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(Note: The following is the full text of the information filed in
federal court in Arkansas against former U.S. Associate Attorney General
Webster Hubbell on Dec. 6, 1994, and of the plea agreement entered the
same day in which Hubbell agreed to plead guilty to two felony
UNITED STATES DISTRICT COURT
EASTERN DISTRICT OF ARKANSAS
UNITED STATES OF AMERICA
WEBSTER LEE HUBBELL
THE INDEPENDENT COUNSEL CHARGES:
1. At all times material to this Information:
(a) The Rose Law Firm (the ``FIRM'') was a law firm located in downtown
Little Rock, Arkansas. The Firm represented a variety of clients,
including agencies of the United States Government such as the Federal
Deposit Insurance Corporation and the Resolution Trust Corporation.
(b) The Firm, through its attorneys, entered into agreements with its
clients setting forth the conditions and financial arrangements for the
Firm's representation. In many instances the Firm billed clients on a
monthly basis for attorneys' fees and expenses. The amount of attorneys'
fees normally would be computed on the basis of the number of hours of
work performed on the matter by each attorney, multiplied by the agreed
hourly rate for that attorney. It was the Firm's usual practice that a
client of the Firm normally would be obligated to pay, and would be
billed, for all expenses incurred in the course of the Firm's
representation of that client, such as: photocopies, long distance
telephone calls, court reporter fees, expert witness fees, deposition
transcript fees, and case-related travel and lodging. Expenses unrelated
to the Firm's representation of a client would not be billed to a client.
(c) In the course of representing a client, the Firm often incurred
expenses, like those described above, that had to be paid to vendors and
other third parties in advance of the Firm's billing the client for such
expenses, or receiving payment from the client for such expenses. Thus,
the Firm maintained Firm bank accounts--referred to as ``client advance
accounts''-- to pay the client. Any member or associate of the Firm was
authorized to obtain a ``client advance check'' to pay for legitimate
case-related expenses that were incurred in the course of the Firm's
representation of the client. If the amount of the check exceeded $1000,
two members of the Firm had to sign the client advance check. The amount
of the expenses would be paid by the Firm, in advance, on behalf of the
client; the Firm subsequently would include a charge for such expenses on
the client's statement of services; and the client would reimburse the
Firm for the Firm's having paid the expense in advance.
(d) On occasion, members and associates of the Firm incurred non-case
related expenses in the course of conducting and performing business for
the Firm. Such expenses included training, business development, and
other costs associated with operating and maintaining a law practice.
These general business expenses were not billable to clients. However,
when members and associates of the Firm incurred legitimate expenses for
Firm business, the Firm would pay for these legitimate business expenses
out of a Firm account. In the event such a non-billable expense exceeded
$1000, two Firm members had to sign the reimbursement check.
(e) The Federal Deposit Insurance Corporation was an agency of the
United States Government. The Federal Deposit Insurance Corporation,
among other things, regulated federally insured state chartered banks
which were not members of the Federal Reserve System, and served as a
receiver for all federally insured insolvent banks.
(f) The Resolution Trust Corporation was an agency of the United States
Government. The Resolution Trust Corporation, among other things, acted
as a receiver for savings and loan associations which had become
financially insolvent. The Resolution Trust Corporation was appointed
receiver or conservator for a number of such associations in Arkansas.
(g) Madison Guaranty Savings & Loan Association (``Madison'') was a
state chartered, federally insured savings and loan association located
in Little Rock, Arkansas.
(h) Frost & Co. was a certified public accounting firm doing business in
(i) The Firm represented the Federal Deposit Insurance Corporation
between May 1994 and December 1992 and the Resolution Trust Corporation
between November 1990 and November 1994 and, pursuant to a fee agreement,
billed the Federal Deposit Insurance Corporation and the Resolution Trust
Corporation for attorneys' fees and expenses.
(j) From May 1973 through January 1993, defendant WEBSTER LEE HUBBELL
was a practicing attorney who was a member of the Rose Law Firm in Little
Rock, Arkansas. As a member of the Firm, he acted as the billing attorney
on many legal matters handled for clients, and accordingly, had
responsibility for sending statements of services to these clients for
the legal work rendered by the Firm on their behalf and any costs
associated with such work. In January 1993, defendant WEBSTER LEE HUBBELL
resigned from the Firm and became Associate Attorney General of the
United States. He held this position until March 14, 1994 when he
2. From in or about January 1989, and continuing to in or about March
1994, in the Eastern District of Arkansas, and elsewhere, WEBSTER LEE
HUBBELL, defendant herein, devised, intended to devise and knowingly
participated in a scheme to defraud and to obtain money and property from
the Rose Law Firm and its members, and from the Firm's clients, including
the Federal Deposit Insurance Corporation and the Resolution Trust
Corporation, by means of false and fraudulent pretenses and
representations, well knowing that the pretenses and representations
would be and were false and fraudulent when made, which scheme is further
described in the following paragraphs.
3. In was part of the scheme that defendant WEBSTER LEE HUBBELL
fraudulently obtained funds from the Firm's bank accounts in the form of
client advance checks and other instruments to pay for personal expenses
and purchases. To obtain these funds, defendant WEBSTER LEE HUBBELL
fraudulently created, submitted and signed documents falsely purporting
to represent legitimate Firm and client billable expenses, when in fact
the expenses were not properly billable to clients nor reimbursable by
the Firm. By operation of his scheme, defendant WEBSTER LEE HUBBELL
fraudulently obtained at least $394,000.00 through the payment of
personal expenses with Firm checks.
4. It was a further part of the scheme that defendant WEBSTER LEE
HUBBELL indicated on copies of the checks or notes attached thereto that
a particular client advance check be charged to a specific client of the
Firm. Defendant WEBSTER LEE HUBBELL willfully concealed that the client
advance checks were for personal expenses, and instead falsely
represented on the internal paperwork of the Firm that he was using the
checks to pay for legitimate business expenses or case-related expenses
associated with the representation of a particular client.
5. It was further part of the scheme that, in order to further conceal
that he was paying for personal expenses with Firm checks, and that
certain of the expenses would be billed to clients on statements of
services, defendant WEBSTER LEE HUBBELL altered various internal billing
memoranda through several means, including:
(a) indicating that the amount on the client-advance check was for a
fictitious business expense;
(b) causing the alleged ``business expense'' to be billed to a client,
even though the client was not responsible for that expense, because it
was not incurred on behalf of the client;
(c) mischaracterizing the expense as something other than that for which
payment actually was made;
(d) inflating the number of hours of attorney time for which a client
was billed, above the actual hours worked, in order to obtain legal fees
beyond those to which the Firm and defendant WEBSTER LEE HUBBELL were
(e) ``writing off' or deleting certain of his personal expenses from
final client statements of services thereby causing the Firm and its
members to pay for such personal expenses.
6. It was further part of the scheme that defendant WEBSTER LEE HUBBELL
knowingly deprived certain clients of property, that is money, by causing
them to pay for certain of his personal expenses.
7. It was further part of the scheme to defraud that defendant WEBSTER
LEE HUBBELL would cause billing statements which contained
misrepresentations and false information to be sent to the following
clients: the Resolution Trust Corporation, the Federal Deposit Insurance
Corporation, Flintkote, Environmental Systems Company, Money Mortgage
Inc., Champion Enterprises, American Cemetery Associates, Air Products,
Universal Underwriters, Worthen Bank, American Council of Life Insurance,
Tyson Foods Inc., Lovett & Foster Ltd., Sturgis Estate, Brickel Financial
Services and Central Texas Iron Works.
8. Further defendant WEBSTER LEE HUBBELL knowingly deprived the Firm and
its members of property, that is money, by causing them to pay for
certain of his personal expenses and defrauded the Firm of its right to
defendant's honest services.
9. It was a further part of the scheme that defendant WEBSTER LEE
HUBBELL would cause client advance checks drawn on the Firm to be sent in
payment of his and his family's personal expenses for credit card
purchases billed to the following credit cards: American Express
Centurion Bank, Associates National Bank Execugold Visa, American Express
Optima, MBNA Master Card, Associates National Bank Amoco Master Card,
Primerica Visa, Associates National Bank Execugold Master Card, Primerica
Master Card, First USA Visa, and American Express Gold Card; and that
defendant would fraudulently represent to the Firm that all these
payments were legitimate client case-related expenses, or legitimate non-
case-related business expenses.
10. It was further part of the scheme that defendant WEBSTER LEE
HUBBELL, between May 1994 and March 1994, made repeated verbal
misrepresentations to members of the Firm that he would provide
documentation to prove that the questioned expenses were billed
legitimately to the clients or passed on to the Firm.
EXECUTION OF FRAUD
11. It was further part of the scheme that on or about March 7, 1990,
at the direction of defendant WEBSTER LEE HUBBELL, the Firm prepared a
statement of services to be sent to the Federal Deposit Insurance
Corporation for the Firm's representation of the Government's suit
against Frost & Co., a local accounting firm, in connection with Frost &
Co.'s allegedly negligent auditing of Madison Guaranty Savings & Loan.
defendant WEBSTER LEE HUBBELL fraudulently caused the statement of
services to reflect charges for personal expenses that were
misrepresented as charges for legitimate business expenses.
12. On or about March 7, 1990, at Little Rock, Arkansas, in the Eastern
District of Arkansas, and elsewhere, defendant WEBSTER LEE HUBBELL
defendant herein, for the purpose of executing the above-described scheme
to defraud and to obtain money and property by means of false and
fraudulent pretenses, representations and promises, and attempting to do
so, knowingly and willfully did cause to be placed in an authorized
depository for mail matter, to be sent and delivered by the United States
Postal Service, according to the directions thereon, an envelope
containing a statement of services to the Federal Deposit Insurance
In violation of Title 18, United States Code, Sections 2 and 1341.
On or about October 15, 1993, in the Eastern District of Arkansas,
defendant WEBSTER LEE HUBBELL, defendant herein, a resident of Little
Rock, Arkansas, who during the calendar year 1992 was married, did
willfully and knowingly attempt to evade and defeat a substantial part of
the income tax due and owing by him to the United States of America for
the calendar year 1992, by filing and causing to be filed with the
Director, Internal Revenue Service Center, a false and fraudulent United
States Individual Income Tax Return, Form 1040, wherein he stated that
his total income for the calendar year 1992, including his income from
the Rose Law Firm, was $194,966, and he stated that his taxable income
for the calendar year 1992 was the sum of $122,074, and that the amount
of tax due and owing thereon was the sum of $32,193, whereas, as he then
and there well knew and believed, his total income for the calendar year
1992, including his income from the Rose Law Firm, was at least $309,168,
and his taxable income for the said calendar year was the sum of at least
$249,990, upon which said taxable income there was due and owing to the
United States of America an income tax of $71,358.
In violation of Title 26, United States Code, Section 7201.
KENNETH W. STARR
IN THE UNITED STATES DISTRICT COURT
EASTERN DISTRICT OF ARKANSAS
UNITED STATES OF AMERICA
WEBSTER LEE HUBBELL
This Plea Agreement between the Independent Counsel, KENNETH W. STARR,
and the defendant WEBSTER LEE HUBBELL, and his attorney, John W. Nields,
Jr., is made pursuant to Rule 11(e)(B) of the Federal Rules of Criminal
This Plea Agreement is entirely voluntary and represents the entire
agreement between the Independent Counsel and the Defendant regarding
Defendant's criminal liability in case No. LR-CR94-241.
This Plea Agreement finally resolves all of Defendant's criminal
liability involving his billing and expense practices while a member of
the Rose Law Firm as set forth in the Information, and nothing herein
shall limit or in any way waive or release any administrative or judicial
civil claim, demand or cause of action, whatsoever, of the United States
or its agencies relating to the conduct of the Defendant set forth in the
Information in this case. Moreover, this Agreement is limited to the
Independent Counsel, Kenneth W. Starr, and cannot bind other federal,
state, or local prosecuting, administrative, or regulatory authorities
except as expressly set forth in this Agreement.
By this Plea Agreement, KENNETH W. STARR, Independent Counsel, and the
Defendant, WEBSTER LEE HUBBELL, and his attorney, John W. Nields, Jr.,
agree upon the following:
1. Defendant WEBSTER LEE HUBBELL agrees to waive in open court
prosecution by Indictment and consents that the proceeding may be by
Information instead of by Indictment.
Defendant acknowledges that he has been charged in the Information in
this case with Mail Fraud, in violation of Title 18, United States Code,
Section 1341, and with Tax Evasion, in violation of Title 26, United
States Code, section 7201.
2. Defendant has read the charges against him contained in the
Information and those charges have been fully explained to him by his
3. Defendant fully understands the nature and elements of the crimes
with which he has been charged.
4. Defendant will enter voluntary pleas of guilty to Counts One and Two
of the Information in this case.
5. Defendant will plead guilty because he is in fact guilty of the
charges contained in Counts One and Two of the Information. In pleading
guilty, defendant admits that he did, in fact, devise a scheme to defraud
as described in Count One of the Information. Defendant admits that he
did in fact, attempt to evade and defeat his income tax as set forth in
Count Two of the Information.
6. For purposes of applying the Guidelines promulgated by the United
States Sentencing Commission pursuant to Title 28, United States Code,
Section 994, the parties agree on the propositions set forth in
Paragraphs 7 through 11 below.
7. (a) Pursuant to Sentencing Guideline 2F1.1(a) and 2F1.1(b)(1), and
the fact that the amount of the fraud committed by the Defendant between
1989 and 1992, as charged in Count One of the Information, is at least
$394,000.00, the base offense level for the offense set forth in Count
One is at least level 15. The parties agree to present their final
calculations as to the exact dollar amount of the fraud prior to
(b) Pursuant to Sentencing Guideline 2F1.1(b)(2), and the fact that the
offense charged in Count One of the Information involved (A) more than
minimal planning, and (B) a scheme to defraud more than one victim, an
upward increase of 2 levels is appropriate.
(c) Pursuant to Sentencing Guideline 3B1.3, and the fact that the
Defendant abused a position of trust, and used a special skill (he being
a lawyer) in a manner that significantly facilitated the commission and
concealment of the offense, as set forth in Count One of the Information,
an additional upward increase of 2 levels is appropriate.
8. (a) Pursuant to the Sentencing Guidelines 2T1.1(a) and 2T4.1, and the
fact that the Defendant's unreported income for the years 1989 through
1992 is at least $394,000.00, and the tax loss pertaining to all of
Defendant's relevant criminal conduct in violation of the tax laws (for
the years 1989 through 1992) is more than $120,000.00, the base offense
level for the tax offense set forth in Count Two is level 15.
(b) Pursuant to Sentencing Guideline 2T1.3(b)(1), and the fact that the
Defendant failed to report income exceeding $10,000.00 from criminal
activity in 1992, the base offense level for the offense set forth in
Count Two is to receive an upward adjustment of 2 levels.
9. Defendant has demonstrated a recognition of affirmative acceptance of
personal responsibility for his criminal conduct. If the Independent
Counsel does not receive additional evidence in conflict with this
provision, and if the Defendant continues to accept full responsibility
for his actions, within the meaning of Sentencing Guideline 3E1.1, a
three-level reduction in the offense level is appropriate.
10. Based on the facts known to the government as of the date of this
Agreement and stipulated in subparagraphs above, the Defendant's criminal
history points equal 0 and the Defendant's criminal history category is
11. Defendant and his attorney and the Independent Counsel acknowledge
that the above calculations are preliminary in nature and based on facts
known to the government as of the time of this Agreement. In the case of
the amount listed in subparagraphs 7 and 8 above, the figure indicated is
a minimum figure, and is not intended to be a final calculation. The
Defendant understands that the Probation Office will conduct its own
investigation and that the Court ultimately determines the facts and law
relevant to sentencing, and that the Court's determinations govern the
final Sentencing Guidelines calculation. Accordingly, the validity of
this Agreement is not contingent upon the Probation Office's or the
Court's concurrence with the above calculations.
12. Errors in calculations or interpretation of any of the guidelines
may be corrected or amended by either party prior to sentencing. The
parties may correct these errors or misinterpretations either by
stipulation or by a statement to the Probation Office and/or Court
setting forth the disagreement as to the correct guidelines and their
application. The validity of this Agreement will not be affected by such
corrections or amendments, and the Defendant shall not have a right to
withdraw his plea on the basis of such corrections or amendments.
13. Defendant understands that Count One of the Information to which he
will plead guilty carries a maximum penalty of five years imprisonment; a
maximum fine of $250,000.00 [18 USC 3571(b)(3)]; or an alternative fine
based on gain or loss [18 USC 3571(d)]; and any restitution ordered by
14. Defendant understands that Count Two of the Information to which he
will plead guilty carries a maximum penalty of five years imprisonment, a
maximum fine of $250,000.00 [18 USC 3571(b)(3)], together with the costs
of the prosecution, and any restitution ordered by the Court.
15. Defendant understands that in accordance with the federal law, Title
18, United States Code, Section 3013, upon entry of judgment of
conviction, the Defendant will be assessed $50.00 on each count to which
he has pled guilty, in addition to any other penalty imposed.
16. Defendant agrees to cooperate by providing full, complete, accurate
and truthful information concerning matters under investigation by the
Office of the Independent Counsel. If, in the judgment of the Independent
Counsel, the Defendant has provided substantial assistance in an
investigation or prosecution, within the meaning of Section 5K1.1 of the
Sentencing Guidelines, the Independent Counsel will move pursuant to
Section 5K1.1 for a downward departure.
Defendant has the right to seek a downward departure on grounds other
than that set forth in paragraph 16 above, and the Independent Counsel is
free to take whatever position it deems appropriate with respect thereto.
17. Nothing in this Agreement shall limit the Internal Revenue Service
in its collection of any taxes, interest or penalties from the Defendant.
18. Defendant agrees to fill accurate amended income tax returns, Form
1040X, with the Internal Revenue Service for the calendar years 1989
19. Defendant understands that the Independent Counsel will fully
apprise the District Court and the United States Probation Office of the
nature, scope and extent of Defendant's conduct regarding the charges
against him, and related conduct relevant to and including all matters in
aggravation or mitigation on the issue of sentencing.
20. It is understood by the parties that the sentencing Judge is neither
a party to nor bound by this Agreement and is free to impose the maximum
penalties as set forth in paragraphs 13 and 14 above.
21. The Independent Counsel agrees that the Defendant should be released
on his own recognizance pending sentence.
22. Defendant may request designation to a particular facility, and the
Independent Counsel agrees to take no position with respect to such
23. The Independent Counsel agrees that the Defendant should be
permitted to self-surrender to the facility to which he is designated.
24. Should the Judge refuse to accept the Defendant's plea of guilty to
Counts One and Two of the Information, this Agreement shall become null
and void and neither party will be bound thereto.
25. Defendant acknowledges that he has read this Agreement and carefully
reviewed each provision with his attorney. Defendant further acknowledges
that he understands and voluntarily accepts each and every term and
condition of this Agreement.
AGREED THIS DATE: DECEMBER 6, 1994
Kenneth W. Starr
W. Hickman Ewing, Jr.
Webster Lee Hubbell
John W. Nields, Jr.
Attorney for Defendant
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