Henry Schuelke III has the awkward distinction of being both Justice Department witness and Justice Department bane. Today, he was the former, testifying about his investigation of Jack Abramoff and his team of lobbyists, including Kevin Ring, whose trial began Friday.
Schuelke, whom we profiled here over the summer, is also the court-appointed counsel investigating the prosecutors involved in the dismissed Ted Stevens case for criminal contempt. Depositions in Schuelke’s DOJ investigation appear to be a few months off.
Ring’s lawyers raised concerns about Schuelke’s dual roles in pretrial hearings, but U.S. District Judge Ellen Segal Huvelle said she didn’t see a conflict. One of the Stevens prosecutors, William Welch II, is the head of the Public Integrity Section, which is sharing the Ring case with the Maryland U.S. Attorney office and the criminal Fraud Section at Main Justice. Welch recused himself from the Ring case to end what he called “distracting” defense motions.
In 2004, Greenberg Traurig hired Schuelke, of Janis, Schuelke & Wechsler, to investigate Jack Abramoff and his work for the firm’s D.C. lobbying practice. Schuelke interviewed about 25 GT employees and several of Team Abramoff’s tribal clients, and he rummaged though thousands of emails and financial records. Ring, as it turns out, was the first lobbyist Schuelke interviewed.
Ring is accused of lavishing members of Congress, their staff and executive branch officials with meals and tickets to concerts and sporting events in exchange for helping his clients. Some of the counts carry a prison sentence of up to 20 years.
He is the first lobbyist to go to trial. The others members of the team, including Abramoff, have pleaded guilty. Abramoff is not a witness in the case, but two of his associates — Neil Volz and Todd Boulanger — are scheduled to testify.
Schuelke, the government’s first witness, described a loose culture in which congressional ethics rules were considered quaint. Schuelke testified that Ring told him “gift ban rules were widely ignored [by members of Congress] and it was Mr. Abramoff’s policy to likewise ignore the rules.”
The firm-wide head of the lobbying practice, based in Florida, was in charge “in theory,” Schuelke said, but Abramoff and his team enjoyed autonomy.
Schuelke’s testimony followed opening statements by Ring’s lawyers on Friday that called into question the government’s assertion that David Ayres, then-Attorney General John Ashcroft’s chief of staff, helped secure a $16.3 million grant for a jail for one of Ring’s tribal clients.
Last week, we reported here that the government believes Ayres in early 2002 helped secure a $16.3 million grant for a new jail for the Mississippi Band of Choctaw Indians after another DOJ official, Tracy Henke, recommended less money. But Miller & Chevalier’s Andrew Wise in court Friday appeared to contradict the government’s assertion about Ayres. ”Tracy Henke made the decision. The evidence will not show that David Ayres overruled Tracy Henke,” Wise said on Friday.
Henke, a former Deputy Assistant Attorney General in the Office of Justice Programs, now works with Ayres at Ashcroft’s consulting firm, The Ashcroft Group. Ayres has not responded to requests for comment.
Ring gave Ayres tickets in March 2002 to the March Madness NCAA college basketball tournament at the MCI Center, the government says. And in January 2003, his wife, Laura Ayres, asked Ring for “several expensive tickets” to a professional basketball game at the MCI Center, telling Ring they were a birthday gift for her husband, according to a government filing over the weekend. Ring gave the tickets to her, with Abramoff’s approval, the filing said.
Nathaniel Edmonds, a prosecutor in the Criminal Division’s Fraud Section, said Friday that Ring gave Ayres the tickets with the intent of influencing him on future matters. He pointed to an email in which Ring wrote to an associate, “Glad [Ayres] got a chance to relax. Now he can pay us back.”
Ring’s lawyer said the email was a joke. Ring knew he couldn’t “bully” the chief of staff to the top law enforcement official in the nation, Wise said Friday.
David and Laura Ayres have indicated they will take the Fifth Amendment if called to testify. The government has refused to grant them immunity. Ring’s lawyers say they need the Ayreses as witnesses to prove the longtime Ashcroft aide never performed any officials act for Ring.
Ayers is not accused of any crime. His name surfaced in court documents last week in connection with the Choctaw jail. Ring’s lawyers have filed a motion asking Huvelle to compel the government to grant Ayres and his wife immunity to testify on Ring’s behalf. Huvelle is expected to rule on the motion later this week.
Prosecutors also say Ring plied Robert Coughlin II, the only Justice Department official to face charges in the Abramoff probe, with meals and tickets for his help with the Choctaw matter, among others. Coughlin pleaded guilty in April 2008 to a conflict of interest. Prosecutors, however, took Coughlin off their witness list last week after he accused the Justice Department of unfairly singling him out for prosecution and denied that he was ever influenced by Ring’s gifts.
Coughlin is a former lawyer in the Office of Intergovernmental and Public Liaison and was deputy chief of staff in the Criminal Division under then-AAG Alice Fisher. Ring referred to Coughlin as his prized contact in the Justice Department. The two are longtime friends.
Wise said Ring exaggerated Coughlin’s usefulness so he could use his expense account to pay for his friend’s meals.
“Lying to your boss about how you’re using your expense account is not a crime,” Wise said.
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Attorney General Eric Holder and other Justice Department leaders have been granted ethics waivers to allow them to review matters related to the botched Sen. Ted Stevens case, the White House disclosed Friday.
A team of Justice lawyers is under investigation for their handling of the public corruption case against the former senator from Alaska. U.S. District Judge Emmet Sullivan dismissed the charges against Stevens in April after a Justice Department review found that DOJ lawyers hadn’t made potentially exculpatory evidence available to the defense.
A special counsel appointed by Sullivan is conducting a criminal contempt probe of the DOJ lawyers, while the department’s Office of Professional Responsibility is conducting a parallel internal ethics review of the case. Two of the DOJ lawyers under scrutiny have hired counsel from the law firms where Holder, Criminal Division chief Lanny Breuer and Deputy Attorney General David Ogden were partners.
Administration ethics rules require Justice appointees to recuse themselves from official matters in which their former law firms represent parties. Holder and Breuer were partners at Covington & Burling LLP and Ogden at WilmerHale.
“[T]he particular circumstances surrounding these investigations are unusual, and present important issues even at this early stage of the process,” the letters from Assistant Attorney General for Administration Lee Lofthus said. “It is highly unusual to have an investigation by the court concurrent with an OPR investigation, and it raises jurisdictional issues and questions concerning the authority of the special counsel and the proper relationships between OPR’s investigation and that of the special counsel.”
Patty Stemler, chief of the Criminal Division’s appellate section, is fighting a civil contempt finding by Judge Sullivan in the Stevens case. She is represented by WilmerHale’s Howard M. Shapiro and Mary Katherine Gardner. It is unclear who is represented by Covington. Covington’s Mark Lynch represents Public Integrity Section chief William Welch II (along with Zuckerman Spaeder LLP’s William Taylor.)
The waivers were issued in May. The White House disclosed them on Friday as part of a transparency effort. Norm Eisen, special counsel to the president for ethics and government reform, explained in a blog post here:
Several months ago, the public interest community suggested that we also make available in a central place limited waivers granted by other federal agencies besides the White House. Today, we are releasing all ten such agency-granted waivers (none of which involve lobbying). The President’s Executive Order calls for an annual report to be completed in early 2010 that will include all waivers granted pursuant to the Order. We are, however, pleased to make all of the pledge waivers granted to date by this Administration available now–more than four months early.
This article has been updated.
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It would have been hard to add more drama to the April 7 hearing in the Ted Stevens case, which began with a humiliating admission from the government of prosecution errors and ended with dismissal of all charges against the former senator from Alaska.
But Judge Emmet Sullivan managed to pull one last rabbit out of the hat. As the hearing ended, he announced a criminal contempt investigation of the Stevens prosecutors. And a lawyer named Henry F. Schuelke III would lead it, Sullivan said.
Well-known and broadly admired among Washington’s fraternity of top-tier lawyers, “Hank,” as Schuelke prefers to be called, has cultivated a reputation for discretion. It’s a trait that has served the white collar criminal defense and investigations lawyer well over the years, in matters involving U.S. senators, judges, law firms, and lawyers.
In making the Schuelke appointment, Sullivan essentially signaled an end to the phase of public flagellation of the Stevens prosecutors. Schuelke would take on the delicate task of figuring out how the case went so wrong – and whether anyone had intentionally misled the defense.
Schuelke is the ultimate behind-the-scenes Washington counselor, and much of his work stops where the public record begins. In the course of a 41-year career, he has represented scores of high-profile clients, from President Jimmy Carter’s budget director, Bert Lance, to former Enron Corp. Treasurer Ben Glisan Jr.
After the April 7 hearing, Sullivan told me he received “countless calls, emails and comments” from D.C. judges and lawyers. They used words like “outstanding,” “perfect choice,” and “a home run,” to describe Schuelke’s appointment.
The federal judiciary is paying Schuelke $200 an hour to investigate the Stevens prosecutors, a fraction of the rate he would charge a private client. (His friends put him in the $750 to $1,000 range.) The lawyers representing the six prosecutors under investigation are also receiving $200 an hour. The Justice Department is footing their fees as well.
So for the lawyers involved, the case obviously isn’t about money. But it gives them something more valuable: the ability to tell clients they were in the thick of a sensitive investigation that could have consequences far beyond the Stevens case.
Broader Review Possible
A criminal prosecution would likely gut the DOJ’s Public Integrity Section of its top officials and add fuel to a broader review of PIN’s recent work.
William Welch II, the section’s chief, and his deputy, Brenda Morris, are both subjects of Sullivan’s criminal contempt investigation. They remain in supervisory roles, according to the Justice Department.
But two other prosecutors on the Stevens team, Nicholas Marsh and Edward Sullivan, were recently transferred out of the section to the Office of International Affairs, a department redoubt that offers scant opportunity for court appearances. Alaska-based Assistant U.S. Attorneys Joseph Bottini and James Goeke, who are also under investigation, have continued in their current positions.
The Justice Department’s Office of Professional Responsiblity is conducting a parallel investigation, and the Criminal Divison is reviewing other Alaska-related corruption prosecutions, after Justice lawyers exhumed additional documents that were withheld from two convicted Alaska state representatives.
People familiar with the criminal contempt investigation say Schuelke is moving at a steady pace, culling thousands of documents from the Justice Department, though he’s had little contact with the prosecutors’ lawyers — an enviable clutch that includes Hogan & Hartson’s Chuck Rosenberg, the former U.S. attorney for the Eastern District of Virginia; O’Melveny & Myers partner Ken Wainstein, a former U.S. attorney for the District of Columbia; and Patton Boggs partner Robert Luskin, former special counsel to DOJ’s Organized Crime and Racketeering Section.
Schuelke’s progress is difficult to track. His friends and colleagues told me he never discusses cases with them, unless they’re involved, and he rarely talks to reporters on the record. (He declined to be interviewed for this story.) His law partner of 30 years, N. Richard Janis, recalled his time working with Schuelke as counsel to the Senate ethics committee. Beginning in the late 1980s, the two lawyers spent 20 months investigating influence-peddling accusations against then-New York Sen. Alfonso D’Amato (R).
“There was never a leak of anything we did. We handled it in a very quiet and discreet manner,” Janis said. “If I were to draw a parallel, Hank’s view of his current assignment is very much the same.”
Throughout his career, Schuelke has seasoned his private practice with work for various bodies that police professional standards and ethics: the Senate ethics committee, the Judicial Tenure and Disabilities Commission, the Committee on Grievances for U.S. District Court for the District of Columbia.
Morgan Lewis & Bockius partner Biz Van Gelder, who has known Schuelke for 20 years, called his ethics work “the functional equivalent of his pro bono.” She said, “He’s very well-versed in matters of professional responsibility and very well-versed in Brady and Giglio. He’s been doing this stuff for years” — all of it behind closed doors.
Van Gelder went on, “There are trial attorneys and there are counselors, and I think he’s always had more of an interest in being a counselor.”
His discretion in his professional life contrasts starkly with the flamboyant playthings of his personal life. He owns five motorcycles (two Harley-Davidsons, one of which his wife rides; a 1970 Norton Commando; a 1977 BMW R100s; and a Ducati Sport 1000). He drives a 1998 Porche 911 to his Dupont Circle office. And he keeps a 40-foot Bertram Sportfisherman and a Boston-Whaler Runabout at his home on the Chesapeake Bay.
The collection is at least a partial measure of his success, and the success of his seven-lawyer firm, Janis, Schuelke & Wechsler. The firm’s Web site is proudly unglamorous, a relic of 1990s-era design. There are no numbers for any media-relations specialists, no interactive graphics, no photos of the lawyers. The offices are located in an historic, brownstone row house on a leafy stretch of Massachusetts Avenue. The quaintness belies a steady flow of high-profile clients and ironclad relationships with larger firms around the city.
When I asked Janis to talk about some of the Schuelke’s triumphs, he paused. “One of the problems is that some of our best achievements nobody knows about.”
We All Respect Mr. Schuelke
Boards of directors, law firms and lawyers have relied on Schuelke and his colleagues. When the Jack Abramoff scandal exploded in 2004, Greenberg Traurig, the disgraced lobbyist’s firm, hired Schuelke to conduct the internal investigation. The work was highlighted recently in the case of one of Abramoff’s former associates, Kevin Ring, who is accused of lavishing lawmakers with free gifts, trips and meals, in return for helping his clients. The Public Integrity Section is handling the case, and Schuelke is a government witness. Welch, who has supervised the section since 2006, partially recused himself from the case after Ring’s defense lawyers raised questions about a potential conflict.
The incident underscored the close-knit nature of Washington’s legal community. Ring’s lawyer, Miller & Chevalier partner Richard Hibey, is one of Schuelke’s close friends.
“We’re proceeding on good faith on this, I hope you understand, especially given the relationships outside the courtroom you and I both enjoy,” Hibey told U.S. District Judge Ellen Huvelle, at an April 20 hearing in Washington.
“Right,” Huvelle said. “We all respect Mr. Schuelke.”
Grand Christmas Parties
Schuelke’s firm is known for its grand Christmas parties. For a few hours each year, the row house is thronged with the District’s top lawyers, judges and prosecutors. (“Everybody goes. It’s like peace on earth and goodwill to all men,” Van Gelder said.) This is not an idle fact, but a reflection of the firm’s business model: Schuelke and his partners are fed much of their work from other lawyers.
Skadden, Arps, Slate, Meagher & Flom partner Robert Bennett said he regularly refers clients to Schuelke. The two have known each other for more than 20 years, and it was Bennett who recommended Schuelke for the special counsel position on the Commission for Judicial Disabilities and Tenure. (Bennett held the job before Shuelke.)
“When I have a need, I certainly recommend him,” Bennett said.
Crowell & Moring partner Rick Beizer, who has known Schuelke for nearly 40 years, said he often looked to Schuelke when he was representing a corporate client and needed counsel for a high-level executive.
“My first choice was always Hank. Sooner or later, he demonstrated his talents to my partners who work on these types of cases, and he became their go-to guy,” Beizer said.
Sparring with Edward Bennett Williams
Schuelke grew up in Maplewood, N.J., the second-oldest among three sisters. His father, Henry Schuelke Jr., was an underwriter for Metropolitan Life Insurance in New York. His mother, Eleanor Carton Schuelke, was a dietician, and later taught home economics and family living at a high school in West Orange, N.J. Shuelke’s older sister, Margie Schuelke, who still lives in Maplewood, said her brother was an easy-going kid — the kind who made friends easily, brought home stray dogs and generally stayed out of trouble.
His sister described Schuelke as a devoted husband and father of two who dotes on his four grandchildren, one of whom was born earlier this month. He’s a hard worker, Margie Schuelke said, “but he knows how to enjoy himself, and he enjoys nothing more than his family.”
Schuelke attended St. Peter’s College in Jersey City, where he majored in English and was editor of the yearbook. He was a strong student, and the family was proud, but not surprised, when he was accepted into Villanova University School of Law.
After he graduated in 1967, Schuelke joined the Army’s Judge Advocate General’s Corps. He spent nearly four years as a JAG officer, including three as a military judge, before joining the U.S. attorney’s office in 1972. Beizer, who is also a former assistant U.S. attorney, said Schuelke established himself early on as one of the office’s top prosecutors.
“He got it right away. He has an uncanny sense for getting to the heart of any matter,” Beizer said. “I’m one of those guys who has to read every document and mull it around six ways to Sunday. I’m not sure how the hell he does it, but if he could patent it, I’d buy it.”
Schuelke was eventually elevated to executive assistant U.S. attorney, the third-in-command, in the late 1970s. From that perch, he was involved in every major case the office handled.
In 1978, Schuelke and Beizer famously squared off against Edward Bennett Williams, the founder of Williams & Connolly, and two of his proteges, Gregory Craig (now President Obama’s White House Counsel) and David Kendall (President Bill Clinton’s personal lawyer during impeachment). Williams and his colleagues were defending developer Dominic Antonelli Jr., the chairman of Parking Management Inc. (PMI), against charges that he bribed a D.C. public official in exchange for building leases.
The young prosecutors won at trial in Washington, but the verdict was ultimately thrown out on the grounds of juror bias. The case was re-tried in Philadelphia, and Williams won. Schuelke’s family drove down from North Jersey to watch the show. They were impressed with Schuelke’s pluck, as was Williams, an icon then as now.
The scene after the verdict is recounted in Evan Thomas‘ biography of Williams, The Man to See. When congratulated after the trial, Williams gave a desultory answer. “Victory?” he said. “All we did was split a double-header.”
That was the last case Schuelke tried as a federal prosecutor before founding his firm, in 1979, with Janis and Lawrence Wechsler, another veteran of the District’s U.S. attorney’s office. Schuelke’s first client as a private lawyer was Carter’s budget director, Lance, who was accused of misusing bank funds. Lance was acquitted of most of the counts and the jury deadlocked on the balance. The Justice Department elected to drop the case.
He has since represented several other high-profile clients, including White House Secretary Carolyn Huber, who found Hillary Clinton’s Rose Law firm billing records during the Whitewater investigation; Tyson Foods lobbyist Jack Williams; and former Time reporter Viveca Novak, in connection with the CIA leak case.
And then there are the ones we’ll never know about.
Now, Schuelke is again at the invisible center of another high-profile probe.
During the six-day gap between the Justice Department’s April 1 motion to dismiss the Stevens case and the April 7 hearing at which Sullivan granted it, the judge made two decisions. The first was hard. The second was easy.
Sullivan, of the U.S. District Court for the District of Columbia, pored over the record, and after “much consideration,” resolved to appoint an outside counsel to investigate the six prosecutors for criminal contempt, according to an e-mail from his chambers in response to a list of questions. The government’s numerous failures to turn over potentially exculpatory documents to Stevens’ lawyers had driven the case off a cliff. But the wreckage deserved further inspection, the judge determined.
After the hard decision was made, Sullivan moved on to the easy choice: Hiring Schuelke to lead the probe.
Sullivan knew Schuelke from their days serving together on the D.C. Commission on Judicial Disabilities and Tenure. The judge was a member of the commission from 1996 to 2001. Since 1982, Schuelke has been the commission’s special counsel, a low-profile but powerful position, the duties of which include investigating hundreds of allegations of judicial misconduct each year and gauging judges’ fitness to serve on the local bench. (Attorney General Eric Holder was also a member of the commission while a partner at Covington & Burling.)
Sullivan said he was swayed by Schuelke’s ability to handle sensitive matters with “great skill, intelligence, discretion, honesty, and fairness.” The judge also sought someone with prosecutorial experience — Schuelke’s seven years as an assistant U.S. attorney in the District fit the bill. Sullivan also cited Schuelke’s service as a military judge and as special counsel to the Senate Select Committee on Ethics.
Sullivan told me in an interview in his courtroom last month that he has received calls from judges around the country, bemoaning the government’s discovery practices and supporting his efforts to reform them. Some, such as Chief Judge Mark Wolf of the U.S. District Court for the District of Massachusetts, have joined Sullivan in publicly scolding the department for violating discovery obligations.
Sullivan has petitioned the federal judiciary’s policy-making body to stiffen rules governing discovery practices. Failing that, he said he would push his court to adopt local rules, and as a last resort, he said he is considering issuing standing orders in each of his cases to ensure timely production.
Holder, Sullivan added, deserves much praise for dropping the Stevens case and requiring additional evidence training for Justice Department lawyers.
No doubt Hank Schuelke will have some advice to offer at some point – but he’ll do it with total discretion, of course.
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In a court filing late Friday night, the Justice Department disclosed that Public Integrity chief William Welch II voluntarily made the decision to pull himself off the prosecution team of a Jack Abramoff-related case.
Welch’s partial recusal in the case came on June 9, the government filing said. That is nearly two months after U.S. District Judge Ellen Huvelle said during a court hearing that Justice should erect a “wall” to separate Welch from the public corruption case against ex-lobbyist Kevin Ring, and 10 days after Ring raised questions in a court filing about Welch’s handling of evidence during discovery.
The recusal did, however, come one day after Main Justice ran this story publicizing Ring’s allegations against Welch, who is also under criminal investigation by a court to determine whether he and other DOJ lawyers intentionally withheld exculpatory evidence from the prosecution team of then-Sen. Ted Stevens of Alaska.
The sparring between prosecutors and Ring has become increasingly tense. It also appears to be increasingly focused for both sides on winning the out-of-court public relations battle.
With the cloud of the Stevens investigation over PIN, Ring — a former associate of Abramoff accused of corrupting public officials and obstructing justice — is seeking to raise doubts about the section’s overall integrity in handling evidence. At the same time, the Stevens debacle has raised the stakes for the government in the Ring case. Another ruling that it had mishandled evidence would really smart.
The government has hit back at the defense team. This June 15 filing, for example, accused Ring of not reciprocating with the government in discovery sharing.
In the brief filed Friday, the government said Welch has recused himself from the Ring case to avoid being a distraction:
It is apparent that the defendant will continue to use Mr. Welch’s supervision of the Public Integrity Section and the Stevens matter as an excuse for filing distracting motions. Accordingly, Mr. Welch has determined to withdraw himself from supervision over the Ring prosecution. Mr. Raymond Hulser is now Acting Chief of the Public Integrity Section for the purposes of this prosecution.
The other strange wrinkle in this case involves Henry Schuelke III, the white collar investigations lawyer who just seems to be everybody’s good friend.
Ring lawyers raised conflict-of-interest questions about Schuelke, who will be a major witness against Ring and also happens to have been appointed by U.S. District Judge Emmet Sullivan to investigate Welch and other DOJ lawyers for possible criminal contempt in the botched Ted Stevens case. Ring is accused of lying to Schuelke during an internal investigation of the imprionsed lobbyist’s former firm, Greenberg Traurig. The firm hired Schuelke to conduct the internal probe in 2004.
Ring asked Huvelle to disqualify Schuelke from testifying against Ring, arguing that prosecutors might be reluctant to correct any misstatements by Schuelke for fear of angering the man who is also investigating Welch for criminal contempt. Other than Welch, only one other PIN lawyer is working on the Ring case, with the rest of the team from the District of Maryland. That PIN lawyer, Michael Ferrara, is not under investigation in the Stevens matter.
In the April court hearing, Huvelle expressed doubt that “Hank,” as she called Schuelke, would do anything that lacked integrity. Huvelle also noted in the hearing that Ring defense lawyer Richard Hibey is a friend of Schuelke. The government filing on Friday picked up that theme. It said:
The defendant has access to Mr. Schuelke, just as he would any other witness. Lead defense counsel is known to be a long-time friend of Mr. Schuelke. Indeed, defense counsel has admittedly already had a telephone conversation with Mr. Schuelke in which defense counsel inquired about his appointment as a special prosecutor.
The government also said in Friday’s filing:
It is not apparent that a lawyer of Mr. Schuelke’s stature would prefer to give uncorrected false testimony on the stand, rather than have his testimony corrected. To “curry favor” with Mr. Schuelke, a prosecutor might be better served to refresh his recollection if that recollection were inaccurate, rather than leave a false statement uncorrected.
The government added: “Mr. Schuelke’s testimony is important and relates to key issues in the overall case” against Ring.
One purpose of the government’s Friday night filing appears to be to correct the impression that Welch was “removed” from the Ring case. We reported here that Welch was taken off the case, and The Washington Post reported here that Welch and his deputy, Brenda Morris, who is also under investigation for criminal contempt, “have been moved into other roles” following the Stevens case and revelations that materials were withheld in other public corruption cases in Alaska.
The DOJ filing in the Ring case says that Welch’s removal was voluntary.
However, the filing also says Welch ”will continue to be consulted whenever necessary to make sure that the government’s Brady, Giglio and other discovery obligations are being properly discharged,” according to the motion.
You mean, as he did in the Stevens case? Wow, what a mess.