Washington Post
August 9, 2001
Ruling in Oregon Halts Federal Undercover Probes
By Jeff Adler
A controversial ruling by the Oregon Supreme Court has prompted federal prosecutors there to suspend all major federal undercover investigations for the past year, halting everything from street-level drug stings to probes into organized crime and child pornography.
In a strict reading of the state bar's ethics code, the state Supreme Court last year prohibited lawyers from engaging in any form of deceit or encouraging others to lie. Because of the decision, federal and state prosecutors fear that they could face discipline for advising undercover investigators, who must misrepresent themselves as part of their work.
Rather than risk sanction, federal prosecutors stopped signing off on covert operations by the FBI, the Drug Enforcement Administration and other federal agencies in Oregon a year ago. The FBI and DEA cannot initiate undercover investigations without the authorization of the U.S. attorney's office.
Phil Donegan, an FBI special agent in Portland, said the court's decision has hampered hundreds of federal criminal investigations, from white collar fraud to organized crime. The bureau also halted an operation that targeted child pornography on the Internet.
"It has handcuffed federal law enforcement in the state," Donegan said. "If we're going to buy drugs, we have to walk up to the dealer and say, 'We're the FBI, and we'd like to buy drugs from you.' "
Donegan added that the FBI is trying to work within the confines of the court's decision but said, "It certainly gives [criminals] a lot of freedom."
State and local prosecutors are not required to authorize undercover operations, but they have stopped counseling investigators involved in them. Local detectives are still working undercover but are "flying blind," Portland Police Chief Mark A. Kroeker said.
"This has put a crimp in our operation because, naturally, you want to work with the prosecutor to put together the best case you can," Kroeker said.
The Justice Department has filed suit against the Oregon State Bar, challenging the ethics code. On Tuesday, a federal judge agreed to consider a motion to dismiss the suit and another to give the Justice Department a quick victory without a trial.
The Oregon Supreme Court decision stems not from a prosecutor's misconduct but from the unethical behavior of a private attorney.
In 1998, the Oregon State Bar ruled that Daniel J. Gatti violated the ethics code when he posed as a doctor to an insurance company he was preparing to sue. The Oregon State Bar's ethics rules prevent lawyers from engaging in "dishonesty, fraud, deceit or misrepresentation." Similar ethics rules exist in many other states.
When Gatti appealed to the state Supreme Court, U.S. Attorney Michael Mosman asked the court to exempt prosecutors who advise undercover agents. The court refused.
The court upheld sanctions against Gatti last year and allowed no exceptions for prosecutors, prohibiting all Oregon lawyers from "encouraging" others to lie or misrepresent themselves.
The ruling's ripple effect has been far-reaching. In the past, prosecutors under Oregon Attorney General Hardy Myers coordinated closely with investigators on both civil and criminal fraud cases to ensure that evidence was collected legally. But those conversations have ended.
"The two can't talk if there is any chance that the investigator is going undercover," said Kevin Neely, a spokesman for Myers. "So the investigator has to just go out and do it without any oversight from the attorney."
With district attorneys following suit, many anticipate that "there will be a number of investigations where the officers will act in good faith, but the evidence will be suppressed," said Joshua K. Marquis, the district attorney for Clatsop County and president of the Oregon District Attorneys Association.
Jeffrey Standen, a professor at Willamette University College of Law in Salem, Ore., said investigations conducted without prosecutors' advice could endanger detectives.
"Going uncounseled is not only going to lead to people not being convicted," Standen said. "Beyond that, it could put people in some difficult situations where they might reveal their identity."
In January, the Oregon State Bar asked the state Supreme Court to approve an amendment to the bar's ethics rules that would have allowed lawyers to advise or supervise certain clandestine operations. But the high court rejected that amendment in April, calling it too broad. Bar members are working on a revised amendment they hope to present to the state Supreme Court in the fall.
Defense attorneys contend that federal and state prosecutors are overreacting. They applaud the Gatti ruling for reminding lawyers not to use deceit.
"It's a very healthy thing," said John Henry Hingson III, a criminal defense attorney from Oregon City. "Law enforcement has become addicted to the use of the covert -- as opposed to the overt -- in criminal law enforcement."
Ed Harnden, president of the Oregon State Bar, maintains that prosecutors can tiptoe along the Gatti decision, supervising covert investigations without violating the code of ethics.
"It's a fairly fine line," Harnden said. "But I believe it's a fine line that is defensible and simply required in today's world."
The Justice Department decided to fight the ruling by filing a lawsuit in May against the Oregon State Bar, arguing that its prohibitions "encroach upon the authority of the federal government to engage in covert law enforcement activities that necessarily involve deceit or misrepresentation."
The Gatti ruling "has essentially tied our hands from going after the most dangerous and craftiest criminals we chase," Mosman said. "When you can't do undercover work, it doesn't mean you're out of law enforcement, but it means you're out of the business of catching those criminals who are the greatest risk to the population."
But critics say the Justice Department's lawsuit is a ploy to pressure Congress into repealing a 1998 federal law that requires state bar ethics rules to govern federal prosecutors. If that happened, the Justice Department could employ its own ethics regulations for U.S. attorneys.
"They want to police their own," said Hingson, the criminal defense lawyer. "This is something that [Attorney] General [John D.] Ashcroft should be very, very cautious about."
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