Archives for October 2013

Statement: Cause of Action on Deputy IG Charles Edwards stonewalling Congress

Cause of Action, a government accountability group which has investigated Department of Homeland Security Deputy Inspector General (IG) Charles Edwards, issued the following response to the letter sent by Chairman McCaskill and Ranking Member Johnson to IG Edwards regarding his delay in providing information related to the Senate’s investigation.

Executive Director Dan Epstein:

“The lack of transparency by and failure of IG Edwards to provide documents to Cause of Action pertaining to allegations of misconduct and abuse drove us to sue DHS for records. But now DHS has taken a new and alarming stance in their affront to transparency: denying both the public’s access to documents as well as stonewalling Congress. Edwards’ failure has now extended beyond a refusal to provide documents; six members of his staff are refusing to conduct interviews with congressional investigators. IG Edwards must be held accountable for his alleged misconduct and his deliberate and continued objection to the public’s right to know about it.”


Cause of Action files opposing briefs in Department of Energy cronyism lawsuit

As we’ve seen over the past month the DOE is reviving its loan program, this time under new management.

Yet Cause of Action (CoA), a government accountability group, hasn’t forgotten how the DOE handled applications for the Loan Guarantee Program in the first go-round.

Today CoA took a step in a lawsuit we filed against the DOE for corrupting its lending programs to favor political insiders, and arbitrarily denying applications by failing to review applications with ‘established merit criteria’ as required by law.

CoA has been investigating the DOE’s loan guarantee program for  more than a year and has uncovered that the agency failed to give XP Vehicles and Limnia, Inc., two qualified applicants under the DOE’s loan guarantee program fair treatment and the honest opportunity to compete for Government loan funds to build advanced technology vehicles and components.

Click here to see the Opposition to Defendant’s Motion to Dismiss the Official Capacity Claims

Click here to see the Opposition to the Individual Capacity Defendants’ Motion to Dismiss

POLITICO: Bobby Jindal, Haley Barbour boosted visa firm

Bobby Jindal, Haley Barbour boosted visa firm

A company closely tied to former Democratic Party Chairman Terry McAuliffe, and currently under scrutiny for allegedly trying to win political favors from the Department of Homeland Security, earned high-powered support only a few years ago from Republican Gov. Bobby Jindal of Louisiana and then-Mississippi Gov. Haley Barbour, according to documents obtained by a nonpartisan watchdog group.

Both Jindal and Barbour wrote letters to DHS in 2008 seeking federal approval for the firm Gulf Coast Funds Management to become a regional EB-5 center – a hub that helps channel foreign investment into American projects and opens a path to green-card status for foreign businessmen.

GCFM, which is now headed by former Secretary of State Hillary Clinton’s brother, Anthony Rodham, has recently been drawn into an internal government investigation into whether a DHS official inappropriately aided the firm.

Republicans have sharply criticized McAuliffe and his former car company, GreenTech Automotive, for collaborating with GCFM and allegedly trying to use political influence to win government approval for EB-5 investments in Virginia. McAuliffe’s relationship with GreenTech started in 2009, well after the Jindal and Barbour letters were sent.

Jindal chairs the Republican Governors Association, which has attacked McAuliffe in TV ads for his ties to GCFM (one August ad cited this POLITICO headline: “Report: DHS probes firm with ties to Terry McAuliffe.”) The Louisiana governor has said that McAuliffe “disqualified” himself from high office through his questionable business dealings.

In documents obtained by the group Cause of Action – and shared exclusively with POLITICO – Jindal and Barbour endorsed GCFM’s bid to become a regional visa center servicing Mississippi and Louisiana. They jointly wrote to Homeland Security Secretary Michael Chertoff on June 19, 2009, to seek support for a company that they said would help the region bounce back from natural disasters.

“We believe that the situation in Mississippi and Louisiana is uniquely affected by the storms of 2005, and GCFM should be granted an exception to invest at the $500,000 level in both states,” the two governors wrote. “These areas are ‘targeted employment areas’ because only capital investment that creates new jobs can bring full recovery and allow all of our people to come home. Given these issues, we request your support for the GCFM regional center in a manner that allows it to fulfill the objectives of the EB-5 program and put funds to work to create needed jobs in Louisiana and Mississippi.”

Earlier in the year – on Feb. 27, 2008 – Jindal wrote separately to Chertoff to lobby for “a regional [EB-5] center that serves all of the state of Louisiana” and mentioned GCFM by name.

“The EB-5 program is an efficient way to direct private equity into all of the regions in Louisiana that need investment capital,” Jindal wrote. “I further understand that Gulf Coast Funds Regional Center has an application pending at this time for a regional center that serves both Louisiana and Mississippi. I ask you to evaluate this application, and all regional center applications from this area as quickly as possible so that investor dollars can be put to use immediately.”

Both Barbour and a spokesman for Jindal told POLITICO that at the time the two governors expressed support for GCFM, neither Terry McAuliffe nor GreenTech Automotive were involved in the project. Rodham only appears to have come on board at GCFM several years later, and McAuliffe didn’t become chairman of GreenTech until after his losing 2009 bid for governor of Virginia.

Barbour said that the point man at the time for GCFM had been a New Orleans-based investor, David Voelker, who died in May of this year. The DHS approval letter for GCFM’s regional center application, dated Aug. 18, 2008, is addressed to Voelker and another investor, George E. Brower II.

“At the time the letter was written, it was different people who were going to have the EB-5 center [and] we were dealing with a different automobile company,” said Barbour, himself a former RGA chairman.

He said a pair of foreign businessmen, Benjamin Yeung and Charles Wang, were involved in the initial EB-5 center application; only Wang ultimately went on to become deeply engaged with GreenTech and its investments in Mississippi.

“There was, as far as I know, no relationship with Hillary Clinton’s brother [in 2008],” Barbour said, emphasizing: “These are different people at a different time.”

Jindal spokesman Kyle Plotkin said in an emailed statement that it was not surprising that the two governors teamed up to advocate for economic development in their two states, and noting that McAuliffe’s involvement with GCFM came later.

“Louisiana and Mississippi have often cooperated since Hurricane Katrina to cut federal red tape and encourage private sector job creation,” Plotkin said. “It’s unfortunate that well after these letters were sent Terry McAuliffe tried to abuse this federal program and take advantage of a town in North Mississippi. Federal authorities should hold him accountable for any violations that might have occurred.”

An email to a GCFM inquiries address seeking comment was not immediately returned.

Cause of Action executive director Dan Epstein said that regardless of the timeline of GCFM’s activities and its relationship with prominent Democrats, that Jindal and Barbour had “very clearly lobbied for GCFM to get approval as a regional center.”

“Political connections should never be the grounds on which a company gets support from the government. We want a transparent and competitive system,” said Epstein, whose group has been highly critical of McAuliffe and his various business connections during the current gubernatorial race.

He noted dryly that Jindal is now “rather critical of Terry McAuliffe and actually cites Mr. McAuliffe’s bad businesses with GreenTech Automotive, which is of course financed by Gulf Coast Funds Management.”

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Forbes: Dan Epstein: Obamacare’s Implementation Poses Grave, But Largely Unknown Risks For Beneficiaries

Obamacare’s Implementation Poses Grave, But Largely Unknown Risks For Beneficiaries

By Dan Epstein        September 30, 2013

Many of us are concerned and anxious because we don’t know what the Patient Protection and Affordable Care Act (ACA), also known as Obamacare, will mean for our personal health care, our families and our pocketbooks as enrollment commences October 1.  The American people are likely unaware of the risks they face in disclosing their personal medical and financial information to strangers through the enrollment programs and have not been well informed of the potential for state entities to violate federal laws during the implementation of the ACA.

In an aggressive effort to recruit Americans into the ACA, the federal government has implemented “Navigator” and “Assister” programs.  These programs lack not just training and oversight, but also background checks, fingerprinting or other screening that should be required prior to obtaining Americans’ social security numbers, addresses, and personal medical information.  Recognizing these security concerns, thirteen Attorneys General wrote to U.S. Department of Health and Human Services (HHS) Secretary Kathleen Sebelius on August 14, 2013 warning that “…this is a privacy disaster waiting to happen.”  On September 18, 2013, the House Oversight and Government Reform Committee issued a troubling report detailing how navigators and assisters not only threaten to harm consumer privacy and misuse consumer data but are also being carried out by individuals who have not been subject to background checks or other certifications.  Concerned about the potential liabilities associated with these navigator and assister programs, entities in Ohio, Florida, Oklahoma, Pennsylvania, Utah and West Virginia have already voluntarily returned federal navigator grant money.

But another area of concern that has not yet received much attention is the risk of waste, fraud and abuse of the hundreds of millions of taxpayer dollars states are receiving to run their exchanges or marketplaces.  For example, California has received $910 million; New York, $369 million; and Hawaii, $205 million.  And this is just the beginning.  Additional funds will likely be pumped into the system if the navigators and assisters are unable to meet their enrollment “quotas.”   Entities within states should be on high alert regarding their risk of violating laws as implementation of the ACA occurs.  For example, using any false writings or documents known to be materially fictitious, concealing a material fact, or making any fraudulent or fictitious statements to a government representative about the use of grant funds are violations of 18 U.S.C. § 1001.  Further, under OMB Circular A-87, state and local entities that receive federal funding are required to adequately document all costs associated with administering the grant funds. If a recipient falsely certifies that they are conforming to this regulation, or if they do not properly document federal grant funds that are being primarily utilized for state programs, they may be subject to liability under both the OMB Circular A-87 and the False Claims Act. An Inspector General found that the IRS largely failed to account for and report these costs associated with implementing ACA. If our federal agencies are failing at this oversight, it follows that states cannot be adequately equipped, aware, or prepared to conduct oversight over implementation of the ACA, setting these state exchanges up for failure.

Cause of Action (CoA) is concerned about the potential for waste, fraud and abuse of these funds given to state entities.  This is why we have sent liability alert letters to more than 35 Governors thus far, and the District of Columbia, alerting them to the risks involved with the unintended misuse and waste of the ACA grant funds.  Given the hundreds of millions of federal taxpayer dollars at stake, taxpayers should hold their elected representatives accountable for how their money is being spent.

The grim reality is that the Affordable Care Act is deceptively complex and non-transparent.  Americans need to be cautious about enrolling in Obamacare (i.e., providing personal, medical and financial information to unchecked strangers), and mindful of the potential for misuse of taxpayer funds given the myriad, untested liability pitfalls and the vast sums of taxpayer money at stake.  At a minimum, the American people deserve to have our elected representatives and federal government provide proper oversight of the implementation of the Affordable Care Act.


Dan Epstein is the executive director of Cause of Action, a non-profit, nonpartisan government accountability organization.


Appeal in NARA FOIA Case for Financial Crisis Inquiry Commission Records

Cause of Action (CoA), a government accountability group, took a further step toward gaining such public access, filing an appeal in our fight against the National Archives and Records Administration (NARA).  We are challenging NARA’s wrongful withholding of records pertaining to the Financial Crisis Inquiry Commission (FCIC) – a temporary commission created by Congress to investigate the causes of the financial crisis– as NARA continues to claim that the requested records must remain secret and are not subject to the Freedom of Information Act (FOIA).

Appellant’s Brief



Click here to see other posts on our FOIA Request and Litigation for FCIC records.