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Dear President Trump: It’s Time to Release the Watchdogs

May 12, 2017 by

You’re unlikely to hear much about it, but today marks an important yet troubling milestone. The Department of the Interior has gone 3,000 days—over eight years—without a permanent IG, or “Inspector General.”  And according to the Project on Government Oversight’s “Where Are All the Watchdogs?” tracker, there are eleven other IG vacancies, including empty spots at the Central Intelligence Agency (832 days), the Department of Defense (489 days), and the National Security Agency (346 days). It was inexcusable for President Obama to neglect to fill these vacancies with qualified candidates.  It is similarly irresponsible for President Trump to continue to ignore these vital appointments.

IGs serve as the internal watchdogs of the Executive Branch agencies. They are tasked with identifying and combatting waste, fraud, and abuse at their respective entities.  To accomplish this, they conduct important investigations, inspections, and audits.  They are intended to operate independently of agency leadership—a sort of internal check on the operation of the administrative state.

The absence of permanent IG appointees to these vital roles is concerning for numerous reasons. First, it reflects the Administration’s lack of commitment to transparency and accountability in government.  Moreover, acting IGs lack true independence.  As Senator Ron Johnson has commented, “[t]hey are not truly independent, as they can be removed by the agency at any time; they are only temporary and do not drive office policy; and they are at greater risk of compromising their work to appease the agency or the president.”

There has been a renewed push to highlight the crises in IG appointments in recent weeks. The House Oversight and Government Reform Committee, for example, called on President Trump last month to fill the numerous vacancies, describing IGs as “essential to the functions of federal government.” A bi-partisan group of members of the Senate Homeland Security and Governmental Affairs Committee did the same: “[T]he lack of a permanent IG can create the potential for conflicts of interest and diminish the essential independence of IGs.”

President Trump still has a long way to go in appointing qualified candidates to fill the Executive Branch, and it is admittedly early in his Administration. But selecting qualified, independent, and committed individuals for these vacant watchdog spots should be a top priority.

Ryan Mulvey is Counsel at Cause of Action Institute.

 

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It’s Time to End the Federal Government’s Cash-for-Visas Program

May 9, 2017 by

The Washington Post rightly called on the Trump Administration yesterday to end the government’s controversial EB-5 visa regime and, in particular, its Regional Center Program, which was recently extended until the end of September 2017. In most cases, the “Immigrant Investor Program,” or Employment-Based Preference Five (“EB-5”) cash-for-visa program, permits foreign nationals to apply for a conditional visa by investing $500,000 in an area of “high unemployment.”  Once certain job creation requirements are satisfied, the visa holder can apply for a green card (i.e., for permanent residence).  Although advocates contend that EB-5 is good for the economy, the program has been beset with controversy.  Most recently, President Trump’s son-in-law, Jared Kushner, came under scrutiny for his family’s efforts to “push” EB-5 visas to wealthy Chinese investors.

Cause of Action Institute’s (“CoA Institute”) investigation into various aspects of the EB-5 cash-for-visa program and the Regional Center Program have shown that these initiatives are continually abused for political or fraudulent purposes—a fact now acknowledged by the Government Accountability Office.

  • CoA Institute published a comprehensive report detailing how Virginia Governor Terry McAullife’s former company, GreenTech Automotive, used his political connections to garner millions of taxpayer dollars in loans and tax incentives. GreenTech remains embroiled in an investigation by the Securities and Exchange Commission for its involvement with EB-5. The Inspector General for the Department of Homeland Security reported that McAuliffe and friends—including Anthony Rodham, brother of former Secretary of State Hillary Clinton—benefited from political favoritism in the administration of the visa program.
  • CoA Institute’s report on Forest City Enterprises explained how corporate interests and state and local government worked together to take advantage of weak and ambiguous regulations governing EB-5—manipulating census data to create “targeted employment areas” and relying on questionable job prediction models to meet green card conditions. CoA Institute also discovered that Forest City contracted the same immigration lawyer and economist as GreenTech.
  • CoA Institute filed an ethics complaint against former Senator Harry Reid, who contacted officials at the U.S. Citizenship and Immigration Services in an attempt to influence the approval of EB-5 visa applications for a casino development project owned by Reid’s donors and represented by his son. The Senate Ethics Committee ignored the request, claiming that it never received a copy despite evidence to the contrary.
  • In the wake of the DHS Inspector General’s report, CoA Institute called on the Department of Justice to investigate a number of government officials for violation of federal laws.

Simply stated, the EB-5 Program operates as a cash-for-visa scheme. Whatever economic advantage it might offer is outweighed by the corruption it engenders and negative influence it has on national security and good government.  Congress should end the program or work to reform its governing rules to prevent continued abuse by the political class.

Ryan Mulvey is Counsel at Cause of Action Institute

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The IRS Responds to Our Report on Targeting – but Misses the Point

March 31, 2017 by

As detailed in our recent report, the IRS targeting scandal has a hidden cause which remains unaddressed to this day – a rule in the agency’s own manual that directs employees to treat applications differently if they might “generate media or Congressional attention.”  This rule is what initially prompted low-level IRS tax specialists to hold up applications from Tea Party groups, ultimately resulting in both years of delays for taxpayers and widespread embarrassment for the agency.

The report was accompanied by an op-ed in the Wall Street Journal and was reported on by, among other outlets, Fox News and the EO Tax Journal.  Both of these news reports included quotes from an IRS statement responding to our findings – or at least the agency’s interpretation of them.  Although the aggressive tone of the IRS response surprised the editor of the EO Tax Journal, it serves as a classic example of the bureaucratic mindset that led to the targeting scandal happening in the first place.  Here is the IRS statement in full, as reported in the EO Tax Journal:

“The IRS strongly disputes the [Cause of Action] report and any suggestion or allegation that Exempt Organizations is targeting taxpayers. The IRS emphasizes that this point has been confirmed by independent third parties, including the Treasury Inspector General for Tax Administration. There should be absolutely no doubt on that point, and the continuing commitment by the IRS to be guided by the tax law and nothing else.”

“[Sensitive Case Reports] are used within the IRS to bring to upper management’s attention cases that may generate press or Congressional attention, present unique or novel issues, or affect large numbers of taxpayers. It’s important to note that IRS internal guidelines on sensitive case reports do not instruct the employees to stop working a case or direct employees on how to work a case.

It is head-spinning that the IRS can argue in one sentence that it should be guided by tax law “and nothing else” and then insist in the very next sentence that it is proper to consider “press or Congressional attention” as a criterion, delaying a final decision on tax-exempt applications as a result.  The only purpose of this rule is to avoid possible embarrassment.  Yet an application for tax exempt status is no more related to the notoriety of the applicant than a driver’s license is to the fame of the driver – if you pass the test, you should get the status

The problem with rules that mandate this kind of PR-minded defensiveness is that, as amply documented by the many investigations into the targeting scandal, it drags the application process through multiple echelons of bureaucracy and involves higher officials with strong political leanings. The IRS’s statement claims that it was absolved by the Treasury Inspector General for Tax Administration (TIGTA), but in reality, a report from that office repeatedly criticized the IRS for “using inappropriate criteria” to scrutinize applications – criteria which ended up focusing overwhelmingly on political opponents of the administration in power.  IRS officials insisted on seeing every application from Tea Party-affiliated groups because of the “media attention” they were attracting, and as shown in the same TIGTA report, the result was an endless array of delays and invasive questioning.

John McGlothlin is counsel at Cause of Action Institute

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DOJ IG Agrees to Review Conflict of Interest in FBI Hillary Clinton Investigation

March 3, 2017 by

Yesterday, Attorney General Jeff Sessions announced that he would recuse himself from any investigation into President Donald Trump’s election campaign.  That was the right decision to make.  The Department of Justice (“DOJ”) and Federal Bureau of Investigation (“FBI”) must remain clear of all appearances of impropriety.  All DOJ investigations should be, and be seen to be, fair and impartial.

Unfortunately, in the waning days of the Obama Administration, certain Justice officials refused to recuse themselves when facing circumstances similar to Mr. Sessions.  On October 25, 2016, we wrote to the DOJ Office of the Inspector General (“OIG”) requesting an investigation into the failure of FBI Deputy Director Andrew McCabe to recuse himself from investigations of Virginia Governor Terry McAuliffe and former Secretary of State Hillary Clinton, even though Mr. McCabe’s wife, Dr. Jill McCabe, received over $675,000 in money and in-kind contributions from Governor McAuliffe’s political action committee and the Democratic Party of Virginia.  Equally noteworthy, Governor McAuliffe met with Dr. McCabe to urge her to run for office as a Democrat on March 7, 2015, just five days after The New York Times broke the story on former Secretary Clinton’s use of a private email system.

Just this week, on February 23, the DOJ OIG wrote back, informing us that it has opened an investigation into Mr. McCabe’s failure to recuse himself.  This letter came on the heels of a public notice in late January announcing a broader investigation in response to inquiries from Congress and other outside groups.  We are pleased to hear that the DOJ OIG took our allegations seriously and look forward to the result of the investigation.

 

 

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Bob Bauer Agrees With Us About Commissioner Weintraub, But Doesn’t Want to Do Anything About It

February 24, 2017 by

Does the rule of law matter and should government officials abide by the ethical obligations that govern them?  Robert Bauer, former White House Counsel for President Obama, answers: “Not so much.”

On Tuesday, in furtherance of its mission to hold our government accountable, Cause of Action Institute (“CoA Institute”) sent a letter to the Federal Election Commission (“FEC”) Inspector General (“IG”) and Designated Agency Ethics Officer asking them to investigate whether Commissioner Ellen Weintraub violated government ethics standards when she acted outside her authority as a commissioner while using FEC resources.  Ms. Weintraub issued a statement on FEC letterhead, posted to the FEC website, urging President Trump to provide evidence of his claims about voter fraud during the 2016 elections, and then went on national media outlets to promote that statement.  In our letter, we explained that alleged voter fraud and New Hampshire criminal violations, the two subjects of Ms. Weintraub’s statement, are outside the FEC’s jurisdiction and therefore her advocacy on this matter was an improper use of government property and official time.  We also pointed out that, during the Obama administration, Ms. Weintraub herself had expressly rejected any involvement in questions of voter fraud because such matters were outside the FEC’s jurisdiction.

Commissioner Weintraub responded to our letter by providing a post hoc rationalization that her statement was in some manner geared to determine whether “the expense of these buses [alleged to have been used in the voter fraud] has not been accounted for on any campaign-finance filing.”  Without addressing her prior statement about voter fraud being outside of FEC jurisdiction, she also alleged, without citation to any authority, that her statement about the investigation of voter fraud was proper because it was within her “official duties as a federal election official to comment publicly on any aspect of the integrity of federal elections in the United States.”

Yesterday, former White House Counsel Bauer rode to Ms. Weintraub’s defense with a post on his campaign-finance blog, More Soft Money Hard Law.  Nearly lost among Mr. Bauer’s various defenses of Ms. Weintraub’s behavior is a key concession that vindicates CoA Institute’s letter to the FEC.  As he wrote: “Are Weintraub’s comments directly and squarely within the jurisdiction of the Commission, such that she can take some action in response to the President’s failure to produce the requested evidence?  No[.]”  To anyone who believes in the rule of law—that old-fashioned notion that laws, standards, and rules are to be applied regardless of one’s rank or standing in society—that should have ended the matter.  Ms. Weintraub, in her role as FEC Commissioner, acted outside her authority; applicable ethics rules prohibit officials from using official time and government property in unauthorized conduct; Ms. Weintraub continued her unauthorized conduct; she should accordingly be the subject of an ethics investigation.

But Mr. Bauer demurs.  Instead of describing the governing ethical standards and their application to Ms. Weintraub’s behavior, he claims that, “as a 13-year Commissioner, [Ms. Weintraub] should be free to take notice of any claims that bear on the integrity of elections.”  Of course she is free to “take notice” of such claims; no one has argued otherwise.  The issue, however, is whether she can expend government time and resources in promoting the notice she takes.

The length of an official’s tenure at an agency has no bearing on whether she is permitted to operate outside the statutory authority creating the agency’s jurisdiction.  If Ms. Weintraub felt moved by these issues, she was free to opine in her personal capacity.  But using government property and official time to advance personal views that are—as Mr. Bauer himself admits—outside the FEC’s jurisdiction was improper.

Unable to find a valid basis to defend Ms. Weintraub’s behavior, Mr. Bauer’s only remaining move is to impugn CoA Institute’s motives and methods.

First, the motives.  Apparently unconcerned with Ms. Weintraub’s unethical use of government property and time, Mr. Bauer writes that “Budgets are not balanced on the savings achieved by stopping this level of activity.  There is very little of a principle to be upheld here.”  Although the volume of money used improperly may not be enough to balance a budget, the principle at issue is vital and one that CoA Institute works every day to uphold.  Congress creates federal agencies to accomplish statutory objectives and funds them with the taxpayers’ money.  Public officials are hired and paid solely to accomplish those objectives.  Unfortunately, agencies are notorious for straying beyond their authority, wasting taxpayer resources, interfering with the free market, and undermining the liberties that are Americans’ birthrights.  Mr. Bauer may not care that Ms. Weintraub exceeded her authority, but we do.  Mr. Bauer may not be upset with the unchecked growth of power in the administrative state, but we are.

Mr. Bauer also repeats Ms. Weintraub’s claim that our letter was an effort to silence the commissioner, stating that our aim is to “suppress[] unwanted speech” and our “purpose is clearly to strike back at the Weintraub [sic] for the substance of her comments and have her think twice about repeating them while ‘under investigation.’”  What does Mr. Bauer know about our motives?  Did he interview those who drafted the letter?  Did he even go to our website to look at our mission statement or review the kinds of cases we take on?  Since its inception over five years ago, CoA Institute has existed to provide oversight of federal agencies and hold accountable the officials who exercise so much control over the lives of everyday Americans.  We are firm defenders of the First Amendment, and if Ms. Weintraub had made the same statement in her personal capacity, we would have applauded her right to do so.  But that is not what happened.  In acting in this matter in her official capacity, she exceeded her statutory authority, and for that, she should be held accountable.  We do that for apparent violations of all kinds by government officials, regardless of their political affiliation, including former Secretary of Agriculture Tom Vilsack and former Secretary of State Colin Powell.

As for methods, Mr. Bauer suggests that CoA Institute’s request for an investigation will cost more money than it will save and thus, if we were really concerned about preserving government resources, we should have remained silent.  As he stated: “But it cannot escape attention that to make its point, the organization urges a remedy that requires throwing real government money away, on an ‘investigation.’  Ms. Weintraub’s statement-and-tweets communication on voter fraud is a bargain compared to the paper and staff time that may be burned in an IG inquiry.”  Here, Mr. Bauer appears unaware of the economic concept of a sunk cost.  Federal tax dollars already are being spent to employ both an IG and Designated Agency Ethics Officer at the FEC, and the precise purpose for which these officials and their offices exist is to administer government ethics rules and oversee investigations into wrongdoing.  Our request that they allocate a portion of their time to determine whether Ms. Weintraub violated her ethical obligations in this matter is thus entirely proper.  These officials exist to investigate misconduct and we are merely bringing to their attention a matter that they should be investigating of their own accord.  And if we’re wrong, which Mr. Bauer does not believe, we’ll post a follow-up, just as we did for former Secretary Vilsack.

Finally, Mr. Bauer’s attempts to justify Ms. Weintraub’s unethical behavior by pointing to President Trump’s use of “Twitter to visit hell on a department store chain that discontinued his daughter’s line of clothing,” is a logical fallacy.  If President Trump’s action is wrong, how does that exonerate Ms. Weintraub?  Far from proving that CoA Institute acted from a partisan agenda rather than from principle, Mr. Bauer’s insinuation is a case of projection.

James Valvo is Counsel & Senior Policy Advisor at Cause of Action Institute.  You can follow him on Twitter at @JamesValvo.

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Did FEC Commissioner Misuse Her Position When She Demanded Proof of Trump’s N.H. Voter Fraud Claim?

February 21, 2017 by

Washington D.C. – Cause of Action Institute (“CoA Institute”) today called for an investigation into whether Federal Election Commission (“FEC”) Commissioner Ellen Weintraub violated federal ethics laws when she demanded President Trump provide evidence of his voter fraud claims in New Hampshire. Commissioner Weintraub used government property and official time to make these statements, and then promoted her statement on the FEC website, social media, and national media outlets.

In its letter, CoA Institute asks the FEC’s Office of Inspector General and Designated Agency Ethics Officer to open an investigation into whether Commissioner Weintraub violated her ethical obligations and to determine whether it is appropriate for the FEC website to continue to host the statement related to voter fraud and New Hampshire criminal violations, both of which concern matters outside the agency’s jurisdiction. Despite its name, the FEC has no authority over voter fraud claims.

CoA Institute Assistant Vice President Lee Steven: “The public must have confidence that federal agency employees are acting within their ethical requirements and that taxpayer dollars are being used for authorized purposes.  Commissioner Weintraub’s behavior threatens the public’s faith in both of these important principals.”

On February 9, 2017, President Trump was reported to have stated that voter fraud in New Hampshire cost him and former Senator Kelly Ayotte electoral victories in that state in November 2016.   In response to that report, Commissioner Weintraub issued a statement calling “upon President Trump to immediately share his evidence with the public and with the appropriate law-enforcement authorities so that his allegations may be investigated promptly and thoroughly.”   Her statement also claimed that the “scheme the President of the United States alleges would constitute thousands of felony criminal offenses under New Hampshire law.” Commissioner Weintraub subsequently appeared on CNN and public radio to discuss her statement.

When asked about her position, Commissioner Weintraub stated that “[a]s a commissioner on the Federal Election Commission, I fight every day to build the faith of the American people in our elections. . . .  It’s absolutely my right to raise public questions about another public official’s statements about the integrity of our elections.”   In October 2016, however, Commissioner Weintraub took the exact opposite stance, stating through her Twitter account that voter fraud was beyond FEC jurisdiction. In response to the question “What is the FEC doing abt [sic] recent reports of voter fraud?” she replied, “That’s outside the @FEC’s jurisdiction.  We do campaign finance *only*.  The elections themselves are handled by the states.”

FEC regulations provide that FEC members and employees are covered by the Office of Government Ethics (“OGE”) rules governing the proper use of government property and official time. Under OGE regulations, Commissioner Weintraub may only use FEC property and act in her official capacity for purposes that advance the FEC mission as authorized in law or regulation.

The full letter is available here.

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IRS Watchdog shields records on breach of confidential taxpayer information

January 5, 2017 by

The Treasury Inspector General for Tax Administration (TIGTA) has concluded its review of allegations brought by Cause of Action Institute (CoA Institute) concerning the unlawful disclosure and inspection of more than one million pages of confidential taxpayer information. The agency opened its investigation in July 2016 but now claims it cannot provide any further information about of the outcome of its review because such information is itself protected by confidentiality laws originally intended to protect taxpayers.

In June 2016, CoA Institute called on TIGTA and the Department of Justice Office of Inspector General (DOJ-OIG) to examine potential legal violations arising from the October 2010 disclosure of more than one million pages of tax returns and return information to the FBI and DOJ Public Integrity Section by Lois Lerner and the IRS.  CoA Institute first alerted TIGTA about the possible violation of Section 6103 of the Internal Revenue Code with respect to these records in July 2015. [For more information, see pages 11–15 of CoA Institute’s recent investigative report.]

Just months prior to TIGTA’s response, DOJ-OIG confirmed the unlawful disclosure of taxpayer information but dismissed a request to investigate the wrongdoing.  The IG concluded that CoA Institute was correct that “protected taxpayer information was included” on CDs provided by the IRS to the FBI and DOJ, yet it determined inexplicably that the matter “does not warrant further investigation[.]”

CoA Institute Assistant Vice President Lee A. Steven: “Although it appears that TIGTA has investigated our now-proven allegations of wrongdoing, we are concerned by the lack of transparency surrounding whether the responsible IRS officials will be held accountable for the unlawful disclosure of over one million pages of confidential taxpayer information. Congress never intended taxpayer confidentiality laws to be a shield against the disclosure of information concerning the conduct of officials who have abused their positions and acted in contravention of their duty to protect American taxpayers’ most private information.  This incident involves one of the largest and most significant breaches of taxpayer confidentiality laws by the federal government in U.S. history.  The DOJ-OIG seems to have washed its hands of the matter and it is disappointing to see TIGTA do the same.”

The DOJ Public Integrity Section and the FBI originally sought the records at issue in an attempt to identify non-profit organizations who may have engaged in prohibited political activity.  As part of its public oversight efforts, CoA Institute obtained records demonstrating that, between 2009 and 2012, neither agency ever submitted the statutorily-required requests for disclosure of this information to the IRS.

Section 6103 of the Internal Revenue Code provides a strict rule of confidentiality for tax returns and return information.  Unless a statutory exception applies, government agencies and their employees may not disclose such information.  Violations can include fines, termination from employment, and imprisonment.

To access CoA Institute’s June 29, 2016 Letter to TIGTA and DOJ-OIG, click here.
To access DOJ-OIG’s October 12, 2016 response, click here.
To access TIGTA’s December 19, 2016 response, click here.
To access CoA Institute’s October 2016 Investigative Report, click here.

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