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08/2/2018

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

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08/1/2018

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.




 

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08/1/2018

Cause of Action Institute Sues DOJ for Refusing to Release Comey Emails

WASHINGTON, D.C. – Aug. 1, 2018 – Cause of Action Institute (“CoA Institute”) today sued the U.S. Department of Justice (DOJ) for failing to respond to three FOIA requests pertaining to the use of personal email by former FBI Director James Comey, former FBI Chief of Staff James Rybicki, and DOJ’s Director of Public of Affairs Sarah Isgur Flores.

The recent Office of Inspector General (OIG) report on the Hillary Clinton email scandal disclosed that Comey had used his personal email to conduct official business, but that OIG was, “never given access to all the work-related emails.” Comey claimed he either forwarded emails from his personal account to his official account or to Chief of Staff Rybicki. In an unrelated incident last year, Flores was cited as using her Gmail account to issue a statement on behalf of the Attorney General in response to a Washington Post article. CoA Institute filed three FOIAs relating to these matters, and in each case, DOJ failed to respond within the statutory timeframe.

Cause of Action Institute Counsel Ryan Mulvey:

“There is no reason for the U.S. Department of Justice to stonewall and ignore these FOIA requests. The requested emails, even though created or received on personal devices or in personal accounts, are agency records and the public has every right to access them. It should never have been necessary for us to sue the DOJ, the nation’s chief law enforcement body, to force it to abide by its obligations under the FOIA.”

The three FOIA requests include:

  • June 14, 2018 – Office of Inspector General FOIA request for “all emails sent or received by former FBI Director James Comey or former FBI Chief of Staff James Rybicki on a personal email account … conducting official government business, that were acquired or reviewed by” OIG.
  • June 14, 2018 – FBI FOIA request for, “all emails sent or received by former FBI Director James Comey or former FBI Chief of Staff James Rybicki on a personal email account … conducting official government business…”
  • March 2, 2017 – Office of Information Policy FOIA request for, “any email, including attachments, sent by Sarah Isgur Flores on or about March 2, 2017 from a non-governmental email account, containing a statement in response to news reports that Attorney General Jeff Session met with the Russian Ambassador during the 2016 Presidential Election.” CoA Institute also asked for, “all other emails, including attachments, sent or received by Sarah Isgur Flores on a non-government email account that were for the purpose of conducting official government business.”

The full complaint can be viewed below.

About Cause of Action Institute

Cause of Action Institute is a 501(c)(3) non-profit working to enhance individual and economic liberty by limiting the power of the administrative state to make decisions that are contrary to freedom and prosperity by advocating for a transparent and accountable government free from abuse.

Media Contact:

Matt Frendewey
matt.frendewey@causeofaction.org
202-699-2018

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07/31/2018

Millennium Challenge Corporation Adopts CoA Institute’s Recommendations for FOIA Regulations

The Millennium Challenge Corporation (“MCC”) finalized a rule at the end of last week implementing new Freedom of Information Act (“FOIA”) regulations and incorporated important revisions proposed by Cause of Action Institute (“CoA Institute”) in a comment submitted to the agency in March 2018.  The MCC is a small agency tasked with delivering foreign aid to combat global poverty.

CoA Institute made several recommendations in response to the MCC’s proposed rulemaking.  Most importantly, we urged the agency to remove outdated “organized and operated” language from its proposed definition of a “representative of the news media.”  Such language has been used in the past to deny news media requester status—and favorable fee treatment—to government watchdog organizations, including CoA Institute.  For example, CoA Institute sued the Federal Trade Commission, and took its case all the way to the D.C. Circuit, just to get the agency to acknowledged that its FOIA fee regulations were outdated and that it had improperly denied CoA Institute a fee reduction.

In deciding that case, the D.C. Circuit issued a landmark decision clarifying proper fee category definitions and the application of fees in FOIA cases.  CoA Institute cited this case to the MCC and the agency took heed of the current case law, removing the outdated “organized and operated” standard from its final rule.

CoA Institute also asked the MCC to remove language directing FOIA officials to read agency regulations “in conjunction with” fee guidelines published by the White House Office of Management and Budget (“OMB”) in 1987.  Portions of the OMB guidance, which are actually the source of the “organized and operated” standard, are simply no longer authoritative—they conflict with the statutory text, as amended by Congress, and judicial authorities, including Cause of Action v. Federal Trade Commission.

Continued reliance on the OMB guidelines threatens to cause confusion.  In 2016, the FOIA Advisory Committee and the Archivist of the United States both called on OMB to update its fee guidelines.  CoA Institute also filed a petition for rulemaking on the issue, and is currently litigating the matter in federal court.  Although the MCC has decided not to alter its reference to the OMB guidelines (and did not provide an explanation for rejecting that portion of CoA Institute’s comment), the fact remains that no agency can rely on OMB’s superseded directives.

Since the passage of the FOIA Improvement Act of 2016, CoA Institute has commented on twenty-six separate rulemakings.  Of the twelve that have been finalized, CoA Institute has succeeded in convincing seven agencies to abandon the outdated “organized and operated” standard in favor of a proper definition of “representative of the news media,” including the following:

Some agencies, including the National Credit Union Administration and the Federal Reserve, choose to defer on CoA Institute’s recommendations and have promised to propose further rulemakings in the near future to address outstanding fee issues.

CoA Institute’s successful comment to MCC is another small step in our efforts to provide effective and transparent oversight of the administrative state and, more specifically, to ensure agency compliance with the FOIA.

Ryan P. Mulvey is Counsel at Cause of Action Institute

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07/26/2018

EPA Jobs Loss Evaluations Update

Late last year, CoA submitted an amicus brief in the case of Murray Energy v. EPA.  The brief supported Murray Energy’s cert. petition seeking review of its case before the Supreme Court.  The Murray Energy case centered on employment evaluations required under Section 321(a) of the Clean Air Act.

A federal court in West Virginia ordered the EPA to comply with the statutory mandates of Congress, requiring the EPA to conduct “continuing employment evaluations” related to Clean Air Act implementation or enforcement.  The Fourth Circuit, however, sided with the EPA and ruled that, despite the plain language of the statute, Section 321(a) was discretionary and not an agency obligation.

Our brief made the following point: Congress specifically stated that the EPA shall conduct these continuing employment evaluations.  Not may, or if something happens, or if the EPA deems it expedient, but shall.  Unfortunately, earlier this year, the Supreme Court denied Murray Energy’s petition and will not review the matter.  However, the EPA has admitted its failure to conduct job loss evaluations and committed to doing so in the future: “the Agency historically has not conducted these assessments. EPA acknowledges the importance of considering the cumulative effects of its regulations on the American public. Accordingly, EPA intends to conduct these evaluations consistent with the statutes.”  CoA will continue to monitor these developments and help ensure that the EPA follows through on its promises.

Meanwhile, nearly two years ago, CoA petitioned the EPA to initiate a rulemaking to implement procedures and hearings under Section 321(b) of the Clean Air Act.  This section allows any employee who is discharged or laid off, threatened with discharge or layoff, or whose employment is adversely affected by Clean Air Act requirements to request an investigation and a hearing from the EPA.  The EPA has failed to promulgate any regulations regarding the process and standards by which it should conduct investigations and hearings under Section 321(b) and has not responded to our petition, other than to acknowledge it.  As the agency is now under the new leadership of Acting Administrator Andrew Wheeler, the opportunity again presents itself for the EPA to finally address our petition and give the public the necessary tools to seek relief from its regulatory activities.

Josh Schopf is Counsel at Cause of Action Institute

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07/24/2018

Now is the Time for VA to Change its Culture

Yesterday, the Senate confirmed Pentagon official Robert Wilkie as the new Secretary for the Department of Veterans Affairs (“Department” or “VA”). Wilkie takes over a federal agency plagued with a culture of toxicity, politicization, and misconduct. Although recent news reports and investigations of VA leadership have been a public relations nightmare for the agency, the prescription for success for the Secretary is rather simple: implement a culture change from the top-down to develop a VA that both performs its duty to veterans and operates in an ethical and productive manner.

A recent Washington Post report found that acting VA secretary Peter O’Rourke removed or reassigned VA staff members perceived to be disloyal to President Trump and his agenda for veterans. The report said that none of the staffers were given reasons for their reassignments. O’Rourke also incorrectly claimed authority over the VA Inspector General in a letter to the Inspector General. Although it would be easy to blame O’Rourke for the Department’s toxic climate, he only took office in May 2018; the systemic issues within the VA long precede the acting secretary.

Following the Washington Post report, the U.S. Government Accountability Office (“GAO”)  identified several issues within the Department regarding employee misconduct, retaliation against whistleblowers, and impunity for senior officials. Perhaps the most troubling finding was that senior officials, who perpetuate the agency’s climate, are held to a lower standard than their subordinates. The following figure shows the outcomes of seventeen misconduct cases against senior officials where disciplinary or adverse action was proposed over a 53-month period. Although twelve of the officials faced proposed actions calling for their removal based on the specific charges, only three officials were actually removed from their position. In total, 71% of senior officials who were guilty of misconduct served lesser or no disciplinary action compared to the original proposed action.

Other issues the GAO identified include:

  • Poor record-keeping – the current information system for recording adverse disciplinary actions does not track employee misconduct across the Department, despite the system having the capability to include and incorporate such models.
  • Poor communication within the Department – VA employee files investigated by GAO did not always contain documentation indicating that employees were informed of the reason disciplinary action was brought against them. The lack of oversight in the VA’s human resource policies increases the risk that employees will not be adequately informed of their rights during adjudication.
  • Lack of Transparency – VA facilities and program offices did not always provide the supporting documentation that they used to reach their conclusions about case referrals. This calls into question whether enough evidence was gathered to make sound conclusions about disciplinary or adverse actions.
  • A clear disregard for procedure – the report found that facility and program offices did not consistently follow policies and procedures for investigating allegations against senior officials. Similarly, senior officials may not have always been held accountable for misconduct, whether disciplinary action was not taken or recommended, or previous disciplinary failures were not considered in repeated offenses.

Whistleblowers provide a public service by exposing illegal or unethical activity within an organization. But whistleblowers in the VA allege that managers in their chain of command took actions against them after they reported misconduct. These alleged actions included reassignment to other locations, reduced access to computer equipment necessary to complete assignments, and social isolation from peers. Whistleblowers also were not provided adequate information by VA on how to document or file a claim of misconduct or retaliation.

The GAO report included sixteen recommendations to the VA, of which the VA concurred with nine and partially concurred with five. According to their comments to GAO, the VA plans to, among other things, have the Secretary direct the Office of Accountability and Whistleblower Protection (“OAWP”) review and issue guidance on how OAWP will discipline senior officials, and develop a functional process to ensure the implementation of whistleblower protections.

Wilkie is now the face of the VA. It is up to him to make sure that the agency implements the recommendations to protect whistleblowers and hold managers that retaliate against them accountable. Cause of Action Institute will continue to conduct oversight to make sure the VA follows through with adopting GAO’s recommendations. We have documented what happens when agencies provide lip-service instead of fixing problems. Our veterans deserve a functional and ethically-operated VA, and that can only start by repairing the climate of the agency from the top.

Chris Klein is a Research Fellow at Cause of Action Institute

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07/23/2018

Federal Judge Confirms Agencies’ FRA Record Recovery Efforts Must Include Reaching Out to Third-Party Email Providers

Last Friday, Judge Trevor McFadden of the U.S. District Court for the District of Columbia granted the federal government’s second motion to dismiss a lawsuit to compel Secretary of State Mike Pompeo and U.S. Archivist David Ferriero to fulfill their statutory obligations under the Federal Records Act (“FRA”) to recover former Secretary of State Colin Powell’s work-related email records from a personal account hosted by AOL, Inc.  Cause of Action Institute (“CoA Institute”) filed the lawsuit in October 2016 after then-Secretary John Kerry and Archivist Ferriero failed to act on CoA Institute’s FRA notice and Freedom of Information Act (“FOIA”) request.

Although Judge McFadden’s dismissal is a technical defeat, albeit on procedural grounds, CoA Institute’s work in this case, and in another FRA case involving Hillary Clinton, is still a success.  Taken together, these cases have the raised the bar for what federal agencies must do when records go missing.  In future cases, agencies will be required, at the least, to reach out directly to third-party email providers in an attempt to recover work-related email records and may not rely on self-serving statements from agency officials that such records no longer exist.

In the recent motion, the government again sought dismissal on mootness grounds, arguing that Secretary Powell no longer had access to the account he used during his tenure at the State Department and, moreover, it would be “technologically impossible” for AOL to recover any records from its servers.  Correspondence from Secretary Powell and various AOL employees was used to support the government’s claims.  But the agency reached out to Secretary Powell and AOL only after Judge McFadden rejected a similar motion to dismiss in January 2018, holding that there was still a “substantial likelihood,” based on the record, that Secretary Powell’s work-related email could be recovered if the State Department were to leverage the full law enforcement authority of the federal government.  Judge McFadden looked to the Department of Justice’s successful recovery of former Secretary Hillary Clinton’s email from computer hard drives and mobile devices as a guide.

In opposition to the government’s second motion, and in support of its own motion for summary judgment, CoA Institute argued that the government had failed to provide enough evidence to establish fatal loss of the email records at issue, particularly since Secretary Pompeo and Archivist Ferriero continued to refuse to involve the Attorney General in compulsory or forensic recovery efforts.

This time around, however, the judge was convinced that the government had done enough and additional efforts would be “pointless.”  Nevertheless, in future cases, agencies will need to undertake substantial efforts to prove fatal loss, even if that means contacting third-party commercial communications providers to determine the recoverability of records on their servers or networks.

The alienation of federal records will likely continue with the fast-paced development of technology and alternative means of communication within the federal bureaucracy.  CoA Institute is committed to ensuring that the law follows these developments and holds government employees accountable.

Ryan Mulvey is Counsel at Cause of Action Institute.

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