Ethics Rules 'Nearly Halt' Large-Scale Federal
              Criminal Probes

                             EUGENE, Ore. - A Oregon
                             Supreme Court ruling on legal
                             ethics has essentially shut down
                             federal probes statewide into
                             crimes such as drug trafficking,
                             child pornography and
                             extortion, officials say in court

                             The Aug. 17, 2000 ruling
                             extended ordinary rules
                             forbidding deceit on the part of
              attorneys in court cases to all activities involving
              lawyers - with the effect that federal undercover
              operations, which under Justice Department
              guidelines must be supervised by federal
              prosecutors, simply can't continue in Oregon, the
              papers say.

              The Justice Department, arguing that the restrictions
              are unconstitutional and "act as a massive
              roadblock" to federal law-enforcement activities,
              has filed a suit against the Oregon State Bar. U.S.
              District Judge Michael Hogan of Eugene will hear
              arguments next Tuesday.

              The state Supreme Court is also considering
              changing the ethics code to allow government
              lawyers to give advice about or supervise
              undercover investigations that use misrepresentations
              "or other subterfuge."

              The "truth ruling," which sent shock waves through
              the state's legal community, came during a case
              involving Dan Gatti, a private lawyer who the court
              said violated ethics rules when he posed as a doctor
              in phone calls to an insurance company he was
              preparing to sue.

              The court, which has the final word on ethics
              breaches, strictly interpreted state bar rules against
              attorneys engaging in "dishonesty, fraud, deceit or
              misrepresentation" and declared that the rules cover
              all attorneys - including those working for the

              A 1998 federal law requires federal attorneys to
              comply with ethics rules adopted by the states where
              they operate. Violations of state bar rules, enforced
              by the state Supreme Court, can result in loss of an
              attorney's license to practice law in Oregon.

              Authorities say the ruling has stymied major criminal
              probes because prosecutors can no longer give
              advice or oversee such tactics as eavesdropping by
              telephone or concealed microphones, which require
              undercover operatives to misrepresent their
              identities and the purposes of conversations.

              In one case, a probe into a "major Mexican
              drug-trafficking organization," was delayed after
              federal agents had bought "black tar" heroin from the
              suspects, said Philip Donegan Jr., an assistant
              special agent in charge of the Portland FBI office, in
              one court document.

              While federal attorneys, worried about following
              ethics rules in approving search warrants,
              considered requests to search "known stash houses,"
              Donegan said, the suspects "dispersed" and the case
              "became unprosecutable."

              Michael Mosman, chief U.S. attorney for Oregon,
              said in a court filing that an investigation into "a
              major international money-laundering case involving
              proceeds of a worldwide narcotics conspiracy" is

              "We will never be able to penetrate its inner
              workings and acquire the evidence needed to bring
              the conspirators to justice without some covert
              activity," Mosman said.

              Efforts to prosecute many serious crimes "have
              nearly ground to a halt," he said.

              The FBI says the ethics constraints have hampered
              investigations into child pornography and abuse
              cases and financial crimes, including a check-fraud
              ring "directed by a well known career criminal."

              In his affidavit, Donegan said a local police agency
              got confessions from four "low-level check passers"
              and that one agreed to cooperate with the federal
              probe. But the investigation stalled after federal
              attorneys wouldn't approve secretly recording
              conversations between the check passer and a major

              Donegan said an investigation into Ecstasy, linked to
              several deaths in Oregon at so-called "rave" parties,
              "developed promising sources" but also has
              languished partly because agents can't make
              undercover drug purchases.

              Mosman said the government's inability to use
              undercover probes can even be life-threatening.

              He said investigations into Asian and Eurasian
              organized crime have produced evidence of "at least
              three" extortions of small businesses in Oregon. But
              he said the probes are hampered because he can't
              allow federal agents to monitor phone calls between
              victims and extortioners.

              "We have been in the terrible position of having to
              inform the FBI that we cannot approve the use of
              such calls," Mosman said, "even though the risk of
              harm to the victim thereby increases."

              Justice Department lawyers argue that the ethics
              rules unconstitutionally interfere with federal
              officials' ability to perform their duties. They cite the
              "supremacy clause" in the U.S. Constitution, which
              says federal activities generally are to be free from
              state regulation.

              "Some elements of deceit or misrepresentation have
              long been held constitutional" by courts, the
              department says.

              Attorneys for the state bar contend that the
              department hasn't shown that the rules conflict with
              federal law and that the agency has "overreacted" to
              the state court ruling.

              The bar also says the federal court should postpone a
              decision in the case while the state Supreme Court
              considers the proposed rule changes. 

              The Associated Press contributed to this report