E. F. Hutton & Co.'s chairman insisted yesterday that he "was not looking for Republican influence" when he asked his executive assistant -- a former White House aide -- to arrange a lunch with then-attorney general William French Smith while a grand jury was investigating the brokerage firm for check-kiting.
"If I have a problem with General Motors, I call the chairman," Robert M. Fomon, Hutton's chairman and chief executive officer, told the House Judiciary subcommittee on crime. "If I have a problem with the Justice Department, I call the attorney general."
And if he had wanted to exploit the two-year White House stint of his assistant, Jay Moorhead, Fomon said, "why screw around with the attorney general?"
Fomon, Moorhead, and three Justice Department officials testified about the lunch at the seventh and last subcommittee hearing on the department's handling of the case, particularly the decision to prosecute Hutton, but no individuals.
Hutton pleaded guilty May 2 to 2,000 counts of mail and wire fraud, paid a $2 million fine and the government's costs of $750,000, and signed a civil agreement never to engage in numerous cash-management abuses beyond those specified in the indictment. Particularly because of its warnings to corporate America, Assistant Attorney General Stephen S. Trott testified, he endorsed the package "to this day and forever."
The Fomon-Smith lunch was on Nov. 15, 1984. Fomon feared an indictment of Hutton by Nov. 23, the day when the grand jury was scheduled to expire, and wanted the grand jury extended so Hutton could submit more information. Unknown to him and Hutton attorneys, the department had already secretly requested a six-month extension of the grand jury's term before Fomon, Smith, their wives and Moorhead gathered at the Jockey Club in the Fairfax Hotel.
Robert W. Ogren, chief of the criminal division's fraud section, testified that the department's basic reason for its request for the grand jury extension was that its review of the evidence was so incomplete that to proceed would be like "running off a cliff."
Fomon said Hutton counsel had told him that they needed time to make "submissions" that would persuade the department that an indictment was unwarranted. Fomon said he decided to contact Smith about the matter, and that he did not alert Hutton attorneys.
Moorhead testified that within about 24 hours after he had went to work for Hutton, Fomon asked him to set up "a social lunch" with Smith, and to indicate that Fomon had an unspecified business matter to take up with the attorney general. Fomon said he knew both of the Smiths socially.
Moorhead had become a friend of Smith's wife, Jean, while he was in the White House, although Fomon said the White House tie "had absolutely nothing to do with this."
Moorhead said it was his own idea to phone Mrs. Smith to set up the lunch, and he did so. The lunch followed, about 10 days later. Before coffee, when Smith was about to leave, Fomon said, he told Smith of the need for a grand jury extension but "I didn't ask him to do anything."
Smith "registered what I consider shock at the fact that E. F. Hutton was being exposed to a grand jury investigation that he knew nothing about," Fomon said. He described Smith's response as "noncommittal."
Subsequently, Trott phoned Moorhead and then Fomon to say that it was "improper" for Fomon to be talking to the attorney general about the case.
Both Hutton witnesses said they would not repeat the episode. Trott said the influence exerted by the lunch was "absolutely none." Ogren said he was left "very angry" by this "backdoor" approach and decided to "kick the tails" of the Hutton attorneys he assumed had been involved. Peter B. Clark, the fraud section trial attorney in the case, referred to Fomon's act as "intemperate."
Rep. Romano L. Mazzoli (D-Ky.) accused Fomon of a "total lack of contrition."
"I don't think that's true," the Hutton executive responded. When Mazzoli charged that he had been trying to put in a "fix," Fomon said: "I don't know how extending a grand jury's time can be regarded as a fix."