-evasion case called a result of 'fishing expedition'

Starr says he'll appeal

Decision is latest in series of setbacks for special prosecutor

July 02, 1998|By Susan Baer and Lyle Denniston | Susan Baer and Lyle Denniston,SUN NATIONAL STAFF

WASHINGTON -- Denouncing Kenneth W. Starr's tactics, a federal judge dismissed a tax-evasion case yesterday against Webster L. Hubbell, a former top Justice Department official and Clinton confidant, and accused the Whitewater independent counsel of engaging in a "fishing expedition."

In a sharply worded ruling -- which Starr immediately said he would appeal -- U.S. District Judge James Robertson said the tax charges "had nothing in common" with Starr's original mandate to investigate Hubbell. Robertson also rebuked Starr, saying he had failed to obtain proper authority to expand his investigation before prosecuting Hubbell on the tax charges.

What's more, the judge said, Starr violated Hubbell's constitutional rights by building the case on 13,120 pages of records that had been produced by Hubbell under a grant of immunity from prosecution.

The dismissed charges could have put renewed pressure on Hubbell to reach a plea bargain with Starr, thus turning Hubbell into a potential witness against President Clinton, the first lady or their associates in the Whitewater land deal.

But beyond its legal damage, the judge's decision yesterday represents a major public relations blow for the independent counsel. The ruling gave ammunition to critics who have accused Starr of being an overzealous prosecutor veering out of control.

Hubbell provided the documents in late 1996 as Starr was investigating whether Clinton allies sought to buy Hubbell's silence on Whitewater-related matters with a steady stream of consulting fees for which Hubbell did little or no work. The fees were paid to Hubbell after he resigned as associate attorney general in 1994.

"Mr. Hubbell's compelled production of documents allowed the independent counsel to build a case against Mr. Hubbell different in all material respects from the case for which they had been subpoenaed," Robertson wrote. "Mr. Hubbell was thereby turned into the primary informant against himself."

The decision by Robertson, who was appointed to the federal bench by Clinton, also means that all charges brought by Starr against Hubbell's wife, Suzanna, his accountant and his tax lawyer will also be dropped.

Outside his home in Washington, Hubbell, a longtime Clinton friend and golfing buddy who served 18 months in federal prison after pleading guilty to bilking his former clients and the Rose law firm, said he was "excited" and "grateful" for the judge's decision. Hillary Rodham Clinton was a partner in the Rose firm.

"The last five years have been very difficult," he said, his wife at his side. "We're very happy and very grateful. We didn't expect anything this quick."

"Hopefully, this is finally over," Suzanna Hubbell said.

"We believe the judge's written decision speaks for itself," said James Kennedy, a White House spokesman.

Starr said in a statement that his court filings and arguments "reveal our respectful disagreement with the judge's decision." The prosecutor asserted that Robertson's conclusions differed from two other district court rulings in Washington.

The judge's opinion comes on the heels of several recent legal setbacks for the independent counsel. The Supreme Court decided last week that a lawyer for Vincent W. Foster Jr. did not have to turn over notes of conversations he had with Foster shortly before the deputy White House counsel killed himself.

Also last week, Susan McDougal, a former Clinton business partner who has refused to testify before Starr's grand jury, was freed from prison for health problems. And recently, the Supreme Court refused to speed up a review of legal matters pending in the Monica Lewinsky matter.

Hubbell has been under investigation by Starr from the start of the prosecutor's 4-year-old investigation into the Whitewater land deal. Upon pleading guilty in December 1994 to two felony counts for stealing nearly $400,000 from his former clients and law partners, Hubbell promised to cooperate with Starr's investigation in return for a lighter sentence.

But while serving 18 months in prison, he offered little information to Starr. Suspecting that Hubbell had been paid consulting fees by Clinton associates to keep mum about Whitewater-related events, Starr subpoenaed a vast array of Hubbell's personal and business papers in late 1996. After Hubbell resisted the demand, Starr persuaded a federal judge in Little Rock, Ark., to grant Hubbell immunity from prosecution in exchange for the documents.

Late last year, 14 months after Starr had subpoenaed the records, the prosecutor obtained from the special court additional power to investigate Hubbell -- mainly, Starr said later, on possible obstruction-of-justice charges, but also on possible tax-evasion charges.

Based on those documents, Starr persuaded a grand jury to indict Hubbell on April 30. Hubbell was charged with failing to pay more than $850,000 in taxes and penalties over the past four years on income that came from the consulting fees.

In his sweeping 36-page ruling, Judge Robertson said the immunity promise to Hubbell covered whatever evidence Starr found in "The subpoena served on Mr. Hubbell was the quintessential fishing expedition," the judge wrote. "The independent counsel freely admits that he was not investigating tax-related charges when he issued it."

Robertson also sharply criticized the special court that names independent counsels and that chose Starr, ruling that that court did not have authority to expand Starr's earlier inquiry by adding a new tax investigation.

The ruling also raised the question of whether any other federal prosecutor could mount a tax-evasion case against Hubbell, if Starr does not regain through an appeal the power to prosecute the case himself.

Pub Date: 7/02/98

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