United States Court of Appeals
FOR THE DISTRICT OF COLUMBIA CIRCUIT
Filed March 17, 2006
Division No. 94-1
IN RE: MADISON GUARANTY SAVINGS & LOAN
(BEARD 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 petition of Bennie C.
Beard 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 petition is not well taken,
it is hereby
2
ORDERED, ADJUDGED, and DECREED that the
petition of Bennie C. Beard for attorneys’ fees that he incurred
during the Independent Counsel’s investigation be denied.
PER CURIAM
For the Court:
Mark J. Langer, Clerk
By:
Marilyn R. Sargent
Chief Deputy Clerk
3
United States Court of Appeals
FOR THE DISTRICT OF COLUMBIA CIRCUIT
Filed March 17, 2006
Division No. 94-1
IN RE: MADISON GUARANTY SAVINGS & LOAN
(BEARD 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: Bennie C. Beard petitions this Court under the
Ethics in Government Act of 1978, as amended, 28 U.S.C. §§
591-599 (2000) (“the Act”), for reimbursement of attorneys’
fees in the amount of $7500 that he claims were incurred during
and as a result of the investigation conducted by the Independent
Counsel. Because we conclude that Beard has not carried his
burden of showing that his fees were incurred during the
Independent Counsel’s investigation or that the fees would not
have been incurred but for the requirements of the Act, we deny
the petition in its entirety.
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Background
In 1993, during the initial phase of what was to become
known as the “Whitewater” investigation,1 the Department of
Justice was investigating numerous questionable financial
transactions involving Jim McDougal and his bank, Madison
Guaranty Savings & Loan Association, in Little Rock, Arkansas.
One of the Madison Guaranty transactions being investigated
pertained to McDougal’s investment in a residential construction
project called Castle Grande. Bennie C. Beard, the fee
petitioner here, drew prosecutors’ attention as an appraiser for
Madison Guaranty on the Castle Grande project.
The investigation of the financial transactions was
subsequently taken over first by regulatory special counsel
Robert Fiske in early 1994, and then later that year by
independent counsel Kenneth W. Starr (hereinafter “IC” or
“OIC”). Although a fellow appraiser at Madison Guaranty was
indicted and pled guilty to making false statements in a savings
and loan document, Beard himself was not indicted. Pursuant
to § 593(f)(1) of the Act, Beard now petitions the court for
reimbursement of attorneys’ fees in the amount of $7500 that he
claims were incurred in defense of the IC’s investigation. As
directed by section 593(f)(2) of the Act, we forwarded copies of
Beard’s fee petition to the OIC and the United States Attorney
General (hereinafter “AG”) and requested written evaluations of
the petition. The court expresses its appreciation to the OIC and
the AG for submitting these evaluations, which we have given
due consideration in arriving at the decision announced herein.
1
For further background on the Whitewater matter, see In re
Madison Guar. Sav. & Loan (Clinton Fee Application), 334 F.3d 1119
(D.C. Cir., Spec. Div., 2003) (per curiam).
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Arguments
The Independent Counsel statute provides:
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.
28 U.S.C. § 593(f)(1). Accordingly, in order to obtain an
attorneys’ fees award under the statute, a petitioner must show
that all of the following requirements are met: 1) the petitioner
is a “subject” of the investigation; 2) the fees were incurred
“during” the investigation; 3) the fees would not have been
incurred “but for” the requirements of the Act; and, 4) the fees
are “reasonable.” Id.; see In re North (Dutton Fee Application),
11 F.3d 1075, 1077-82 (D.C. Cir., Spec. Div., 1993) (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). There appears to be little doubt that Beard was a
“subject” of the investigation, and arguably his fees were
“reasonable.” There is dispute, however, as to whether his fees
were incurred “during” the investigation and whether they
would have been incurred “but for” the requirements of the Act.
Although Beard does not specifically address the “during”
issue, according to his fee petition “[s]ometime in late 1993, the
Independent Counsel, initiated an investigation into [him],”
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which was not concluded until the summer of 1995. During this
time period, in June of 1994, he paid a flat fee to his attorney in
the amount of $7500. Beard notes, however, that because
representation was provided to him on this flat fee basis, no
standard billing records were prepared and therefore none could
be provided with his fee petition. He has, instead, submitted
“draw sheets” which he asserts reflect that the fee was in fact
paid.
The OIC in its evaluation notes that under the Act
reimbursement can only be granted for those fees incurred
during an independent counsel investigation, that here the IC
was not appointed until August 5, 1994, and thus Beard “has not
shown which of the fees, if any, were ‘incurred’ after August 5,
1994, and has therefore provided no basis upon which this Court
could determine for which fees, if any, it had jurisdiction to
reimburse Beard.”
Likewise, the DOJ’s evaluation of Beard’s fee application
argues that he has not fulfilled the “during” requirement. Noting
that the flat fee was paid in June of 1994, the DOJ asserts that
this in fact was the time when the fees were “incurred,” and they
are therefore not reimbursable as the IC was not appointed until
that August.
Concerning the “but for” requirement, Beard argues that his
petition satisfies this requirement because he would not have
been investigated but for the “inquiry into the financial dealings
of the President of the United States and First Lady.” This is so,
he explains, because “the appointment of the Independent
Counsel resulted in this a-typical criminal investigation which,
‘but for’ such investigation, [he] would not have incurred legal
fees for which he now seeks reimbursement.”
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In addressing Beard’s “but for” argument, the OIC again
notes that in 1993, when Beard claims the IC began its inquiry
of him, the investigation surrounding Madison Guaranty was in
fact being conducted by the Department of Justice. As such,
states the OIC, “Beard cannot demonstrate that the requirements
of the Act caused him to incur attorneys’ fees that he otherwise
would not have incurred, because he incurred those legal fees
during an investigation that began when there was no
independent counsel law.”
Analysis
As discussed below, we find that Beard’s fee application
fails to show that he has satisfied the “during” and “but for”
requirements of the Act. He is therefore not eligible for
reimbursement as failure to satisfy either of these requirements
constitutes grounds for denial.
First, Beard has not satisfactorily shown that all of his fees
were incurred during the IC’s investigation. He states that in
June 1994 he paid a flat fee to his attorney for representation
concerning the IC’s investigation of him. The IC was not
appointed until that August, however, and presumably Beard’s
attorney spent time on his defense in the period between
payment of the fee and appointment of the IC. But because
“Congress did not provide in section 593(f) for the payment of
fees incurred prior to the appointment of independent counsel,”
In re Nofziger, 938 F.2d 1397, 1403 (D.C. Cir., Spec. Div.,
1991) (per curiam), and because the lack of billing records
makes unknown what, if any, work was performed by the
attorney after the IC’s appointment, it is impossible to determine
what portion of the flat fee is eligible for reimbursement.
Second, in arguing that he has passed the “but for” test,
Beard is apparently asserting that the investigation of him
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resulted solely from the appointment of an independent counsel
to investigate the Clintons. In other words, if no independent
counsel had been appointed, then he would not have been
investigated. We have asserted previously, however, that the
IC’s investigation of the Whitewater matter would have been
undertaken even in the absence of the independent counsel
statute. 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, including 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
Department of Justice.” Id. Consequently, Beard’s claim that he
would not have been investigated but for the appointment of an
independent counsel is wholly without merit.
Conclusion
The petition of Bennie C. Beard for reimbursement of
attorneys’ fees is denied for failure to satisfy the “during” and
“but for” requirements of the Act.