This may not interest anyone except those who study Nebraska legal history. Then, again, it is sufficiently weird that it may be interesting to others. I will tell the story. You decide.
As I indicated in my post on Bill Barrett, in the early 1980s I was hired to represent the Nebraska legislature when a state savings and loan company went under and many Nebraskans lost a lot of money. One of my jobs was to investigate the involvement of Attorney General Paul Douglas. To make a long story short, one of my investigators, a detective with the Lincoln police department, dove into the records of the failed company and came up with a check that seemingly proved that Douglas had been involved in “straw man” loans with the company. That was a problem for Douglas, particularly because he also had oversight authority of the banking department that regulated the failed institution. To make matters worse, Douglas had assigned an assistant attorney general to that task who owed a lot of money to the failed institution and she had previously been married to the Attorney General’s business partner.
I became convinced that Douglas had not been honest with the Nebraska legislature when he testified that he did not understand the nature of the fraudulent transactions he had engaged in with the company. Basically, the transactions worked like this: (a) Douglas and his business partner would borrow money from the failed institution to buy real estate owned or financed by the financial institution; (b) someone controlled by the institution would buy the real estate from Douglas and is partner with financing from the failed institution; (c) Douglas and his partner would profit from that transaction; (d) the new loan on the real estate would be booked by the institution and the sale price would indicate that the institution was well secured by the real estate that now had an inflated value. The straw buyer from Douglas and his partner would hold the real estate until he or she could sell it. This worked fine until it didn’t; that is, until real estate values crashed in Nebraska and throughout the nation.
The question for me was whether I should advise the Nebraska legislature to impeach Douglas. At that time, there had been only one impeachment in Nebraska’s history and it had failed. See State v. Hastings, 37 Neb. 96, 55 N.W. 774 (1893); State v. Leese, 37 Neb. 92, 55 N.W. 798 (1893); State v. Hill, 37 Neb. 80, 55 N.W. 794 (1893). Moreover, that earlier impeachment was before Nebraska had a unicameral legislature. With the advent of the unicameral legislature, impeachments were of necessity tried in a real court, the Nebraska Supreme Court, and not in the Senate of a bicameral legislature.
The standards for an impeachment conviction were impossibly high: (1) although the only “punishment” involved was the loss of office, the Nebraska Supreme Court treated the proceeding as “criminal” in nature and required proof beyond a reasonable doubt; and (2) a majority of the Justices (four) was not sufficient to convict, a super-majority of five out the seven was required to find “guilt.” Moreover, we would have almost no time to prepare because the trial was required to be held in ten days and that time limit would not be extended!
I was instructed to draft articles of impeachment that could be used in two ways. The legislature could adopt the articles, but, instead of impeachment, officially reprimand Douglas, call for his resignation and refer the matter to the Nebraska Counsel on Discipline for an ethics probe. This was the alternative I recommended arguing in a memorandum (leaked by a Douglas supporter and state senator) that a conviction would be very hard to obtain given the criminal nature of the proceedings, the requirement of proof beyond a reasonable doubt, the need for a super-majority of justices to find “guilt,” and the ten-day time to prepare. The alternative was impeachment. When the day of the debate came, I was stunned as I watched the proceedings unfold. The body elected to impeach, and it was my job to try the case.
I needed help. So, I called my friend Wes Mues, who later became a distinguished appellate judge. I have written about Wes in these pages and in particular his tragic death in an auto accident. Wes and I decided that we would try the case as fast as possible leaving Douglas’ defense team little time to prepare. (In about three days, we called 21 witnesses* and offered 103 exhibits.) We also sought to call Douglas as a witness but the Supreme Court quashed the subpoena on “Fifth Amendment” grounds. We did not call the principals of the failed institution because they were being prosecuted in state court and they were also the subject of a federal grand jury investigation.** If the impeachment trial was truly a criminal case, we could not ethically call anyone who had a legitimate Fifth Amendment privilege if we also knew the witness would invoke the privilege in front of the finder of fact.
When Wes and I had our first “status conference” with the defense team and the Supreme Court we quickly realized that there was an evident hostility among some of the judges toward our side. Judge Boslaugh was presiding because the Chief Justice and two other justices had recused themselves and in their place state district judges had been substituted.
Boslaugh quickly threw us a curve. “Who do you represent?”, he asked. I replied that we represented the Nebraska legislature. Boslaugh disagreed. He instructed us that we were no longer representatives of the legislature but we were henceforth “special assistant attorneys general.” We were told that we represented the State of Nebraska. We objected, and told the judge that we would have to consult our client, the legislature. Boslaugh implied that he would kick the case if we did not relent. We spoke with our client–through the two legislators who had been designated as “managers.” They agreed that we had no choice, and Wes and I became “special assistant attorneys general” representing the State of Nebraska. And, that dear friends became very significant as I will next explain.
Working day and night to get ready, Wes and I went into seclusion at the Super Eight motel. We had help from young staffers from the legislature. They were willing but none of them had ever been in a trial. Wes called one of his law partners, Graten Beavers (who later became a county judge). He had a lot of experience as JAG prosecutor, and Graten drove from Kearney to Lincoln to help us. But we remained under the gun.
And then the call came.
A very experienced criminal defense attorney from Omaha called. His call was a bombshell. His client was the mastermind of the “straw man” loans and the main principal at the failed institution. Since Wes and I were now special assistant attorneys general, we had the power to grant immunity. He wanted a deal. In exchange for immunity in the pending prosecution in state court, his client would appear as a witness against Douglas and explain fully that the Attorney General knew exactly what was going on. I listened, and told the lawyer I would have to get back to him.
My initial inclination was to reject the offer. It was too high a price to pay. But, without that testimony, we almost surely would be unable to convince five judges beyond a reasonable doubt that Douglas had guilty knowledge. I decided that I needed to consult with the local prosecutor. His name was Mike Heavican. I did not know Mike then, although I consider him a good friend now. He later became the United States Attorney for the District of Nebraska and presently serves as Chief Justice of the Nebraska Supreme Court. When I called Mike, he was very helpful. Essentially, he said that he thought it would be wrong to do any deal. Even a deal limited to use immunity would put the malefactor in a position to argue for leniency if, as was likely, the state criminal prosecution against him was successful. Mike and I agreed that I should completely reject any offer of cooperation. And I did.
After the trial, which was televised throughout the state on public television, the outcome I had feared came to fruition. We had convinced a majority of the Supreme Court that Douglas was guilty. Hastings, Shanahan***, and Grant, Justices, and Moran, District Judge found that:
based on the evidence before us, we find beyond a reasonable doubt that the misrepresentation by Douglas was willfully done with a corrupt intention. Specifically, we find that Douglas is guilty of specification No. 1 of the articles of impeachment and resolution submitted by the Eighty-eighth Legislature, Second Session, of the State of Nebraska. Therefore, we would find that Paul L. Douglas has committed a misdemeanor in his office as Attorney General of the State of Nebraska.
State v. Douglas, 349 NW 2d 870, 903 (1984).
Lacking a super-majority, however, Douglas escaped conviction.****
So, I will conclude with a question. Was I a dumber than a mule for rejecting the cooperation agreement?
To this day, I go back and forth on the answer to that question. Quite frequently, I bray and wiggle my pointed ears.
*Among other witnesses, we called the brilliant Ronald D. Rotunda, a constitutional law expert, an ethics expert and a lawyer who served as assistant majority counsel during the Watergate scandal and investigation.
**As a side note, the feds had brought in a special prosecutor from the Department of Justice. I had convinced him to give me the grand jury transcripts under Federal Rule of Criminal Procedure 6 as it then existed. On the day I was scheduled to drive to Omaha to get the transcripts, the DOJ prosecutor pulled the plug asserting that the FBI’s “in-house counsel” did not believe that disclosure was permitted under Rule 6 because I was really not a prosecutor. Tell that to Justice Boslaugh, I thought to myself.
***Tom Shanahan later became a federal district judge and my dear friend. I never spoke to him about the Douglas matter.
****Mr. Douglas was later prosecuted for what amounted to perjury. I testified against him. He was found guilty but his conviction was overturned when the Nebraska Supreme Court found that the legislative committee that administered the oath lacked the power to do so. See here. Subsequently, Douglas lost his law license for four years, was reinstated and practiced law until his death. See here. Mr. Douglas later appeared before me several times. It was awkward. That said, he always treated me with respect and he always did a good job for his clients. So far as I am concerned, Paul Douglas was a good man and a good lawyer who made a bad mistake. He passed away in November of 2012. See here.