Archives for July 2015

Weekly Rundown 7-30-2015

Cause of Action in the News:

Wall Street JournalForcing Hillary’s Emails Into the Open (Why we’re suing to make the government do what it seems disinclined to do: get to the bottom of this murky matter.)

Dan Epstein, executive director of Cause of Action, wrote in the Wall Street Journal to better explain what we are trying to achieve in our suit for the turnover of Hillary Clinton’s emails. He describes how our approach is different and how we continue to strive for accountability for those in government. We feel that it is important that the government unravels this “murky matter” and be honest with the American people.

Daily Caller – Non-Profit Watchdog Wants Probe Of Biggest Tax-Return Leak Ever

Cause of Action continues to stand up for the American people and protect against the government’s abuse of taxpayer information. We have challenged the Treasury and Justice Departments to investigate the handover of more than one million pages of confidential tax information that should not have been released.

In other news:

PoliticoReport: Criminal probe urged over Clinton email use at State

The Justice Department has received evidence from at least one inspector general regarding the emails that Hillary Clinton sent as Secretary of State from a private server. This new information may eventually lead to a criminal investigation in Clinton’s actions.

Washington PostOPM to federal agencies: We got hacked, but you have to help pay for the response

After the Office of Personnel Management failed to protect the personal information of millions of employees (including contractors and military personnel) they have demanded that other government agencies donate to the cleanup. In addition agencies have been asked to pay for the monitoring and protection offered to those effected by the breach.

The HillCruz calls for abolishing the Consumer Financial Protection Bureau

Senator Ted Cruz says that the agency is not checked as it grows in influence. Many businesses are burdened by the additional regulations imposed on them by the CFPB, causing them to focus on meeting regulatory requirements instead of their customers. Senator Cruz says that the only way to stop this abuse of power is to totally dispose of the CFPB.

Fox NewsEPA ‘secret science’ under the microscope as GOP lawmakers seek ban

The Environmental Protection Agency bases many of its regulations on studies that they have actively kept from the American people. The agency, while claiming to support transparency, claim that there are many issues that get in the way of releasing the data of the studies. This unknown data is what has led to the most costly regulations imposed by the EPA. New legislation would require that all pertinent research be available to the public when certain rules are delivered. The opposition claims that this legislation would hinder the ability of the EPA.

Federal Judge Issues Landmark Ruling on Cronyism in Energy Loan Guarantee Program

Ruling marks the first time a court has allowed a claim under the Administrative Procedure Act on the basis of cronyism or political favoritism in federal discretionary spending.

In response to a legal complaint filed by Cause of Action (CoA), a federal judge has declared that U.S. Department of Energy discretionary spending tainted by alleged cronyism and political favoritism is subject to legal challenge.

Read the Opinion Here

Read the Order Here

Cause of Action represents XP Vehicles (XPV) and Limnia, two green energy companies that were denied loans and a loan guarantee in favor of politically-connected corporations.

XPV is a now-dissolved company that had applied for a loan under the DOE’s Advanced Technology Vehicle Manufacturing (ATVM) Loan Program in order to manufacture a lightweight, energy-efficient sport utility vehicle. XPV partnered with Limnia, a company that developed an energy storage system to power XPV’s proposed vehicle. Limnia had applied for an ATVM loan, as well as a loan under DOE’s Section 1703 Loan Guarantee Program (LGP).

The ATVM Loan Program is designed to provide direct loans to manufacturers of energy-efficient vehicles, while the LGP allows the agency to guarantee loans for advanced technology projects that result in the avoidance or reduction of air pollutants. This is the same program that awarded Solyndra $535 million in taxpayer funds.

During and after the loan application process, XPV and Limnia learned that these loan programs were being run for the benefit of politically-connected insiders.  For example, DOE provided application assistance to Tesla and Fisker that it refused to provide to XPV and Limnia (and others), and then large taxpayer-funded loans. A member of Tesla’s board, who was also a bundler during President Obama’s campaigns, was on a key DOE advisory board, and another bundler who was a Tesla investor and advisor had a primary role in the DOE’s Loan Program Office. In addition, individuals tied to Fisker had made large donations to the Obama campaign and other Democratic causes.  Also, there were emails suggesting that the DOE’s review of a loan applicant was sped up as a result of pressure from then-House Majority Leader Steny Hoyer; that the White House made an effort to encourage DOE to hasten review of another loan application; and that DOE bent its own rules to play favorites. CoA also relied upon two Government Accountability Office reports about these programs that highlighted the potential for abuse.

Judge Ketanji Brown Jackson on the United States District Court for the District of Columbia agreed with CoA, ruling that Limnia has adequately alleged that the DOE’s denials of Limnia’s ATVM Loan Program and LG Program applications were the result of arbitrary and capricious agency action in violation of the APA.

Judge Jackson has thereby allowed Limnia’s claims to proceed. This is significant because prior to this ruling, no court had ever held that cronyism or political favoritism could result in a grant or loan program being administered in an arbitrary and capricious manner.

Cause of Action Executive Director Dan Epstein issued the following statement on the ruling:

“When politicians and agencies allow companies to purchase government access, the basic foundation of our free market economy is compromised. For the first time, a federal district court has confirmed there is a legal remedy when cronyism influences federal administrative discretionary spending. This groundbreaking opinion establishes that the government owes everyone – not just Presidential campaign donors – a fair shake when awarding government funds. Judge Ketanji Brown Jackson’s common-sense judgment that government decisions tainted by cronyism and political favoritism are ‘arbitrary and capricious’ is a victory for individuals and businesses everywhere.”

Cause of Action Lawsuit Challenges Legality of Hillary Clinton’s Email Practices

Cause of Action sues Secretary of State John Kerry and the National Archivist

for failing to preserve former Secretary Clinton’s electronic records

In the first federal action filed to mandate retrieval of former Secretary of State Hillary Clinton’s records and declare her actions unlawful, Cause of Action filed a lawsuit today to compel Secretary of State John Kerry and U. S. Archivist David Ferriero to comply with their statutory duty to initiate legal action through the Attorney General for the recovery of federal records former Secretary of State Hillary Clinton unlawfully removed from the State Department and stored on her personal server. Federal law requires these agency heads to notify Congress when such action has been taken.

This suit was brought in the in United States District Court for the District of Columbia under the Federal Records Act and Administrative Procedure Act.

[Click HERE to view the complaint]

Cause of Action Executive Director Dan Epstein issued the following statement:

“This case is about no government official being above the law and the duty of Secretary Kerry and Archivist Ferriero to fulfill their statutory obligations to hold former Secretary of State Hillary Clinton accountable for misusing taxpayer funded federal property. Mrs. Clinton’s emails relate to the official business of the United States, thereby requiring treatment as federal records. Even if we were to set aside the catastrophic failure of these agencies to implement and oversee proper record keeping protocols during the former Secretary’s tenure, the refusal to recover the documents now constitutes brazen neglect at best and cover-up of illegal activity at worst.”

Politico – New lawsuit tests Hillary Clinton’s claim private email system was legal

Read the full story: Politico

Just a day after former Secretary of State Hillary Clinton declared that she violated no law in storing tens of thousands of work-related emails on a private server, a watchdog organization is putting that claim to the legal test in court.  D.C.-based Cause of Action filed a lawsuit Wednesday against current Secretary of State John Kerry and National Archives chief David Ferriero, seeking to force them to recover Clinton’s emails and ensure they are placed in government hands. The suit, filed in U.S. District Court in Washington, also asks a judge to issue a legal finding that Clinton illegally removed federal records from government control when she stored them on a private server.  “Fundamentally, when you’re head of a Cabinet agency, the Federal Records Act requires you to have an enormous amount of duties in terms of preserving records. Clearly, former Secretary of State Clinton did not exercise those duties diligently,” Cause of Action executive director Dan Epstein said in an interview. “What concerns us is the signal is sent when somebody with that much power blatantly ignores the law.”  In an interview with CNN on Tuesday, Clinton repeatedly insisted that her decision to use a personal email account and private server as her sole email account as secretary of state did not break any law or government rules.

Bloomberg – Hillary Clinton E-Mail Must Be Moved to Archives, Group Says in Suit

Read the full story: Bloomberg

Hillary Clinton was accused of violating federal law by storing e-mails on her private server while she was secretary of state, in a new lawsuit that seeks to have messages she sent turned over to the national archives.  The nonprofit group Cause of Action asked a judge in Washington to rule the presidential contender broke the Federal Records Act. Clinton failed to ask the National Archives and Records Administration for permission to use her own server to send government-related e-mail, the group claimed.  Clinton also didn’t turn over some e-mails as required under an earlier court ruling, according to the complaint. The State Department was ordered to begin releasing some of her correspondence in batches starting June 30.  The new claim, filed against U.S. Secretary of State John Kerry and the head of the National Archives, seeks to force a government lawsuit to recover all of Clinton’s e-mail. Clinton, 67, who is seeking the Democratic nomination for U.S. president, isn’t named as a defendant.  “As Clinton knew or should have known, the Federal Records Act did not authorize her to set up her own record keeping system or to maintain e-mails on a personal server or use a private e-mail account without ensuring that the e-mails were concurrently archived in the State Department’s official record keeping system,” the group said in its complaint.  Pooja Jhunjhunwala, a press officer with the State Department, declined to comment on the suit. Neither a Clinton campaign spokesman, Jesse Ferguson, nor the organization’s media relations department, immediately replied to e-mailed requests for comment on the filing.

Investors Business Daily – Obama DOJ Channels Bank Shakedown Money To Private Groups

By Dan Epstein

The Department of Justice’s war against the financial industry shows no sign of ending. The agency is now suing Quicken Loans over alleged issues with its taxpayer-backed housing loans. This follows a string of multibillion dollar settlements with major banks for their alleged actions prior to the Great Recession, most notably the record $16.65 billion deal with Bank of America and $7 billion settlement with Citigroup in 2014 and the $13 billion deal with JP Morgan Chase in 2013.

To date, the DOJ has extracted at least $127 billion from these and other companies in the wake of the financial crisis.

Yet while the DOJ says that its actions are in the public interest, the public has no way of verifying whether this is true. Moreover, the agency’s opaque administrative process has resulted in settlements that raise more questions than answers.

The DOJ has not explained which laws or regulations allow it to divert a bare minimum of $150 million, and potentially billions, from its bank settlements to third-party organizations — a historically unprecedented arrangement.

Before the Department of Justice can squeeze a similar settlement out of Quicken Loans, the public deserves to learn the details about how — and why — such deals were reached.

On June 15, government watchdog Cause of Action, where I am executive director, filed a Freedom of Information Act request with the DOJ concerning its recent settlements with Bank of America, Citigroup and JP Morgan Chase. We seek an explanation of the DOJ’s statutory authority to direct a private organization’s settlement money to third-party organizations — and why specific organizations were chosen.

The settlements’ problems primarily stem from their “consumer relief” sections. Under the terms of their respective deals, Citigroup must commit $2.5 billion, JP Morgan must pay $4 billion, and Bank of America must remit $7 billion on this item.

Normally, consumer relief money would go to actual victims of fraud. Instead, the Department of Justice provided a menu of organizations to which the banks could give their money.

The Bank of America settlement, for instance, included a minimum of $20 million to “housing counseling agencies” approved by the Department of Housing and Urban Development and a minimum $50 million to “Community Development Financial Institutions” approved by the U.S. Treasury. The settlement also offers to forgive $2 of money owed for every $1 given to such groups — a powerful incentive to direct money their way.

Moreover, such arrangements conveniently dovetail with several of the Obama administration’s other policy goals.

The money to community development financial institutions, or CDFIs, is the most obvious example. They are marketed as taxpayer-backed alternatives to payday lenders and check-cashing services in low-income communities. Not coincidentally, the DOJ is also engaged in a multiyear campaign — “Operation Choke Point” — that’s effectively shutting down payday lenders and giving CDFIs an opportunity to gain market share. Bank of America is now legally obliged to assist them.

The money to housing counseling agencies is also troublesome. By directing cash to these groups, the DOJ is forcing Bank of America to fund a program whose budget was eliminated by Congress in 2014. In effect, the Obama administration is using the private sector’s money in lieu of taxpayer dollars.

Another eyebrow-raising provision requires that Bank of America and JP Morgan Chase spend a combined $4.15 billion on loan forgiveness and forbearance. Both settlements note that this money can be given to the “Making Home Affordable Program,” a taxpayer-funded federal program created by the Obama administration as part of the 2009 stimulus bill.

MHA is set to expire at the end of 2016, but before that day comes, it can likely count on an influx of cash from the private sector.

Finally, there’s the matter of what happens if the three banks haven’t disbursed their consumer relief budgets by December 2017 for JP Morgan Chase, August 2018 for Bank of America and December 2018 for Citigroup. At that point, all of the money still owed by Citigroup and JP Morgan Chase, and 25% of Bank of America’s outstanding obligation, will go to the third-party organization NeighborWorks America, which will spend the money on many of the programs and causes listed above.

Imagine if a Republican administration directed billions of dollars of “small business relief” into the coffers of the U.S. Chamber of Commerce, the National Federation of Independent Business and the National Restaurant Association, all while hiding the details from the public. The media and political outcry would be severe.

Yet that’s essentially what the Obama administration has done with its campaign against the financial industry, forcing banks to bankroll organizations and causes that advance its political agenda.

The Justice Department must release the documents that make clear why it structured the Bank of America, Citigroup and JP Morgan Chase settlements in such a way, and why that is legally acceptable. The American people deserve to know if the federal government is disguising political shakedowns as a public service.

New York Post – Obama’s pet watchdog left veterans out in the cold

Read the full story: New York Post

Driven out by whistleblowers, Acting Inspector General of the Veterans Administration Richard Griffin finally resigned last week. Good riddance.  Griffin had whitewashed and concealed information about inadequate care and phony waiting lists and tried to retaliate against truth-tellers.  But don’t expect real improvement at the VA. Griffin’s successor is another bureaucratic lifer, Lin Halliday. She’s been collecting a paycheck from the VA Inspector General’s Office since 1992, while the deadly problems festered. President Obama seems to like that approach.  On July 2 in Wisconsin, whistleblower Ryan Honl — a Gulf War veteran — urged Obama to appoint an independent inspector general: “If they just pick someone new from inside the agency, it will be business as usual and the problems will continue.” But Obama brushed him off, saying VA Secretary Robert McDonald “had it covered.”  Sorry. That’s just not true.  Only the president can appoint an inspector general. Federal law requires that the Veterans Administration and other departments have outside inspectors general to guard against corruption and mismanagement. Obama simply refuses to appoint them, allowing the vacant offices to be filled instead by “acting” IGs like Griffin and Halliday.  They’re lapdogs instead of watchdogs, compliant temporary placeholders from inside the system…

Daniel Epstein, executive director of Cause of Action, a good-government group, said for Hillary Clinton’s entire tenure at the State Department, Obama refused to appoint a permanent IG.  Consequently, “oversight” at State was in the hands of the ultimate insider, acting IG Harold Geisel, who’d served as an ambassador under former President Bill Clinton and remains a close friend of the Clintons: The very definition of a lapdog.