FDIC Case Against Texas Businessman Hurwitz Moves Forward With Approval of

By James V. Grimaldi
Washington Post Staff Writer
Monday, August 12, 2002; Page E01

K Street beware. A federal judge has issued a ruling that should give pause
to every lobbyist, the lawmakers they lobby and especially their clients.

U.S. District Judge Thomas Penfield Jackson, who oversaw the Microsoft
Corp. antitrust trial, has given the go-ahead for a subpoena of the
lobbying activities of the Patton Boggs LLP law firm on behalf of Texas
businessman Charles Hurwitz.

The ruling last month was made at the request of the Federal Deposit
Insurance Corp. and marks another nasty turn in the particularly bitter
litigation pending against Hurwitz in which the FDIC is seeking $250
million recompense for his role in the $1.6 billion failure of United
Financial Savings & Loan Houston in 1988. The FDIC wants the subpoena so it
can disprove Hurwitz's claim, pushed by Patton Boggs lobbyists with members
of Congress, that the agency had a vendetta against him.

Patton Boggs lawyers attempted to rebuff the subpoena, citing among other
things attorney-client privilege. But Jackson enforced the subpoena,
limiting the file search to communications with federal agencies or
departments, members of Congress, brokerage houses, consultants and public
relations firms.

The ruling echoes that of U.S. District Judge Denny Chin in Manhattan, who
granted the subpoena of federal prosecutors seeking communications of
lawyers lobbying for the presidential pardon of fugitive financier Marc Rich.

"The Marc Rich Lawyers were acting principally as lobbyists," Chin wrote
last year. "They were not acting as lawyers or providing legal advice in
the traditional sense."

Though many of their K Street colleagues wanted Rich's attorneys to appeal,
they did not. Among those forced to hand over communications were Jack
Quinn of the Quinn Gillespie & Associates LLP lobbying firm, Kathleen A.
Behan of Arnold & Porter, G. Michael Green of Dickstein Shapiro Morin &
Oshinsky LLP, and Robert F. Fink of Piper Rudnick LLP. Rich attorney Lewis
"Scooter" Libby, formerly of the Dechert firm and now Vice President
Cheney's chief of staff, escaped that subpoena.

In the Hurwitz matter, the FDIC, a regulator and federal insurer of the
nation's bank deposits, said it sought the subpoena of Patton Boggs
materials to rebut assertions by Hurwitz that the FDIC sued him so the
government could get its hands on a treasured California redwood forest. He
claims the agency is conspiring with the Interior Department and
environmentalists to extort him into giving up the forest.

Hurwitz has increased logging on 196,000 acres of land he owns in the
Headwaters Forest. Congress in 1997, in a bid to keep Hurwitz from stepping
up logging and at the behest of the Clinton administration, passed a weird
authorization to purchase about 7,500 acres of Hurwitz's forest -- and
allowed the government to accept more acreage as a settlement of claims
brought by the FDIC and the Office of Thrift Supervision, which has a
separate action pending against Hurwitz.

But FDIC lawyers said it never wanted the forest. It wants cash from the
Texas businessman as compensation for the loss to the taxpayers when the
Houston savings and loan failed. Officials there scoff at the idea that the
bank regulator is in cahoots with environmentalists to grab Hurwitz's trees.

FDIC Deputy General Counsel Jack Smith told Jackson at a hearing that the
subpoena "is designed to show that the charges that have been trotted
around this town for the last six years by Patton Boggs and by Charles
Hurwitz are totally untrue."

"Not a single offer for redwoods came from the FDIC," Smith continued, "yet
somehow Patton Boggs and Charles Hurwitz have managed to convince some
congressmen and a lot of people who write for the press about the idea that
that FDIC is the one who has been trying to get their redwoods and steal them."

Patton Boggs lawyer Mitchell R. Berger argued that the FDIC sought the
subpoena in retaliation after it lost attempts to quash a deposition of
FDIC General Counsel William F. Kroener. Patton Boggs also argued that the
request failed to meet a legal test to overcome attorney-client privilege.

Berger called the subpoena a "cathartic exercise" because "they feel like
they have been beat up in Congress, that they have been subject to charges
that they don't like."

But Smith said Thomas Hale Boggs Jr. , name partner of the firm, was not
Hurwitz's attorney but his lobbyist: "You can almost take judicial notice
that Tommy Boggs is not a litigator. He is the most prominent lobbyist in
America right now."

Jackson sided with the FDIC, giving Patton Boggs until Sept. 1 to allow a
Texas judge to review whether the subpoena is relevant. Turning to Berger,
Jackson said he would be inclined to agree with him "if you were, in fact,
defense counsel" but added: "You are not. You provided services of a
different nature."

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