Court Opinion

ID: 3016396
Source: CourtListenerOpinion
Date Created: 2015-10-13 22:15:31.560903+00
Date Added: 2024-06-11T15:03:19.450004
License: Public Domain

___________

                                  No. 95-3268
                                  ___________

United States of America,             *
                                      *
           Appellant,                 *
                                      *
     v.                               *
                                      *
Jim Guy Tucker; William J.            *    Appeal from the United States
Marks, Sr.; John H. Haley,            *    District Court for the
                                      *    Eastern District of Arkansas.
           Appellees.                 *
------------------------------        *
                                      *
United States Department of           *
Justice; Sun Diamond Growers          *
of California,                        *
                                      *
     Amicus Curiae.                   *

                                  ___________

                   Submitted:     December 12, 1995

                         Filed:   March 15, 1996
                                  ___________

Before BOWMAN, BEAM, and LOKEN, Circuit Judges.

                                  ___________

BOWMAN, Circuit Judge.

     The United States, represented by Independent Counsel Kenneth W.
Starr, appeals from an order of the District Court dismissing an indictment
brought against Jim Guy Tucker, William J. Marks, Sr., and John H. Haley.
The court ruled that the Office of Independent Counsel (OIC) has no
jurisdiction to prosecute the case.       We reverse.
     On August 5, 1994, the Division for the Purpose of Appointing
Independent Counsels (commonly known and herein referred to as the Special
Division), pursuant to a request from United States Attorney General Janet
Reno, appointed Starr as Independent Counsel

     to investigate to the maximum extent authorized by the
     Independent Counsel Reauthorization Act of 1994 whether any
     individuals or entities have committed a violation of any
     federal criminal law, other than a Class B or C misdemeanor or
     infraction, relating in any way to James B. McDougal's,
     President William Jefferson Clinton's, or Mrs. Hillary Rodham
     Clinton's relationships with Madison Guaranty Savings & Loan
     Association, Whitewater Development Corporation, or Capital
     Management Services, Inc.

In re Madison Guar. Sav. & Loan Ass'n, Div. No. 94-1, Order at 1-2 (D.C.
Cir. Sp. Div. Aug. 5, 1994) (emphasis added).1   The order further conferred
upon Starr "jurisdiction and authority to investigate other allegations or
evidence of violation of any federal criminal law . . . by any person or
entity developed during the Independent Counsel's investigation referred
to above and connected with or arising out of that investigation."   Id. at
2 (emphasis added).     The OIC also was empowered to investigate any
obstruction of justice "in connection with any investigation of the matters
described above."     Id.   Finally, the Special Division vested in the
Independent Counsel "jurisdiction and authority to seek indictments and to
prosecute any persons or entities involved in any of the matters described
above, who are reasonably believed to have committed a violation of any
federal criminal law arising out of such matters."   Id.   In sum, the court
ordered that the Independent Counsel "shall have prosecutorial jurisdiction
to fully investigate and prosecute the subject matter with respect to which

     1
      Under 28 U.S.C. § 49 (1994), the Chief Justice appoints
three judicial officers to serve two-year terms for this division
of the United States Court of Appeals for the District of
Columbia.

                                    -2-
the Attorney General requested the appointment of independent counsel, as
hereinbefore set forth, and all matters and individuals whose acts may be
related to that subject matter," including crimes "that may arise out of
the above described matter."       Id. at 3 (emphasis added).

      Starr succeeded Robert B. Fiske, Jr., who had been appointed by the
Attorney General in January 1994 pursuant to 28 C.F.R. § 600.1 (1993)
(after the 1987 statutes reauthorizing appointment of independent counsel
had expired, and before the OIC was reauthorized again in June 1994), both
in the position and in his scope of authority as Independent Counsel.
Fiske had been appointed, in turn, to replace a team of lawyers from the
fraud section of the criminal division of the Justice Department, which had
taken over the Madison Guaranty Savings & Loan Association investigation
in November 1993 when Paula Casey, United States Attorney for the Eastern
District of Arkansas, recused herself and her staff from the investigation
and   prosecution   of   matters   concerning   Madison   Guaranty   and   Capital
Management Services (CMS).

      By letter dated September 2, 1994, the Acting Assistant Attorney
General, Criminal Division, responding to Starr's August 31 request,
referred to the OIC "investigative and prosecutorial jurisdiction over
. . . [w]hether any person committed any federal crime relating to the
bankruptcy action entitled In Re: Landowners Management System, Inc., Tax
Identification No XX-XXXXXXX, Debtor, United States Bankruptcy Court,
Northern District of Texas, Case No. 787-70392 (Chapter 11)."         The letter
noted that the Attorney General had agreed that this matter, and another
that was redacted from the record that is before us in this case, are
related to the OIC's investigation.       Letter from John C. Keeney, Acting
Assistant Attorney General, Criminal Division, to Kenneth W. Starr (Sept.
2, 1994).    The Independent Counsel sought referral, and the Attorney
General granted it, pursuant to 28 U.S.C. § 594(e) (1994), which provides,
as relevant here:    "An independent counsel may ask the

                                       -3-
Attorney General or the division of the court to refer to the independent
counsel   matters    related   to   the   independent   counsel's   prosecutorial
jurisdiction, and the Attorney General or the division of the court, as the
case may be, may refer such matters."       Out of what the Independent Counsel
referred to during oral argument of this appeal as "an abundance of
caution," the Independent Counsel in December 1994 also sought referral
jurisdiction over the investigation and prosecution of federal criminal
matters relating to the Landowners Management System (LMS) bankruptcy
(among other matters) from the Special Division.            On December 19, the
Special   Division issued an Order of Referral, a paragraph of which
precisely tracks the Attorney General's September 2, 1994, referral to the
OIC of all investigative and prosecutorial jurisdiction over federal
criminal matters relating to the LMS bankruptcy.

     The OIC's criminal investigation of matters relating to the LMS
bankruptcy culminated on June 7, 1995, when a grand jury for the Eastern
District of Arkansas issued the indictment that is the subject of this
appeal.   Governor of Arkansas Jim Guy Tucker, his Little Rock lawyer John
H. Haley, and his San Francisco business partner William J. Marks, Sr.,
were variously charged with tax fraud; bankruptcy fraud; making false
material statements for the purpose of influencing CMS, a federally
licensed management company in Arkansas; and conspiracy to commit various
of these acts.      The specifics of the indictment are discussed in further
detail as necessary to the discussion in Part II of this opinion.

     The case was assigned to Judge Henry Woods,2 who on September 5,
1995, held a hearing on the defendants' motions to dismiss.          Within a few
hours, the court issued a twenty-one-page

     2
      United States District Judge for the Eastern District of
Arkansas.

                                          -4-
order and opinion dismissing the indictment on the ground that the OIC
lacked prosecutorial jurisdiction over this case.

                                          I.

      The Independent Counsel's first issue on appeal was addressed by the
District Court somewhat summarily and with little legal analysis:           whether
the courts have the authority to review the Attorney General's decision
under 28 U.S.C. § 594(e) to refer jurisdiction to the OIC.           We review this
question of law de novo and hold that the Attorney General's exercise of
her   discretion   to   refer   matters    to   the   OIC   for   investigation   and
prosecution is not reviewable.

      An independent counsel, of course, is not an ordinary United States
attorney.    The counsel is appointed by the judiciary (the Special Division)
at the behest of the Attorney General.          28 U.S.C. §§ 593(b)(1), 592(c)(1)
(1994).     The scope of counsel's prosecutorial jurisdiction is delineated
by the Special Division.    Id. § 593(b)(1).       Counsel may be removed only by
impeachment and conviction, or "by the personal action of the Attorney
General and only for good cause, physical or mental disability . . ., or
any other condition that substantially impairs the performance of such
independent counsel's duties."      Id. § 596(a)(1) (1994).         The independent
counsel law specifically provides that the United States District Court for
the District of Columbia has jurisdiction to review a removal decision of
the Attorney General upon petition by the ousted independent counsel.             Id.
§ 596(a)(3) (1994).     The Special Division, or the independent counsel, may
terminate an OIC when an investigation and any resulting prosecutions are
substantially completed.     Id. § 596(b) (1994). The independent counsel is
subject to congressional oversight, id. § 595 (1994),

                                          -5-
and must make periodic reports to the Special Division, id. § 594(h)
(1994).3

     The unusual nature of the office notwithstanding, a duly appointed
independent   counsel   is   a   prosecutor   for   the   United   States,   and
prosecutorial decisions of the nature here in question--who should be
prosecuted and for what alleged crimes--have long been committed to the
discretion of the prosecutor.4       "In our criminal justice system, the
Government retains 'broad discretion' as to whom to prosecute. . . . This
broad discretion rests largely on the recognition that the decision to
prosecute is particularly ill-suited to judicial review."      Wayte v. United
States, 470 U.S. 598, 607 (1985) (quoting United States v. Goodwin, 457
U.S. 368, 380 n.11 (1982)); see also Massey v. Smith, 555 F.2d 1355, 1356
(8th Cir. 1977) (per curiam) ("The authority to decide against whom federal
indictments shall be sought lies almost exclusively with the United States
Attorneys or the Justice Department, and their decisions in this regard are
not generally subject to judicial review.").

     Although prosecutorial discretion is not the precise issue here, we
do not see any reason to believe that the Attorney General's referral
decision is any more subject to judicial review

     3
      The Supreme Court has held that the independent counsel law
does not violate the Appointments Clause, Article III, or the
separation of powers principles of the Constitution. Morrison v.
Olson, 487 U.S. 654 (1988).
     4
      As the Supreme Court noted in Wayte v. United States, 470
U.S. 598, 608 (1985), a prosecutor's decisions are not free from
scrutiny when the challenge is to the constitutionality of those
decisions, such as selective prosecution that violates the Equal
Protection Clause. See United States v. Batchelder, 442 U.S.
114, 125 & n.9 (1979). But there is no constitutional right of a
criminal defendant to choose his or her prosecutor and thus there
can be no constitutional dimension to the challenge to the
prosecutor's jurisdiction when it is conceded, as it is here,
that there is some federal prosecutor who is empowered to bring
the charges on which the appellees have been indicted.

                                     -6-
than the usual prosecutorial decisions.         But we need not rest our decision
on intuition guided by a consideration of prosecutorial discretion and its
unreviewability in its ordinary contexts, for the definitive answer to the
question of reviewability in this case is found in legislative history that
cannot be ignored (although the appellees and the District Court elected
to do just that).

     In 1987, the second time legislation establishing the independent
counsel process was reauthorized, the conferees discussed the possibility
of codifying the holdings of Dellums v. Smith, 797 F.2d 817 (9th Cir.
1986), and Banzhaf v. Smith, 737 F.2d 1167 (D.C. Cir. 1984) (en banc) (per
curiam) (the legislative history incorrectly referred to the case as
Banzhai    v.   Smith),   wherein   two   circuit   courts   of    appeals   "properly
reflect[ed] legislative intent" by concluding "that no judicial review is
available of decisions by the Attorney General not to conduct preliminary
investigations."      H.R. Conf. Rep. No. 452, 100th Cong., 1st Sess. 22
(1987), reprinted in 1987 U.S.C.C.A.N. 2185, 2188.5               The joint statement
explained, however, that such a provision was not included in the jointly
proposed legislation "because the conferees did not wish to suggest, by
indicating a lack of judicial review of Attorney General decisions on
preliminary investigations, that judicial review might be available of
other Attorney General decisions under this chapter."             Id.   Thus one might
quite logically conclude that, where Congress did intend there to be
judicial

     5
      The court in Banzhaf v. Smith, 737 F.2d 1167, 1168 (D.C.
Cir. 1984) (en banc) (per curiam), held "that Congress
specifically intended in the Ethics in Government Act to preclude
judicial review, at the behest of members of the public, of the
Attorney General's decisions not to investigate or seek
appointment of an independent counsel with respect to officials
covered by the Act." The court in Dellums v. Smith, 797 F.2d
817, 823 (9th Cir. 1986), reached the same conclusion, noting its
view, based on its reading of 28 U.S.C. § 595 (1994)--the
provision concerning congressional oversight of the OIC--that
Congress intended "that enforcement by members of congressional
judiciary committees would be effective in preventing the
Attorney General from refusing to obey the law."

                                          -7-
review of Attorney General decisions, it specifically ordained judicial
review, as it did when providing for judicial review of an Attorney
General's decision to remove an independent counsel.             To be certain that
its point--that unreviewability of the Attorney General's decisions is the
rule when the independent counsel law does not expressly provide otherwise-
-was not missed, the Committee stated, in no uncertain terms that "[t]he
conferees agree that an Attorney General's determinations under the
independent counsel law are not subject to judicial review."            Id. (emphasis
added).   The District Court and all the appellees studiously ignore this
compelling language from the legislative history, despite the fact that it
was   brought   to   their   attention,    evidently   finding   it    impossible   to
           6
challenge.      We too think it is irrefutable, and conclude that this
legislative history, which confirms the conclusion one logically would
reach by reading the statute, settles the question.                   For us to hold
otherwise would subvert congressional purpose in creating and empowering
the independent counsel and in structuring the office as it did.

      United States v. Juvenile Male, 923 F.2d 614 (8th Cir. 1991), to
which the appellees direct our attention for the proposition

      6
      In an apparent effort to avoid the illuminating legislative
history concerning review of the Attorney General's decisions
under the independent counsel law, the appellees urge that they
are actually seeking (or, in addition, they are seeking) review
of the Independent Counsel's decision to ask the Attorney General
to refer, and his decision to accept referral of, the matters in
question. This argument is specious. Any possible issue
relating to counsel's decision to seek or to accept referral in
this case is mooted by the decision of the Attorney General to
refer the matters in question to the jurisdiction of the
Independent Counsel. The contentions that it is the referral
from the Special Division that is challenged here and that the
courts may review that referral strike us as being even more
specious, but in fact we need not and do not consider them.
Referral by the Special Division, as noted above, was redundant
and unnecessary. Given that the Attorney General has authority
to make the referral independently, and did so here, the
additional, identical referral by the Special Division, though it
may be a source of additional comfort to the OIC, is a moot point
in this appeal.

                                          -8-
that the Attorney General's referral is reviewable, is inapposite.                    In
Juvenile Male, the issue was the reviewability of the Attorney General's
decision to certify, under the Juvenile Justice and Delinquency Prevention
Act, that the crime with which a juvenile was charged was a "crime of
violence."      The    Court   held   that    the    certification   in   question   was
reviewable.     Cf. United States v. C.G., 736 F.2d 1474 (11th Cir. 1984)
(holding certification under the Act that appropriate state court did not
have jurisdiction was not reviewable); United States v. Vancier, 515 F.2d
1378 (2d Cir.) (same), cert. denied, 423 U.S. 857 (1975).                   We stated,
"While this court may not have the power to guide a federal prosecutor's
discretion, we must insure that the exercise of that discretion is within
the confines" of the statute.          Juvenile Male, 923 F.2d at 617-18.            The
argument that the Juvenile Male holding is applicable here ignores the
definitive legislative history of the law reauthorizing the OIC that
clearly evidences Congress's intent that (unless otherwise provided in the
statute) the Attorney General's decisions under the independent counsel law
are nonjusticiable.       Further, the question whether a juvenile has been
charged with a "crime of violence" is easily reviewed by a court and is
well   within    the    expertise     of     the    judiciary.    The     "relatedness"
determination at issue here, on the other hand, is an exercise of a
discretion that only the prosecutor and the Attorney General command,
because of their intimate knowledge of the course of the investigation,
including witness statements, and of other proceedings that may be ongoing
before the grand jury.         That is, the "relatedness" question is largely
without the standards that the judiciary typically requires for review,
another reason for entrusting it, as Congress has, to the broad (and
unreviewable) discretion of the Attorney General.

       Reliance on Gutierrez de Martinez v. Lamagno, ___ U.S. ___, 115 S.
Ct. 2227 (1995), in support of the appellees' position also is misplaced.
Gutierrez was a case decided under the terms of the Westfall Act, which
authorizes the Attorney General to certify that

                                           -9-
a federal employee sued for a wrongful or negligent act was acting within
the scope of employment at the time of the alleged act, so that the United
States is substituted for the defendant.               In the ordinary case, such
certification would allow a plaintiff to maintain an action under the
Federal Tort Claims Act (FTCA), although because of an exception to the
FTCA the result in Gutierrez was just the opposite, and the United States
retained its sovereign immunity from suit.          The issue in Gutierrez was the
reviewability of that certification.            The Court noted two factors that
"weigh[ed] heavily" in its analysis:          that "the Attorney General herself
urge[d] review," and that review is generally available "when a government
official's determination of a fact or circumstance . . . is dispositive of
a court controversy."       Id. at ___, 115 S. Ct. at 2231.

        Neither factor is present here.           In this case, the Department of
Justice, as amicus curiae, agrees with the Independent Counsel that the
Attorney General's referral is not reviewable.              Further, as is apparent
from    the    District    Court's   unchallenged     acknowledgement        that      these
defendants properly may be prosecuted by the United States Attorney for the
Eastern    District   of    Arkansas   (who   has   recused      herself    from    matters
concerning CMS) or by the Attorney General (who made the referral to the
OIC),    the   Attorney    General's   referral     does   not    "instruct[]      a   court
automatically to enter a judgment pursuant to a decision the court has no
authority to evaluate."       Id. at ___, 115 S. Ct. at 2234.              The absence of
judicial review of the discretionary referral decision merely allows the
prosecution to proceed without the delay that judicial review inevitably
would entail; it does not direct the outcome of the prosecution.                   Further,
unlike the situation in Gutierrez, this is not a case where the Attorney
General has a vested interest in the referral such that she "is hardly
positioned to act impartially."         Id. at ___, 115 S. Ct. at 2233.

                                         -10-
      At oral argument we were directed to the admonition of the Gutierrez
Court that "judicial review of executive action `will not be cut off.'"
Id. at ___, 115 S. Ct. at 2231 (quoting Abbott Lab. v. Gardner, 387 U.S.
136, 140 (1967)).    But considering our reading of the independent counsel
law and the uncontroverted legislative history we have discussed above, the
full, unabridged language of the Court does not support the appellees'
position, and actually supports our holding that the Attorney General's
referral decisions are nonjusticiable:          "Accordingly, we have stated time
and again that judicial review of executive action `will not be cut off
unless there is persuasive reason to believe that such was the purpose of
Congress.'"   Id. (emphasis added).       It is fair to say that the "reason to
believe" here is more than just "persuasive," it is beyond reasonable
dispute.

      Accordingly, we hold that the Attorney General's referral decision
under § 594(e) is not reviewable and that the District Court erred in
holding otherwise.

                                         II.

      Even if the courts had jurisdiction to review the Attorney General's
"relatedness" determination under § 594(e), which in Part I of this opinion
we have held the courts do not have, we nevertheless would reverse the
District Court, which reviewed the "relatedness" issue and disagreed with
the   Attorney   General's    determination.        We   begin    our   discussion    of
"relatedness"    with   a   look   at   the    factual   basis,   according   to     the
indictment, for the charges against Tucker, Marks, and Haley.

      The grand jury's indictment of June 7, 1995, was the culmination of
an investigation that began on Independent Counsel Fiske's watch.                    The
indictment alleged that Tucker and Marks made false material statements to
CMS for the purpose of securing a $300,000 loan.                   Tucker and Marks
represented to CMS that the loan

                                        -11-
was for investment in D & L Telecommunications, Inc., when in fact           it was
used as part of the cash collateral pledged for a personal loan of $8.5
million from Fleet National Bank.       Allegedly, $6 million of that loan was
used to purchase controlling interest in Planned Cable Systems Corporation
(PCS), a cable television company in which Marks, who was president of the
company, already was a minor shareholder.           According to the indictment,
Haley acquired a "shelf" corporation, that is, one with no assets or
operations, in Texas, called LMS.        The appellees merged PCS into LMS and
Marks was named president.        In November 1987, LMS filed a fraudulent
bankruptcy in the Northern District of Texas.        The proposed reorganization
plan, approved by all creditors listed in the bankruptcy schedules before
LMS   even   filed   its   bankruptcy   petition,   transferred   valuable    cable
television assets to Tucker, the only secured creditor listed, and to a
corporation controlled by Tucker, listed as an unsecured creditor.              The
indictment alleges that this scheme was undertaken to avoid paying $4
million in taxes that would have been owed on a sale of the cable
television assets.

      Also relevant here is an indictment from the same grand jury handed
down on August 17, 1995, after the arguments on the question of dismissal
had been briefed to the District Court.        The indictment charged Tucker,
James McDougal, and Susan McDougal with fraudulent loan schemes involving
Madison Guaranty and CMS.
      As we mentioned in our discussion in Part I, "relatedness" in the
context at issue here is an essentially standardless concept and, as the
statute is written, one that is exceedingly broad.        Section 594(e) requires
only that referred matters be "related to the independent counsel's
prosecutorial jurisdiction."      The term "related" is undefined and without
parameters.   Congress did not indicate the degree of consanguinity between
matters that should be evident before jurisdiction may be properly asserted
by the OIC (further indication, we might add, that it was to be a
determination entrusted to the discretion of the Attorney General).

                                        -12-
We also think it is relevant to note that the original jurisdiction of this
OIC, which is not at issue here, includes authority "to investigate other
allegations or evidence of violation of any federal criminal law . . . by
any    person   or   entity   developed   during   the   Independent   Counsel's
investigation referred to above and connected with or arising out of that
investigation."7     In re Madison Guar. Sav. & Loan Ass'n, Div. No. 94-1,
Order at 2 (emphasis added); see also 28 U.S.C. § 593(b)(3) (1994) (scope
of prosecutorial jurisdiction).     Arguably, the prosecutions at issue fall
within the broad grant of original prosecutorial jurisdiction without a
referral even being necessary.     See United States v. Wilson, 26 F.3d 142,
148 (D.C. Cir. 1994) ("[T]he scope of a special prosecutor's investigatory
jurisdiction can be both wide in perimeter and fuzzy at the borders."),
cert. denied, ___ U.S. ___, 115 S. Ct. 1430 (1995).           Even so, the OIC
sought and received a referral from the Attorney General, which set forth
with

       7
      The appellees seem to contend in parts of their argument
that the Independent Counsel is relying on "arising out of"
jurisdiction, as set forth in two places in the original grant of
jurisdiction, for his referral jurisdiction. See also 28 U.S.C.
§ 593(b)(3) (1994) (scope of prosecutorial jurisdiction "shall
also include the authority to investigate and prosecute Federal
crimes . . . that may arise out of the investigation or
prosecution of the matter"). They argue that the "arising out
of" language concerns the investigation or prosecution of a crime
committed as a direct result of the OIC's investigation or
prosecution, that is, an obstruction of justice crime such as
perjury. We need not decide whether "arising out of" as
variously used in the original grant of jurisdiction should be so
narrowly interpreted, as the OIC has jurisdictional authority to
investigate and prosecute not only obstruction of justice crimes
related to his grant of authority but also to investigate matters
"developed during the Independent Counsel's investigation . . .
and connected with or arising out of that investigation." In re
Madison Guar. Sav. & Loan Ass'n, Div. No. 94-1, Order at 2 (D.C.
Cir. Sp. Div. Aug. 5, 1994) (emphasis added). Further, in order
to acquire referral jurisdiction over a matter, the OIC does not
need to rely on either the "arising out of" or the "connected
with" language to justify his request; the referred matters need
only be "related." 28 U.S.C. § 594(e) (1994).

                                      -13-
specificity the additional criminal matters to be investigated and possibly
prosecuted by the OIC.

     Considering the open-ended phrasing of § 594(e) and the expansive
jurisdiction originally granted the OIC, we believe that the association
between the original jurisdiction and the jurisdiction sought via referral
need not be as intimate as the appellees suggest.8      The appellees argue
that the matters must be "demonstrably related" in order for referral
jurisdiction to be proper.      That language is excerpted from Morrison v.
Olson, 487 U.S. 654 (1988), wherein the Supreme Court addressed the
constitutionality of the independent counsel provisions of the Ethics in
Government Act.   Reference to the Court's entire discussion, however, makes
it clear that the Court was not delimiting "relatedness" for the purpose
of referral jurisdiction.      Instead, the Court was observing that, due to
the temporary nature of the OIC, "the nature and duties of which will by
necessity vary with the factual circumstances giving rise to the need for
an appointment in the first place," Congress properly conferred upon the
Special Division the authority "to define the scope of the office."      Id.
at 679.   The Court went on:

     This said, we do not think that Congress may give the Division
     unlimited discretion to determine the independent counsel's
     jurisdiction. In order for the Division's definition of the
     counsel's jurisdiction to be truly "incidental" to its power to
     appoint, the jurisdiction that the court decides upon must be
     demonstrably related to the factual circumstances that gave
     rise to the Attorney General's investigation and

     8
      We reject the suggestion that the OIC has disavowed any
relation between the indictment in this case and the Independent
Counsel's original jurisdiction. We agree with the OIC that this
is an obvious distortion of the Independent Counsel's position,
which from the initial request for referral always has been that
the matter with respect to which the OIC sought referral and the
original grant of jurisdiction are indeed related within the
meaning of the statute.

                                     -14-
        request for the appointment of the independent counsel in the
        particular case.

Id.     It is clear that the limitation in question (assuming, as do the
appellees, that "demonstrably related" is a genuine limitation) was upon
the authority of the Special Division to define jurisdiction in the first
instance, and was the result of the constitutional concerns (appointments
clause and separation of powers) generated by Congress's decision to vest
executive powers in the judiciary (the Special Division).                      "Demonstrably
related" is not, as Marks asserts, "[t]he applicable legal standard for
evaluating whether the Independent Counsel has authority to prosecute the
instant case."         Brief of Appellee Marks at 13.            We do not agree that the
subject matter of the referral jurisdiction must be "demonstrably related"
either "`to the factual circumstances' that give rise to the appointment,"
Brief       of   Appellee   Tucker   at   10,   or   "to   the   subject      matter   of   the
Independent Counsel's jurisdiction," Brief of Appellee Marks at 13.9                        We
thus reject the appellees' contention that the subject matter of the
referral         jurisdiction   is   required   to   relate      to   James   McDougal's     or
President Clinton's or Mrs. Clinton's relationship to CMS or Madison
Guaranty or the Whitewater Development, which is the subject matter of the
Independent Counsel's original investigatory jurisdiction.                      If that were
the test for a proper referral, then referral never would be necessary and
§ 594(e) would be superfluous.            We think it is clear that, contrary to the
appellees' arguments, relatedness for purposes of referral under § 594(e)
depends upon the procedural and factual link between the OIC's original
prosecutorial jurisdiction and the matter sought to be referred.

        9
      Haley simply argues that the independent counsel law and
Morrison "require that matters to be referred must be
`demonstrably related,'" Brief of Appellee Haley at 5, although
to what they must be so related is not stated.

                                             -15-
        The matters over which the OIC sought referral jurisdiction were
developed during the investigation conducted by the OIC under the original
grants     of    jurisdiction,         first     the    jurisdiction    of    the   regulatory
Independent Counsel (Fiske) and then the statutory Independent Counsel
(Starr).    It is apparent from the record before us, even though grand jury
proceedings to which we are not privy continue, that there is overlap in
witnesses and in defendants between the original prosecutorial jurisdiction
(see August 17, 1995, indictment) and the referral jurisdiction (see June
7, 1995, indictment).        Further, as the August 17 indictment demonstrates,
there is a clearly defined relationship between Tucker (referral) and
McDougal (original), Tucker (referral) and CMS (original and referral), and
Tucker (referral) and Madison Guaranty (original).                      (CMS was an entity
named in the original grant of jurisdiction and allegedly defrauded by the
activities       charged    in    the    August    17    indictment,    and   material   false
statements to CMS by Tucker and Marks constitute a part of the charges in
the June 7 indictment.)                We have no difficulty in concluding that the
required relatedness between original and referral jurisdiction is present
here.

        The appellees further argue that they are not "persons" within the
meaning of 28 U.S.C. § 591 (1994) who can be investigated by the OIC, and
therefore they cannot be prosecuted by the OIC for wrongdoing.                      The covered
"persons"       described    by    §    591(b)    are    high-ranking    federal     executive
officials and national campaign committee officers.                      Tucker, Marks, and
Haley are outside the definition.                But § 591(b) refers to persons to whom
§ 591(a) applies, and § 591(a) sets out the requirement of a preliminary
investigation by the Attorney General:

        The Attorney General shall conduct a preliminary

                                               -16-
       investigation in accordance with section 592 whenever the
       Attorney General receives information sufficient to constitute
       grounds to investigate whether any person described in
       subsection (b) may have violated any Federal criminal law . . .
       .

Thus it is the alleged culpability of a covered "person" that may require
the Attorney General to conduct an initial preliminary investigation.          But
the ultimate scope of jurisdiction of the OIC--whom he may investigate and
whom he may prosecute--as determined by the Special Division, is not
necessarily     limited   to   covered    persons,   and   neither   is   referral
jurisdiction.    Moreover, referral jurisdiction requires only relatedness
to the original prosecutorial jurisdiction; nowhere do the OIC provisions
require that a § 591 preliminary investigation into the involvement of
covered persons be conducted before a matter may be referred to an existing
OIC.   Finally, the appellees' argument is in any event inapposite to their
case, for here the Attorney General originally sought the appointment of
independent counsel under 28 U.S.C. § 591(c) because the investigation and
prosecution would present a "political conflict of interest," not because
covered persons were the targets.

       The appellees also argue that the Independent Counsel was, in
reality, seeking expansion jurisdiction, not referral jurisdiction, and
that he did not comply with the requirements of expansion jurisdiction, or,
in the alternative, that he should have sought expansion jurisdiction
instead of referral jurisdiction.         Expansion jurisdiction may be granted
to the OIC by the Special Division upon the request of the Attorney
General, if possible violations of criminal law by § 591(b) "covered
persons" that are outside the prosecutorial jurisdiction of the OIC come
to the attention of the independent counsel.         28 U.S.C. § 593(c) (1994).
If, after a 28 U.S.C. § 592 (1994) preliminary investigation, the Attorney
General determines that further investigation is warranted, the Special
Division then must either expand the existing OIC's jurisdiction or

                                         -17-
appoint another independent counsel.               The argument that the Independent
Counsel and the Attorney General failed to comply with the requirements of
§ 593(c) (expansion jurisdiction) is irrelevant to this case, because in
fact the Independent Counsel did not seek expansion jurisdiction.                           He
clearly   sought--and       received--referral       jurisdiction       under    §    594(e),
obviating   any    need     to    comply   with    the   requirements     for     expansion
jurisdiction.     As for the contention that the Independent Counsel should
have sought expansion jurisdiction in the first place, and not referral
jurisdiction,     our decision that referral was proper because the referred
matter is related to the Independent Counsel's prosecutorial jurisdiction
renders this argument moot.

      Assuming for the sake of argument that the discretion exercised by
the   Attorney    General    in    referring      "related"   matters    to     the   OIC   is
reviewable, and giving the Attorney General the deference that is due such
discretionary decisions, we hold that she did not abuse her discretion in
determining that the subject matter of the referral jurisdiction in this
case is "related" to the Independent Counsel's original prosecutorial
jurisdiction within the meaning of 28 U.S.C. §                  594(e).         The OIC has
jurisdiction to prosecute this case.

                                           III.

      We come now to the Independent Counsel's request that this case be
assigned to a judge other than Judge Woods upon remand to the District
Court.    We conclude that this request must be granted to preserve the
appearance of impartiality.

                                           -18-
        The Independent Counsel relies primarily on newspaper articles to
support his request.10        First, there are articles that connect Judge Woods
and Hillary Rodham Clinton.          Judge Woods appointed her as counsel for a
special committee in the Pulaski County, Arkansas, school desegregation
case, and was quoted as saying that he "did work with Hillary" and that he
"came to admire her during that period."         Rex Nelson, Road to Tucker trial
full of twists for Judge Woods, Ark. Democrat-Gazette, Sept. 3, 1995, at
1A, 20A; see also Connie Bruck, Hillary the Pol, New Yorker, May 30, 1994,
at 58, 69.         In the Arkansas Democrat-Gazette article, the newspaper
reported that Judge Woods said, "If anything came up regarding President
Clinton, I would recuse," because of the Judge's relationship with Hillary
Clinton.        Nelson, supra, at 20A.      A column in a daily periodical with
national--actually international--circulation reported that Judge Woods
wrote to then Deputy White House Counsel, the late Vincent Foster, in July
1993 to ask whether he should grant an interview where the topic was to be
Hillary Rodham Clinton.        Micah Morrison, Arkansas Judge Runs the Clock on
Whitewater, Wall St. J., Oct. 4, 1995, at A14.                  Finally, in a column
criticizing efforts "to get federal Judge Henry Woods, a Democratic
appointee,       off   Gov.   Jim   Guy   Tucker's   criminal    case,"   the   author
acknowledged, "Indeed, the judge spent the night at the White House the
night Republicans swept a majority of Congress last November."                     Max
Brantley, Political notebook, Ark. Times, June 30, 1995, at 16.

        For their part, President and Mrs. Clinton have been reported to have
expressed continued support for Tucker since his indictment by the grand
jury.        It was reported in an article on the front page of the Arkansas
Democrat-Gazette that, the day after Tucker pleaded

        10
      In order to adequately consider the Independent Counsel's
argument for reassignment, once having determined that his
request is properly ours to grant, see infra, we asked the OIC to
supplement the record by providing to the Court copies of the
articles upon which he relies.

                                          -19-
not guilty to the charges in this case, the Clintons attended a fund-
raising    luncheon     in    Little   Rock,    Arkansas,     where    Tucker     received a
"sustained standing ovation."            Noel Oman & Peter Aronson, Clinton lunch
also a feast for Tucker, Ark. Democrat-Gazette, June 24, 1995, at 1A.                      At
the event, solidifying his connection with the recently indicted Tucker,
the President said in a speech, "I am especially glad to see Governor and
Mrs. Tucker here today and especially grateful for the reception you gave
them."    Id. at 12A.    Tucker also acknowledged the perceived connection when
he was quoted in an interview as saying of the OIC, "I think that's been
much of their goal, to try and tar the [P]resident with images of
wrongdoing here in his home state."             Inside Politics (Cable News Network,
Inc., television broadcast, June 21, 1995).

     The appellees object to the Independent Counsel's request on several
grounds, among them:         that the issue was not raised in the District Court
and is raised now only because the Independent Counsel did not like the
result reached in the proceeding below; that "the motion is . . . frivolous
because it is obviously premature to raise such a motion in an appellate
court," Brief of Appellee Marks at 38; that Judge Woods's political
affiliation,    and     the    Independent      Counsel's     affiliation    with    another
political party, comprise the basis for the argument; and that the argument
is "an improper vehicle for the publication of a personal attack on Judge
Woods for the purpose of distracting this Court from a proper review of the
district court's dismissal ruling on its merits," id.                           Most of the
appellees' claims are undeserving of comment, and we summarily reject the
suggestion that appellant's brief is evidence that Judge Woods's political
persuasion forms the basis for the Independent Counsel's request.                    Nowhere
do the appellees give us reasons for concluding that the matters the
Independent    Counsel        has   brought    to    our   attention   do   not   create   an
appearance of bias.

                                              -20-
     We also reject the contention that the Independent Counsel's request
is improperly made to this Court in the first instance rather than to Judge
Woods.   The appellees' arguments stem from their confusion about the source
of our power to grant the OIC's request.           "Federal appellate courts'
ability to assign a case to a different judge on remand rests not on the
recusal statutes alone, but on the appellate courts' statutory power to
`require such further proceedings to be had as may be just under the
circumstances,' 28 U.S.C. § 2106."    Liteky v. United States, ___ U.S. ___,
___, 114 S. Ct. 1147, 1156-57 (1994).     Thus we are empowered to "direct the
entry of such appropriate . . . order . . . as may be just under the
circumstances," 28 U.S.C. § 2106 (1994), including reassignment of the case
where, in the language of 28 U.S.C. § 455(a) (1994), the district judge's
"impartiality might reasonably be questioned."      See Dyas v. Lockhart, 705
F.2d 993, 997-98 (8th Cir.) (remanding to another district judge to assure
the appearance of impartiality, notwithstanding that appeal was from
court's failure to recuse sua sponte and the issue was never raised in the
district court), cert. denied, 464 U.S. 982 (1983).

     The Independent Counsel does not seek review of Judge Woods's failure
to disqualify himself under 28 U.S.C. § 144 (1994), which requires the
party seeking recusal to timely file an affidavit alleging facts showing
bias with the district judge that he wishes to be disqualified.            Unlike
§ 144, § 455 sets forth no procedure for seeking recusal in the district
court.   See Liteky, ___ U.S. at ___, 114 S. Ct. at 1153 (as distinguished
from § 144, § 455 "place[s] the obligation to identify the existence of
those grounds upon the judge himself, rather than requiring recusal only
in response to a party affidavit").      The appellees' reliance on either the
language of § 144 or on cases interpreting § 144 is misplaced.
     Further,   the   Eighth   Circuit   cases   cited   by   the   appellees   are
distinguishable.   See United States v. Bauer, 19 F.3d 409, 414 (8th

                                      -21-
Cir. 1994) ("This Court has held that claims under § 455 `will not be
considered unless timely made.'") (quoting Holloway v. United States, 960
F.2d 1348, 1355 (8th Cir. 1992)).            This is not a case like Bauer and
Holloway where actual bias under § 455(b) is alleged, and where a judge
arguably should have an opportunity first to answer charges of partiality.
See 28 U.S.C. § 455(b) (1994) (requiring recusal in cases of actual bias,
conflicts of interest, and where certain relatives of the judge are
involved in the proceedings before the court).                 Nor is the Independent
Counsel seeking to have the judgment vacated on appeal as a remedy for the
judge's failure to recuse.         In fact, the Independent Counsel seeks no
appellate review at all.        Rather, he asks to have the case reassigned to
a judge other than Judge Woods, under the § 2106 powers of this Court, in
the event we reverse the dismissal of the indictment and remand the case
for trial.     The Independent Counsel made his request for reassignment in
his appellant's brief.       Under § 2106, that is all that is required to make
the request timely.

     We turn now to the merits of the OIC's request.                  Under § 455(a),
"disqualification       is   required   if   a    reasonable    person   who   knew    the
circumstances would question the judge's impartiality, even though no
actual bias or prejudice has been shown."           Gray v. University of Ark., 883
F.2d 1394, 1398 (8th Cir. 1989).        Section 455(a) "was designed to promote
public confidence in the integrity of the judicial process by replacing the
subjective `in his opinion' standard with an objective test."                  Liljeberg
v. Health Servs. Acquisition Corp., 486 U.S. 847, 858 n.7 (1988).                       In
determining,    then,    whether   remand    to    a   different   district    judge    is
warranted to achieve the goal of ensuring "the appearance of impartiality,"
we apply "an objective standard of reasonableness."                 United States v.
Poludniak, 657 F.2d 948, 954 (8th Cir. 1981), cert. denied, 455 U.S. 940
(1982).   It is the appearance of bias or partiality that matters here, not
actual bias.

                                         -22-
       The Independent Counsel argues that, because of the "unmistakable
appearance" of bias or partiality here, "[r]eassignment is necessary to
preserve the appearance and reality of justice."              Brief of Appellant at 42.
We agree.      Based on the information before us in this case, we conclude
that   the    risk   of    a   perception    of    judicial   bias    or   partiality   is
sufficiently great so that our proper course is to order reassignment on
remand.11     As we have discussed, Judge Woods's link with the Clintons and
the Clintons' connection to Tucker have been widely reported in the press.
Moreover, as the Independent Counsel has noted, "this case will, as a
matter      of law, involve matters related to the investigation of the
President and Hillary Rodham Clinton."              Reply Brief of Appellant at 25.
Given the high profile of the Independent Counsel's work and of this case
in   particular,     and   the   reported    connections      among   Judge   Woods,    the
Clintons, and Tucker, assignment to a different judge on remand is required
to insure the perception of impartiality.

       As a practical matter, there is no shortage of other judges in the
Eastern District of Arkansas to whom this case may be assigned.                Apart from
whatever time Judge Woods spent in ruling on the motion

       11
      The Independent Counsel also directs our attention to
certain comments in the District Court's opinion, which were
reported in the local Arkansas press, that, in the view of the
OIC, "displayed hostility to the Independent Counsel system."
Brief of Appellant at 46-47. We do not consider these comments
to be persuasive evidence of a perceived bias or partiality.

       [J]udicial remarks during the course of a trial that
       are critical or disapproving of, or even hostile to,
       counsel, the parties, or their cases, ordinarily do not
       support a bias or partiality challenge. They may do so
       if they reveal an opinion that derives from an
       extrajudicial source; and they will do so if they
       reveal such a high degree of favoritism or antagonism
       as to make fair judgment impossible.

Liteky, ___ U.S. at ___, 114 S. Ct. at 1157. We conclude that
the passages referred to by the OIC, standing alone, would not
cause a reasonable person to doubt Judge Woods's impartiality.

                                            -23-
to dismiss the indictment, judicial resources have not been expended on the
case and neither judicial, prosecutorial, nor defense efforts will have to
be    duplicated when the case is reassigned.              The OIC's request for
reassignment is granted, not because we believe Judge Woods would not
handle the case in a fair and impartial manner (we have every confidence
that he would), but only because we believe this step is necessary in order
to preserve the appearance as well as the reality of impartial justice.

                                         IV.

       We have taken with the case Marks's motion to strike portions of
appellant's brief and appendix, which according to Marks contain "Offending
Materials."

       We first reject, without lengthy comment, the contention that any
part of the appellant's brief raised frivolous arguments or that the brief
"reflects a considered decision by the Independent Counsel to attack Judge
Woods personally rather than to address the correctness of the trial
court's decision on its legal merits."          Motion to Strike and Brief in
Support Thereof at 12-13.     As we have concluded in this opinion, not only
are    the   Independent   Counsel's     arguments   not    frivolous,   they   are
meritorious, and the bulk of his brief is indeed devoted to "address[ing]
the correctness of the trial court's decision on its legal merits."         In any
case, Marks need not be concerned that we so easily could be distracted
from our duty to review the merits of an appeal that is properly before us.
Throughout    his   motion,   Marks    mischaracterizes    Independent   Counsel's
advocacy, and comes perilously close to having filed a frivolous motion.

       As for the materials that Marks claims have no business being cited
in appellant's brief or being included in appellant's appendix, we conclude
that they are either documents properly in the record in this case; legal
authority properly cited to the

                                        -24-
Court; or publicly filed or disseminated documents or articles of which we
properly may take judicial notice.    Here, too, Marks's argument is devoid
of merit.

     The motion is denied.

                                      V.

     The judgment of the District Court dismissing the indictment for lack
of prosecutorial jurisdiction is reversed and the case is remanded for
trial.   The Independent Counsel's motion for reassignment of the case is
granted, and the Chief Judge of the United States District Court for the
Eastern District of Arkansas is instructed to see that the case is assigned
to a judge other than Judge Woods.     Marks's motion to strike portions of
the Independent Counsel's brief and appendix is denied.

     A true copy.

            Attest:

                 CLERK, U. S. COURT OF APPEALS, EIGHTH CIRCUIT.

                                     -25-