Archives for March 2018

Appellate Court Unfreezes Small Business Owner’s Assets After Being Wrongly Targeted by FTC

Washington, D.C. – The 11th Circuit Court of Appeals has ruled to unfreeze in part the assets of our client, Robert Cupo, who owns a small family-run tech support company, Vylah Tec, LLC (“V-Tec”), after the Federal Trade Commission (“FTC”) used misleading evidence to convince the lower court to grant a damaging injunctive order against his company. The ruling rejects the government’s clear overreach in not only freezing assets of the company, but also the joint marital assets of Mr. Cupo and his wife, and the assets of his brother who had no business connection to V-Tec.  Cause of Action Institute (“CoA Institute”) filed an appeal of the district court’s order in September 2017.

CoA Institute Senior Counsel Cynthia Crawford: “The Government attempted to bulldoze Mr. Cupo and his family with punitive financial penalties before they had an opportunity to defend themselves. The preliminary injunction was granted based on faulty and mischaracterized evidence. That’s not due process, and it certainly is not justice. After nine long months of financial hardship, a large portion of the burden has finally been lifted, allowing our client to continue to fight to clear his name.”

The 11th Circuit found that the district court “did not make sufficient factual findings to support freezing these assets.”

Case Background:

V-Tec provides tech support to customers and also sells third-party antivirus and other data security software. In May 2017, the company’s headquarters was raided by FTC regulators, in conjunction with the Florida Attorney General’s office, on suspicion of “deceptive” sales practices.

To obtain the injunctive order that froze the Cupos’ assets, the FTC in court cited two examples of recorded calls that were both mischaracterized. The Government conceded that it submitted false evidence. Nonetheless, a Florida district court judge granted the injunctive order turning V-Tec’s operation over to a third-party receiver and freezing the assets of Mr. Cupo and several of his family members.

The 11th Circuit ruling vacates the asset freeze imposed against the assets held jointly by Mr. Cupo and his wife, as well as the asset held by his brother.

The full opinion can be found here.

For information regarding this press release, please contact Zachary Kurz, Director of Communications at CoA Institute:


DHS Fails to Locate Records Concerning Compliance with Federal Records Act over Private Web-based Email Accounts

Cause of Action Institute (“CoA Institute”) filed a Freedom of Information Act (“FOIA”) appeal with the Department of Homeland Security (“DHS”) yesterday, challenging the adequacy of the agency’s search for records concerning the use of private web-based email accounts by former DHS officials, as well as efforts to recover federal records from those officials’ accounts, as required by the Federal Records Act (“FRA”).  Although DHS disclosed two records in response to our request—namely, a letter from the National Archives and Records Administration (“NARA”), which expressed concern over the possible alienation of federal records, and DHS’s response to NARA—DHS’s repeated representations in federal court demonstrate the existence of countless other responsive records.

High-Ranking DHS Officials Received “Waivers” to Use Private Web-based Email Accounts

In July 2015, Bloomberg reported that then-Secretary Jeh Johnson and at least twenty-eight other senior officials at DHS were granted special permission to used private web-based email accounts—such as Google and Yahoo—to conduct official business.  These “waivers” were exceptions to an agency-wide ban on the use of private email that was imposed in April 2014.  Agency insiders admitted that the practice of issuing such waivers was a “national security risk.”  As reported by Politico, DHS ended its use of waivers, but the agency still faced numerous FOIA requests—and a lawsuit brought by Judicial Watch—from those seeking access to the work-related records created or received on the private web-based email accounts.

CoA Institute’s Initial Investigation into the DHS Webmail Waivers

On September 11, 2015, CoA Institute submitted a FOIA request to DHS for all agency records maintained on Secretary Johnson’s—or any other official’s—private web-based email account.  We also sought records concerning the DHS webmail waiver regime, including policies on how waivers were granted or guidance on record retention that may have been provided to waiver recipients.  In response to the request, DHS provided a substantial number of records concerning the actual processing of waivers, but it failed to produce any official correspondence from the private accounts.  Although we appealed that determination, DHS upheld the adequacy of its search, even though it had openly admitted in court to having control over actual responsive records.  A federal district court judge even issued a preservation order to ensure that former officials would continue to cooperate with recovery efforts under the Trump Administration.

Exploring DHS’s Compliance with the Federal Records Act

Armed with the knowledge that DHS was working to recover potential federal records from Secretary Johnson’s private web-based email account, as well as the accounts of three other former officials, CoA Institute filed two additional FOIA requests on June 1, 2017.  We asked both DHS and NARA to disclose records concerning NARA approval for the practice of issuing webmail waivers, as well as records reflecting the agencies’ compliance with their FRA obligations.  For example, we wanted to know whether DHS had involved the Attorney General in recovery efforts, or whether anything had been done to recover records from the other twenty-five webmail recipients that were not the subject of Judicial Watch’s ongoing FOIA litigation.

DHS could only locate two responsive records.  The first was a February 22, 2017 letter from NARA, which was prompted by the Judicial Watch lawsuit and raised concerns about the possible alienation of federal records.  NARA asked DHS to prepare a report on its recover efforts, along with a description of the “safeguards” that had been implemented to prevent the future alienation of records from private web-based email accounts.  The second responsive record was DHS’s Mary 19, 2017 response to NARA, in which the agency described its ongoing communications with Secretary Johnson and others to facilitate the return of potential federal records.  DHS claimed it was unable to locate any other responsive material.

This is an absurd determination.  DHS has repeatedly described its ongoing efforts to comply with the FRA and to ensure that work-related emails from the private web-based email accounts are returned to the agency, at least with respect to the four officials identified by Judicial Watch.  Whither the records of such communications?  CoA Institute’s request to DHS was intentionally broad and sought to capture, among other things, “any correspondence from a webmail recipient indicating that he or she no longer ha[s] possession of DHS records in a personal email account, or that he or she ha[s] forwarded them to a DHS-hosted email account, and any records evidencing agency efforts to confirm the truth of such representations.”

As for our request to NARA, that agency has failed to provide any sort of interim response, let alone a final determination, despite the fact it had granted CoA Institute’s FOIA request expedited processing.

The Lack of Transparency in Agency Compliance with the Federal Records Act is Troubling

The Obama Administration established a pattern of high-ranking officials using personal email accounts to conduct agency affairs, thereby potentially ignoring federal laws that require the preservation of records for future disclosure to Congress and the American public.  The lack of transparency with respect to the use of private email is concerning enough; the lack of transparency over efforts to remedy abusive and unauthorized use of personal email, and to return records to agency custody, is even more worrisome.  Government-oversight organizations such as CoA Institute have increasingly been forced to seek judicial relief to ensure agency compliance with the FRA, and this tendency is only likely to increase given the pace of technological development.

DHS seems to be working extra hard to keep secret whether it has fully met its FRA obligations.  It was certainly embarrassing for the agency when its practice of issuing waivers that allowed agency leadership to use private web-based email accounts came to light.  It will be even more embarrassing if evidence surfaces to show that DHS is still dragging its feet to recover those records, as required by law.

Ryan Mulvey is Counsel at Cause of Action Institute


CoA Institute Criticizes the Presidio Trust on Flawed FOIA Rule

Cause of Action Institute (“CoA Institute”) submitted a comment today to the Presidio Trust concerning the agency’s publication of a flawed FOIA rule intended to revise the agency’s Freedom of Information Act (“FOIA”) regulations. Congress created the Presidio Trust in 1996 to oversee and manage interior lands of The Presido, a national park on the northern tip of the San Francisco Peninsula, which is part of the Golden Gate National Recreation Area. Specifically, CoA Institute explained that the Trust’s flawed FOIA rule fails to correct its definition of a “representative of the news media” in line with statutory and judicial authorities.

News Media Fee Category

The Presidio Trust’s proposed rule marks the agency’s first effort to update its fee provisions in roughly twenty years.  Yet despite ample time to review recent legal developments, and notwithstanding the Trust’s reliance on the Department of Justice template for agency FOIA regulations, which correctly advise agencies to eliminate the so-called “organized and operated” standard from their definition of a “representative of the news media,” the Trust still missed an important deficiency in its rulemaking.

The “organized and operated” standard, which the Presidio Trust has improperly retained, has been used in the past to deny news media requester status to nascent media groups and government watchdog organizations like CoA Institute.  Indeed, CoA Institute took another agency—the Federal Trade Commission—to court, and argued its case all to the way to the D.C. Circuit, just to get the agency to acknowledge that its similar retention of the “organized and operated” standard was unlawful and led to improperly denying CoA Institute a fee reduction.  The D.C. Circuit eventually issued a landmark decision in CoA Institute’s favor to clarify proper fee category definitions and their application in FOIA cases.

CoA Institute has succeeded in convincing a number of other agencies to adopt a proper definition of “representative of the news media” in line with the FOIA statute and controlling case law.  Those agencies include, among others, the Consumer Product Safety Commission, Office of the Special Counsel, Department of Defense, U.S. Agency for International Development, and Department of Homeland Security.  We hope that the Presidio Trust will likewise revisit its flawed FOIA rule and eliminate the “organized and operated” standard in lieu of a proper definition of a news media requester.

Ryan Mulvey is Counsel at Cause of Action Institute