UNITED STATES COURT OF APPEALS FOR THE D.C. CIRCUIT


IN RE: SAMUEL R. PIERCE, JR. (SELIGMAN FEE APPLICATION)


89-0005f

D.C. Cir. 2000


*	*	*


Opinion for the Special Court filed PER CURIAM.


PER CURIAM: Irving R. Seligman petitions this court  under section
593(f) of the Ethics in Government Act of 1978,  as amended, 28 U.S.C.
s 591 et seq. (1994) (the "Act"), for  reimbursement of attorneys'
fees in the amount of $745,116.25  that he incurred during and as a
result of the investigation  conducted by Independent Counsels ("IC")
Arlin M. Adams  and Larry D. Thompson. Because we conclude that
Seligman  has not carried his burden of showing that the fees would
not  have been incurred but for the requirements of the Act, we  deny
the petition in its entirety.


Background1


In 1978 Congress established the moderate rehabilitation  ("mod rehab")
program within the U.S. Department of Hous-




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n 1 We have had recent occasion to review the facts of this matter  in
In re Pierce (Olivas Fee Application), 178 F.3d 1350 (D.C. Cir., 


ing and Urban Development ("HUD"). This program encour- aged developers
to upgrade moderately substandard housing  units for occupation by low
income families. In 1988 HUD's  Inspector General ("IG") conducted an
audit of the mod rehab  program as administered from 1984 through 1988
and found  that the program was not being administered efficiently, 
effectively, or economically. The Inspector General's audit  report
triggered congressional investigations into abuses, fa- voritism, and
mismanagement at HUD during the 1980s  under the tenure of HUD
Secretary Samuel R. Pierce, Jr.  Irving R. Seligman, the fee
petitioner here, owned and oper- ated HUD properties that received
substantial HUD funding.


Based on information elicited during the congressional  investigations,
the House Judiciary Committee wrote to At- torney General Richard
Thornburgh seeking the appointment  of an independent counsel to
investigate the matter. Follow- ing a preliminary investigation,
Attorney General Thornburgh  applied to this court for appointment of
an independent  counsel. On March 1, 1990, we appointed former United 
States Circuit Judge Arlin Adams2 as independent counsel "to 
investigate ... whether Samuel R. Pierce, Jr., and other  [HUD]
officials may have committed the crime of conspiracy  to defraud the
United States or any other Federal crimes ...  relating to the
administration of the selection process of the  Department's Moderate
Rehabilitation Program from 1984  through 1988." Order Appointing


The IC conducted a comprehensive investigation ultimately  confirming a
widespread pattern of corruption at HUD dur- ing Pierce's tenure.
Although the IC announced on January  11, 1995, that he would not seek
indictment of Pierce, during 




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n Spec. Div., 1999) (per curiam). Rather than re-plow recently tilled 
ground, we have adopted much of the language in the background 
portion of this opinion, and, where applicable, a portion of the 
analysis from that decision.


2 Independent Counsel Adams resigned in May of 1995. This  court
appointed his deputy, Larry D. Thompson of the Atlanta bar,  to
succeed him.


the course of the investigation seventeen (17) other persons  were
charged with and convicted of federal crimes as a result  of the IC's
investigation. That investigation and the indict- ments ranged well
beyond the core facts of the original  application for appointment of
independent counsel. Of par- ticular reference to the petitioner
before us, the IC investi- gated a $100,000 loan given by Seligman to
HUD Assistant  Secretary Thomas T. Demery.


The IC's investigation is now complete. Pursuant to the  statute, the
IC submitted a final report to this court on  March 30, 1998. See 28
U.S.C. s 594(h)(1)(B). We ordered  the report made public by order of
October 27, 1998. There- after, Seligman, pursuant to section
593(f)(1) of the Act,  petitioned this court for reimbursement of his
attorneys' fees.  As directed by section 593(f)(2) of the Act, we
forwarded  copies of Seligman's fee petition to the Attorney General
and  the IC and requested written evaluations of the petition. The 
court expresses its appreciation to the IC and the Attorney  General
for submitting these evaluations, which we have  given due
consideration in arriving at the decision announced  herein.


Analysis


Unique in the criminal law structure of the United States,  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.  s 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.


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). Therefore,  the
Act provides only reimbursement for attorneys' fees that  survive an
elemental analysis determining whether the peti- tioner is the
"subject" of the independent counsel's investiga- tion, incurred the
fees "during" that investigation, and would  not have incurred them
"but for" the requirements of the Act.  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).  We conclude that Seligman has not met the "but


As we have held, "[a]ll requests for attorneys' fees under  the Act
must satisfy the 'but for' requirement of" the Act. In  re Sealed
Case, 890 F.2d 451, 452 (D.C. Cir., Spec. Div., 1989)  (per curiam).
The purpose of awarding only fees that would  not have been incurred
"but for" the Act is to ensure that  "officials [and here derivative
'subjects'] who are investigated  by independent counsels will be
subject only to paying those  attorneys' fees that would normally be
paid by private citi- zens being investigated for the same offense by"
federal  executive officials such as the United States Attorney. Id.
at  452-53 (citing S. Rep. No. 97-496, 97th Cong., 2d Sess. 18 
(1982), reprinted in 1982 U.S.C.C.A.N. 3537, 3554 (referring  to "fees
[that] would not have been incurred in the absence of  the special
prosecutor [independent counsel] law")).


As we have stated "[t]he most difficult element for a fee  applicant to
establish under the Act is that the fees 'would not  have been
incurred but for the requirements of [the Act].' "  In re North (Bush
Fee Application), 59 F.3d 184, 188 (D.C.  Cir., Spec. Div., 1995) (per
curiam) (quoting In re North  (Dutton Fee Application), 11 F.3d 1075,
1079 (D.C. Cir., Spec.  Div., 1993) (per curiam)). In part this is so
because the  element requires a petitioner to prove a negative and one
 with a high component of speculation. In part, though, it is 
difficult because the law contemplates that it should be diffi- cult,
that such fees will not be a common thing. As we stated  above, the
contemplation of the legislation is not that subjects  of independent
counsel investigations will be reimbursed for  all legal fees, but
only that they will be reimbursed for those 


legal fees that would not have been incurred by a similarly- situated
subject investigated in the absence of the Act.


Nonetheless, we have found that petitioners qualify for an  award of
fees in the face of the but-for test in at least four (4) 
circumstances:


(1) When the independent counsel's investigation sub- stantially
constituted duplication of the preliminary in- vestigation conducted
by the Department of Justice  ("DOJ"). See In re Olson, 884 F.2d 1415,
1420 (D.C.  Cir., Spec. Div., 1989) (per curiam); Dutton, 11 F.3d at 


(2) When the petitioning subject has been "prejudiced by  the
Department of Justice's failure to comply with the  substantial
protective features of the Act." In re Nofzig- er, 925 F.2d at 438
(citing In re Meese, 907 F.2d 1192  (D.C. Cir., Spec. Div., 1990) (per


(3) When in the absence of the requirements of the Act  " 'the case
could have been disposed of at an early stage  of the investigation,'
" without subjecting the petitioning  subject to the conditions that
led to his incurring the fees  sought. In re Segal (Sagawa Fee
Application), 151 F.3d  1085, 1089 (D.C. Cir., Spec. Div., 1998) (per
curiam)  (quoting In re Nofziger, 925 F.2d at 438).


(4) Not wholly distinct from No. 3, supra, when "high  public officials
[or derivative subjects] were investigated  under the Act in
circumstances where private citizens  would not [have been]
investigated." In re Nofziger, 925  F.2d at 442; see also Dutton, 11


Seligman argues that he satisfies the "but for" requirement  under
categories (1), (3), and (4). As to category (1), Selig- man claims
that he was subjected to "duplicative" prosecu- tions because "both
the DOJ and the OIC examined the  possibility of prosecuting Mr.
Seligman, and both obtained a  great deal of evidence for the purpose
of doing so."3 Reply to 




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n 3 We note that two paragraphs before, in claiming that his case  fits
the "but for" category because the DOJ elected not to prosecute  him,
Seligman states that "DOJ did not ... commit any act 


DOJ and OIC Evaluations at 21. He is, in effect, arguing  that category
(1) is satisfied here because the DOJ, to which  his case was
transferred at the end of the IC's investigation,  duplicated the IC's
investigation of him. However, as we  held in In re Pierce (Sanders
Fee Application), 1999 WL  1215303 (D.C. Cir., Spec. Div., Dec. 21,
1999) (per curiam), the  Act and its legislative history lead us to
conclude that catego- ry (1) can only be satisfied when the IC
duplicates the  preliminary investigation of the DOJ. Seligman has put
forth  no evidence that such duplication occurred in this investiga-
tion, and thus does not fit into category (1).


As to category (3), Seligman claims that the Attorney  General was
reluctant to have an independent counsel ap- pointed but that the Act
compelled the Attorney General to  do so. Seligman points out that
after his case was trans- ferred to the DOJ at the completion of the
IC's investigation,  the DOJ took no prosecutorial action against him,
eventually  closing his case. He argues that this shows that if there
had  been no IC Act then the DOJ would not have "pursued" him  when
initially presented with the matter.


Seligman compares his case to In re Segal (Segal Fee  Application), 145
F.3d 1348 (D.C. Cir., Spec. Div., 1998) (per  curiam), in which we
held that the "but for" requirement was  satisfied because the
Attorney General in her application to  the court seeking appointment
of an independent counsel  stated that she was compelled to apply for
an independent  counsel even though "the Department of Justice would
in all  likelihood exercise its discretion to decline to prosecute
this  case as a criminal matter." Id. at 1352. Ultimately, the IC  in
the Segal matter closed the investigation without any  indictments.
But here, as we noted in Sanders, "we can  discern nothing in the
Attorney General's Application that  would lead us to believe that he
was in any way hesitant to  have an independent counsel appointed
based on the sub- stance of the evidence available to him." Sanders,
1999 WL  1215303 at * 6. Indeed, the Attorney General made specific 




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n whatsoever that Mr. Seligman is aware of to further any prosecu-
tion." Reply to DOJ and OIC Evaluations at 20.


reference to the "breadth of the allegations" in the matter, 
Application for Appointment of Independent Counsel at 5,  which as we
noted above led ultimately to numerous indict- ments. Additionally,
one of the main figures in the HUD  investigation was Assistant
Secretary Thomas Demery, who  was investigated for, and eventually
pled guilty to, receiving  an illegal gratuity. The gratuity was paid
by Seligman. In  sum, we conclude that if the IC had not investigated
this  matter then, as we stated in In re Pierce (Kisner Fee 
Application), 178 F.3d 1356 (D.C. Cir., Spec. Div., 1999) (per 
curiam), "the Attorney General or other investigative authori- ty
would have pursued allegations of corruption as deep and  widespread
as those occasioning the Independent Counsel's  investigation." Id. at
1360; see also Olivas, 178 F.3d at 1355.


In a further reference to the DOJ's decision not to prose- cute him,
Seligman claims that he satisfies category (4).  Citing to this
court's Boland Amendment cases, see, e.g.,  Dutton, 11 F.3d at 1080;
In re North (Gadd Fee Applica- tion), 12 F.3d 252, 252 (D.C. Cir.,
Spec. Div., 1994) (per  curiam), in which we held that the "but for"
requirement was  satisfied where the IC treated as criminal conduct
that had  never before been considered as such, Seligman states that 
since the DOJ declined prosecution in his case, then "[i]t is  clear
... that this matter would not have been treated  'criminally' but for
the Independent Counsel's investigation."  Seligman Application at 9.
We disagree. After conducting  an investigation, a prosecutor's
decision not to prosecute in  the matter does not in any way imply
that the conduct  investigated was not considered criminal.
Prosecutors de- cline to prosecute for many reasons, including cost,
manpow- er, sufficiency of evidence, and so forth. We are not privy to
 the DOJ's reasons for declining prosecution in this matter.  However,
as we stated above, we know that a public official  was investigated
for, and pled guilty to, accepting an illegal  gratuity, and that
Seligman paid the gratuity. Under these  circumstances we are
persuaded that the DOJ would have  investigated the Seligman case as a
criminal matter if the IC  had not done so, resulting in a comparable


Seligman argues that he further satisfies category (4) be- cause his
conduct which was investigated by the IC, that is,  his provision of a
gratuity to Demery, is not illegal. He  states that "[t]he DOJ has
traditionally not pursued such  prosecutions" because of their
"attenuated nature." Reply to  DOJ and OIC Evaluations at 25. Citing
to United States v.  Sun-Diamond Growers of California, 119 S. Ct.
1402 (1999),  in which the Court held that a violation of the illegal
gratuity  statute only occurs when there is a link between the
gratuity  and a specific act for or because of which the gratuity was 
given, Seligman argues that his situation is governed by that  case
because "there was no tie between the loan provided to  Demery by Mr.
Seligman ... and the actions taken by  Demery at HUD." Reply to DOJ
and OIC Evaluations at 23.  We do not find this argument persuasive.
The IC in his  Final Report stated that the gratuity given by Seligman
to  Demery occurred at the same time that Demery was acting to  fund
certain projects owned and developed by Seligman. See  2 Arlin M.
Adams & Larry D. Thompson, Final Report of the  Independent Counsel In
Re: Samuel R. Pierce, Jr. 71 (1998).  Under these circumstances we
feel confident that the DOJ  would have looked into the matter if it
had been within its  jurisdiction. We are even more convinced,
however, that this  would be the outcome in light of the DOJ's own
words on the  matter: in its evaluation of Seligman's Application,
after  noting Seligman's conduct as described in the IC's Final 
Report, the DOJ stated that Seligman "could not argue that  this kind
of conduct would not have been investigated in the  absence of an


Conclusion


The petition of Irving R. Seligman for reimbursement of  attorneys'
fees is denied for failure to comply with the "but  for" requirement
of 28 U.S.C. s 593(f)(1).