Maryland State Bar Ass'n v. Sugarman

Smith, J., delivered the opinion of the Court. Once again we are faced with the unpleasant task of disciplining a member of the bar of this Court. It is possible that the misconduct of the attorney here might not have come to light had it not been for the ongoing probe of Maryland political corruption. The facts are not in dispute.

Two questions are before us, whether testimony compelled under a Federal immunity statute, 18 U.S.C. §§ 6002-6003 , may form the evidentiary base for disciplinary action and whether disbarment is the appropriate disposition of this case. We shall answer both questions in the affirmative. Richard L. Sugarman was admitted to the bar of this Court on November 26, 1968, after examination. He has maintained an office for the practice of law in Montgomery County.

On June 10, 1974, pursuant to an authorization of its Board of Governors on April 10, 1974, the Maryland State Bar Association, Inc., filed its petition in this Court praying disciplinary action against Sugarman. The petition, filed pursuant to the provisions of Maryland Rule BV3, alleged that Sugarman “ha[d] committed acts of professional misconduct, ha[d] engaged in conduct prejudicial to the administration of justice, ha[d] committed acts of fraud and ³⁰⁸ deceit, ha[d] acted contrary to Canons 1, 7 and 9 of the Code of Professional Responsibility and ha[d] violated Disciplinary Rules 1-102, 7-102, and 9-102 of the Code of Professional Responsibility,” adopted by Rule 1230. The matter ultimately came on for hearing before a panel of three judges of the Sixth Judicial Circuit designated by us under the provisions of Rule BV3 b to hear the matter in the Circuit Court for Montgomery County. A large part of the evidence against Sugarman came from his testimony this spring as a witness for the Government in the trial of United States v. N. Dale Anderson, Criminal No. 73-0527-Y, in the United States District Court for the District of Maryland.

The United States Attorney filed a motion in that case for “an order pursuant to the provisions of Title 18, United States Code, Section 6001 et seq., compelling Richard Lewis Sugarman to give testimony or provide other information, which he refuses to give or provide on the basis of his privilege against self-incrimination,” reciting that the application was “made with the approval of Henry E. Petersen, Assistant Attorney General in charge of the Criminal Division of the Department of Justice, pursuant to the authority vested in him by 18 U.S.C. 6003 and 28 C.F.R. 0.175.” An order of that court was duly passed on February 14, 1974, requiring Sugarman to “give testimony or provide other information which he refuse[d] to give or provide on the basis of his privilege against self-incrimination as to all matters about which he [might] be interrogated at said trial.” The hearing panel in the Circuit Court for Montgomery County said that “[t]he evidence is overwhelming that [Sugarman], by his own admissions, did engage in improper and illegal transactions for a client, one Joel Kline; and did purchase and sell stock in his own name with the fraudulent purpose of assisting said client in avoiding income taxes.” It also said that he “did receive moneys from said Kline for the purpose of disguising custody by exchange of checks, commingling the bank accounts by the ‘laundering’ of moneys received from his client with fraudulent and deceitful purpose” and “[t]he rendering and delivering of ³⁰⁹ financial statements for professional services to the client Kline, which services were not rendered, [was] particularly distressing and was clearly for the purpose of enabling Kline to use such statements as tax or business deductions.” Disbarment was recommended. The immunity statute to which reference has been made, 18 U.S.C. § 6002 , provides in pertinent part: “§ 6002. Immunity generally “Whenever a witness refuses, on the basis of his privilege against self-incrimination, to testify or provide other information in a proceeding before or ancillary to— (1) a court or grand jury of the United States, . . . and the person presiding over the proceeding communicates to the witness an order issued under this part, the witness may not refuse to comply with the order on the basis of his privilege against self-incrimination; but no testimony or other information compelled under the order (or any information directly or indirectly derived from such testimony or other information) may be used against the witness in any criminal case, except a prosecution for perjury, giving a false statement, or otherwise failing to comply with the order.” The crux of the question here raised by Sugarman may be stated as wdiether a disciplinary action against an attorney involves a potential criminal or quasi-criminal sanction for the purpose of the privilege against self-incrimination provided by the Fifth Amendment to the Constitution of the United States. Sugarman bases his hopes here upon Kastigar v. United, States, 406 U. S. 441 , 92 S. Ct. 1653 , 32 L.Ed.2d 212 (1972), and Spevack v. Klein, 385 U. S. 511 , 87 S. Ct. 625 , 17 L.Ed.2d 574 (1967).

In Kastigar the Court held that the immunity granted by 18 U.S.C. § 6002 was coextensive with the Fifth Amendment ³¹⁰ privilege against self-incrimination and, therefore, the statute was constitutional since the grant of immunity supplanted the privilege and protected a person to the same extent. In that case the petitioners were called to testify before a grand jury where they claimed their privilege against self-incrimination. They were granted immunity pursuant to the statute. They still refused to testify on the ground that the immunity was not coextensive with the privilege.

They were held in contempt and ordered confined. Mr. Justice Powell for the Court held that the Fifth Amendment did not require “transactional immunity,” but only “use and derivative use immunity” which was granted by the statute in question. “This is very substantial protection, commensurate with that resulting from invoking the privilege itself. The privilege assures that a citizen is not compelled to incriminate himself by his own testimony. It usually operates to allow a citizen to remain silent when asked a question requiring an incriminatory answer.

This statute, which operates after a witness has given incriminatory testimony, affords the same protection by assuring that the compelled testimony can in no way lead to the infliction of criminal penalties. The statute, like the Fifth Amendment, grants neither pardon nor amnesty.” Id. at 461 . (Emphasis added.) The emphasized language relates to the provisions of § 6002 in that the statute prohibits the use of testimony given under grant of immunity in any subsequent “criminal case.” A “criminal case” is one that may “lead to the infliction of criminal penalties.” Accordingly, if disbarment is a criminal penalty, then a disciplinary proceeding is a criminal proceeding and, pursuant to § 6002, which supplanted the constitutional privilege, the testimony given under the grant of immunity could not be utilized. Thus, the issue in this case becomes whether disbarment is a criminal penalty which cannot be inflicted on the basis of compelled ³¹¹ testimony.

The Supreme Court of the United States has not expressly answered the question. Nothing in Spevack or in In re Ruffalo, 390 U. S. 544 , 88 S. Ct. 1222 , 20 L.Ed.2d 117 (1968), bears precisely upon the point. In Spevack , a New York lawyer had refused to honor a subpoena duces tecum served on him in that he refused to produce the demanded financial records and refused to testify at the judicial inquiry. His sole defense was that the production of those records and his testimony would tend to incriminate him.

The Appellate Division of the New York Supreme Court ordered him disbarred, holding that the constitutional privilege against self-incrimination was not available to him under the holding of Cohen v. Hurley, 366 U. S. 117 , 81 S. Ct. 954 , 6 L.Ed.2d 156 (1961). The Court of Appeals of New York affirmed. Mr. Justice Douglas announced the judgment of the Court and delivered an opinion in which three other justices joined. He said: “We conclude that Cohen v. Hurley [, 366 U.S. 117 , 81 S.Ct. 954 , 6 L.Ed.2d 156 (1961),] should be overruled, that the Self-Incrimination Clause of the Fifth Amendment has been absorbed in the Fourteenth, that it extends its protection to lawyers as well as to other individuals, and that it should not be watered down by imposing the dishonor of disbarment and the deprivation of a livelihood as a price for asserting it .’’Id. at 514. “The threat of disbarment and the loss of professional standing, professional reputation, and of livelihood are powerful forms of compulsion to make a lawyer relinquish the privilege.

That threat is indeed as powerful an instrument of compulsion as ‘the use of legal process to force from the lips of the accused individual the evidence necessary to convict him * * *.’ United States v. White, 322 U.S. 694, 698 , 64 S.Ct. 1248, 1251 , 88 L.Ed. 1542 .” Id. at 516. Spevack must be read in the light of the fact that Mr. Justice ³¹² Fortas, in concurring in the judgment and in the overruling of Cohen v. Hurley, said: “If this case presented the question whether a lawyer might be disbarred for refusal to keep or to produce, upon properly authorized and particularized demand, records which the lawyer was lawfully and properly required to keep by the State as a proper part of its functions in relation to him as licensor of his high calling, I should feel compelled to vote to affirm, although I would be prepared in an appropriate case to re-examine the scope of the principle announced in Shapiro v. United States, 335 U.S. 1 , 68 S.Ct. 1375 , 92 L.Ed. 1787 (1948). I am not prepared to indicate doubt as to the essential validity of Shapiro.” Id. at 520. Four justices dissented in that case, making the Fortas vote essential to the holding.

The Supreme Court did not say in Spevack that a disciplinary proceeding was a criminal proceeding. The only reason that the privilege against self-incrimination was involved was because the attorney’s testimony if given, so it was claimed, would have incriminated him in the conventional sense of that word, that is his testimony would have subjected him to possible prosecution under the New York penal code for solicitation and fee splitting. This view of Spevack is shared by R. Niles and J. Kaye, Spevack v. Klein: Milestone or Millstone in Bar Discipline? 53 A.B.A.J. 1121 (1967), and M. Franck, The Myth of Spevack v. Kline, 54 A.B.A.J. 970 (1968). They also discuss an immunity grant and the subsequent use of the testimony in a disciplinary proceeding.

Both support the view we shall take here today. Ullman v. United States, 350 U. S. 422 , 76 S. Ct. 497 , 100 L. Ed. 511 (1956), is relevant here. There the petitioner was convicted of contempt after refusing to testify before a grand jury. He had been granted immunity pursuant to the provisions of the Immunity Act of 1954, 68 Stat. 745 , 18 U.S.C.

(Supp. II) § 3486. However, he contended that his testimony might lead to loss of his job. Mr. Justice Frankfurter said for the Court: ³¹³ “[T]he immunity granted need only remove those sanctions which generate the fear justifying invocation of the privilege: ‘The interdiction of the 5th Amendment operates only where a witness is asked to incriminate himself, — in other words, to give testimony which may possibly expose him to a criminal charge. But if the criminality has already been taken away, the amendment ceases to apply.’ Hale v. Henkel, 201 U.S. 43, 67 , 26 S.Ct. 370, 376 , 50 L.Ed. 652 .

Here, since the Immunity Act protects a witness who is compelled to answer to the extent of his constitutional immunity, he has of course, when a particular sanction is sought to be imposed against him, the right to claim that it is criminal in nature.” Id. at 431. His conviction was affirmed. Pertinent to the inquiry here is Matter of Rouss, 221 N. Y. 81 , 116 N. E. 782 (1917). Jacob Rouss had been compelled under a New York statute to give testimony against five New York City police inspectors who had been indicted for conspiracy to obstruct justice through the suppression of an individual’s testimony.

In the course of that trial it was