GOP Rep. Bob Goodlatte of Virginia said that he has uncovered a "smoking gun" email that proves the Justice Department under Barack Obama kept settlement payouts from going to conservative-leaning organizations, even though groups aligned with the Democratic Party were awarded settlements. Justice Department officials, however, denied “picking and choosing” recipients. “It is not every day in congressional investigations that we find a smoking gun,” Goodlatte said Tuesday. “Here, we have it.”
Then-Attorney General Eric Holder allowed prosecutors to reach agreements that compelled corporations to give pay-outs to advocacy organizations not connected to their cases in order to meet settlement burdens imposed by Obama’s Justice Department. Congressional Republicans have long denounced the practice as a “slush fund” for liberals. Under President Donald Trump, DOJ has ceased the practice.
Emails released by Goodlatte show that DOJ officials were not only involved in deciding which groups would receive settlement funds, but they also intervened to ensure that money did not go to conservative and libertarian-leaning organizations, such as the Pacific Legal Foundation -- a nonprofit law firm that defends property rights.
A senior Justice Department official expressed “concerns” in a July 2014 email over settlement funds going from Citigroup to the Pacific Legal Foundation, which the official identified as providing “conservative property-rights legal services.” The official, whose name was redacted, wrote “Concerns include: a) not allowing Citi to pick a statewide intermediary like the Pacific Legal Foundation (does conservative property-rights legal services).” The unidentified official bore the title: “Acting Senior Counselor for Access to Justice.” Furthermore, the official wrote that “we are more likely to get the right result from a state bar association affiliated entity.”
On Tuesday, the Pacific Legal Foundation responded by telling Fox News that “permanent reforms to prevent such abuse are needed.” Pacific Legal Foundation CEO Steven D. Anderson wrote that he was flattered that the Obama administration was so concerned about the the foundation’s success in litigation that it sought to “prevent settlement funds from making their way to Pacific Legal Foundation.” PLF has won numerous cases before the Supreme Court and other courts.
“When the federal government settles a case against a corporate wrongdoer, any settlement funds should go first to the victims and then to the American people— not to bankroll third-party special interest groups or the political friends of whoever is in power,” Attorney General Jeff Sessions said in September.
To remedy the Obama administration’s practice Goodlatte sponsored the Stop Settlement Slush Funds Act of 2017. In announcing the bill on the House floor, he took particular aim at former Associate Attorney General Tony West. “Aiding their political allies was only the half of it,” Goodlatte said. “The evidence of the Obama DOJ’s abuse of power shows that Tony West’s team went out of its way to exclude conservative groups.” West played an active role in helping liberal organizations obtain settlement information. The bill passed the House by a 238-183 vote on Tuesday night.
Groups who received funding expressed their appreciation to West. An August 2014 email from Charles R. Dunlap of the Indiana Bar said, “Now that it has been more than 24 hours for us all to try and digest the Bank of America settlement, I would like to discuss ways we might want to recognize and show appreciation for the Department of Justice and specifically Associate Attorney General Tony West.” Dunlap added that West “by all accounts was the one person most responsible” for the Interest on Lawyers Trust Accounts group receiving money.
Long before the release of the emails, Republicans had criticized the practice of passing on settlement money to advocacy groups. For example, Gibson Guitars was forced to pay $50,000 to the National Fish and Wildlife Foundation in 2012, though that organization has nothing to do with the case. Later, the Bank of America paid out to the National Urban League, the Neighborhood Assistance Corporation of America, and the National Council of La Raza as part of a major mortgage fraud settlement stemming from the 2008 financial crisis.
According to an October 25 press release from Goodlatte:
“An investigation by the House Judiciary Committee last Congress revealed the Department of Justice’s abuse of power: using settlement agreements to direct money away from victims toward organizations of their choosing and away from those they disliked. DOJ’s actions contradict the spending power given explicitly to the Legislative Branch and undermine Congress’s most effective tool to hold the Executive Branch accountable. Regardless of which party is in the White House, subverting Congress to funnel money to outside organizations is unacceptable and unconstitutional.
“I applaud the passage of this bipartisan bill that bans settlement payments to non-victim third parties permanently for future administrations. There should be no excuse or justification for this banned behavior, and I urge my colleagues in the Senate to defend Congress’s constitutional interests and support H.R. 732.”
Background: A joint investigation by the House Judiciary Committee and Financial Services Committee revealed that DOJ used mandatory donations to direct nearly a billion dollars to activist groups during the last two years of the Obama Administration. Internal documents reveal that the third-party organizations were actively involved in lobbying DOJ to receive settlement money, and that DOJ went out of its way to exclude conservative groups.