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08/10/2016

CoA Institute Investigates $400 Million Cash Payment to Iran, Hidden “Side Agreement” During Nuclear Negotiations

Washington, DC – Today, Cause of Action Institute (CoA Institute) sent Freedom of Information Act requests to the U.S. Department of State and U.S. Department of Treasury seeking information surrounding the widely reported $400 million cash payment the Obama administration sent to Iran in January.  Recent revelations about this previously undisclosed cash payment has called into question whether the State Department and other executive branch agencies engage in secret, potentially unlawful negotiations with foreign governments, designed to evade Congressional and public notice and oversight.

Cause of Action President and CEO, and former federal judge, Alfred J. Lechner, Jr.: “Since 1984, Iran has been listed as a state sponsor of terror; it has been subject to various financial sanctions.  Serious concerns about money laundering and terrorist financing in Iran persist. Details regarding this payment and the supposedly coincidental timing of the hostage release have been hidden from the public and Congress.”

Administration officials, including State spokesmen John Kirby, denied any connection between this payment and the release of American hostages, asserting that the payment was part of a separate settlement agreement, despite reports that the Iranians considered the cash payments “ransom.”

Because any transaction with Iran in U.S. dollars violates U.S. sanctions provisions, the $400 million payment was reportedly made entirely with foreign currency and flown into Iran on wooden pallets onboard an unmarked cargo plane. It has also come to light that Department of Justice officials apparently objected to the payment on legal and policy grounds, but were overruled by the State Department.

In a related but separate matter, CoA Institute is also investigating allegations of a secret “side agreement” the State Department apparently negotiated with Iran last year that would ease restrictions on its nuclear program. In July 2015, the United States, along with six other countries, finalized a controversial agreement involving Iran’s nuclear program.  Under the agreement, Iran was supposedly barred for a 15-year period from engaging in nuclear research and development. Despite widespread criticism from Congress, the agreement went into effect beginning in October 2015.

However, within the last few weeks, contents of a secretive “side agreement” have been revealed.  According to the Associated Press, this side agreement allows Iran to start replacing its stockpile of uranium centrifuges with thousands of more sophisticated models beginning in 2027 instead of 2031.  Such a process could cut the time needed to develop weapons-grade uranium to six months or less. If confirmed, this side agreement would significantly reduce the timeframe for Iran to re-build its nuclear capabilities. Despite such serious consequences, this agreement was hidden from the public and from members of Congress.

In order to further examine these issues, CoA Institute today requested records and internal agency communications surrounding these issues.

The letter to the Department of Treasury can be found here.
The letter to the Department of State can be found here.

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08/9/2016

More Broken Promises: Taxpayer-subsidized electric car company misses debt payment

According to recent reports, GreenTech Automotive—the electric car company that was once a joint venture between Virginia Governor Terry McAuliffe and Chinese investor Charles Wang—missed its first repayment on a $3,000,000 public loan from the Mississippi Development Authority (“MDA”).

The story of GreenTech is one of broken promises. In a series of investigations, which culminated in the publication of a comprehensive report in 2013, Cause of Action Institute explained how GreenTech used McAuliffe’s political connections to garner millions of taxpayer dollars in loans and tax incentives, yet failed to meet expectations, instead exaggerating projections of job creation and vehicle production.

According to the Memorandum of Understanding between GreenTech and the MDA, the company promised to invest at least $60 million in the state and create at least 350 full-time jobs within three years of starting commercial production.  In exchange, Mississippi officials promised to loan $2 million to local government to purchase the plot for the company’s production facility, and to provide a direct loan to GreenTech of $3 million.  GreenTech also received a host of tax breaks and incentives valued at $25 million.

As of May 2016, however, sources suggest that GreenTech employs merely 75 people and has failed to sell a single vehicle.  On top of its apparent inability to make good on its promises to taxpayers, the company’s added failure to meet the initial repayment deadline on the public-funded loan calls into question the economic viability of the entire project.

GreenTech and its former chairman, Governor McAuliffe, have been embroiled in other controversies. The company is under investigation by the SEC for its participation in the EB-5 Immigrant Investor Visa Program, through which it has received approximately $46 million in foreign capital, according to some reports.  The watchdog for the Department of Homeland Security also reported that McAuliffe and friends—including as Anthony Rodham, brother of former Secretary of State Hillary Clinton—benefited from political favoritism in the administration of the EB-5 program.

It is unknown whether Mississippi officials will take action against GreenTech for its failure to perform under the loan agreement. But taxpayers should be concerned that the company be given a mere slap on the wrist for its apparent misuse of public funds.

Read Cause of Action Institute’s report on GreenTech Automotive HERE

Related documents can be found HERE

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07/29/2016

Court Rules Against Local Fishermen, Upholds Job-Killing Government Mandate

The U.S. District Court for the District of New Hampshire held that the requirement is “an expected expense of doing business” for New England fishermen

 

WASHINGTON, D.C. – Today, the United States District Court for the District of New Hampshire dismissed the lawsuit filed by Plaintiffs David Goethel and Northeast Fishery Sector 13 against the U.S. Department of Commerce.

In December 2015, the Department of Commerce ordered that fishermen who fish for cod, flounder and certain other fish in the Northeast United States not only must carry National Oceanic and Atmospheric Administration (“NOAA”) enforcement contractors known as “at-sea monitors” on their vessels during fishing trips, but must pay out-of-pocket for the cost of those monitors.  This “industry funding” requirement would devastate the Northeast fishing industry, at the price of many jobs and livelihoods.  The District Court’s order allows that requirement to remain in place.

The Court found that the fishermen’s suit was untimely and that the requirement that monitors be funded by the fishermen was authorized by law.

“I am very disappointed by this decision,” said Goethel.  “I’ve made a living fishing in New England for more than 30 years, but I can’t afford to fish if I have to pay for at-sea monitors.  I’m grateful to Cause of Action Institute for joining the fight, and I hope that the rule of law will win in the end.”

“The fishermen in my sector can’t sustain this industry funding requirement,” said Northeast Fishery Sector 13 Manager John Haran. “They’ll have to try other fisheries, if they can keep fishing at all.”

“While we respect the District Court and its decision, it appears that decision is contrary to the law and facts,” said Alfred J. Lechner, Jr., President and CEO of Cause of Action Institute and a former federal judge.  “In the end, the federal government is overextending its regulatory power and is destroying an industry. We intend to study the decision and consider further action.”

The District Court’s full opinion can be found here. For additional information about the case, visit the Cause of Action Institute website.

 

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07/29/2016

FTC Reverses Initial Decision in LabMD

Federal Trade Commission finds cancer detection lab in violation of data security statute, despite no evidence of consumer harm

 

Washington, D.C. – In an unfortunate but somewhat anticipated decision, the Federal Trade Commission (FTC) today issued a finding that LabMD violated a data security statute, reversing an earlier decision by the agency’s own chief in-house administrative law judge (ALJ).  In the Initial Decision on November 13, 2015, Chief ALJ D. Michael Chappell held that the FTC failed to prove the commercial activities of LabMD were unfair to consumers under Section 5(n) of the FTC Act. 

This decision sets a dangerous precedent for every small business in America that deals with sensitive personal information. The FTC appears to have overlooked a significant body of evidence that had been presented before the agency’s chief ALJ. The FTC has imposed liability on LabMD, despite there being no evidence that a single consumer was harmed.

In reversing the Initial Decision, the FTC Commissioners disavowed and disregarded the witness credibility findings of Chief ALJ Chappell, which were based on his first-hand observations of the witnesses.

About Cause of Action Institute:

Cause of Action Institute is a public interest law firm committed to limiting corruption and abuse in the federal government. For more information, visit www.causeofaction.org.

 

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07/27/2016

Cause of Action Institute Seeks Supreme Court Review in Chicago Transit Authority False Claims Act Suit

Today, Cause of Action Institute filed a petition for writ of certiorari with the United States Supreme Court, the first in the organization’s history, asking the high court to reverse a Seventh Circuit ruling that barred CoA Institute from suing the Chicago Transit Authority (CTA) under the False Claims Act.

In March 2012, CoA Institute provided the U.S. Department of Justice with evidence that CTA for years had intentionally over-billed the Federal Transportation Authority, defrauding taxpayers out of tens of millions of dollars. The Department of Justice declined to intervene in the case.  The U.S. District Court for the Northern District of Illinois granted CTA’s motion to dismiss, which the Seventh Circuit incorrectly upheld.

The cert petition identifies several areas of judicial confusion over the proper application of the public disclosure bar, which prevents qui tam plaintiffs from assisting the federal government in recovering money defendants fraudulently obtained from the government.

Qui tam plaintiffs play an important role in policing federal programs.  In the last fiscal year, eighty percent of the funds recovered for the government in False Claims Act cases derived from lawsuits filed under the qui tam provisions.  The Seven Circuit’s decision to bar CoA Institute from pursuing a case against CTA will chill other qui tam plaintiffs and hurt the federal government’s ability to root out fraudsters.

Read the petition for writ of certiorari here.

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07/15/2016

Banning Arbitration, A Boon for Class Action Lawyers, Not Consumers (Judge Lechner Opinion–Forbes)

Forbes

071516_forbes_oped

The Consumer Financial Protection Bureau (CFPB), created in the wake of the 2008 financial crisis, is typically portrayed as a federal agency that protects the little guy from powerful big banks. But reality looks much different. For example, in May the agency proposed new rules to prohibit the use of arbitration—the legal process in which individual consumers and financial institutions avoid costly litigation by working to solve disputes with the help of third parties.

These rules have long been in the works. The 2010 Dodd-Frank Wall Street Reform and Consumer Protection Act, which created the CFPB, directed the agency to conduct an objective study of arbitration and propose rules based on its findings. Nearly six years later, the agency’s conclusions are little more than a handout to class action lawyers, with no actual benefit to consumers.

The final rule bans financial institutions from including mandatory binding arbitration clauses in their contacts. This upends the legal system that has long governed the industry. It opens banks to countless class action lawsuits, with virtually no corresponding benefit to the consumer. And it will almost certainly drive up the cost of bank loans and other financial products that millions of Americans depend on.

So what data does the agency use to justify its claims? To paraphrase Mark Twain, there are lies, damn lies, and then there are the CFPB’s statistics.

The data the agency collected showed that arbitration in most cases was quicker and actually provided better outcomes for the consumer. Perhaps surprisingly, arbitration achieves these outcomes even though consumers normally do not have attorneys present…

The study the CFPB conducted to justify its arbitration guidelines is exactly what the Information Quality Act was supposed to prevent. The final rule is based on junk science rather than sound research. It will harm the economy and millions of Americans while enriching a lucky few at law firms. So much for protecting the little guy. Read More

 

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07/14/2016

CoA Institute Investigates Role of DHS, Shooter’s Motives in Dallas Shooting

Washington, DC – Cause of Action Institute (CoA Institute) today filed a Freedom of Information Act (FOIA) request to investigate the involvement of the Department of Homeland Security (DHS) in investigating and responding to the recent shooting of Dallas police officers. In light of seemingly contradictory statements by Secretary Johnson and President Obama regarding the shooter’s motives, CoA Institute seeks to better understand if information is being withheld from the American public.

CoA Institute President and CEO, and former federal judge, Alfred J. Lechner, Jr.: “Statements about the shootings by President Obama and DHS Secretary Jeh Johnson raise questions about the DHS role in responding to the Dallas shooting and whether there is information about the shooter being withheld from the public.  Because Secretary Johnson appears to be the first public official to confirm that only one shooter existed, it raises questions as to what extent DHS was involved during the aftermath of the shooting and why local authorities were not first in alerting the public. Additionally, discrepancies between statements by President Obama and the Dallas police chief raise concerns that there may be additional information about the motives of the gunman that are being withheld from the public by the Obama administration.”

Background:

On July 7, 2016, a gunman killed five police officers in Dallas, Texas.  On July 8, Chief David Brown held a press conference and stated that multiple suspects may be involved. Three suspects were ultimately taken into custody. Later the same day, Secretary Johnson contradicted initial reports by announcing that the gunman apparently acted alone. According to media reports, Secretary Johnson was the first public official to announce that the gunman was a sole actor.

Additionally, at a press conference on July 9, President Obama said that it is “very hard to untangle the motives” of the Dallas shooter.   He further stated, “I’ll leave that to psychologists and people who study these kinds of incidents . . . I think the danger is that we somehow suggest the act of troubled individuals speaks to some larger political statement across the country.”   President Obama’s statement that the motives of the gunman appear uncertain directly contradicts Dallas Police Chief David Brown’s description of the incident.  According to Chief Brown, the gunman stated that he “was upset about the recent police shootings…and he wanted to kill white people, especially white officers.”

CoA Institute requests documents and communications to better understand the role of DHS in the aftermath of the Dallas Shooting. The full FOIA request is available HERE.

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