Notice: This opinion is subject to formal revision before publication in the
Federal Reporter or U.S.App.D.C. Reports. Users are requested to notify
the Clerk of any formal errors in order that corrections may be made
before the bound volumes go to press.
United States Court of Appeals
FOR THE DISTRICT OF COLUMBIA CIRCUIT
Filed January 23, 2004
Division No. 94-1
IN RE: MADISON GUARANTY SAVINGS & LOAN
(SCAIFE FEE APPLICATION)
Division for the Purpose of
Appointing Independent Counsels
Ethics in Government Act of 1978, As Amended
–————
Before: SENTELLE, Presiding, FAY and REAVLEY, Senior
Circuit Judges.
ORDER
This matter coming to be heard and being heard before the
Special Division of the Court upon the application of Richard
Mellon Scaife for reimbursement of attorneys’ fees and costs
pursuant to section 593(f) of the Ethics in Government Act of
1978, as amended, 28 U.S.C. § 591 et seq. (2000), and it
appearing to the court for the reasons set forth more fully in
the opinion filed contemporaneously herewith that the peti-
tion is not well taken, it is hereby
ORDERED, ADJUDGED, and DECREED that the peti-
tion of Richard Mellon Scaife for attorneys’ fees that he
2
incurred during the investigation by Independent Counsel be
denied.
PER CURIAM
For the Court:
Mark J. Langer, Clerk
By:
Marilyn R. Sargent
Chief Deputy Clerk
Notice: This opinion is subject to formal revision before publication in the
Federal Reporter or U.S.App.D.C. Reports. Users are requested to notify
the Clerk of any formal errors in order that corrections may be made
before the bound volumes go to press.
United States Court of Appeals
FOR THE DISTRICT OF COLUMBIA CIRCUIT
Filed January 23, 2004
Division No. 94-1
IN RE: MADISON GUARANTY SAVINGS & LOAN
(SCAIFE FEE APPLICATION)
Division for the Purpose of
Appointing Independent Counsels
Ethics in Government Act of 1978, As Amended
–————
Before: SENTELLE, Presiding, FAY and REAVLEY, Senior
Circuit Judges.
ON APPLICATION FOR ATTORNEYS’ FEES
Opinion for the Special Court filed PER CURIAM.
PER CURIAM: Richard Mellon Scaife petitions this court
under Section 593(f) of the Ethics in Government Act of 1978,
as amended, 28 U.S.C. § 591 et seq. (2000) (the ‘‘Act’’), for
reimbursement of attorneys’ fees in the amount of $80,904.96
that he incurred during, and as a result of, the investigation
conducted by independent counsel. Because we conclude that
Scaife has not carried his burden of showing that he was a
‘‘subject’’ of the investigation or that the fees would not have
been incurred ‘‘but for’’ the requirements of the Act, we deny
the petition in its entirety.
2
Background
In the mid–1980’s, Jim and Susan McDougal, along with
former President William Jefferson Clinton and Hillary Rod-
ham Clinton, were members of a Little Rock, Arkansas,
partnership known as the Whitewater Development Compa-
ny. At this time Jim McDougal was also the owner of a
Little Rock savings and loan, Madison Guaranty, and David
Hale was the owner of Capital Management Services, Inc.
(‘‘CMS’’), a Little Rock company regulated, and in large part
funded, by the Small Business Administration. Hale, the
McDougals, and former Arkansas Governor Jim Guy Tucker
apparently became involved in a fraudulent scheme involving
Madison Guaranty and CMS. The investigation was initially
conducted by the U.S. Attorney in Little Rock, but later
transferred to the DOJ’s criminal division. Robert B. Fiske,
Jr., after his appointment by the Attorney General (‘‘AG’’) in
January 1994 as regulatory independent counsel, took over
the investigation. In August 1994 this Court appointed Ken-
neth W. Starr as statutory independent counsel (hereinafter
‘‘IC’’ or ‘‘OIC’’) to investigate the Whitewater matter, and his
office assumed the investigation of the fraudulent Madison
Guaranty/CMS scheme. During the time period of these
various investigations, indictments and convictions were se-
cured with Hale’s cooperation against the McDougals and
Tucker for conspiracy and fraud involving Madison Guaranty
and CMS. Indictments and convictions were also secured
against Tucker for tax conspiracy and fraud involving CMS.
Thereafter, allegations arose that things of value had been
given to Hale to influence his testimony in these matters.
Specifically, it was alleged that a friend of Hale’s, Parker
Dozhier, had provided the things of value, and that FBI
agents guarding Hale had witnessed these transactions. Fur-
ther, it was alleged that Dozhier had received the funds to
give these things of value from Stephen Boynton, an attorney
who worked for American Spectator magazine, which was
investigating possible misconduct by the Clintons in Arkan-
sas. American Spectator, in turn, had received funds from
one or more of the foundations controlled by Richard Mellon
Scaife, the fee petitioner here. This situation led to public
3
statements and allegations of improprieties on the part of
Scaife by at least one member of Congress, John Conyers,
Jr., who at the same time questioned an alleged financial
relationship between Scaife and IC Starr. Conyers request-
ed an investigation of the matter by the Attorney General.
Conyers also sent a letter concerning the matter to Scaife.
Upon conferral between the AG and the IC, the IC estab-
lished an Office of Special Review (‘‘OSR’’) to investigate.
During the investigation, Scaife was subpoenaed to appear
before the grand jury. Ultimately, the OSR concluded that
many of the allegations regarding the tendering and receipt
of things of value were unsubstantiated or untrue, and recom-
mended that no prosecutions be brought.1 The findings and
conclusions of the OSR were accepted by the IC, and the
matter was closed.
Pursuant to section 593(f)(1) of the Act, Scaife now peti-
tions this court for reimbursement of the attorneys’ fees that
he incurred during the OSR investigation. He seeks reim-
bursement in the amount of $80,904.96.
Discussion
The Ethics in Government Act provides for reimbursement
of attorneys’ fees expended by subjects in defense against an
investigation under the Act. Specifically, 28 U.S.C.
§ 593(f)(1) states:
Upon the request of an individual who is the subject of
an investigation conducted by an independent counsel
pursuant to this chapter, the division of the court may, if
no indictment is brought against such individual pursuant
to that investigation, award reimbursement for those
reasonable attorneys’ fees incurred by that individual
during that investigation which would not have been
incurred but for the requirements of this chapter.
1The report of the OSR remains under seal. The factual infor-
mation contained in this opinion has previously been publicly re-
ported elsewhere.
4
Because the Act ‘‘constitutes a waiver of sovereign immuni-
ty it is to be strictly construed.’’ In re Nofziger, 925 F.2d
428, 438 (D.C. Cir., Spec. Div., 1991) (per curiam). Under the
Act, therefore, we can only order reimbursement for attor-
neys’ fees when we determine, inter alia, that the fee peti-
tioner was a ‘‘subject’’ of the independent counsel’s investiga-
tion and would not have incurred the attorneys’ fees ‘‘but for’’
the requirements of the Act. See, e.g., In re Pierce (Kisner
Fee Application), 178 F.3d 1356, 1358 (D.C. Cir., Spec. Div.,
1999) (per curiam). The petitioner ‘‘bears the burden of
establishing all elements of his entitlement.’’ In re North
(Reagan Fee Application), 94 F.3d 685, 690 (D.C. Cir., Spec.
Div., 1996) (per curiam). For the reasons stated below, we
find that Scaife has failed to establish the ‘‘subject’’ and ‘‘but
for’’ elements and is therefore not entitled to an attorneys’
fees award.
1. ‘‘Subject’’ Status
The statute by its terms provides reimbursement of fees
only to ‘‘an individual who is the subject of an investigation
conducted by an independent counsel.’’ 28 U.S.C. § 593(f)(1)
(emphasis added). Though the statute does not define ‘‘sub-
ject,’’ we have previously held that status as a ‘‘mere witness’’
is not sufficient to meet the elemental requirement of ‘‘sub-
ject’’ designation for purposes of the Act. In re North
(Dutton Fee Application, 11 F.3d 1075, 1078 (D.C. Cir., Spec.
Div., 1993) (per curiam). A fee applicant must establish that
he is a person whose conduct was within the scope of the
independent counsel’s investigation in the sense that ‘‘the
Independent Counsel might reasonably be expected to point
the finger of accusation’’ at him. Id. Otherwise put, he must
not merely have been a witness to the matters under investi-
gation, but a potential defendant of indictments that might
arise from that investigation. Although Scaife argues that he
‘‘easily meets’’ the Act’s requirement for being a subject of
the OIC/OSR investigation, we are not persuaded that the
OSR, or at any other time the OIC, was focused on any
possible criminal culpability by Scaife.
5
Scaife claims that the letter he received from Congressman
Conyers ‘‘suggest[ed] that he had directed money to a witness
to encourage or reward testimony adverse to President Clin-
ton and his allies.’’ He argues that from the time he received
that letter until the time he received notification from the
OSR office that no prosecution would be initiated against him,
he ‘‘understood that he was accused of directing foundation
donations into the pocket of a government witness in ex-
change for the witness’s favorable testimony.’’
The IC in her evaluation disputes Scaife’s claim, stating
that he ‘‘was not a principal focus of th[e] investigation, Hale,
Dozhier, and Boynton were.’’ With respect to Conyers’ let-
ter, the IC argues that at the time it was sent Scaife may
have been under investigation by Congress, but was not
under investigation by the IC. Furthermore, the IC asserts
that the documents sent to Scaife from the OIC/OSR ‘‘do not
name him as a target or subject of the investigation,’’ nor was
he ever so advised by any of the OIC/OSR attorneys. Rath-
er, according to the IC, the ‘‘documents he attaches to his
petition clearly indicate that the government considered him
to be a fact witness.’’
The DOJ in its evaluation defers to the IC as to Scaife’s
claim of ‘‘subject’’ status. But the DOJ does note, citing In re
North (Dutton Fee Application), 11 F.3d 1075, 1079 (D.C.
Cir., Spec. Div., 1993), that Conyers’ letter to Scaife, as well
as the grand jury’s investigation of Hale and its subpoena(s)
to Scaife, ‘‘are not, by themselves, sufficient to demonstrate
that Mr. Scaife was a subject of the investigation.’’
We agree with the IC and the DOJ that Scaife has not
carried his burden of establishing that he was in fact a
subject of the OIC/OSR investigation. As the IC points out,
the documents relied upon by Scaife show that he was only a
witness. Statements from his petition, as well as documents
attached thereto, establish that he received a subpoena, su-
perseded shortly thereafter by another, to testify before the
grand jury. The cover letter for the original subpoena was
from the OIC/OSR ‘‘Witness Coordinator’’ and states that the
Witness Coordinator should be contacted for Scaife’s entitle-
6
ment to a ‘‘witness fee’’ and that a ‘‘Fact Witness Voucher’’
should be executed. Letter from the OIC/OSR to H. Yale
Gutnick, August 14, 1998. Cf. In re North (Gardner Fee
Application), 30 F.3d 143, 146 (D.C. Cir., Spec. Div., 1994)
(per curiam) (‘‘the Independent Counsel issued a grand jury
subpoena designating [petitioner] as a subject’’).
Furthermore, the cover letter for the superseding subpoe-
na states that an interview of Scaife will be necessary before
his grand jury appearance. Letter from the OIC/OSR to
William L. Gardner and H. Yale Gutnick, August 26, 1998.
Other than this interview and his grand jury appearance,
there is no evidence presented of any other contact between
Scaife and the OIC/OSR. See In re Pierce (Sanders Fee
Application), 198 F.3d 899, 902 (D.C. Cir., Spec. Div., 1999)
(per curiam) (petitioner’s involvement with IC’s investigation
considered ‘‘minimal’’ in that he was served one subpoena for
documents and interviewed once three years later). There is
also no evidence that Scaife was ever informed that he was a
subject of the OIC/OSR investigation, either in writing, see,
e.g., In re North (Cave Fee Application), 57 F.3d 1117, 1120
(D.C. Cir., Spec. Div., 1995) (per curiam) (petitioner received
letter from OIC specifically advising him that his status was
that of subject), or otherwise, see, e.g., In re Segal (Sagawa
Fee Application), 151 F.3d 1085, 1088 (D.C. Cir., Spec. Div.,
1998) (per curiam) (IC did not contest petitioner’s claim that
she was ‘‘expressly informed’’ by his office that she was a
subject); In re North (Dwyer Fee Application), 120 F.3d 293,
296 (D.C. Cir., Spec. Div., 1997) (per curiam) (IC in his
evaluation stated that petitioner could have reasonably be-
lieved that he was a subject). In sum, it is apparent that
Scaife’s status was that of witness, and ‘‘status as a ‘mere
witness’ is not sufficient to meet the elemental requirement of
‘subject’ designation for purposes of the Act.’’ In re Pierce
(Abrams Fee Application), 190 F.3d 586, 590 (D.C. Cir., Spec.
Div., 1999) (per curiam).
2. Fees Not Incurred ‘‘But For’’ the Requirements of the
Act
We have in the past held that ‘‘[a]ll requests for attorneys’
fees under the Act must satisfy the ‘but for’ requirement of’’
7
the Act. In re Sealed Case, 890 F.2d 451, 452 (D.C. Cir.,
Spec. Div., 1989) (per curiam). On numerous occasions we
have also held that ‘‘the contemplation of the legislation is not
that subjects of independent counsel investigations will be
reimbursed for all legal fees, but only TTT for those legal fees
that would not have been incurred by a similarly-situated
subject investigated in the absence of the Act.’’ See In re
Madison Guaranty Savings & Loan (Clinton Fee Applica-
tion), 334 F.3d 1119, 1123 (D.C. Cir., Spec. Div., 2003).
Scaife claims that he satisfies the ‘‘but for’’ element of the
Act under two theories previously identified by this court: (1)
when the petitioning subject has been prejudiced by the
Department of Justice’s failure to comply with the substantial
protective features of the Act, see In re Meese, 907 F.2d 1192
(D.C. Cir., Spec. Div., 1990) (per curiam); and (2) when high
public officials or derivative subjects were investigated under
the Act in circumstances where private citizens would not
have been investigated, see In re Nofziger, 925 F.2d 428, 442
(D.C. Cir., Spec. Div., 1991) (per curiam).
Under theory (1), Scaife argues that Congressman Conyers
accused IC Starr of a lack of independence because of IC
Starr’s alleged financial ties to Scaife. Thus, when the AG
requested that IC Starr investigate the matter, ‘‘Mr. Starr
could not, in good conscience, decline to investigate Mr.
Scaife.’’ According to Scaife, IC Starr was thus deprived of
his prosecutorial discretion to dismiss matters granted to him
by section 594(g), which Scaife describes as ‘‘the most impor-
tant feature of the Act.’’ Scaife was thus ‘‘robbed of the
ability to have the independent counsel exercise its discretion
and dismiss the matter without formal investigation.’’
In furtherance of this argument, Scaife compares his situa-
tion favorably to that of the fee petitioner in In re Meese, 907
F.2d 1192 (D.C. Cir., Spec. Div., 1990) (per curiam). In that
case, the AG made a referral to the independent counsel
concerning Meese. According to Scaife, that referral ‘‘was
based upon speculation and conjecture’’ with ‘‘the Court
conclud[ing] that the referral should never have been
brought.’’ Scaife claims that his ‘‘situation is no different
8
than Meese’s’’ because ‘‘[t]here was never, at any time, any
evidence linking him to any payoffs of David Hale.’’ Quoting
from Meese, he states that his referral arose only from a
‘‘ ‘generalized suspicion based on associations of a personal
and personal business nature.’ ’’ Id. at 1200.
Under theory (2), Scaife claims that there was no evidence
to establish a level of guilt between him and Hale, see U.S. v.
Sun–Diamond Growers, 526 U.S. 398 (1999), and further
makes reference to the ‘‘ridiculousness of attributing Boyn-
ton’s conduct to Mr. Scaife, and then attributing to Mr. Scaife
a culpable state of mind.’’ In this light, Scaife argues that:
(1) ‘‘[t]he Attorney General’s referral was political retribution,
plain and simple;’’ (2) he was investigated on a meritless
charge for his political views; (3) ‘‘[i]n any other climate,
there would have been no investigation;’’ and (4) he, there-
fore, would not have been investigated but for the require-
ments of the Act.
In disputing that Scaife fulfills the ‘‘but for’’ requirement,
the IC first points out that, contrary to Scaife’s assertions,
there was no referral in this matter. Rather, the AG re-
quested that the IC conduct an investigation. Upon confer-
ral, both agreed that an independent investigation within the
IC’s jurisdiction was the best way to proceed. The IC then
argues that, even in the absence of the Act, this matter would
have been investigated:
The Department of Justice had received information
indicating that a government witness in a successful
criminal prosecution had committed perjury, obstruction
of justice, or other serious crimes. Even without the
requirements of the Act, given the Department’s interest
in these allegations, some federal prosecutor would have
investigated. The Department of Justice routinely inves-
tigates allegations of witness tampering or other obstruc-
tive behavior.
Evaluation by the Independent Counsel, at 9–10.
The IC notes that the DOJ’s interest in investigating this
matter would have been particularly high because of the
9
allegations that FBI agents were involved in, or at least had
knowledge of, the acts. The IC further points out that the
allegations directly related to FBI agents who had been
assigned to regulatory independent counsel Fiske and one of
his cooperating witnesses. Therefore, even in the absence of
the Act, if Fiske had continued the investigation, he ‘‘would [ ]
also have conducted some investigation into whether anyone
had tampered with Hale.’’ Like the IC, the DOJ notes that
‘‘[a]llegations that a witness in a prior stage of an ongoing
criminal investigation may have testified falsely, and may
have been paid to make false statements, would be taken
seriously by any prosecutor, with or without an Independent
Counsel law.’’
We are not persuaded that Scaife would not have incurred
his attorneys’ fees in the absence of the Act. In a companion
case, we noted that the IC’s investigation of the matter
known generally as Whitewater would have been undertaken
even in the absence of the IC statute. In re Madison
Guaranty Savings & Loan (Clinton Fee Application), 334
F.3d at 1127. In making this conclusion we noted that the
Whitewater allegations looked into by IC Starr were, prior to
his appointment, investigated by various prosecutors, includ-
ing regulatory independent counsel Fiske. In this light, we
stated that ‘‘we harbor no doubt that in the absence of the
independent counsel statute the allegations surrounding the
Clintons, Madison Guaranty, and Whitewater would have
been similarly investigated and prosecuted by the Depart-
ment of Justice.’’ Id. So too here. As the IC points out, the
allegations surrounding Hale, Tucker, and the McDougals
concerning Madison Guaranty and CMS were already investi-
gated by the U.S. Attorney’s office and regulatory indepen-
dent counsel Fiske before being assumed by IC Starr. There
appears to us no reason why, in the absence of the statute
under which we appointed IC Starr, the investigation of this
particular matter would not have continued in the same
manner as IC Starr continued it. Consequently, the particu-
lar allegations surrounding Hale that were investigated by
the OIC/OSR concerning witness tampering are, as the DOJ
points out, serious matters ordinarily handled by the case’s
10
prosecutors, and which we are certain would have been
handled in a similar fashion by regulatory independent coun-
sel Fiske’s prosecutors in the absence of the Act.
CONCLUSION
The petition of Richard Mellon Scaife for reimbursement of
attorneys’ fees is denied for failure to comply with the
‘‘subject’’ and ‘‘but for’’ requirements of 28 U.S.C. § 593(f)(1).