The Department touted the $2 million fine as the highest in history. But in its more candid moments, it acknowledged that the fine was actually "insignificant," and that it was only a small fraction of the profit Hutton obtained from its illegal conduct.

It sought to support the plea bargain by citing deficiencies in the mail and wire fraud statutes-deficiencies that did not actually exist. It failed completely to justify its failure to use RICO, which would have provided not only a significant substantive cause of action, but also appropriate penalties and remedies for both the Government and Hutton's victims.

According to the Department, the plea bargain had merit because it sent a message to the cash management community about acceptable conduct. If any message was sent to the cash management community, it was one of confusion, a message to which the Department's statements contributed significantly. At no time did the prosecution clearly articulate its case and the facts behind that case. The field was left too much to Hutton to characterize its conduct. No wonder "[m]ost public comment on the results in the case has been based on a serious misunderstanding of the unusual factual and legal setting of the case. . . ." 1

The Department has, in prosecuting other cases, shown great tenacity and willingness to ignore cost considerations and significant adverse odds. Yet in Hutton, the prosecutors seemed overwhelmed by the fact that discovery would be time-consuming, that the defendants might move for severance, that the case would be complex, and that it might take months to try.

There are two equally compelling interpretations of the Department's backfilling and ex post facto justifications for the plea bargain in Hutton. One is that it regards white collar crime cases as second priority, that it does treat corporate criminals more favorably than other criminals. A second interpretation is that the Department simply cannot handle complex, time consuming cases because it lacks adequate resources.

The evidence in the Hutton investigation clearly points in both directions. The Subcommittee cannot reach definitive conclusions about the Department's general attitude toward white collar crime cases this early in its series of hearings. It can, however, reach some definitive conclusions about the handling of the Hutton case. This was a case of prosecutorial errors and misjudgments, lack of foresight before the fact and defensiveness after the fact.

There is no doubt that Albert Murray and his team of postal inspectors worked tirelessly for over three years on this case. Given the complexity of the case and the vast numbers of documents it engendered, it is to their credit that the case did not sink into oblivion. It is to their credit that the case was prosecuted criminally, rather than left to the civil arena.

Yet the result was hardly worth the energy expended. The Hutton plea contributed to a decrease in public confidence in the fairness of the criminal justice system-a pervasive feeling that defendants with enough money and resources can "buy" their way out of trouble.

'Trott Senate testimony.

It is an immutable premise of our criminal justice system that no one-individual and corporation alike-should be charged with a crime simply because it is politically expedient or because there will otherwise be a public outcry. This Government may charge a crime only when it believes there is sufficient evidence to do so, and when justice would not dictate otherwise. But justice is a two way street. When there is sufficient evidence, and when the public interest in prosecuting the case is great, justice is served only by a vigorous and relentless prosecution. It is no excuse to say that the case was risky, that it might have been lost, that the defendants would only have received probation anyway. It is the task of our prosecutors to present the case fairly and impartially and for the jury to decide the difficult issues. In this sense, the plea bargain did not serve the public interest.

CONGRESSIONAL OVERSIGHT

Congressional oversight is a basic component of the efficient, fair, and proper administration of the Government. The Committee on the Judiciary is charged with oversight over the Department of Justice and, within that jurisdiction, there are at least four legiti mate avenues of inquiry, all of which are applicable to the Hutton case. First, are the laws being administered according to the purposes for which they were enacted? Second, are the laws adequate to carry out the desired public purpose? Third, are the prosecutors' decisions soundly based in the law and its precedents? Or have they been made for inappropriate reasons? And fourth, did the prosecutors adequately do their job? Or did they commit any improprieties?

To equate congressional oversight with "second-guessing" Executive Branch decisions is to misconstrue the purpose and Constitutional significance of oversight. It is to claim that the Executive Branch should be free of any restrictions on, or review of, its activities. This claim must fail.

In general, the Department appears to resent the oversight process and has sought, whenever possible, to limit its cooperation with such investigations. In particular, in the Hutton investigation, that lack of cooperation was demonstrated by the Department's failure to produce documents, its initial refusal to testify formally except under its own preferred rules, and its intransigence in providing informal assistance by all of the lawyers who worked on the case. Ultimately, this lack of cooperation forced the Subcommittee to subpoena the necessary documents from the Department, and to abandon efforts to obtain informal interviews with two key prosecutors.

The lawsuit that the Department attempted, but failed, to institute is but one example of how the Department forced the oversight investigation into an adversarial, rather than a cooperative, proceeding. Other examples, discussed in detail above, include the refusal of Messrs. Ogren and Clark to be interviewed, the incomplete production of documents pursuant to request and then subpoena, and the refusal to provide any accounting of the materials it failed to produce.

Underlying all of these tactics is the Department's interpretation of Rule 6(e) of the Federal Rules of Criminal Procedure. Increasingly, as claims of executive privilege have been rejected, the Department has substituted assertions of Rule 6(e) as a means to obstruct and stall Congressional oversight investigations.

There is no doubt that Rule 6(e) has important and salutary aims. The secrecy of the grand jury and the protection of innocent individuals from public reprobation underly the Constitutional presumption of innocence. The Committee on the Judiciary, which has jurisdiction over such matters generally, and over Rule 6(e) in particular, is uniquely sensitive to these matters.

These important and salutary aims have been perverted by the Department in an effort to evade Congressional oversight. Its Rule 6(e) claims in the Hutton oversight investigation were so overbroad as to render them completely without merit, and were used to delay and refuse production of relevant evidence. As both the Subcommittee, and ultimately the court, made clear to the Department time and time again, Rule 6(e) was completely inapplicable to the Subcommittee's request because it never asked for and never sought grand jury material. In its obstructionist tactics, the Department chose to ignore judicial precedent, the facts, and the plain language of the Rule.

The Department's assertion that it was "between a rock and a hard place" because of competing concerns over compliance with the Subcommittee's subpoena and the dictates of Rule 6(e) 2 was thus nothing more than an attempt to circumvent the statutory procedures relating to Congressional contempt. The Department well knows those procedures and well knows that ex parte motions seeking advisory opinions have been consistently rejected by the courts.

Fortunately, none of these impediments prevented the Subcommittee from conducting its oversight investigation. The information provided by Hutton, the banks, regulatory and other agencies, and the Department itself has, in the end, been sufficient to permit the Subcommittee to reach documented conclusions about the Department's handling of the case.

The Department did succeed, however, in delaying the investigation and in diverting the attention of the Subcommittee from its essential purpose. As the Department knows, Congressional investigations are limited by the immediate and constant need for the Members to attend to a variety of other legislative matters of national importance and, often, by the time limits within which a particular Congress meets.

If the Department had any hopes of delaying this investigation to such an extent that the Subcommittee would simply "give up and go home," it could not have been more wrong. The results here were the same as in the other cases where the Department's stalling tactics were rebuffed by the courts. Now, as then, Congressional oversight was only delayed, not denied. However, the Department is walking a thin line between delay and contempt. If the Department continues to pursue this course, ultimately there will be

2 Department Memorandum at 1.

an inevitable result: an increase in Congressional subpoenas of the Department, and an increase in the risk of a Constitutional confrontation between the Executive and Legislative Branches. Only time will tell whether the Department will change its course of action, and begin to cooperate.

APPENDIX

STAFF ANALYSIS OF "THE HUTTON REPORT" BY GRIFFIN BELL-FEBRUARY 1986 Part I: Highlights of Bell Report Weaknesses, State Actions, and Pearce Suit. Part II: Analysis of "The Hutton Report".

HIGHLIGHTS OF BELL REPORT WEAKNESSES, STATE ACTIONS, AND PEARCE SUIT

The Bell Report:

Lack of support for conclusions: A consistent problem throughout the Bell report is his failure to provide details in support of his assertions, so that the reader can verify them.

"Harm to banks exaggerated": Bell asserts that estimates of restitution due, and thus harm to, the banks are exaggerated and that most of Hutton's banks were satisfied customers. He includes within this category of "satisfied" banks those that discovered the overdrafting and that demanded compensation. Obviously, our investigation shows that most of these banks were not satisfied and, in fact, many of them threatened to close Hutton's account if the ovedrafting was not stopped. Bell says there were only a few banks that did not discover Hutton's activities, which we also dispute. Bell bases his claim that restitution estimates have been exaggerated on the small number of banks that applied for it by the deadline. He ignores the fact that many banks feel applying for restitution is futile, too time-consuming or expensive, and that many banks have already extracted compensation for their losses outside the restitution program.

Justification for chains: Bell claims that much of the chaining was "justifiable," in that it served the "legitimate" purposes of convenience and improving availability of funds. Presumably, Bell even considered chains set up to create float to be justifiable if one of these other purposes was also present.

Number of chains: DOJ indicated there were as many as 50 chains. Bell purports to investigate only 25, and makes conclusions about only 15. He does not disclose what happened to the other 10, or why he did not investigate the other 25. Using Bell's own appendices to the report, we identified 123 branches involved in a chain; in the report, however, Bell has apparently ignored his own appendices and explained the involvement of only 56.

Plea to certain counts a mistake: Even though Hutton pleaded guilty to many counts involving the First National Bank of Louisville, Bell asserts that no fraud occurred because the bank was aware of Hutton's activities. In our conversations with the bank, it became clear that the bank discovered the overdrafting, demanded that it stop, and was promised that it would. After several months of unfulfilled promises, the bank threatened to close the account.

The Louisville branch manager asked the bank to write a letter to Bell, which Bell contends shows that the bank knew about and in essence consented to the activities. In fact, the letter only says that the bank knew about the activities, not that it consented. In context, the letter is extremely misleading. The branch manager suggested the letter's language to the bank; bank officials have told us that they would have been more complete if they had understood the context in which it was to be used.

Conflicting witness statements: In a number of instances, Bell cites conflicts between statements of various Hutton employees, but either makes no attempt to resolve those conflicts, or resolves them without any explanation of how he reached his conclusions. Often, those resolutions are in favor of the higher level employee. Bell recommends sanctions against some of the branch and regional employees; ultimately, he must have concluded that the higher level employes who the branch and regional officers claimed approved their activities, but who denied it, were to be believed.

Thoroughness of investigation: Robert Fomon instructed Bell to take as much time as necessary to complete the investigation. Subsequently, however, Bell cut corners