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March Rich Pardon: Attorney Jack Quinn Testifies Before Senate Judiciary CommitteeAired February 14, 2001 - 12:21 p.m. ET
THIS IS A RUSH TRANSCRIPT. THIS COPY MAY NOT BE IN ITS FINAL FORM AND MAY BE UPDATED.
DARYN KAGAN, CNN ANCHOR: And we go back live now to the Senate Judiciary Committee hearing testimony surrounding the last-minute pardon of financier Marc Rich. Currently testifying before the committee is Professor Christopher Schroeder from Duke University Law School.
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PROF. CHRISTOPHER SCHROEDER, DUKE UNIVERSITY LAW SCHOOL: The examples they used are probably not apposite any longer. The idea that a pardon given to a participant in a treason conspiracy before he or she had been tried might enable us to honoreth the other accomplices and suppress the treasonist plot in an expeditious manner may not be applicable today, but that is still a value that would be lost with the recommendation to subject a pardon to 180-day review. And you can think of circumstances, even today, where that might matter.
It would have mattered, I think, in the Preston King case, where in the interest of humanitarian concerns, the pardon was granted when it was, in significant part, in order to allow Mr. King to come to the country in a timely manner to attend his brother's funeral. And you can imagine circumstances that we hope will never arise in which we do have some difficulties with some foreign power and we have the potential of getting information from a spy, say, and we haven't tried him or her yet, and yet it's felt in the interest of the nation that we might be able to extract that information in return for a conditional pardon.
Well, how often will those circumstances occur? Who knows? It really is impossible to say.
I've got two background principles with which I approach any question of amending the Constitution, though, that also, for me, tilt the scale further in the direction of inaction at this time. One, Mr. Chairman, you've mentioned it, that we ought to be very careful before we amend the Constitution. It's only been done, as others have noted, 17 times since the first Congress. And the stability of that document is one of the virtues of it and one of our national assets, and we just ought to be very careful before we do it.
And the corollary to that to me is we ought to make sure before we amend the Constitution that we've exhausted nonconstitutional means to at least round off some of the rough edges that we might see in a situation. It might not be a perfect substitute for an amendment, but there are some legislative proposals, such as some version of S. 2042 that was introduced and voted on in committee in the last Congress, that would add some more transparency to the process and I think there may be some other ideas, some of which I mentioned in my testimony, that the Congress could constitutionally take, that would fall short of amending the document.
Any kind of review provision is inevitably going to be most successful in grabbing and preventing unpopular pardons -- perhaps, with the two-thirds provision, only highly unpopular pardons. But the difficulty is, as Professor Gromley has noted, in our history there have been good unpopular pardons and there have been bad unpopular pardons. It's just that we can't tell them at the time. We're consumed by a passionate moment, as in the case of the Nixon pardon. I think in retrospect that one has borne up fairly well. I was also, myself, personally -- I will express a personal opinion -- opposed to President Bush's pardon of Defense Secretary Weinberger and the other five, and I've come to look a lot more kindly on that pardon as time has gone on and as I've come to understand in more detail the way the independent counsel statute works, among other things.
And so that's the cost you pay. The question then for you is whether the cost is worth it for the benefit you would gain in preventing a future Marc Rich.
And I think that the prospects of this kind of event, a last-hour pardon that has a lot of questionable features to it, is one that is relatively if not highly unlikely to occur in the future. And I say that not wanting myself to express any definitive opinion about the Rich pardon, because I don't yet know all the facts either. There's certainly a lot of interest in learning more of those facts.
But those are my considerations and why, in my written remarks, I recommend against a constitutional amendment, and I look forward to answering any questions you may have.
SEN. ARLEN SPECTER (R), PENNSYLVANIA: Thank you very much, Professor Schroeder.
Mr. Quinn, you were not here when we started the panel and since you may be in part a fact witness, I'd like you to stand and take the oath.
JACK QUINN, ATTORNEY FOR MARC RICH: Certainly.
SPECTER: Do you, Jack Quinn, solemnly swear that the testimony you will give before this committee, the Judiciary of the United States Senate, will be the truth, the whole truth and nothing but the truth, so help you God?
QUINN: I do.
SPECTER: Mr. Quinn, we are taking a look at the pardons of Mr. Rich and Mr. Green as illustrative for looking forward as to what action might be taken in the future. You have already testified as to the facts before the House Committee, and we're interested in a focus on what we might look to the future. But the seven minutes are yours, so we're interested in hearing whatever you have to say.
QUINN: Appreciate it, Senator.
Senator Specter, distinguished members of the committee, I appreciate this opportunity to provide information about the pardon of Marc Rich.
Can you hear me well enough?
QUINN: I am well-aware that all of you have already have expressed your disapproval of this pardon. I don't expect to be able to change your mind about that today. But before the hearing is adjourned, I hope that all of you will know that I presented a case on the legal merits, I pursued my client's vigorously and ethically, and that I believe this pardon was based on the legal and diplomatic considerations presented to the president.
My principal mission, upon being retained in this matter in the spring of 1999, was to help bring resolution to the indictment against Mr. Rich at the Justice Department. During an intensive period of review that lasted for several months, I learned that the Rich indictment grew out of a patchwork of energy regulations enacted in the Carter administration and repealed on President Reagan's first day in office. Those regulations attempted to limit the price of oil, but, as a result of their many exceptions, they created powerful incentives from major U.S. oil companies to try to avoid these price caps.
One way to do so involved linking price-controlled domestic oil transactions with nonprice-controlled foreign transactions in dealings with international oil resellers. U.S. oil producers structured transactions that provided additional profits on foreign transactions to compensate them for their inability to maximize profits on regulated domestic transactions. My client facilitated this and profited from these linkages. The complex resulting transactions are central to Mr. Rich's indictment. For reasons I can explain, it is critical that you keep in mind the linked nature of these transactions, because it is the failure to see this linkage that led to a mistaken view of the tax charges that are the heart of Mr. Rich's indictment.
The indictment against Mr. Rich was unique for two very important reasons: First, prosecutors used the Racketeer Influenced and Corrupt Organizations Act, RICO, when they indicted Mr. Rich. It was one of the first times they had done so in a case not involving organized crime.
Ignoring what I believe was clear congressional intent, the New York prosecutor used the RICO sledgehammer to attack Mr. Rich for what amounted to what he thought was no more than a regulatory dispute.
In 1989, as you know, the Department of Justice changed its guidelines for the use of RICO statutes, essentially prohibiting its use in tax cases like this one. It did so on the heels of widespread criticism of the use of RICO in cases like this. I've cited several examples of this criticism in my testimony, but just as an example, on the pages of the Wall Street Journal, which repeatedly recognized that the U.S. Attorney's Office in New York was misusing RICO, and it cited the Marc Rich case as a prominent example of that abuse.
In 1989, Yale-trained lawyer and weekly columnist Gordon Crovitz wrote, and I quote, "It's worth taking a second look at Mr. Giuliani's first big RICO case. This was the much-celebrated 1984 case against Marc Rich, the wealthy oil trader. A close reading of the allegations shows that these effectively reduce to tax charges. The core of the case is that Mr. Rich wrongly attributed domestic income to a foreign subsidiary. Again, this sounds like a standard civil tax case, not RICO."
Unfortunately, by the time the Department of Justice had finally reined in its tactics, the Southern District prosecutors had used RICO and its asset forfeiture provisions to coerce Mr. Rich's companies into a $200 million guilty plea just to survive. And Mr. Rich had been labeled a racketeer and fugitive for not returning from his headquarters in Switzerland to be subjected to what he believed would be, rightly or wrongly, would be an unfair and prejudicial racketeering trial. Indeed, once his companies had been forced to plead guilty by the use of the RICO statute, Mr. Rich believed, again, rightly or wrongly, that he stood virtually defenseless as an individual to similar criminal charges.
The second unique aspect of this case was that although the prosecutors were still trying to subject Mr. Rich to criminal penalties, the major U.S. oil companies that had structured the very transactions at issue in the indictment were themselves pursued only civilly. In fact, when the United States Department of Energy independently examined transactions involving one of Mr. Rich's major trading partners, ARCO, it concluded that ARCO had improperly failed to account for the linked domestic and foreign transactions and thereby had violated the excess pricing-profits regulations; yet, DOE pursued ARCO only on a civil basis for violations of the regulations. The Southern District of New York never indicted any of the U.S. oil companies that structured these transactions.
I want to emphasize this point: The same Department of Energy recognized that the Marc Rich companies had correctly taken into account the linked nature of the transactions on their books. Despite this, the prosecutors attacked the same transactions in their indictment against Mr. Rich. They took the position directly contrary to the DOE regulators, that the domestic and foreign transactions should not be considered linked for U.S. tax and energy purposes. So DOE used the administrative process to collect hundreds of millions of dollars in civil penalties from ARCO, while the Southern District criminalized the conduct of Mr. Rich based on an exactly contradictory analysis of the same facts.
This was not just my conclusion. Two of the most preeminent tax authorities in the nation, Professors Bernard Wolfman of Harvard and Martin Ginsburg of Georgetown, analyzed the transactions at issue and concluded that the Marc Rich subsidiary correctly reported its income from those transactions.
So in October 1999, I turned to a man with whom I had worked in the past and for whom I have immense respect, then-Deputy Attorney General Eric Holder. I first met with Mr. Holder about the Rich case in late October 1999. I met with him to provide him with an overview of the flaws in the outstanding indictment against Mr. Rich. This conversation and other contacts with Mr. Holder are reflected in the documents I provided to the committee.
According to my notes of a November 8, 1999, telephone conversation with Mr. Holder, several weeks after our first meeting, he told me that he and other senior DOJ officials thought that the refusal of the Southern District to meet with Mr. Rich's attorneys was ill-considered and, in fact, in his word, ridiculous.
At Mr. Holder's suggestion, I wrote to Mary Jo White, the U.S. attorney for the Southern District of New York on December 1, 1999, asking that her office reexamine the charges against Mr. Rich. I was denied even a meeting. This left us at an intractable impasse. And so eventually I sought a pardon.
I know you say, "He was a fugitive. How could you do that?" As a general rule, I don't disagree that pardons should not be granted to alleged fugitives, but there have been exceptions for unique circumstances. Mr. Rich is certainly not the first person who has been pardoned despite his alleged fugitivity. As you heard earlier, Presidents Wilson, Truman and Carter pardoned all of the draft evaders of their eras, despite their fugitivity. Mr. Holder himself advocated a pardon granted to a fugitive who had received prejudicial treatment because of his race.
I argued my case, though certainly dissimilar from those, as another reasonable exception, because I thought our legal arguments were compelling and because the government's now admitted misuse of RICO had created the very situation, Mr. Rich's absence, that the government cited in refusing to discuss the merits of the case.
As Senator DeWine earlier recited, I personally notified Mr. Holder in his office on November 21, 2000, that I would be sending a pardon application directly to the White House. I told him then that I hoped to encourage the White House to seek his views. He said that I should do so, and I did later encourage the White House to seek his views.
At no time did I attempt to circumvent the Justice Department or prevent its views from being taken into account. In fact, I hoped the consultation with Mr. Holder by the White House would help me make my case for Mr. Rich, because I believed Mr. Holder was familiar with the charges and with our arguments as to the flaws in the indictment. And more importantly, at a minimum, I knew that he realized we were at an impasse, because the U.S. Attorney's Office would not discuss the matter or consider our arguments.
On December 11, I delivered a two-inch thick pardon application to the White House, more than five weeks before the pardon was granted on January 20. While the application was under consideration, I wrote to Mr. Holder on January 10 and asked him to weigh in at the White House with his views. I sent that letter to him hoping for his support, having been informed that his views would be considered important. I had that letter sent by messenger to the Department of Justice while I was out of town, though I now understand there were problems with its arrival at Justice and that it was routed to and received by the pardon attorney on January 18.
The point here, though, is that I wanted the Department of Justice and Mr. Holder involved, because I understood their views would be considered important.
Still later, as you know, I called Mr. Holder on the evening of January 19, and I told him that Mr. Rich's pardon was receiving serious consideration at the White House, and that I understood he would, in fact, be contacted before a decision was made. It is now my understanding, from Mr. Holder himself, from then-White House counsel Beth Nolan, and from former-President Clinton, that Mr. Holder was indeed consulted and that he expressed a view. I am further told by Ms. Nolan that the position he expressed was important to the ultimate decision to grant the pardon.
This was not he first pardon granted upon application directly to the White House rather than through the pardon attorney. And it most certainly did not exclude the Department of Justice. In filing the petition, I included the views of the prosecutors in the form of the responses I and other counsel had received from the Southern District for a meeting and, most particularly, in the form of the original indictment of Mr. Rich, itself. And again, I encouraged the White House Counsel's Office on, I believe, more than one occasion to seek the views of Mr. Holder and the department.
The pardon petition was filed directly with the White House because I knew from personal experience, as a former White House counsel, that that is not an uncommon practice. And I knew that this application did not fit within the four corners of the regulations you've discussed earlier governing how the pardon attorney handles pardon applications. As the Washington Post has reported, previous administrations, in their closing days, have considered pardons directly at the White House that have not gone through the customary Justice Department screening process. In fact, the Los Angeles Times reported last week that 46 other pardon petitions were submitted directly to the White House in a similar fashion this very year.
I see the light is on, Senator, do you want me to refrain from the...
SPECTER: No, you may finish your statement, Mr. Quinn.
QUINN: Thank you, Senator.
Lastly, let me address the involvement of Denise Rich and Beth Dozoretz. Yes, both were involved. Their involvement was emphatically not, in my view, determinative or even central to my efforts. I based my efforts on the legal case I made, as well as on the support of the government of Israel, not on the false presumption that any personal or political relationship with President Clinton would result in a favorable outcome. Denise Rich is the ex-wife of my client, and she wanted President Clinton to grant her ex-husband and the father of her children this pardon. I encouraged her and her daughters to write letters to President Clinton because, as in any pardon application, it was appropriate that the president hear from family members. I know that she urged the president to consider this case carefully on two or more occasions. But, and I want to emphasize, I never suggested that she talk to the president about anything extraneous to the pardon itself. Indeed, I did not know at the time about the reported contributions or pledges that she has made to the Clinton library, nor did I know at the time about the extent of her fund-raising activity for the Democratic Party, nor did I know that she may have given personal gifts to the former president.
As for the involvement of Beth Dozoretz, Beth has been a good friend of mine for several years. She is also a close friend of Denise Rich, and she is a good friend of President Clinton. I knew that she speaks with the former president with some frequency, and so I was sure she would know of my efforts, and no doubt inquire about the status of our application. That was not unwelcome to me. I believed she might provide me with a sense of our progress or lack of progress.
As a lawyer, I wanted information from as many sources as I could get about where my petition stood at the White House so that, if necessary, I could refocus my efforts and my arguments to achieve the desired result for my client. And so, I spoke to Ms. Dozoretz over the Thanksgiving weekend and told her that I would be filing a pardon petition on behalf of Marc Rich. I encouraged her to help me be sure that the president himself was aware of the fact that the application had been filed with the White House Counsel's Office. She did just that, and reported back to me, at some point, in essence, that President Clinton had said I should make my case to Bruce Lindsey and other counsel in the White House Counsel's Office.
Weeks later, Ms. Dozoretz talked to the president again. What I understand her to have reported then, is that the president was impressed with the legal arguments I had made. But was doing due diligence with lawyers in the White House so that he understood all the arguments for and against the pardon.
Again, I would like to emphasize this point: The notion that the president was going to be convinced to grant this pardon because of support for it from Beth Dozoretz or Denise Rich, rather than because of the case we made on the law and the important support of world leaders like Prime Minister Ehud Barak of Israel, is, in my view, just untrue.
I want to add that as with Ms. Rich, I never asked Ms. Dozoretz to talk to the president about this in a fund-raising capacity. On the contrary, from my very first conversation, I emphasized to Ms. Dozoretz that this case could and must be made on the merits. She did not have to be convinced of that.
As far as I am concerned, the most conclusive evidence that the president granted this pardon on the merits was the telephone conversation I had with him on the night of Friday, January 19. In that conversation, I could tell that President Clinton had obviously read and studied the pardon petition. He grasped the essence of my argument about this case being one that should have been handled civilly, not criminally, and he discussed with me whether the passage of time would permit statute of limitations defenses in such a civil proceeding.
I told him that I would happily give him a letter waiving those defenses, and he insisted that I provide one to him within an hour. These comments, I believe, reflect the state of mind of a president who was searching to make a decision based on fairness and equity. You may disagree with him and me. You may believe he made a terrible mistake. But I tell you today that nothing, absolutely nothing, in my conversations with him remotely suggested to me that he was thinking about or motivated by his friendships, his politics or his library. Everything I saw in my dealings with the president suggested to me that President Clinton based his decision on his judgment of the merits and, I believe, on the strong support for the pardon from Prime Minister Barak.
Thank you, Mr. Chairman.
SPECTER: Thank you, Mr. Quinn.
Mr. Quinn, we're looking to the future, and the merits look very thin to me, but the appearance of impropriety is overwhelming. What could be done when you have someone in your position, former White House counsel, very close to the president -- you have a conversation with him on January 19, the day before he is to leave office, which was very rare time, considering what he had to do, and to call that special access would be a vast understatement. And then you consult with Ms. Beth Dozoretz for, as you say, the purpose of finding out what had happened; but it is an obvious inference that there's an interest in having her weigh in as an official of the Democratic National Committee. Then the pardon attorney is not consulted. The pardon falls outside the parameters of the Department of Justice regulations which the president ignores and has a constitutional right to ignore. And on an inquiry from the pardon attorney, a few hours before the president is to leave office -- about 11 hours before he's to leave office -- the pardon attorney is told that Mr. Rich and Mr. Green are living abroad. That drew quite a murmur from the people who were listening to that.
Now, looking beyond Marc Rich, what can be done to see to it that the very powerful, who have the president's ear, like Jack Quinn and Beth Dozoretz, are counterbalanced at least by having somebody in the White House know something more than Marc Rich is living abroad, so that you have the opportunity for a just decision, to say nothing about the opportunity for the appearance of propriety at the highest level of our government?
QUINN: There was an awful lot embedded in that question, and I'd like to try to deal...
SPECTER: Well, not nearly as much as in your testimony, Mr. Quinn.
QUINN: ... deal with as much of it as I can.
As I've said, Senator, I do believe the pardon was granted on the merits.
I don't disagree with you that one of the unfortunate aspects of this is that this and other decisions were not gotten around to until very, very late, to say the least...
SPECTER: Mr. Quinn, well, I understand that you believe it was granted on the merits, and you're the attorney for the petitioner, though you also said you think it was the right decision. Whether it was granted on the merits is in the mind of President Clinton.
When you say it was the right decision, you're about the only person who thinks so. It's hard to find a senator from the other side of the aisle to stand. I don't think it's hard, pardon me; it's not possible to find a senator from the Democratic side of the aisle. And the headlines are that the Democrats are deserting the president over it. And then you have the appearance question.
So what I'd like for you to direct your attention to, in the few minutes we have, is what can we do for the future?
QUINN: Well, I do have a thought about that, Senator. In retrospect, I suppose if I had to make a recommendation for you as to how this should be handled in the future, I think that the current and future presidents should adopt by executive order some process that would be sufficiently transparent, and ensure the input of as many people as possible and appropriate, that their decisions on matters like this would not be subject to criticism, because of the appearances that you've discussed.
SPECTER: If the president adopts an executive order, is he bound to follow it? Executive orders are fine for the whole government. The president's the executive. He can impose an order that people have to follow, but does the president have to follow an executive order or could he technically rescind an executive order and do as he pleases? Or in one act of violating the executive order, both may be implied. QUINN: Yes, you're quite right, a president could, theoretically, at least, repeal the executive order that governed his process and then choose to ignore the process. But the reason I suggest that as the appropriate vehicle for doing it is that I think there are serious constitutional problems with the notion of doing it legislatively through statute.
What's wrong with former Senator Mondale's idea, Mr. Quinn?
QUINN: As a former White House counsel, I've spent an awful lot of time defending the prerogatives and the powers of the presidency and the office of the presidency. I would worry that this process would become imbued with politics. And that the cure...
SPECTER: The current process is not imbued with politics?
QUINN: Well, I think, in general it is not.
SPECTER: How about here?
QUINN: I'm sorry?
SPECTER: How about this case? In general, it is not. How about this case?
QUINN: I don't disagree with you that there have been appearance problems here that require people like myself to offer an explanation as to...
SPECTER: My red light just went on, but you may finish your answer, Mr. Quinn.
QUINN: ... as to the case we made. But it is certainly not my impression that the pardon process is inherently or even occasionally a political process.
SPECTER: Senator Feinstein?
SEN. DIANNE FEINSTEIN (D), CALIFORNIA: Thanks very much, Mr. Chairman.
Mr. Quinn, you're obviously a very smart man, a very good lawyer.
QUINN: Thank you, Senator.
FEINSTEIN: I listened to your opening statement and you made a couple of points. And then I looked back to your exhibit B where you say the communications with Justice, I counted at least eight different occasions where you had made contact with Justice.
So that's one point.
The second point was, when you went over the merit of the case, let me read what I think happened, and you correct me as I go along, interrupt me where this is wrong.
At the time, federal law limited the price a seller of crude oil could charge, and this amount varied depending on how the oil was classified, and the oil classifications vary according to the history or the level of production of the well from which the oil came. One way to make illegal profits at the time was to buy crude oil at a classification that had a low maximum price, illegally alter that classification, and then sell it at a higher maximum price. To avoid getting caught, a buyer would often arrange for the oil to be repeatedly bought and sold through a series of oil resellers called a daisy chain, thus effectively disguising the change in classifications through a blizzard of paperwork.
Now, as I understand it, the prosecutors allege that Rich and Green and their companies engaged in a number of daisy chain oil transactions, reaping illegal profits on millions of barrels of crude oil. In carrying out this scheme, they allegedly prepared numerous false invoices and other documents and that there was more than one set of books. Ultimately, the scheme netted Rich and Green over $100 million in illegal profits. The prosecutors allege then that the scheme violated both the federal energy law and the RICO statute.
Once Rich and Green had made their illegal profits, they moved this money off-shore to hide it from the IRS. Not surprisingly, they filed false tax returns omitting this income. Hence, the tax evasion charges.
Finally, while Americans were being held hostage in Tehran, Rich and Green illegally bought millions of barrels of crude oil from Iran. They then took a number of steps to disguise these purchases, including using a secret code. In '84, their companies pled guilty to those charges, as I understand it. However, Rich and Green fled the country, ending up in Switzerland, and prosecutors attempted to extradite them, but Switzerland, of course, refused to hand them over.
Now, does this accurately set the charges?
QUINN: It accurately reflects the allegations that were made, but there are answers at each point. And, frankly, the attachments to our pardon application, including the arguments we made to the Southern District in my letter in 1999, as well as the presentation made by Mr. Urgenson several years earlier, address each and every one of those allegations. The tier trading or daisy chains, as you call them, were not themselves illegal.
What, in essence, was going on here was that companies like ARCO structured transactions that would enable them to them, by way of example, a barrel of domestic oil for which they could only charge $10, move it to a reseller, who, as you say, in turn, would transfer it. And in the course of doing that, end up getting $30 for that barrel of oil. That set of transactions was permissible under these complex regulations. But if you think about this, what's going on is that ARCO has allowed somebody to take a barrel of oil that they could only get $10 for and end up getting $30 for it. Well, ARCO and the other major oil companies didn't want to do that. So Rich helped them...
FEINSTEIN: Are you saying this was common practice at the time for major oil companies?
QUINN: I'm saying that ARCO and other major oil companies engaged in these activities with the effect of ending up getting more for a foreign barrel of oil than it was worth. And when you average the two, instead of getting $10 for that barrel of oil, they were, in effect, getting $27.50.
The Department of Energy went after ARCO for doing that, and said, "You are misleading us about these domestic transactions in your failure to link them to the foreign transactions." The Department of Energy went after ARCO for hundreds of millions of dollars and won, and, in the course of doing that, concluded that Rich in his accounting had properly linked the foreign and domestic transactions, and that ARCO had not.
Now, by the way, I alluded very quickly to the analysis undertaken by Professors Wolfman and Ginsburg. And all of the allegations that you recited were before the tax professors when they did their analysis.
FEINSTEIN: I'm told there are two sets of books, and that those professors were only given one set of the books. Is that correct?
QUINN: I do not believe that is the case. I believe the tax professors knew that the Southern District claimed there was a duplicate or second set of phony books. But our response to that is that there was not a second set of books; there was a ledger by which Rich and people like ARCO were keeping track of the money they needed to get back for making these underpriced domestic trades.
FEINSTEIN: Are you saying that Mr. Rich essentially did the same thing that ARCO did, except that ARCO got away with it at the time, and he did not? So his companies plea guilty?
QUINN: Senator, I'm not only saying they did the same thing, the transactions, as I understand it, were structured by the oil companies, not by Rich. Rich facilitated them. The guilty plea, frankly -- you're familiar with the Draconian asset forfeiture provisions of RICO. What Marc Rich would say to you is that they entered into that corporate guilty plea as the only thing they could do to keep the company. Because had they not done that, under the forfeiture provisions, they could have lost the entire company and all of its assets.
FEINSTEIN: Let me ask this question. You have asserted that as part of your deal with President Clinton, Rich waived all statute of limitation defenses. In theory, the government then could still pursue Rich in civil court. The president has also offered this argument in defense of the pardon. However, my understanding is, that since Rich's companies paid all the back taxes, Rich may owe nothing and the statute of limitation waiver becomes irrelevant. Do you agree that this waiver is irrelevant? QUINN: No, I do not, Senator. And I think, frankly, that that analysis mixes up the tax and the energy regulatory regimes that could apply here.
SPECTER: Do you have many more questions, Senator Feinstein?
FEINSTEIN: I didn't realize my light went on. I apologize, Mr. Chairman.
QUINN: What I'd like to do, Senator, is just cite to you a section of the U.S. Code, 15 U.S.C. 754, sub-384 -- I'm happy to provide you with a copy of it today -- which I believe would provide the basis for at least an argument by the Department of Energy that Mr. Rich and Mr. Green could be held to account civilly for the transactions that you and I discussed a few minutes ago. I hasten to add that they would, of course, defend themselves on the merits in any such civil action, but they have agreed to subject themselves to such a proceeding.
FEINSTEIN: Thank you.
Thank you, Mr. Chairman.
SPECTER: Thank you, Senator Feinstein. Senator DeWine?
SEN. MIKE DEWINE (R), OHIO: Thank you, Mr. Chairman.
Mr. Quinn, you're obviously a good lawyer, a strong advocate, doing what you should be doing, as far as presenting your case today. Let me look at some of your written testimony and ask you a question about it. You say, put simply, the indictment against Mr. Rich was flawed, not just in my view, but also in the views later expressed by two departments in the United States government.
The case was built on a perception of the transaction, later directly contradicted by the Department of Energy. It was inappropriately ratcheted up into a RICO case in a manner the Department of Justice later acknowledged was inappropriate.
Now, unfortunately, we don't have the prosecutor here, we don't have the Justice Department here, we don't have anybody to give the counterargument for that today. But you're not inferring or stating that Justice Department today thinks this was a bad case or that they shouldn't have brought the case or that they think it's a flawed case. And that's not the position, is it?
QUINN: Senator, if the prosecutors were here, they'd tell you I'm full of beans. They feel very different about this than I feel about it. They feel differently than the reputable and good attorneys who I joined on this defense team feel about it.
I, as you indicated, made a case as an advocate on the merits. I think it as a solid case. I think that each element of the indictment can be attacked. I do believe that if one considers that RICO really was, at least in the minds of Rich and Green, kind of, the straw that broke the camel's back here. And look, we can disagree with whether or not that justified the actions they engaged in. And, of course, as you know, I was not their attorney at the time that they choose not to return to the United States. And I hope I can honestly say to you that I would have encouraged them to do so at that time and stand trial.
But RICO really was a sledgehammer here. And it was subject to the kind of criticism I recited from opinion pages in any number of good publications, like the Wall Street Journal and the New York Times. And it was what they thought would prevent them from getting a fair trial. And the Department of Justice itself, then in 1989, acknowledged that RICO shouldn't be used in cases like this.
On the second point, I think it really is pretty remarkable that you had the prosecutors in the Southern District arguing a tax case on the basis of an analysis of the transactions that was 180 degrees different from the analysis of the same transactions by the very regulatory department charged with enforcing these price control regulations. So I don't think it's unfair to say that the government was really of two minds here. And that has to call in question some of the core charges that were laid down here.
DEWINE: Mr. Quinn, thank you. Mr. Chairman, thank you.
SPECTER: Thank you very much, Senator DeWine.
SEN. JEFF SESSIONS (R), ALABAMA: Thank you very much.
You indicated that the goal was to bring resolution to the indictment, Mr. Quinn, and I think that wasn't the goal. The goal was to get the charges dismissed. The way you normally bring a resolution to indictment is you come forward and face the charges.
Mr. Rich was indeed that very rich, billionaire level of wealth. He was obviously arrogant. And he determined that he was going to try to buy his way out of this deal, it seems to me, and not face the music like every other poor person that gets hauled before a court. Would you comment on that?
QUINN: Yes, Senator. Certainly, when I undertook his representation and communicated with main Justice and with the Southern District, it was my hope and my aim to persuade them to drop the charges.
SESSIONS: Let me pursue that a minute. Was there a predecessor counsel to you on this matter?
QUINN: Yes, sir.
SESSIONS: And they had been negotiating with the United States Attorney's Office in Southern District of New York for quite a number of years, had they not, off and on?
QUINN: No, sir. In point of fact...
SESSIONS: There had been no discussions about Mr. Rich appearing and answering the charges?
QUINN: I want to be careful here because I'm under oath. It is my impression that, since at least the mid-'80s, the U.S. Attorney's Office in New York would not sit down and discuss the merits of the case. There was a conversation when Mister -- and now Judge Obermier (ph) was in the U.S. Attorney's Office. But, as I understand it, he indicated in the course of that conversation that he would not agree to devote the resources of the office to review the merits of the case without preconditions the clients thought were impossible to agree to.
But at least since the late '80s or 1990, and in particular, Senator, since the analysis by the tax professors, it has been the view of the attorneys who preceded me on this matter that the U.S. attorney's office would not give anything approaching a thoroughgoing review of that tax opinion.
SESSIONS: They were taking the view I think that most United States attorneys' offices take, that you don't negotiate with a fugitive. They have to... QUINN: Well, you're quite right.
SESSIONS: ... submit themselves to the authority of the court before you enter into a negotiation.
QUINN: You're quite right. And, Senator, may I just...
SESSIONS: You mentioned that this tax charges, but the RICO had to have been founded on false claims or false statements or mail fraud, was it not? Was it mail fraud charges or wire fraud that formed the basis for the RICO case?
QUINN: Yes, sir. And can I address? But can I also just back up one...
SESSIONS: Well, I know what you're saying. You're saying it was fraud -- it involved tax. But it also would have to be a fraud...
QUINN: No, that's not right.
SESSIONS: ... or they couldn't have charged it as a mail fraud; isn't that right?
QUINN: The Supreme Court, in the McNally case -- the later McNally case, in effect, disallowed the fraud charge that was the RICO predicate. You're quite right...
SESSIONS: So you think under McNally that these charges would have been invalid?
QUINN: Yes, sir.
SESSIONS: Why didn't you come in and then you were home free? Why didn't you come in and move to dismiss?
QUINN: Well, they couldn't in and make a motion to dismiss because they weren't within the jurisdiction of the court. So they were in this catch-22. And with respect to...
SESSIONS: No, I mean, they had a decision to make: either come in, submit themselves to the court and file a motion to dismiss...
SESSIONS: ... the RICO charges.
SESSIONS: Wouldn't that have been the proper thing for them to do?
QUINN: It certainly would have been an alternative. But they were unwilling to come back, and they were...
SESSIONS: That is right. They were unwilling.
SESSIONS: They didn't want to do what everybody else has to do. They wanted to beat the system...
SESSIONS: ... another way.
QUINN: May I add one other point to that, this fugitivity? Because you're quite right that the Southern District took the position that it would not have discussions with fugitives or absent persons.
And I'd be happy to send to you a document that was prepared for me and for Mr. Libby which reports on a series of plea bargains with domestic and international fugitives by various U.S. attorney's offices.
SESSIONS: Well, I know you could do that.
QUINN: I'm happy to submit it...
SESSIONS: ... they took the position they didn't want to do that.
Could you have approached the chief of the Criminal Division and asked for an independent review of the RICO charges and gotten a high official in the department that wasn't a part of the prosecution team?
QUINN: Well, as a matter of fact...
SESSIONS: Did you ever think about asking for that?
QUINN: I think, in effect, we did, sir.
SESSIONS: No, did you formally ask for that? And did you have a review by anyone in the Department of Justice occur?
QUINN: Yes, I think we did. When I communicated with Mr. Holder in 1999, I provided to him materials that outlined all the arguments we made against the indictment, and we copied Mr. Robinson (ph) in the Criminal Division, and the head of the Tax Division on those arguments.
SESSIONS: After the Southern District, did you ask them to overrule the opinion of the United States attorney in Manhattan?
QUINN: In effect, I sure did after...
SESSIONS: Did they do so?
QUINN: No, they did not.
SESSIONS: That would have been a proper avenue, I think, if you are unhappy with the charge of United States attorney. And isn't it true that the attorney general could, in fact, remove the United States attorney if they failed to comply with a decision of the attorney general?
QUINN: Of course. But all I'm saying to you, Senator, is that I believe we availed ourselves of that avenue with no success.
SESSIONS: But this is President Clinton's Department of Justice.
QUINN: I understand that.
SESSIONS: They worked for him. So you're saying that President Clinton couldn't get the Department of Justice to even review the case for criminal appropriateness, and so he's going to up and grant a pardon about a complex matter of which I submit he knew very little law. He may have known the politics, but he didn't know the law. Why wouldn't that have been the appropriate action for the president if he was troubled by a prosecution, to say, "I want a chief of the Criminal Division"?
SPECTER: Do you have many more questions, Senator Sessions?
SESSIONS: Yes, but my time is out.
SPECTER: Well, finish this one.
SESSIONS: So why wouldn't that have been the appropriate thing, rather than just ripping out the legitimacy of the pardon?
QUINN: Senator, it would have been an alternative, but it's not one I asked him to take.
SESSIONS: I would suggest that had that happened you wouldn't have received the opinion you wished.
SPECTER: Thank you, Senator Sessions.
Professor Gormley, you say that the pardon of President Nixon didn't look too good in 1974, but it looks pretty good 27 years later. Do you think the pardon of Marc Rich will look pretty good in 2028?
PROF. GORMLEY, DUQUESNE UNIVERSITY SCHOOL OF LAW: I don't, Senator Specter. And my point is that I think the danger in tinkering with the Constitution isn't the Marc Rich cases that I think are always going to be, as I referred to, the, you know, the bad pennies. One can question them. There are a number of instances in history.
LOU WATERS, CNN ANCHOR: The Senate Judiciary Committee joining with the Senate Government Reform Committee and Sen. Dan Burton in continuing to investigation the Clinton pardons in the final hours of his presidency. I'm Lou Waters. Natalie Allen's at my side, once again. But this is a different kind of a day. It's all questions and answers from Washington today.
NATALIE ALLEN, CNN ANCHOR: And we will be continuing to follow it has these hearings march on. We'll take a quick break and resume our coverage in just a moment.
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