Archives for September 2016

CoA Institute Investigates Extravagant Taxpayer-Funded Foreign Travel, ‘Over the Top’ Office Renovations by Commerce Dept. Employee

Washington, DC – Today, Cause of Action Institute (CoA Institute) sent a Freedom of Information Act (FOIA) request to the Department of Commerce Office of Inspector General (OIG) to investigate misconduct by a high-ranking political appointee, including inappropriate travel reimbursements and excessive spending on office renovations.

CoA Institute President and CEO, and former federal judge, Alfred J. Lechner, Jr.: “A high-ranking political appointee at the Department of Commerce must be held accountable for his rampant wasteful spending and misconduct. Reports of taxpayer-funded lavish foreign travel, luxury car service, and ‘over the top’ office renovations raise serious concerns. Such misconduct is beyond inappropriate and could even be criminal.  American taxpayers have the right to know whether such wasteful spending could be a more widespread problem at the agency.”

On September 8, 2016, the Department of Commerce Office of Inspector General (OIG) released a report detailing numerous instances of misconduct and wasteful spending. A high-ranking political appointee appears to have regularly used the U.S. Treasury as a slush fund by staying in luxury hotels and using luxury car services at taxpayers’ expense.

In one case, the employee traveled to Geneva, Switzerland where he stayed at a luxury hotel that cost around $1,150 per night, despite the allowable per diem being $340 per night. He was subsequently reimbursed 150 percent of the standard per diem rate for his entire stay, even though a portion of the trip was for personal travel. During the same trip, one of his staff members stayed in a room at a different hotel that was below the per diem rate.

Taxpayers also footed the bill for the employee to travel in luxury vehicles, including nearly $1,800 for an SUV provided by a luxury hotel during his two-day trip to Boston, Massachusetts.

The employee also spent an excessive amount of taxpayer money on his office renovations, likely violating the Anti-Deficiency Act. Despite Congress limiting office renovations to $5,000, the Department spent more than $50,000 on this political appointee’s office.  Shortly after assuming his role with the Department, the employee instructed his subordinates to make the space “reflective of [his] position.” Some subordinate employees were apparently fearful of losing their position if the renovations were not acceptable. According to the OIG report, renovations included new carpeting “chosen after consultation with an interior maintenance specialist” for a luxury hotel. An administrative official described these renovations as “over the top.”

In order to understand the full extent of the abuses, CoA Institute requests all of the materials compiled by the OIG for its report. The full FOIA request can be found here.


Growing Concern over Controversial Mortgage Settlements

Congress to Consider a Bill to Halt Government Slush Funds


On July 13, 2016, Cause of Action (CoA) Institute filed a complaint in the U.S District Court for the District of Columbia against the United States Housing and Urban Development (HUD). The lawsuit seeks records that HUD has failed to produce in response to a Freedom of Information Act (FOIA) request regarding HUD’s role in the federal government multi-million dollar settlements with three banks over their allegedly faulty mortgage practices.  As CoA Institute continues to investigate and litigate, others are paying attention to these troubling settlements as well.

Last week, prominent Washington Post columnist George Will penned a column calling out the government for using the bank settlements as a slush fund.  Will notes that the government:

allows banks to meet some of their settlement obligations by directing “donations” to various nongovernmental advocacy organizations that serve Democratic constituencies and objectives — organizations that were neither parties to the case nor victims of the banks’ behaviors. These donations are from money owed to the government, money that otherwise would go to the Treasury, money the disposition of which is properly Congress’s responsibility.

And in the Wall Street Journal, Andy Koenig, senior policy adviser at Freedom Partners Chamber of Commerce, similarly focuses on one of the key facets of these settlements: financial incentives for the banks to fund third party groups:

Most of the deals give double credit or more against the settlement amount for every dollar in “donations.” Bank of America’s donation list—the only bank to disclose exactly where it sends its money—shows how this benefits liberal groups. The bank has so far given at least $1.15 million to the National Urban League, which counts as if it were $2.6 million against the bank’s settlement. Similarly, $1.5 million to La Raza takes $3.5 million off the total amount of “consumer relief” owed by the bank. There are scores of other examples.

To address the growing chorus of concerns over these controversial settlements, the House of Representatives today will consider the “Stop Settlement Slush Funds Act of 2016,” a bill introduced by Rep. Bob Goodlatte (R-Va.)  to prevent any such future settlements. In other words, the bill would prohibit the government from creating a slush fund to direct settlement payments to favored (or any other) outside recipients.  The U.S. House of Representatives has scheduled a vote on this bill for September 7, 2016.

**UPDATE** The House passed the “Stop Settlement Slush Funds Act of 2016” on September 7 by a vote of 241-174.