Rehnquist’s Approval Seen Likely Despite FBI Probe of Cornell Trust

The FBI has concluded an investigation into Supreme Court Justice William H. Rehnquist’s involvement with a family trust kept secret for more than 20 years from its intended beneficiary, the justice’s disabled brother-in-law, and the result is not expected to threaten Rehnquist’s confirmation as chief justice, sources said Wednesday.

The FBI report, requested by Sen. Joseph Biden (D-Del.), the ranking minority member of the Senate Judiciary Committee, has been reviewed by the panel’s staff in preparation for a scheduled committee vote today on Rehnquist’s nomination and that of Judge Antonin Scalia to be an associate justice.

Sources familiar with the FBI report said Wednesday that it had turned up no significant information beyond an Aug. 2 story in The Times in which Harold Dickerson (Dick) Cornell, 73, a former San Diego County prosecutor who is disabled by multiple sclerosis, accused Rehnquist of joining other family members in concealing from him the existence of a $25,000 trust fund. Under the terms of the trust, established by Cornell’s father, the justice and other relatives stood to gain financially if the bedridden brother-in-law did not collect its proceeds.

Senate aides briefed on the Cornell matter added that they did not expect the subject to be brought up in today’s Judiciary Committee debate.

Sen. Alan Cranston (D-Calif.) had asked the committee to investigate the allegations after Cornell, who lives in San Diego, contacted the senator’s office. Committee aides said the subsequent probe was undertaken with the full cooperation of Judiciary Committee Chairman Strom Thurmond (R-S.C.).

Harold Gross, an aide to Cranston, said that San Diego attorney Paul Peterson, who conducted a preliminary inquiry of Cornell’s allegations on Cranston’s behalf, concluded that Cornell’s testimony alone could not prove any wrongdoing by Rehnquist in connection with the family trust. Cornell, he said, does not have first-hand knowledge that Rehnquist actively chose to withhold information about the trust.

Rehnquist has been married for 33 years to Cornell’s sister, Natalie. In 1961, when Rehnquist was in private law practice in Phoenix, his father-in-law, Dr. Harold David Cornell, asked him to draw up a trust benefiting his disabled son, according to Cornell, who didn’t learn of the trust’s existence until 1982.

Gross added that Cranston has decided to vote against Rehnquist’s confirmation--but not on account of the trust allegations. Instead, Cranston’s opposition will be based on broader concerns about Rehnquist’s extremism, sensitivity and veracity, Gross said.

Cornell said Wednesday that an FBI agent interviewed him Saturday and obtained copies of documents concerning the trust. When the agent, from the FBI’s San Diego field office, returned the documents to Cornell on Tuesday, the agent told him that the investigation had been completed and a report forwarded to Washington, Cornell said.

Cornell added that he was called late Tuesday by an aide in the Washington office of Sen. Edward M. Kennedy (D.-Mass.), who asked for a copy of the trust document itself. A messenger from Cranston’s San Diego office later visited Cornell’s Ocean Beach home to pick up the document, he said.

Rehnquist has refused to comment on Cornell’s allegations. However, other family members said last month that they and Rehnquist simply were following the wishes of Cornell’s late father in concealing the trust fund from Cornell, who they feared would not spend the money wisely. One of Cornell’s sisters discounted his claims of ethical wrongdoing on the part of Rehnquist, saying that the disabled former lawyer bore a longstanding grudge against Rehnquist and others in the family.

But the trust document itself, drawn up by Rehnquist in 1961 for his dying father-in-law, states that funds were to be paid to Cornell whenever his standard of living fell below the level he maintained when the trust was prepared--a time when Cornell had a successful private legal practice. The document also says nothing about keeping the trust a secret from Cornell.

The trust documents authorized the trustee, Cornell’s brother George, to begin liquidating the $25,000 principal of the trust if the income alone was insufficient to meet the disabled man’s needs.

Cornell’s debilitating illness forced him to retire in 1962. And although he claims that family members knew that he was living much of the time on a meager income from disability insurance and Social Security payments, he did not become aware of the trust until January, 1982, shortly after George’s death. When his sister, Ruth Sawday, was to succeed her brother as trustee, her lawyer advised her to inform Cornell of the trust’s existence, according to another of the sisters, Mary Cornell.

Cornell ultimately received $35,000, the amount that had accumulated in the trust, in March, 1982. Cornell said he purchased a hospital bed and motorized scooter for use at home, and gave most of the money to his children and other people.

Cornell contends that, as a lawyer, Rehnquist had a special ethical duty to inform him of the trust’s existence. He also contends that Rehnquist had a conflict of interest in connection with the trust.

The trust specified that if Cornell died, the money was to be divided among his children, brother and five sisters, including Rehnquist’s wife. That provision, Cornell charges, created a financial incentive for Rehnquist and his wife to conceal the existence of the trust from him.

Experts in legal ethics have said that the circumstances pose ethical dilemmas, but disagree about whether Rehnquist breached any of the legal profession’s standards of professional conduct. Some experts say the obligation to expose the existence of a trust falls on the trustee, not the lawyer who drew up the document.

Times staff writers Ronald Ostrow in Washington and Barry M. Horstman in San Diego contributed to this story.