A True Story of Lies by the CIA, and Abuse of Power by Federal Prosecutors Who Will Do Whatever it Takes

Brian Tamanaha

The Bush Administration and the Republican Congress have spewed out a constant stream of exhortations about the need for secrecy, for allowing the CIA to do its job, and for trusting federal prosecutors. In this time of heightened concern about terrorism, it is not easy to appreciate the dangers of giving in to the demands of the Bush Administration (as just occurred with the Military Commissions Act). Opponents are painted as liberals or civil libertarians who exaggerate the potential danger with alarmist assertions and abstract concerns about abuses unlikely to ever happen.

The following cautionary tale will help make the risks more concrete. It is about a young federal public defender handling a case, United States v. Rewald, which involved the CIA and several hundred documents containing classified information. One day, about a month into the trial, following a grueling cross-examination by the defense attorney of a witness from the CIA, which clearly harmed the government’s case, the federal prosecutors asked the judge for a closed hearing. In the closed hearing, with only the lawyers and the judge present, the lead prosecutor, from the U.S. Department of Justice, requested that the judge hold the defense attorney in criminal contempt for asking questions of the CIA witnesses that elicited prohibited classified information in open court.

Despite the protestations to the contrary of the public defender, Federal District Judge Harold Fong immediately agreed with the prosecutor. At that very moment, he ordered that the public defender would be put on trial for three counts of criminal contempt 30 days after the completion of the ongoing trial. Judge Fong also ruled that the public defender would be entitled to representation by counsel, which signaled that the judge contemplated that the lawyer could be sentenced to a year or more in prison if found guilty. The ongoing trial was recessed for the remainder of the afternoon, but it resumed the next day as if nothing had happened.

I am able to recount the details of this event because the assistant federal public defender was me, handling the case in the mid-1980s. To recap the hard-to-believe basics of the situation: in the middle of a trial, I was charged with three criminal offenses on the grounds that the questions I asked in open court prompted the witnesses to disclose classified information. At the time of these supposed offenses, the prosecutors objected neither to the questions nor the answers, and neither they nor the judge gave any indication of a problem until the moment the charges were lodged against me. So there I was, still handling the ongoing trial, but now also facing my own trial to begin 30 days after the current trial was over. Despite my compromised position, I was not allowed by the judge to withdraw as defense counsel, and our request for a mistrial in the ongoing case was denied. I continued to examine witnesses from the CIA, but now with pending criminal charges hanging over my head, and a real prospect of more to come.

You might think this could never happen in the U.S. legal system, but this bizarre story is true (doubters: check out U.S. v. Rewald), and played out in a federal court in Hawaii. After I relate a few other details of the case, the relevance to our present situation will be evident.

Rewald was running a Ponzi scheme. He set up an investment firm with a few initial investors, and sent out regular statements indicating unusually high earnings, which prompted additional investors to send money. Ultimately, he took in about $20 million dollars. Unfortunately for the investors, a significant proportion of the money was not actually invested. When the story broke, Rewald claimed that he set up the entire arrangement at the request of the CIA, to provide a cover operation to fund its activities in the Far East. [Please hold the snickering skepticism for a moment.].

The CIA admitted that they had a relationship with Rewald, but claimed that it was minimal. Rewald was merely a “phone drop.” He had a separate phone on his desk; a few CIA agents in the field carried a business card with that number, and Rewald’s only job for the CIA was to confirm to any inquirers that the person worked for him. Although a number of former and then current CIA agents received money from Rewald, CIA officials claimed that they too were duped by Rewald, and never would have used him as a phone drop had they known about his criminal activities.

The scheme fell apart when a curious IRS agent happened to observe kids (Rewald's) being dropped off at school every morning in a limousine driven by a chauffeur. After a bit of preliminary checking, the IRS opened an investigation into the tax situation of Rewald and his firm.

When he was informed by the IRS of the investigation, Rewald immediately notified his contact in the CIA and asked what he should do. The CIA then provided Rewald with three different stories to give the IRS investigators, and instructed him to pick one. To repeat: they provided Rewald with entirely false, concocted stories with the understanding that he would then give one of them to another federal agency in the middle of a criminal investigation.

All of this sounds shocking enough, but there is an even more chilling point. In the course of cross-examination, I confronted a CIA official with the document the agency sent setting out the alternative stories for Rewald to tell the IRS. The official admitted that none of the stories were in fact true. However, he insisted that they were not “lies.” He said that they were “creative stories.” When I asked him to tell me the difference between “lies” and “creative stories,” given that both are untrue, he said (I paraphrase):

“Untruths are not ‘lies,’ but 'creative stories,' when they are made up in the interest of protecting the country. And the CIA is protecting the country.”

This was the testimony of a high ranking CIA official, under oath, in federal district court. This kind of mindset, needless to say, can justify almost anything.

Now consider a bit of information about the prosecutors. The lead prosecutor in the Rewald case was Theodore Greenburg of the Department of Justice. His second was John Peyton, an Assistant United States Attorney in Hawaii. Curiously, prior to joining the U.S. Attorney’s Office in Hawaii, John Peyton was the Chief of Litigation in the CIA. Peyton claimed that his transfer to Hawaii soon after the inception of the investigation into Rewald’s activities was a pure coincidence, and had nothing to do with the involvement of the CIA in Rewald’s activities. Judge Fong denied our request to remove AUSA Peyton from the case, finding that he had no reason to question Peyton’s claim, although he also refused our request to order Peyton to produce the personnel records connected to his transfer.

Ted Greenburg was lead counsel for the Justice Department in a number of cases involving the CIA, including United States v. Wilson, which he prosecuted in the early 1980s. Wilson claimed in his defense that he was working for the CIA. At his trial, the CIA submitted an affidavit denying that he was working for them at the time.

Two decades later, the CIA finally admitted that the affidavit was false. Wilson was indeed working for them. It turns out, furthermore, that the prosecutors in the case knew that the affidavit was false, but used it at trial anyway. In 2003, after he had spent almost 20 years in prison, Federal District Judge Lynn Hughes vacated Wilson’s conviction (289 F. Supp. 2d 801), observing:

In the course of American justice, one would have to work hard to conceive of a more fundamentally unfair process with a consequently unreliable result than the fabrication of false data by the government, under oath by a government official, presented knowingly by the prosecutor in the courtroom with the express approval of his superiors in Washington. (p. 816)

The court’s opinion identifies Ted Greenburg as the prosecutor who knowingly used the false affidavit. But he was not alone: “The court has identified about two dozen government lawyers who actively participated in the original non-disclosure to the defense, the false rebuttal testimony, and the refusal to correct it.” (p. 811).

The relevance of this story for today should be obvious, and I will not belabor it. The CIA will lie (or tell “creative stories”)—so don’t believe what you read about CIA investigators stopping their harsh interrogations out of concern for liability—and lawyers in the Justice Department will do whatever it takes to win a case. [Of course, there are many superb lawyers in the Justice Department with integrity--Marty Lederman of Balkinization was one of them.].

A thread that runs through this story is that the government actors involved were not necessarily bad people—they were simply doing what they thought was necessary to defend their country, and they used this end to justify their extreme conduct. That’s the problem. When combined with power and with an unwavering conviction in the correctness of one’s conduct, this mindset—which the Bush Administration oozes—can lead to terrible abuses.

Those many people who think that the MCA is nothing to be concerned about—“nothing bad will happen to good Americans, or to innocent people”—are being naïve.

This post has gone on far too long, so I will quickly wrap up the story I began with. Rewald was convicted on mail fraud and tax charges and sent to prison. Thirty days after the trial ended, three lawyers from the Justice Department (including Ted Greenburg) flew back to try me on three counts of criminal contempt. Judge Fong recused himself at our request, and Federal District Judge Marilyn Hall Patel came from San Francisco to preside over my case. I prepared a motion to dismiss the charges on the grounds that I had not in fact asked questions that elicited unapproved classified information; indeed, in one instance the testimony identified by the prosecutors as inappropriate had actually come following a question interjected by Judge Fong. On the morning of my trial, while I sat at the table as a defendant, Judge Patel dismissed the charges against me with prejudice.

Thank you Judge Patel.
Posted 2:07 PM by Brian Tamanaha [link]