NOTICE IS HEREBY GIVEN that the Court will hold a hearing on Julie Hiatt Steele’s Motion To Dismiss The Indictment For Violation Of Order Of Immunity And Incorporated Motion For A Kastigar Hearing, Steele Pretrial Motion No. 5, on Friday, February 26, 1999 at 9:00 a.m.

DATED: February 16, 1999

Julie Hiatt Steele, through undersigned counsel, respectfully requests that the Court dismiss the Indictment in the above-captioned matter because the Office of the Independent Counsel ["OIC"] violated this Court's Order pursuant to 18 U.S.C. §6002, granting immunity to Ms. Steele. Count Two of this Indictment charges Ms. Steele precisely for her immunized act of surrendering subpoenaed documents to the grand jury. The OIC realleged and incorporated into each count of the Indictment this physical act of production. The entire Indictment is tainted by the OIC's use of an immunized production - a production it compelled. The OIC cannot conceivably satisfy its heavy burden of proving an independent source for Ms. Steele's physical act of production; consequently, the tainted Indictment must be dismissed.

Ms. Steele respectfully requests a hearing on the use of this immunized testimonial act pursuant to Kastigar v. United States, 406 U.S. 441 (1972). In support of her motion, Ms. Steele relies on the accompanying Memorandum of Law.

WHEREFORE, for the reasons set forth in the attached Memorandum of Law, the Court must dismiss the Indictment in the above-captioned matter.

DATED: February 16, 1999

This case involves the use of evidence obtained and used by the Office of Independent Counsel ["OIC"] pursuant to a grant of immunity. The OIC sought a grand jury subpoena for Ms. Steele to produce documents relating to the National Enquirer's acquisition of a photograph from Ms. and subsequently sought and obtained act-of-production immunity for Ms. Steele from the Court. The OIC then indicted Ms. Steele, claiming that her very act of producing responsive material obstructed justice.

The paragraph of the indictment alleging Ms. Steele's obstruction of justice by her surrender of the subpoenaed documents is realleged and incorporated in each count of the Indictment, thereby tainting the entire Indictment. This immunized evidence was presented before the Grand Jury, thereby tainting that proceeding as well. As a practical matter, it is impossible for the OIC to prove an independent source for Ms. Steele's act of production, because the act itself occurred only as a result of the OIC seeking and obtaining an order of immunity pursuant to 18 U.S.C. §6002. Consequently, pursuant to Kastigar v. United States, the indictment must be dismissed.

A full recitation of the facts, outlined in Defendant's Motion to Dismiss Indictment, Or in the Alternative, For Transfer of Cause To the District of Columbia, [hereinafter "Venue Motion"] filed with this Court on Monday, February 8, 1999, is incorporated by reference. Only the facts pertinent to this Motion are highlighted here.

On June 24, 1998, a grand jury in the Eastern District of Virginia issued to Ms. Steele subpoena #V064, ordering the production of specified documents. The subpoena required, in pertinent part, the production of:

Subpoena #V064, June 24, 1998, at 1-3 (emphasis in original) (hereinafter "Subpoena #V064")(Attached at Exhibit "10" in Venue Motion). Through counsel and before producing documents, Ms. Steele inquired as to her status in the OIC's investigation. The OIC informed Ms. Steele that although it had previously described her as a "witness", she had actually been a "subject" at the time of an earlier grand jury appearance in the District of Columbia on June 11, 1998. See Letter dated August 3, 1998 (Attached at Exhibit "11" in Venue Motion). In light of this letter, Ms. Steele asserted her Fifth Amendment privilege against self-incrimination in response to Subpoena #V064, prompting this Court's granting of immunity to her on August 14, 1998. See Order of Immunity dated August 14, 1998 (Attached at Exhibit "13" in Venue Motion) (hereinafter "Order of Immunity").

The Order of Immunity, drafted by the OIC and issued pursuant to 18 U.S.C. §§6002 and 6003, immunized Ms. Steele from her act of producing documents described in subpoena #V064. This order specifically states, in relevant part:

Order of Immunity at 1.

On August 11, 1998, Ms. Steele was served with subpoena #V066 to appear before the grand jury. See Subpoena #V066 dated August 11, 1998 (hereinafter "Subpoena #V066") (attached at Exhibit "14" in Venue Motion). Ms. Steele appeared before a Grand Jury sitting in the Eastern District of Virginia on August 18, 1998, and produced all documents responsive to subpoena #V064 as required by the Order of Immunity. Among those documents were a transcript and videotape of an August 7, 1998, Larry King Live appearance by Ms. Steele and John Coale, a civil attorney. See Transcript of Va. Grand Jury Appearance dated August 18, 1998 (hereinafter "Va. Transcript")(Attached at Exhibit "15" in Venue Motion) and Larry King Live Transcript dated August 7, 1998, pp. 17, 19 (hereinafter "Larry King Live Transcript")(Attached at Exhibit "A" here).

On January 7, 1999, another grand jury sitting in the Eastern District of Virginia indicted Ms. Steele on three counts of obstruction of justice and one count of making a false statement. See generally January 7, 1999 Indictment ["Indictment"]. The Indictment, in paragraph Twenty-nine, states that Ms. Steele "without being asked in any way, intentionally presented to a federal grand jury a video tape and a transcript of her appearance on Larry King Live so the grand jurors could consider the information contained in the broadcast." Indictment at ¶ 29.

This paragraph is incorporated by reference generally in each count of the indictment, Indictment at ¶¶ 34, 38, 41, & 44, and specifically in Count Two, which charges Ms. Steele with obstructing a grand jury investigation in the Eastern District of Virginia by, among other actions, "providing and attempting to provide materially false and misleading testimony and information to the grand jury in the Eastern District of Virginia." Indictment at ¶ 39.

The government created the obstruction of justice charge by requiring Ms. Steele to comply with the subpoena, granting her act-of-production immunity with regard to the subpoenaed documents, and then claiming that her very act of production, in compliance with this Court's Order of Immunity, obstructed justice.

1. Duty To Testify

Each person has a duty to testify when properly subpoenaed by a court. United States v. Bryan, 339 U.S. 323, 331 (1950); Kastigar v. United States, 406 U.S. 441, 443-44 (1972). Failure to comply with a subpoena, without adequate justification, may result in the subpoenaed person being held in contempt of court. Fed. R. Crim. P. 17(g)(1998).

A subpoena for documents simply requires the subpoenaed person to hand over the required documents, not to attest to or affirm the truth of their contents. Fisher v. United States, 425 U.S. 391, 409-10, 410n.11 (1976); United States v. Doe, 465 U.S. 605, 610-11 (1984). The communicative inferences that may be drawn from the production of the requested documents include the existence of the documents, possession of the documents, and the the belief that the documents produced are the ones requested. Fisher, 425 U.S. at 410; Doe, 465 U.S. at 612-13; In re Grand Jury 89-4 Subpoena Duces Tecum, 727 F. Supp. 265, 267-68 (E.D. Va. 1989). When these inferences are testimonial and incriminating, the Fifth Amendment privilege against self-incrimination attaches, and the subpoenaed person may invoke this constitutional privilege to avoid complying with the subpoena. Fisher, 425 U.S. at 410; Doe, 465 U.S. at 612-13; In re Grand Jury, 727 F.Supp. at 267-68.

2. Act-of-Production Immunity

When the government seeks to override a witness' Fifth Amendment privilege, the government must petition the court to grant the subpoenaed person immunity, which coexists with, and must be as broad as the scope of, the Fifth Amendment privilege. Kastigar, 406 U.S. at 445-53 ("[A] grant of immunity must afford protection commensurate with that afforded by the privilege."); Fisher, 425 U.S. at 400; United States v. North, 910 F.2d 843, 853-54 (D.C. Cir. 1990). The United States Supreme Court held, in Kastigar, that statutory immunity, granted in §6002, was constitutional because it protected the subpoenaed person as much as if the person invoked her Fifth Amendment privilege. Section §6002 provides, in relevant part:

18 U.S.C. 6002 (emphasis added). Act-of-production immunity, which derives from §6002, is as broad as the Fifth Amendment privilege and immunizes a person from the government's direct or indirect use of the testimonial inferences of the act of production. See 18 U.S.C. 6002; Kastigar, 406 U.S. at 460-61. Doe, 465 U.S. at 615-16 & n.17; Braswell v. United States, 487 U.S. 99, 117 (1988); North, 910 F.2d at 854 (D.C. Cir. 1990); Order of Immunity.

Section 6002 immunizes a witness from criminal prosecution "except a prosecution for perjury, giving a false statement, or otherwise failing to comply with the order." 18 U.S.C. 6002. An immunized witness may be prosecuted for obstruction of justice based upon any perjury or false statement made after the immunity grant. United States v. Caron, 551 F.Supp. 662, 671 (E.D. Va. 1982) aff'd mem., 722 F.2d 739 (4^th Cir. 1983), cert. denied 465 U.S. 1103 (1984).

In this case, Ms. Steele received subpoena #V064 to produce documents, Ms. Steele invoked her Fifth Amendment privilege and received act-of-production immunity, to compel her production of documents demanded in the subpoena. See Order of Immunity. By this Order, Ms. Steele was immunized from the government's direct or indirect use of the testimonial inferences of her act of production. Kastigar, 406 U.S. at 460-61. Doe, 465 U.S. at 615-16 & n.17. The plain language of the Order of Immunity supports this fact by stating that "the fact of her compliance with the subpoena may not be used against her in any criminal case." Order of Immunity, at p. 1.

Despite this immunity order not tracking the language of §6002 verbatim, the only possible constitutional interpretation of the "obstruction of justice" exemption in this Order is that perjurous testimony, testimony based on false statements, or the failure to comply with the Order must be the obstruction of justice. Kastigar, 406 U.S. at 453 (scope of immunity must be commensurate with privilege); Caron, 551 F.Supp. at 671. The Order would be rendered meaningless if an immunized witness could be prosecuted for any obstruction.

In fact, Ms. Steele made the allegedly false statement originally in August 1997 to the Newsweek reporter, a year before the immunity order, and repeated it, in the Larry King Live appearance, on August 7, 1998, two weeks before she was order immunity. She did absolutely nothing to affect or change her testimony after being granted immunity. Simply she complied with this Court's Order of Immunity to produce responsive documents, such as the Larry King Live transcript and videotape. Nonetheless, her compliance with this Court's Order of Immunity is precisely the obstruction charged.

It is clear from the jurisdictional authority granted to the OIC, that the OIC was investigating alleged acts of perjury and obstruction of justice, and no other substantive criminal statutes. The OIC ignored the explicit language of this Court's Order of Immunity, and long-standing case precedent, and indicted Ms. Steele precisely for her act of producing the requested documents. Indictment at ¶29. Paragraph Twenty-nine forms the basis for the allegations in Count Two that Ms. Steele provided materially false and misleading testimony to the Grand Jury. It states that Ms. Steele "without being asked in any way, intentionally presented to a federal grand jury a video tape and a transcript of her appearance on Larry King Live so the grand jurors could consider the information contained in the broadcast." Indictment at ¶29.

The statement that Ms. Steele produced the videotape and transcript "without being asked in any way" defies the plain language of the subpoena and logic. Ms. Steele was subpoenaed specifically for "[a]ny and all contracts or other documents pertaining to the National Enquirer's acquisition of the photograph of Kathleen Willey and President Clinton, which appeared in the National Enquirer's August 19, 1997 issue." Subpoena, ¶A, p. 1(emphasis added). The subpoena explicitly defines documents to include videotapes and transcripts. Subpoena #V064, p. 3. The subpoena also states the technicality that "[t]he words "and" and "or" shall be construed conjunctively or disjunctively as necessary to make the request inclusive rather than exclusive." Clearly, the subpoena requested the sum total of as many documents as existed in Ms. Steele's possession that complied with the subpoena, including video tapes and transcripts that referenced the National Enquirer's acquisition of the photograph. The Larry King Live videotape and transcript clearly fell within the mandate of the subpoena and this Court's Order of Immunity because they clearly contain a discussion of the National Enquirer's acquisition of the photograph. Transcript, p. 17, 19. As such, Ms. Steele was required to produce them.

The indictment alleges that Ms. Steele's act of producing the Larry King Live videotape and transcript constituted obstruction of the grand jury, presumably because the OIC believes that the content of the videotape and transcript contains allegedly false statements. However, the Order of Immunity specifically "ORDERS Julie Hiatt Steele to appear before the Grand Jury to surrender the records called for in the subpoena issued to her." Order of Immunity, p. 1 (emphasis added). Had not the OIC both subpoenaed the material, and sought and obtained an immunity order covering its production, Ms. Steele would not have produced these materials to the Grand Jury. This simple "but for" analysis leads to only one conclusion; that is, that neither the act of producing the transcript and videotape, nor any information derived directly or indirectly therefrom, can be used against Ms. Steele.

It is abundantly clear that the OIC crafted this obstruction of justice charge in Count Two by violating this Court's Order of Immunity. From Ms. Steele's numerous public statements since August 1997, and from her prior Grand Jury testimony in the District of Columbia, in which Associate Independent Counsel Barger was integrally involved, the OIC knew what Ms. Steele's recollection was: that Ms. Willey asked her to lie to corroborate Ms. Willey's "groping" story. Nonetheless, the OIC set a trap for Ms. Steele by subpoenaing documents and materials that were consistent with Ms. Steele's previous testimony and public statements; all which the OIC had previously concluded were false. The OIC then indicted Ms. Steele precisely for her act of handing over the Larry King Live transcript and video tape that affirmed those statements. The charge in Count Two of the Indictment is in direct violation of this Court's Order of Immunity. Because each count of the Indictment incorporates by reference paragraph Twenty-nine, the entire Indictment is tainted by the OIC's violation of this Court's Order of Immunity. More importantly the Grand Jury proceeding is tainted by the OIC's pursuance of an indictment for obstruction of justice based on an immunized act.

A prosecutor cannot use immunized testimony, either directly or derivatively, in any manner to inflict criminal penalties on the immunized witness. Kastigar, 406 U.S. at 460-61. Doe, 465 U.S. at 615-16 & n.17; Braswell v. United States, 487 U.S. 99, 117 (1988); North, 910 F.2d at 853. If he does, he has the heavy burden of proving that he had an independent, legitimate source for the immunized testimony to show that the evidence is not tainted. Kastigar, 406 U.S. at 453. Braswell, 487 U.S. at 117; United States v. Harris, 973 F.2d 333, 336 (4^th Cir. 1992). Most courts require the prosecutor to prove this independent, legitimate source by a preponderance of the evidence. Harris, 973 F.2d at 336 (dismissing all but one count of the indictment following a Kastigar hearing because prosecutor used immunized testimony); North, 910 F.2d at 854. If he fails to meet this affirmative burden, the indictment must be dismissed, especially if tainted evidence was presented before the grand jury. North, 910 F.2d at 854, 870 (citations omitted)("'[I]f the tainted evidence was presented to the grand jury, the indictment will be dismissed.'" (citations omitted)); United States v. Hampton, 775 F.2d 1479 (11^th Cir. 1985)("Kastigar and its progeny require dismissal of an indictment of a previously immunized witness unless the government can demonstrate that 'none of the evidence presented to the grand jury is derived, directly or indirectly, from the immunized testimony.'" (citations omitted)).

The OIC cannot satisfy this heavy burden because Ms. Steele's immunized act alone is the obstruction of justice charged. While the OIC may be able to prove an independent source for acquiring the Larry King Live transcript and videotape, this is of no moment because the OIC violated the Court's Order of Immunity by indicting Ms. Steele for her physical act of production, claiming it, in and of itself, obstructed justice. It is inconceivable that the OIC could prove an independent source for Ms. Steele's physical act. Since the OIC cannot meet its heavy burden, and since the physical act of production occurred before the Grand Jury, Va. Transcript, p.2, lines 7-11, in accordance with Order of Immunity, the presentation and use of the immunized act before the Grand Jury taints the entire Indictment.

Furthermore, paragraph Twenty-nine, which alleges Ms. Steele's obstruction of justice in complying with the subpoena for documents, is realleged and incorporated into each count of the Indictment. Indictment, ¶¶ 34, 38, 41, & 44. Thus, the OIC's use of the immunized documents in each count taints the entire Indictment. Since both the Grand Jury proceeding and the Indictment itself are tainted, this Court must dismiss the Indictment, as dismissal is the proper remedy.

Most compelling is the Fourth Circuit's 1992 affirmation of a dismissal of all but one count of an Indictment in a situation nearly on all fours with this case. See United States v. Harris, 973 F.2d 333, 336 (4^th Cir. 1992). In Harris, following a Kastigar hearing, the Fourth Circuit affirmed the dismissal precisely because the prosecutor presented immunized testimony before the Grand Jury and used the immunized testimony in the indictment, all in violation of Kastigar.

In Harris, the government was investigating a company's scheme to defraud the United States by supplying defective lifeboats to the United States military. The defendant was an employee of the company for sixteen years, serving as Quality Control Manager for the last few. Id. at 334. To investigate the scheme, the government granted the defendant immunity in exchange for her cooperation and truthful testimony. Id. at 334. After entering into this immunity agreement with the government, the defendant spoke to prosecutors, providing them with information about the company's reporting procedures on lifeboat repairs and minimizing their significance. Id. at 334-35. The defendant specifically told prosecutors in which particular folder to find such reports, which also detailed her incriminating role in the scheme. Id.

The government then subpoenaed the defendant to appear before two grand juries pursuant to the immunity agreement. Id. at 335-36. Shortly before the defendant's second scheduled grand jury appearance, the government rescinded the immunity agreement because it believed that the defendant had not been truthful from the beginning. Id. at 336. The prosecutor then used the incriminating contents of the folder, about which the defendant told him, to indict her. Id.

After a Kastigar hearing, the lower court dismissed all counts but perjury, holding that such use of the folder to indict the defendant violated her Fifth Amendment right against self-incrimination. Id. United States v. Harris, 780 F.Supp. 385, 392-93 (D.C.W.Va. 1991). The Fourth Circuit affirmed the dismissal, finding the unjustifiable use of immunized testimony warranted the dismissal. Harris, 973 F.2d at 334, 338.

Harris is eerily similar to the case at bar, prompting an analogous dismissal here. First, Ms. Steele and the defendant in Harris were both outsiders to the investigation at hand. In Harris, the government was investigating the company's scheme to defraud the United States. Id. at 334. Harris, 780 F.Supp. at 386-87. The defendant was an employee of the company, not a party to the supply contract under investigation. She was not originally being investigated, which is presumably why she was granted immunity. In the case at bar, the OIC is charged with investigating obstruction of justice in the Jones v. Clinton case. Ms. Steele was not involved with any allegation in the Jones case. Consequently, the OIC was not originally investigating her and, arguably, they did not have the jurisdiction to do so.

Second, the court in Harris noted serious problems with using the same prosecutor to indict the immunized witness as to receive the immunized testimony. The court found such conduct problematic because it "certainly makes it more difficult for the government to prove that the compelled testimony did not contribute to the prosecution." Harris, 973 F.2d at 337. The court further stated that "[t]he usual precautions, not followed in this case, are for the government to insulate a prosecutor and/or investigator who is familiar with the immunized statement from subsequent prosecution of the compelled witness or to seal the incriminating documents." Id. The court highlighted that even the Department of Justice ["DOJ"] recognized the importance of these usual precautions in its DOJ Manual that "recommend[s] that prosecution of a compelled witness [to] be handled by an attorney unfamiliar with the substance of the compelled testimony." Id. (citing the United States Attorneys' Manual §1-11.400 (citations omitted)).

In this case, the OIC's lack of precautions taints the Grand Jury proceeding and the Indictment. Mr. Barger, the attorney who compelled Ms. Steele's immunized act of production in the Grand Jury, is the same attorney who indicted and is prosecuting her for that act. At the very minimum, Mr. Barger violated the provisions set forth in the DOJ Manual.

Applying Harris to the case at bar, the OIC's use of Ms. Steele's immunized act to indict her taints the entire Indictment, both because the act occurred before the Grand Jury and because the paragraph alleging her act as obstruction is realleged in each count. The only way to save the Indictment is for the OIC to prove it had an independent legitimate source for the act, which it logically cannot. Consequently, like Harris, the Indictment here must be dismissed.

C. The Court Must Conduct a Kastigar Hearing

Once a defendant demonstrates that she previously appeared before a grand jury under a grant of immunity, the district court must hold a hearing at which the prosecutor carries "the heavy burden of proving that all of the evidence it proposes to use was derived from . . . sources" independent of the immunized testimony. United States v. Jarvis, 7 F.3d 404, 414 (4th Cir. 1993)(emphasis added)(citing Kastigar v. United States, 406 U.S. at 461-62). See also United States v. France, 1998 U.S. App. Lexis 32527 (December 29, 1998).

To prevail in this case, the OIC must prove by a preponderance of the evidence that Ms. Steele's act of producing the Larry King Live videotape was derived from a source other than her compelled production. This is both factually and legally impossible. Further the OIC must prove that no evidence derived from the immunized act of production was used against Ms. Steele.

WHEREFORE, for the foregoing reasons, the Court must dismiss the Indictment in the above-captioned matter.

DATED: February 16, 1999

I hereby certify that a true and correct copy of the foregoing Notice of Hearing, Motion To Dismiss The Indictment For Violation Of Order Of Immunity And Incorporated Motion For A Kastigar Hearing (Steele Pretrial Motion No. 5), and Memorandum of Law in Support thereof was served, via hand-delivery and first class mail, on this 16th day of February, 1999, on the following:

Andrew L. Hurst

Upon consideration of Ms. Steele's Motion To Dismiss The Indictment For Violation Of Order Of Immunity And Incorporated Motion For A Kastigar Hearing, it is this _______ day of _____________, 1999, hereby

ORDERED that Ms. Steele's Motion is hereby GRANTED, and it is further

ORDERED that the indictment in this matter is dismissed.

____________________________

Hon.

United States District Court

Judge