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On April 13, 1981, Judge Claiborne filled out and filed a request for extension of time in which to file his 1980 return, and he shows on that request, that extension request, which is Government's exhibit 4, that he has an estimated tax liability for 1980 of $42,847.96. That is what is in Judge Claiborne's mind when he signed that re quest for extension, during the course of his discussions with Mr. Watson.
On June 15, 1981, Mr. Watson completed Judge Claiborne's 1980 return. Judge Claiborne studied the return and discussed it with Mr. Watson, according to Mr. Watson's testimony-page 814 of the transcript-for 10 or 15 minutes.
That return is Government's exhibit 5. Judge Claiborne signed the return, and that return reports no legal fee income for 1980, when in fact his legal fee income for 1980 was $87,911.83.
Now, I should make some points which are beyond carefulbeyond context, regarding the degree of sophistication that Judge Claiborne as a human being brought to that tax return at the moment he signed it.
First, Judge Claiborne, and this is without question, had reported legal fee income on his tax returns Schedule C income for 30 years.
Second, Judge Claiborne was a trial attorney with substantial criminal trial experience, and a person who had tried criminal tax cases.
Third, since 1978, Judge Claiborne had sat as a U.S. district judge in approximately 20 criminal tax trials, a number of which tax trials involved the same false statement issue, same issues regarding false statements, that are involved in this case, so Judge Claiborne has substantial experience and one would think a substantial sensitivity to the making of false statements on a tax return.
He also was a person who knew, by his own admission, transcript at page 923, how to handle capital transactions. He is a person who has stated that he clearly knew the difference between Schedule C income and capital gains income, page 923 of the transcript.
I said, in cross-examination in part at page 923, question: "You knew, did you not, Judge, the difference between regular income that you had always reported, Schedule C, and capital gains income?" Answer: "I did."
Another point that should be made with respect to this is that Judge Claiborne, this is the year 1980, in which Judge Claiborne, by his own admission, was desperately in need for money.
Finally, this is the year in which he dismisses Mr. Wright without so much as a discussion, a man who had diligently prepared his tax returns for 30-some years, and proceeds to hire Mr. Watson without any inquiry and proceeds to pay Mr. Watson three times as much money as he had paid Mr. Wright for the services Mr. Wright had provided.
Mr. Watson produced Government's exhibit 5; that is, the income tax return for 1980. It reported no legal fee income. In fact, Judge Claiborne knew perfectly well, and I don't believe this is subject to any question, he knew that he had received substantial legal fees for the year 1980, and those legal fees were set forth in another chart which I would similarly offer for the benefit of the members, with the chairman's permission.
Mr. KASTENMEIER. Without objection, the committee will receive the charts as indicated. You will distribute them to the members.
[See appendix II.]
Mr. HENDRICKS. The chart I have distributed is a chart which shows a legal fee which Judge Claiborne received in 1980, and this chart was also Government's exhibit 43 at the trial.
It shows on December 31, 1979, an attorney, an associate, a person with whom Judge Claiborne had associated himself in connection with another legal matter, Peter Echeverria, wrote Judge Claiborne a $42,452.34 check, which Judge Claiborne received and deposited in January 1980, so this check was properly accounted as 1980 income.
On August 6, James Brown, associate of Judge Claiborne, wrote Judge Claiborne an $888.30 check, that on August 15, the law firm of Hochman, Salkin & DeRoy wrote Judge Claiborne a $37,500 check, and this check is the check which Judge Claiborne obtained after indicating he was desperately in need of money, and for the year 1980, November 7, James Brown wrote another check for $7,071.19 to Judge Claiborne.
Now, these checks, these three checks were deposited, three checks were deposited. The $37,500 check was cashed at a casino. None of this legal fee was reported on Schedule C or anyplace else in the report as legal fee income for 1980.
By way of observation, when looking at the chart, you will note that Judge Claiborne has gone back to the safer practice of depositing most of these large legal fee checks.
Now, this could be, and I submit this is an area with which Mr. Goodman and I might differ, but I submit that this could be attributable to the fact that Mr. Wright has now been eliminated from the scene, and since no accountant is receiving monthly statements, there is no particular need for Judge Claiborne to cash the large majority of his checks in order to avoid the reporting of them.
He is now free by 1980 to deposit any of the checks he sees fit to deposit. We have for 1980, instead of the $42,847.96 tax liability which Judge Claiborne had believed he would have when he submitted his request for extension of time to file his return, Judge Claiborne received back a refund from the Government for 1980 of $44,356.
That completes my presentation of the evidence, outline of the evidence in the case. I would be happy at this time to answer any questions.
Mr. KASTENMEIER. Thank you, Mr. Hendricks.
We will call on counsel. I would like to call on special counsel, and I would like to recognize him for 5 minutes of his own time and 5 minutes of my time-10 minutes—to ask any questions he
Do I understand, Mr. Goodman, that you are asking for a recess?
Mr. GOODMAN. With the members' permission, I would request a 2- to 5-minute recess. I have been advised that my client, Judge Claiborne, has arrived; and I would like the opportunity to counsel with him as to what has taken place so far and to invite him into these proceedings. I would like to be present, however, for all the questioning by Mr. Cates, and the other members of the subcommittee.
Mr. KASTENMEIER. Is it not possible for your associate counsel to inform the judge of what has happened so far?
Mr. GOODMAN. It certainly is possible.
Mr. MAZZOLI. Could we finish the round of questions? Would that disable the gentleman from counseling his client?
You limited us to the 5-minute rule.
Mr. KASTENMETER. It may last about an hour, so that is what we are talking about here.
Mr. GOODMAN. Mr. Chairman, understanding the position, I would ask Senator Cannon whether he would be kind enough to speak with Judge Claiborne.
Mr. KASTENMEIER. I can understand your preference, but I think so long as there are two of you as counsel, that you could proceed in that manner without jeopardizing this matter.
Mr. GOODMAN. I appreciate that.
Mr. CATES. Mr. Hendricks, do you intend to speak about the processes, the procedure-are you going to tell us that part?
Mr. HENDRICKS. Yes, sir. I am sorry. I inadvertently overlooked that.
Briefly, if I might provide the committee with some information regarding the procedures, a chronology of the proceedings in this litigation, the indictments in this case were filed in 1983 on the 8th of December.
With respect to the tax counts, as is the usual practice of the IRS, a preindictment conference was provided, and trial counsel did not attend, but Judge Claiborne was afforded an opportunity to raise his views and express himself prior to any tax counts being brought in the case. So a preindictment conference was provided to him on the tax accounts. It was November 22, 1983.
On December 8, 1983, the indictment was filed and Judge Claibrone was arraigned on December 13, 1983.
On December 20, 1983, Judge Claiborne filed motions for a change of venue. Thereafter, on the 3d of January, he filed roughly 30 additional pretrial motions, which basically divided down into seven categories. Three of these thirty motions related to electronic surveillance, and six of the motions related to discovery, and three of the motions related to grand jury practice, and six of the motions related to alleged Government misconduct, and two of the motions were substantive motions to dismiss. One of the thirty motions related to evidentiary issues, and three of the motions related to procedural issues.
On the 3d, thereafter, the Government filed opposition on the 3d of January to the defendant's motion for a change of venue; and on the 9th of January, the Government filed its opposition to the 30 pertrial motions.
On January 9, 1984, there was a pretrial hearing held by Judge Hoffman, U.S. District Court judge, sitting by designation from the Eastern District of Virginia.
There were hearings on all 31 pertrial motions. These hearings lasted for approximately 3 days and were evidentiray in nature.
On the 11th of January, 27 of those motions were disposed of by Judge Claiborne-excuse me, by Judge Hoffman. Seven of those motions involved deferrals of action. No action was taken at that time. One of those motions related to alleged grand jury abuse, and one related to electronic surveillance, and one related to grand jury minutes, a motion to discover grand jury minutes, and one of those motions related to plea bargaining, and another related to alleged IRS leaks, to alibis, and to a Government motion regarding the recusal of one of Judge Claiborne's counsel, one John Squire Drendel, who the Government believes was an anticipated witness in the case.
We had substantial pretrial litigation and disposal of the pretrial motions.
On January 20, 1984, the defendant filed an appeal, an interlocutory appeal, with the Ninth Circuit Court of Appeals regarding the constitutional issue of whether a judge may be tried before he is impeached by the House of Representatives. In regard to this litigation, interlocutory pretrial litigation, on February 10, 1984, a motion with the ninth circuit was filed to stay all proceedings in the U.S. district court; briefs were filed on the 13th, in the ninth circuit.
On the 14th, the stay was denied. On the 16th of February, the defendant, appellant, or petitioner, moved to renew the stays. On February 21, 1984, the stay was again denied.
On the 24th of February, oral argument took place in the ninth circuit; and on the 3d-or March 2,
1984, a third motion was made by the petitioner to stay the trial pending the resolution of this pretrial issue regarding the constitutionality of trying a Federal judge before he is impeached.
On the 5th of March, the ninth circuit entered an opinion affirming Judge Hoffman's position that a judge could be tried before he is impeached. That panel was three judges: Judge Kennedy from the sixth circuit; Judge Garth from the third circuit; and Judge Gibson from the eighth circuit.
On the 14th of March, there was a petition for mandamus filed in regard to this matter; and on the 19th, the petition for mandamus was denied by the ninth circuit. Thereafter, applications were filed with the U.S. Supreme Court.
On March 9, 1984, an application for a stay with the Supreme Court was filed. On the 12th of March, Justice Rehnquist denied the stay. On the 12th of March, Judge Claiborne's attorneys contacted Justice White. Justice White denied the stay on the 12th of March. Finally, on October 1, 1984, the Supreme Court denied cert on the interlocutory appeal.
Meanwhile, going back to early 1984, on the 9th of February, moving toward the trial date, there were three additional motions regarding procedural matters filed by the defendant.
On the 15th of February 1984, three more motions were filed by the defendant. And on the 17th of February, the Government filed its responses. And on the 17th of February, an order was entered by Judge Hoffman denying motions 27 and 30 of the previous-of the previously submitted motions regarding grand jury abuse and prosecutorial misconduct. And, in that order of the 17th of February 1984, Judge Hoffman, after reviewing the records in the case, characterized the prosecution, the prosecutor's activity as that of a model prosecutor.
I would recommend and commend to the committee's attention Judge Hoffman's order of the 17th of February 1984, which order we have provided to the committee.
February 21, 1984, there was a second pretrial hearing before Judge Hoffman, and the pending motions at that time were denied.
On the 29th of February of 1984, the defendant filed additional pretrail motions to dismiss count VII. On the 1st of March of 1984, the defendant filed two pretrial motions relating to a witness in the case.
On the 8th of March, the Government filed its responses. On the 12th of March 1984, the third pretrial hearing was afforded Judge Claiborne in this case, and it was a hearing on the motions to dismiss, relating to the use of FBI agents as agents who assisted the grand jury in connection with its operations.
On the 13th-excuse me, that was the 12th of March.
On the 13th of March 1984, the fourth pretrial hearing was held by Judge Hoffman, that time on the motion that the defendant had filed on the 29th of February to dismiss count VII. And, finally, on the 12th of March 1984, after four pretrial hearings, 40-odd pretrial motions by the defense, and an interlocutory appeal to the U.S. Supreme Court, the trial started the 12th of March 1984.
On the 13th of April, approximately a month and a day later, a mistrial was declared by Judge Hoffman after the jury in the first trial failed to reach a decision on any of the counts then under consideration by the jury.
Judge Hoffman indicated that the trial would be held some time later in the year, a retrial.
On the 13th of April-excuse me, on the 23d of April 1984, the defendant filed a motion to recuse Judge Hoffman, and there were several supplements provided, attached to that motion.
On the 11th of June of 1984, an additional motion was filed by the defendant to proceed by way of unsequestered jury. The reason that was done is, Judge Hoffman had indicated after the mistrial that he intended to sequester the jury in the second trial because of some concerns the Judge had regarding the security of the jury.
On the 18th of June 1984, the judge offered an official order re questing sequestration of the second jury. On the 28th of June 1984, Judge Hoffman issued an order regarding the recusal motion which he denied, and which order of Judge Hoffman's is available for the committee.
On the 10th of July 1984, the Government dismissed certain of the counts in the indictment. Those counts were counts I, II, III and IV.
Excuse me. Should I abide by these lights?
Mr. KASTENMEIER. Let me just say that we are going to treat this explanation as part of your testimony rather than as a response to a question, because it might have been presented originally by you rather than in response to a question. It necessitates such a long response, the record is so long, that it should not militate against