Court Bars Indictment of Deaver : Hearing Ordered on Suit Challenging Prosecutor’s Power

A federal judge Wednesday blocked a court-appointed independent counsel from seeking criminal charges against former presidential aide Michael K. Deaver until serious constitutional questions about the prosecutor’s powers are settled.

The ruling by U.S. District Judge Thomas Penfield Jackson marked the first court action on a challenge by a potential defendant to the appointment of an independent counsel under the Ethics in Government Act, which covers the activities of past or present government officials.

It also cast a cloud over the work of other such counsels, including Lawrence E. Walsh, who was appointed to investigate the Iran- contra scandal, until the courts ultimately resolve the question of their authority.

Challenge by North

A similar constitutional challenge was filed Tuesday by attorneys for Lt. Col. Oliver L. North, a key figure in the Iran arms operation, to block Walsh’s probe, but the court has not acted on it. Officials said the issue appears to be headed toward appellate review.

Both challenges contend that the appointment of independent counsels by a panel of appellate court judges, as mandated in the 1978 ethics law, violates the separation of powers doctrine and other constitutional provisions. Authority to investigate and prosecute properly belongs to the executive branch of government, the suits contend.

Jackson said his order blocking action against Deaver would remain in effect at least until March 11, when he said he would hear further arguments on a permanent injunction against the independent counsel.

Perjury Indictments Sought

Wednesday’s ruling brought at least temporary relief to Deaver, who was on the verge of being indicted on four counts of perjury in connection with his Washington lobbying activities.

Independent counsel Whitney North Seymour Jr. told the court he was planning to ask a federal grand jury Wednesday afternoon to indict Deaver on perjury charges growing out of the former White House official’s sworn testimony before a House subcommittee last May and before the grand jury the following month.

Seymour, a former U.S. attorney in New York during the Richard M. Nixon Administration, did not describe Deaver’s alleged false statements except to suggest that he misled grand jurors about when he had approached his first client in setting up his Washington consulting firm in 1985.

There have been reports that Deaver lined up the government of Canada as a $105,000-a-year client before actually leaving the White House as deputy chief of staff in May, 1985. But Deaver and some Canadian officials have denied this.

The ethics law prohibits a former top federal official from lobbying his former colleagues on behalf of a client for one year after leaving government service and bans him for life from representing a client before the government on any matter in which he had “personal and substantial” involvement while in government.

Last summer the oversight and investigations subcommittee of the House Energy and Commerce Committee, chaired by Rep. John D. Dingell (D-Mich.), voted unanimously to ask Seymour to investigate possible perjury by Deaver after Deaver answered the panel’s questions about top Reagan Administration officials he had contacted after leaving government service.

‘Changing His Tune’

Wednesday, Dingell called it “most curious” that Deaver was challenging Seymour’s authority inasmuch as Deaver himself asked for appointment of an independent counsel to clear his name. “Now that he knows Mr. Seymour is seeking an indictment, Deaver is changing his tune,” Dingell said. At a hearing in Jackson’s courtroom before the judge’s ruling, Herbert J. Miller, Deaver’s chief attorney, said Seymour’s nine-month-old inquiry had ruined the former Reagan aide’s once-thriving business.

“Mr. Seymour’s tactic of extending his investigation to virtually all of Mr. Deaver’s clients has resulted in the loss of substantially all of those clients, and now threatens the complete destruction of his business,” Miller said.

Papers Subpoenaed

Miller said Seymour had called 150 witnesses to testify, including all of Deaver’s clients, and that “every scrap of paper since he started his business was subpoenaed.”

Seymour told the judge that Miller had waited nine months to mount his legal challenge, delaying such action until it was clear that Deaver had “lost his gamble” that he would be exonerated.

Miller argued that Seymour “has no constitutional right” to ask grand jurors to indict Deaver because the statute under which Seymour was appointed was flawed.

In an accompanying legal brief, Miller argued--as North’s attorneys did in their brief--that the office of independent counsel was improperly established under the control of the legislative and judicial branches of government. Such prosecutorial authority, which he said exclusively belongs to the executive branch, cannot be given to “an ordinary private citizen” like Seymour, Miller said.

‘Substantial Questions’

In agreeing with Miller, Jackson ruled that “substantial questions” exist about the constitutionality of the Ethics in Government Act. He said he would “temporarily restrain” Seymour from acting on an indictment, declaring that “a brief delay” would not harm any criminal case against Deaver.

Legal experts said no matter how Jackson rules on the question of a permanent injunction, the losing side will carry the issue to the appellate court and perhaps the Supreme Court for an opinion that ultimately will affect all independent counsels.

Besides Seymour and Walsh, other court appointed counsels are investigating conflict-of-interest charges against former White House political director Lyn Nofziger; allegations of misleading congressional testimony against former Assistant Atty. Gen. Theodore B. Olson, and the personal financial affairs of W. Lawrence Wallace, another former Justice Department official.

After Wednesday’s ruling, Walsh noted that “our office is not a party to the Deaver case” and added:

“We believe that the independent counsel statute is constitutional and that the lawsuit against our office should be dismissed. We intend to continue our investigation of the Iran-contra matter without interruption.”