Archives for August 2018

CoA Institute President and CEO John Vecchione Discusses CoA’s Two Lawsuits Against the DOJ

 

Cause of Action Institute (“CoA Institute”) President and CEO John Vecchione appeared on the Daily Ledger to discuss CoA’s two lawsuits against the DOJ for failing to comply with numerous FOIA requests.

The interview comes after CoA Institute filed two complaints against the DOJ in six days for failing to respond to Freedom of Information Act (“FOIA”) requests. CoA’s first suit was a result of DOJ’s failure to respond to three requests in regards to the use of a personal email by  former FBI Director James Comey, former FBI Chief of Staff James Rybicki, and DOJ’s Director of Public Affairs Sarah Isgur Flores.

CoA’s second law suit, filed on behalf of the Daily Caller News Foundation, comes after the FBI failed to respond to a FOIA requesting communication records and work product relating to  Daniel Richman, a “Special Government Employee” (SGE) hired by former FBI Director James Comey. Richman gained notoriety when James Comey admitted to using Richman to leak memos to the media.

 

 

GAO Finds Ex-Im Bank Lacks Comprehensive Fraud Prevention: CoA Renews Push to Abolish

The Export-Import Bank of the United States (“Ex-Im Bank”  or “Bank”) is a federal agency that provides financial credit to those who claim they are unable to obtain it privately. In reality, Ex-Im Bank offers taxpayer-guaranteed loans to politically-connected companies while leaving smaller companies at a competitive disadvantage. Last August, citing Ex-Im Bank as a form of corporate welfare, Cause of Action Institute advocated for its abolishment.

Now, a new Government Accountability Office (GAO) report finds that Ex-Im Bank lacks a comprehensive framework to deter fraud, needs comprehensive fraud risk management reform, and currently poses a significant risk of loss to taxpayers by failing to provide these adequate protections against fraud and abuse.

Between October 2016 to July 2018, the GAO conducted a performance audit of the Bank, surveying more than 400 employees about the organization’s fraud risk management capabilities. The GAO report concluded that:

“[T]he Bank has approached fraud risk management on a fragmented, reactive basis, and its anti-fraud activities have not been marshalled into the kind of comprehensive, strategic fraud risk management regime envisioned by GAO’s Fraud Risk Framework and its leading practices.”

The report found that employees were concerned about the lack of proactive measures being taken to combat and prevent fraud. The protocols in place focus on reacting after the fraud was committed, rather than preventing fraud from occurring. The GAO noted that the Bank was making efforts to reform its anti-fraud capabilities, but it was not clear whether improvements were keeping pace with expectations.

The GAO report surveyed employees and included the following comments and summaries about the Bank’s attitude towards addressing fraud:

  • “The Bank is more concerned with increasing sales than preventing fraud.”
  • “[The current division of responsibilities] is not the most effective way for the Bank to oversee fraud and fraud risk, as responsibility needs to be given to the teams on the front end—such as the individual relationship managers and loan officers—not on the back end.”
  • “[The current arrangement]seems to be more of an after-the-fact approach to potentially (if reluctantly) detecting fraud than any proactive encouragement to actively prevent fraud.”

These comments from Ex-Im Bank employees illustrate both a cultural challenge within the Bank and the Bank’s failure in constructing comprehensive reforms to prevent fraud. The GAO presented Ex-Im Bank with a list of recommendations to address its vulnerabilities and create a culture of prevention rather than reaction.

Given the Bank operates with taxpayer funds, these improvements are critical. In the words of a concerned Bank employee,  “More due diligence should be required in order to qualify for the U.S. government’s support.”

It is Cause of Action’s mission to advocate for a transparent and accountable government free from fraud and cronyism. The Ex-Im Bank is a key example where oversight and accountability are critical to ensuring its service to the public interest. For too long, the Ex-Im Bank has been linked to providing political favors for well-connected corporations and undermining fair market competition, and Cause of Action Institute will continue to advocate for ending the Bank and this form of corporate welfare.

Ethan Yang is a Research Fellow at Cause of Action Institute.

DoD Watchdog Details Agency’s Failure to Address FOIA Shortcomings

The Inspector General (“IG”) for the Department of Defense (“DOD”) recently published its annual compendium of unimplemented recommendations given to various DOD components and military departments in past investigations, audits, and inspections.  The list of unresolved matters is rather lengthy—some issues are more serious, others less so.  Relevant here, the watchdog highlighted two outstanding recommendations concerning the Freedom of Information Act (“FOIA”) and, more specifically, the formalization and publication of Pentagon guidance on “sensitive review.”

Both of these FOIA-related recommendations originate with an August 16, 2016 IG report that was prepared at the request of Senator Ron Johnson, Chairman of the Homeland Security and Governmental Affairs Committee (“HSGAC”).  Senator Johnson initiated an investigation in 2015 into interference by political appointees within the Obama Administration in agency FOIA processes.  Cause of Action Institute (“CoA Institute”) actively followed the HSGAC inquiry and sued one agency, the Central Intelligence Agency, for refusing to release its response to the Committee.

“Sensitive review” refers to the practice of giving certain FOIA requests extra scrutiny, usually because the records sought are potentially newsworthy or politically embarrassing.  In its most benign form, sensitive review involves notifying an agency’s public affairs team, communications specialists, or political leadership of incoming requests and outgoing productions.  At its worst, it entails the active involvement of non-career officials in processing and redacting records, which results in significant delays and sometimes completely prevents the disclosure of records that the public has a right to access.

Sensitive review has been increasingly in the news.  A week ago, I described CoA Institute’s new investigation into politicized FOIA at the Department of Veterans Affairs, following allegations raised by Democrats on the Senate Veterans’ Affairs Committee.  Last month, I explained how an official from the Environmental Protection Agency told Ranking Member Elijah Cummings at the House Oversight and Government Reform Committee that the Trump White House had supposedly added an “extra lawyer of review” for “politically charged” or “complex requests.”  And, earlier this year, I revealed records exposing the National Oceanic and Atmospheric Administration and the Federal Aviation Administration for heightening sensitive review by, among other things, targeting attorney and media requesters.

Although recent news reports suggest that “sensitive review” is a novel practice, that is not so.  Intra-agency FOIA politicization, and related practices such as “White House equities” review, did not originate with the Trump White House, but date to the Obama Administration and beyond.  Indeed, as I have explained here and here, the Obama White House was particularly notorious for its efforts to delay and block disclosure of politically damaging or otherwise newsworthy records.  President Trump is taking advantage of President Obama’s legacy of secrecy.

All this is confirmed by the case of the DOD.  In its 2016 report, the IG explained that it had failed to identify any instances of “noncareer officials” either “adversely affecting” or “unduly influencing” the agency’s FOIA process.  But the watchdog’s cautious language and technical phrases failed to mask other troubling practices, including a special “situational awareness process” for “significant” requests.  DOD guidelines governing that process still have not been incorporated into the agency’s FOIA regulations, FOIA manual, or FOIA directive.  (The IG also faulted DOD for failing to update its regulations in light of the Open Government Act of 2007 and Executive Order 13392, but that was remedied with the finalization of new regulations in February 2018.)

CoA Institute has obtained copies of two versions of DOD’s “situational awareness” protocol (here and here), one of which dates to December 2012.  Both records similarly define “significant” requests—that is, requests deserving of special treatment—to include anything likely to “generate media interest” or be of “potential interest” to DOD leadership.  Requests implicating Members of Congress or President Obama, even during his time as a senator, also were included.

In addition to “situational” notification, component FOIA officers were expected to provide weekly updates on “significant” requests to the front office and delay any response or production of records until clearance was provided by departmental disclosure leadership.

This requirement was emphasized for “White House or Congressionally related” FOIA requests.

Although alerting or involving agency leadership, including political appointees, in FOIA administration does not violate the law per se—and may, in rare cases, be appropriate—there is never any assurance that the practice will not lead to severe delays of months and even years.  The danger for politicization is evident.  “Notification” and “situational awareness” can too easily lead to political leadership controlling the disclosure of public records.  That result cannot be tolerated.

Although DOD has yet to incorporate its sensitive review protocol into formal and publicly available guidance, it is also unknown whether the policy has changed or been enhanced in any way in recent years.  Considering the unresolved IG recommendations, CoA Institute has submitted a FOIA request to DOD seeking further information.  We will continue to report on the matter as records become available.

Ryan P. Mulvey is Counsel at Cause of Action Institute



2018 08 08 Final and Approved DOD Sensitive Review FOIA Request (Text)

Congressional Inquiries into the VA are the First Steps Towards Reforming the Agency

We recently published a blog post urging newly confirmed Department of Veterans Affairs (“VA”) Secretary Robert Wilkie to mitigate the cultural plagues preventing the VA from operating as the functional and ethically organized agency that our veterans deserve.  Reports published last month from the Washington Post and the U.S. Government Accountability Office (“GAO”) found several problems within the VA including politicization, retaliation against whistleblowers, impunity for senior officials, and an overall lack of transparency.  The VA’s problems won’t be fixed overnight, but external pressures for reform within the agency should hopefully spur necessary changes.

Fortunately, there appear to be signs of progress on the reform front with several new congressional inquiries.  At the end of July, members of Congress from both sides of the aisle wrote letters to express concern about the VA’s toxic culture and to seek further information about the agency’s ongoing problems.

  • As Cause of Action Institute Counsel Ryan Mulvey discussed last week, eight Democratic Senators, led by Ranking Member Jon Tester of the U.S. Senate Committee on Veteran’s Affairs wrote to the VA on July 25th to express concern about the possible politicization of the agency’s Freedom of Information Act (“FOIA”) policies. The senators sent a concurrent letter to the VA’s watchdog, Inspector General Michael J. Missal, requesting an investigation in their allegations: “[FOIA] is the route through which media and other interested parties get answers and information after their requests to [the] VA about policies and initiatives have gone unanswered.”
  • On July 26th, Representatives Tim Walz (D-MN), Mark Takano (D-CA), and Kathleen Rice (D-NY) authored a letter to Attorney General Jeff Sessions referring former Acting Secretary Peter O’Rourke for investigation for “alleged perjury, or withholding information from Congress, or making otherwise unlawful statements in testimony and communications before the Committee on Veterans’ Affairs.” This letter comes one month after O’Rourke falsely claimed he had authority over the VA Inspector General—an independent entity that ensures investigators can conduct their work without fear of reprisal by agency leadership.
  • Finally, on July 30th, a bipartisan coalition of congressmen wrote to Secretary Wilkie asking him to implement the GAO’s recommendations from their report:

“To ensure the Department of Veterans Affairs (VA) can fulfill its important mission, it is vital that its work force is properly trained, led, and accountable.  To that end we call your attention to the recent [GAO] report . . . and urge the VA to immediately implement the recommendations outlined in that report . . . The GAO’s investigation uncovered serious issues with the VA’s record-keeping, its protection of whistleblowers, and its handling allegations of misconduct, waste, fraud, and abuse.”

I have previously discussed the GAO’s sixteen recommendations in an earlier blog post.  Of those sixteen recommendations, the VA concurred with nine of them and partially concurred with another five.  The congressional letter explains that immediate implementation of the GAO’s recommendations is necessary because the agency must encourage trust and openness in its culture.

These letters address different aspects of improvement needed at the VA.  Senator Tester’s letters highlight the possible politicization of how information is made available to the public.  The letter to Attorney General Sessions asks the VA to hold its senior officials to the same standards as their subordinates—one of the most prominent issues covered in the GAO report.  And finally, the letter to Secretary Wilkie underscores a necessary criticism of the VA: the primary role of the agency is to care for Americans injured or traumatized while defending our nation and, as such, it is unacceptable for agency leadership to tolerate misconduct, let alone encourage it.

However, we should view these signs of progress with just a bit of skepticism.  Senator Tester and the other Democrats on the Committee on Veterans’ Affairs have asked preliminary questions regarding politicization in the FOIA process, which is good, but what happens next? Will they continue to hold the VA accountable for their culture and leadership?  Or will they move on to another issue?  Will Attorney General Jeff Sessions open an investigation to determine whether O’Rourke made unlawful statements in providing false testimony, or will the bipartisan coalition fall upon deaf ears?

Cause of Action Institute will continue to investigate VA mismanagement  and the agency’s efforts to adopt GAO’s recommendations.  But we will also watch the congressmen who have expressed interest in reforming the plagued agency.  The authors of the letters to Attorney General Sessions and VA officials should be applauded for their inquiries, but they should also be committed to following through to the complete reform of the VA.

Chris Klein is a Research Fellow at Cause of Action Institute

Cause of Action Institute Files Suit Against DOJ for Emails Relating to Daniel Richman: Second lawsuit in six days against DOJ for failing to comply with FOIA

WASHINGTON, D.C. – August 7, 2018 – Cause of Action Institute (“CoA Institute”), on behalf of the Daily Caller News Foundation (“DCNF”), filed a complaint against the Federal Bureau of Investigation (“FBI”) seeking access to all communication records relating to Daniel Richman, a “Special Government Employee” (SGE) hired by former FBI Director James Comey. Richman gained notoriety when James Comey admitted to using Richman to leak memos to the media.

John J. Vecchione, president and CEO of Cause of Action Institute issued the following statement:

“For the second time in less than a week, we are compelled to sue DOJ, in this case on behalf of our client, the Daily Caller News Foundation, for failing to follow the law and release emails relating to former FBI Director James Comey and other high ranking and controversial DOJ employees. These are matters of high public concern. This is an unacceptable pattern of behavior and we will not back down in our pursuit of government transparency and accountability.”

In April 2018, DCNF filed a Freedom of Information request (FOIA) requesting “…all communications between the bureau and Mr. Richman concerning his SGE work assignments, all intra-bureau communications about Mr. Richman and his assignments and activities, as well as all work product delivered to Director Comey or to others within the bureau … additionally all of Mr. Richman’s work product whose messages were conveyed to the public in FBI comments, speeches and printed material.”

The FBI confirmed receipt of the FOIA and granted DCNF a media waiver concerning fees. However, since May 7, the FBI has refused to produce the documents or provide an update on the status of the FOIA.

Mr. Richman played a significant role in a contentious matter of government accountability and the records pertain to both the conduct and communications between two high-profile and controversial government officials. Consistent transparency and the subsequent production of these records by the FBI are imperative to maintaining the trustworthiness and integrity of the government.

The full complaint can be viewed below.

Last week CoA Institute filed a lawsuit against the U.S. Department of Justice due to their failure to release Comey’s personal emails that were used in his official capacity.

About Cause of Action Institute

Cause of Action Institute is a 501(c)(3) nonprofit, dedicated to providing government oversight, transparency and advocating for economic freedom and individual opportunity advanced by honest, accountable, and limited government.

Media Contact:

Matt Frendewey
matt.frendewey@causeofaction.org
202-499-4231

New Website Documents Fraud & Corruption from EB-5 Immigration Program

WASHINGTON, D.C. – Aug. 2, 2018 – Today, Cause of Action Institute (“CoA Institute”) launched a new website www.EndEB5.org, documenting  questionable investments and investigations relating to the EB-5 Immigrant Investor Program (“EB-5”) and the Regional Center Program. As the Cause of Action’s website reveals, the EB-5 program is ripe for fraud, corruption, can pose a national security threat, and provide questionable value to taxpayers and the U.S. economy. The website launched with more than a dozen examples of questionable investment. The organization has identified more than 50 examples and will release more troubling investments over the next two weeks.

CoA Institute created the website in response to Sen. Diane Feinstein asking the director of the program for a list of “shady programs.” The director didn’t have a list of “shady programs,” so CoA Institute put one together. As Congress weighs whether to extend or allow the Regional Center Program component of the EB-5 program to expire, CoA Institute urges Congress to review this website and recognize the severe flaws in the EB-5 program and let it expire on Sept. 30.

John J. Vecchione, president and CEO of CoA Institute, issued the following statement:

“The EB-5 Program faces legitimate scrutiny due to allegations that it’s become ripe for fraud and corruption and become a pay-to-play scheme. As our research illustrates, EB-5 and the Regional Center Program amounts to a pay-to-play scheme that enriches questionable actors who defraud investors and visa seekers and poses a threat to national security. We urge Congress to review the cases we have identified and allow this program to expire.”

BACKGROUND & HOW IT WORKS:

  • The Immigration Act of 1990 created EB-5 and permits foreign nationals to apply for a conditional visa by making a $1,000,000 investment in an American business that creates at least 10 jobs.
  • Alternatively, a visa-seeker can invest $500,000 in a “targeted employment area” (rural or area of high unemployment) to satisfy the visa requirement.
  • In 1992, the “Regional Center Program” was created to allow pre-approved third parties to pool EB-5 investments from foreign nationals toward American development projects.
  • The Regional Center Program is a source of much of the fraud in EB-5 Immigrant Investor program.
  • CoA Institute has found numerous cases where individuals who controlled a pre-approved Regional Center Program, use the program to collect huge sums in “investments” and fees from individuals seeking a visa, only to use the funds not to create jobs in the U.S. but to fund their lavish lifestyle.

On June 19, 2018, the U.S. Senate Committee on the Judiciary held a hearing on EB-5 with Lee Francis Cissna, Director of the U.S. Citizenship and Immigration Services (“USCIS”), the agency responsible for the program. In this hearing, when Senator Feinstein asked Director Cissna for a list of “shady investments” the agency has found while investigating fraud in this program, Cissna stated he was unable to produce one.

In response, CoA has begun tracking and identifying examples of fraud or other questionable investments made through the EB-5 program. The website includes 13 examples and CoA Institute expects to release as many as 50 examples of questionable investments under the EB-5 project files page, detailing projects that have been proven to be fraudulent and failed to provide the proposed economic benefit.

The countless documented instances of fraud and corruption developed through this program have pushed the EB-5 program far beyond the point of corrective legislative reform. CoA Institute will continue to publish findings on this website as Congress decides whether to allow the program to expire on September 30.

About Cause of Action Institute

Cause of Action Institute is a 501(c)(3) nonprofit, dedicated to providing government oversight, transparency and advocating for economic freedom and individual opportunity advanced by honest, accountable, and limited government.

Media Contact:

Matt Frendewey
matt.frendewey@causeofaction.org
202-499-4231

Democratic Senators Seek Records about “Sensitive Review” from VA, Ask Inspector General to Open Investigation into FOIA Politicization

Last week, a group of eight Democratic Senators, led by Ranking Member Jon Tester of the U.S. Senate Committee on Veterans’ Affairs, wrote to the Department of Veterans Affairs (“VA”) to express concern over the possible politicization of the agency’s Freedom of Information Act (“FOIA”) processes.  The senators requested various records concerning the involvement of political appointees in the FOIA decision-making process, as well as other “sensitive review”-type policies.  They also wrote to the VA’s Inspector General to request an investigation into these allegations.  Among other things, the legislators sought “an assessment of the role that political appointees play in the FOIA process, what types of oversight exist to ensure employees are providing all responsive material, and who makes determinations about what is or is not responsive to a request[.]”

Sensitive FOIA review has been increasingly in the news.  The most recent reports have focused on the Environmental Protection Agency (“EPA”).  According to EPA Chief of Staff Ryan Jackson, the Trump Administration has added an “extra layer of review” for “politically charged” or “complex requests.”  Other officials claim that “sensitive review,” and similar practices such as “White House equities” review, actually originated with the Obama White House.  This latter claim is better supported by the historical record, as I (here and here) and others (here) have repeatedly argued.  The Obama Administration was notorious for its efforts to delay and block the disclosure of politically damaging or otherwise newsworthy records.  This is not to say the Trump Administration is innocent—it has likewise contributed to obfuscation and an overall erosion of transparency.  My posts earlier this year on sensitive review at the National Oceanic and Atmospheric Administration and the Federal Aviation Administration demonstrate as much.

In the case of the VA, the agency’s watchdog previously argued, in 2010 and 2015, that there has not been regular inference by political appointees in the FOIA process.  But the public has long known of internal practices at the VA that likely contribute to politicization.  In August 2007, for example, the agency issued a directive concerning the processing of “high visibility” or “sensitive” FOIA requests that implicate potentially embarrassing or newsworthy records.

The potential for politicization only worsened during the Obama Administration.  An October 2013 memorandum instructed all Central Office components to clear FOIA responses and productions through Jim Horan, Director of the VA FOIA Service.  (Mr. Horan is still part of the leadership in the Office of Privacy and Records Management.)  This clearance process imposed a “temporary requirement” for front office review—although it is unknown whether the practice continues—and entailed a “sensitivity determination” leading to unnamed “specific procedures.”

Regardless of which party or president controls the government, sensitive review raises serious concerns.  Although alerting or involving political appointees in FOIA administration does not violate the law per se—and may, in rare cases, be appropriate—there is never any assurance that the practice will not lead to severe delays of months and even years.  At its worst, sensitive FOIA review leads to intentionally inadequate searches, politicized document review, improper record redaction, and incomplete disclosure.  When politically sensitive or potentially embarrassing records are at issue, politicians and bureaucrats will always have an incentive to err on the side of secrecy and non-disclosure.

Considering the new allegations of FOIA troubles at the VA, CoA Institute has submitted a FOIA request seeking further information about the agency’s sensitive review policy.  We will continue to report on the matter as information becomes available.

Ryan P. Mulvey is Counsel at Cause of Action Institute.