The Washington Post
WEDNESDAY, JANUARY 3, 1996
Watt Pleads to Misdemeanor in HUD Case
Ex-Interior Secretary Originally Indicted on 25 Felony Counts
By Toni Locy
Washington Post Staff Writer
Former interior secretary James G. Watt pleaded guilty yesterday to a misdemeanor charge of attempting to mislead a grand jury, bringing to a close a $20 million investigation of influence-peddling in the Reagan administration's Department of Housing and Urban Development.
The plea in the case against Watt considered by far the biggest catch in the nearly six-year investigation, is extraordinary because it knocked a 25-count felony indictment down to a misdemeanor punishable by up to six months in jail. Independent counsel Larry D. Thompson defended the plea, saying it "advances the interest of the government in avoiding protracted litigation," but critics said the prosecutor's willingness to drop the more serious charges demonstrates the case against Watt never should have been brought.
Watt, 57, of Jackson Hole, Wyo., was indicted last year in the investigation conducted by former independent counsel Arlin Adams on charges of lying to Congress and a federal grand jury about his use of HUD political connections to help private landlords and developers obtain millions of dollars in low-income housing funds. The interior secretary from 1981 to 1983, Watt was accused of committing perjury before a grand jury and lying to Congress about his work as a consultant who helped private clients seeking federal funds for housing projects in Maryland, New Jersey, Massachusetts, Puerto Rico and the Virgin Islands.
Yesterday, Watt admitted he made inaccurate and misleading statements in a June 6, 1990, letter to an FBI agent in responding to a grand jury subpoena for documents.
Watt Pleads Guilty to Misdemeanor
In the letter, he said he had few documents and the ones he did have were of "marginal, if any, relevance" to the grand jury.
It turned out Watt had many documents that were relevant to the investigation, including letters he wrote to then-HUD Secretary Samuel Pierce, business associates and a HUD undersecretary about specific projects of interest to his clients. The documents also included his notes of conversations he had with HUD officials and business associates about those projects.
Yesterday's guilty plea reduced the felony charges to a misdemeanor. Under the plea agreement with Thompson, who took over the case from Adams last year, Watt has agreed to pay a $5,000 fine. U.S. District Judge Royce C. Lamberth has scheduled Watt's sentencing for March 12.
William Bradford Reynolds, one of Watt's attorneys, praised Thompson for making the "responsible" decision to plead the case out.
"We said all along it never should have happened," Reynolds said. "I think that the whole thing got off on the wrong foot and that's very unfortunate . . . for Watt and his family. It's been a terrible ordeal."
Thompson, in a statement, said allowing Watt to plead guilty holds him responsible for trying to influence a grand jury by providing misleading, inaccurate information. Adams did not return a phone call.
Attorney Joseph E. diGenova, who recently ended a tour of duty as an independent counsel, said the case shows how powerful prosecutors can abuse their discretion. "When a 25-count indictment gets pleaded down to a misdemeanor, it raises serious questions about the original indictment and its probity. This is not what the process is supposed to be about. It's not about personalities. It's about evidence," said diGenova, a former U.S. attorney in Washington during the Reagan administration. DiGenova late last year completed an investigation into whether anyone in the Bush administration had broken the law by examining then-presidential candidate Bill Clinton's passport records.
Watt admitted he made inaccurate and misleading statements in a June 6, 1990, letter to an FBI agent.
"Charging somebody with a crime is one of the three most powerful things a government can do. It can draft you into war. It can tax you out of existence. And it can put you in prison," diGenova said. "Indicting someone is a very serious matter. This type of plea makes it look as if it isn't."
The investigation that ensnared Watt began in 1989 when a congressional committee uncovered abuses, favoritism and mismanagement in HUD during the Reagan administration. In March 1990, a three-judge panel appointed Adams as independent counsel.
Under Adams's tenure, the investigation yielded 16 convictions, including the U.S. treasurer and three former HUD assistant secretaries. Pierce was not indicted, although Adams did secure from him an admission out of court that he created an atmosphere at HUD that allowed influence-peddling to go on.
DiGenova and others have criticized the independent counsel law because it gives broad powers to prosecutors to conduct far-ranging investigations with virtually no oversight. Because the independent counsels are appointed to investigate one person or an area of suspected corruption in the executive branch, diGenova has argued that the special prosecutors feel pressured to come up with a case, no matter how trivial.
In addition to the Reagan administration HUD independent counsel investigation, there are four special prosecutors examining the Clinton administration.
Watt's plea agreement notably does not contain any requirement that he cooperate with investigators or provide testimony against others, raising yet another question with diGenova about bringing the case against Watt. "I've always believed that these pleas say something about the nature of the investigation," he said. "I don't think any reasonable people can look at that plea and say anything other than 'what gives?' "