Category Archives: Law

Banana Republic of N. America

If this does is not exactly what we see in “Banana Republics” I don’t know how else it can be explained.
WSJ 8/29/2016

By Andy Koenig

Imagine if the president of the United States forced America’s biggest banks to funnel hundreds of millions—and potentially billions—of dollars to the corporations and lobbyists who supported his agenda, all while calling it “Main Street Relief.” The public outcry would rightly be deafening. Yet the Obama administration has used a similar strategy to enrich its political allies, advance leftist pet projects, and protect its legacy—and hardly anyone has noticed.

The administration’s multiyear campaign against the banking industry has quietly steered money to organizations and politicians who are working to ensure liberal policy and political victories at every level of government. The conduit for this funding is the Residential Mortgage- Backed Securities Working Group, a coalition of federal and state regulators and prosecutors created in 2012 to “identify, investigate, and prosecute instances of wrongdoing” in the residential mortgage-backed securities market. In conjunction with the Justice Department, the RMBS Working Group has reached multibilliondollar settlements with essentially every major bank in America.

The most recent came in April when the Justice Department announced a $5.1 billion settlement with Goldman Sachs. In February Morgan Stanley agreed to a $3.2 billion settlement. Previous targets were Citigroup ($7 billion), J.P. Morgan Chase ($13 billion), and Bank of America, which in 2014 reached the largest civil settlement in American history at $16.65 billion. Smaller deals with other banks have also been announced.

Combined, the banks must divert well over $11 billion into “consumer relief,” which is supposed to benefit homeowners harmed during the Great Recession. Yet it is unknown how much, if any, of the banks’ settlement money will find its way to individual homeowners. Instead, a substantial portion is allocated to private, nonprofit organizations drawn from a federally approved list. Some groups on the list—Catholic Charities, for instance—are relatively nonpolitical. Others—La Raza, the National Urban League, the National Community Reinvestment Coalition and more—are anything but.

This is a handout to the administration’s allies. Many of these groups engage in voter registration, community organizing and lobbying on liberal policy priorities at every level of government. They also provide grants to other liberal groups not eligible for payouts under the settlements. Thanks to the Obama administration, and the fungibility of money, the settlements’ beneficiaries can now devote hundreds of thousands or even millions of dollars to these activities.

The settlements also give banks a financial incentive to fund these groups. Most of the deals give double credit or more against the settlement amount for every dollar in “donations.” Bank of America’s donation list—the only bank to disclose exactly where it sends its money—shows how this benefits liberal groups. The bank has so far given at least $1.15 million to the National Urban League, which counts as if it were $2.6 million against the bank’s settlement. Similarly, $1.5 million to La Raza takes $3.5 million off the total amount of “consumer relief” owed by the bank. There are scores of other examples.

Our analysis of over 80 beneficiaries from Bank of America’s settlement shows that they received, on average, more than 10% of their 2015 budgets from the bank. When other bank checks are added, the amount funneled to these organizations is guaranteed to rise. And the banks have multiple years to pay their total penalties, meaning some liberal interest groups can count on additional funding for years—and election cycles—to come.

As part of their “consumer relief” penalties, Bank of America and J.P. Morgan Chase must also pay a minimum $75 million to Community Development Financial Institutions— taxpayer-funded groups propped up by the Obama administration as an alternative to payday lenders. “Housing Counseling Agencies” also get at least $30 million. This essentially circumvents Congress’s recent decision to cut $43 million in federal funds routed to these groups through the Department of Housing and Urban Development.

The politicians who negotiate the settlements as part of the RMBS Working Group have also directed money to their supporters and states. Illinois’s Democratic attorney general Lisa Madigan announced she had secured $22.5 million from February’s Morgan Stanley deal for her state’s debtridden pension funds—a blatant payout to public unions. The deals with J.P. Morgan Chase, Bank of America and Citigroup yielded a further $344 million for both “consumer relief” and direct payments to pension funds.

New York hit the jackpot too. Attorney General Eric Schneiderman, also a Democrat and chairman of the RMBS Working Group, arranged for Morgan Stanley to fork over $400 million to New York nonprofits and $150 million to the state.

Despite the best efforts of a few principled legislators late last year, Congress missed an opportunity to amend the Justice Department’s funding bill to stop further handouts. Lawmakers now have another opportunity as Congress enters budget negotiation for fiscal year 2017. Rep. Bob Goodlatte (R., Va.) introduced a bill in April that would prevent government officials from enforcing settlements that funnel money to third parties, and it needs to gain wider traction with his colleagues. The political shakedowns disguised as public service must end.

Mr. Koenig is senior policy adviser at Freedom Partners Chamber of Commerce.


Reign In the Prosecutors!

If the targets of the prosecutors were leftists, or Democrats, I’m afraid there would have been a lynching long ago.
WSJ 8/19/2016

We wish we could stop writing about Wisconsin’s abusive prosecutors, but conservatives in the state are still fighting to have their rights vindicated in court.

Readers are familiar with the secret John Doe probe by Democratic prosecutors that targeted conservative groups, using kitchen-sink subpoenas and raiding their homes in pursuit of an illegal theory of campaign-finance coordination. The investigation was shut down by the Wisconsin Supreme Court.

But before those outrages, prosecutors did a test run on a Scott Walker aide named Cindy Archer as part of an investigation into Mr. Walker’s associates that began around the time of his first run for Governor. Ms. Archer was never charged, but her career and reputation were damaged.

Ms. Archer has been fighting the politicized harassment in a federal civil-rights action. Her complaint notes that prosecutors violated her First and Fourth Amendment rights when they searched her home without a warrant that narrowly specified what they were looking for. In May federal Judge Lynn Adelman rejected the claim on grounds that prosecutors are immune from lawsuits concerning their official duty.

But prosecutors are not eligible for immunity when a well-established constitutional right has been violated. No government has carte blanche to retaliate against citizens based on their speech. To get around that hurdle, Judge Adelman offered a tortured interpretation of the Supreme Court’s 2006 decision in Garcetti v. Ceballos to claim civil servants have no First Amendment rights when they are speaking about policy. Ms. Archer has appealed to the Seventh Circuit Court of Appeals. Ms. Archer’s case is revealing for its display of procedural shortcuts and abusive prosecutorial tactics. In particular prosecutors submitted a 115-page warrant and affidavit for approval by the John Doe judge on the morning of Sept. 13, 2011, incorporating a record that included tens of thousands of documents. Curiously, the warrant was approved hours later even though time sheets submitted by the judge show he didn’t work on the Doe case at all that day or the days immediately following. Ms. Archer’s lawsuit notes that on the day the warrant was signed, the judge was 30 miles away working on another matter. Ms. Archer’s home was nonetheless raided on Sept. 14 and Ms. Archer made the subject of invidious speculation on the evening news.

Meanwhile, the Madison-based MacIver Institute has filed a class-action lawsuit against Milwaukee District Attorney John Chisholm and others in his office and at the Wisconsin Government Accountability Board (GAB) for an illegal seizure of its records during the John Doe fishing expedition.

The lawsuit claims that the Milwaukee District Attorney’s office and the GAB, which regulates campaign finance in the state, improperly gathered every document and email it wanted from the Institute without going through the proper legal process. MacIver specifically challenges what it calls the “secret and unlawful” manner in which prosecutors violated the federal Stored Communications Act, which protects the privacy of digital communications like email.

These are serious claims that deserve their day in court. Prosecutors can’t short-cut due process merely because their targets are political activists.


Who’s in Kahootz with Who?

More citizens need to ‘push back’.
WSJ 6/17/2016
A seedy side of American law is the widespread collusion between the plaintiffs bar and government prosecutors, who trade contingency-fee lawsuits for campaign contributions. Now the contingencyfee arrangements are getting a legal challenge in Texas, where a citizen says they are unconstitutional.

The government of Hunt County, Texas claimed that Kirk Grady was storing a pile of wood on his property in violation of a local waste-disposal law. The county subcontracted the 2015 lawsuit against Mr. Grady to the Houston plaintiffs firm Baker Wotring, which saw green in that woodpile.

The lawsuit claims Mr. Grady’s woodpile sat on the land from 1998 through 2015, or 6,208 days. Although Mr. Grady owned the property from 1998 to 2002, the suit sought up to the maximum penalty against him and co-defendant Republic Waste of $25,000 a day. With as many as 13 alleged violations a day, that adds up to a liability of $2 billion. The suit is still pending.

Mr. Grady decided to fight back. In his own lawsuit in federal court in Texas, Mr. Grady argues that the government illegally outsourced its enforcement power by entering into the contingency- fee deal with outside counsel. The suit claims the private tort lawyers “are unrestrained by the statutory and constitutional checks on the exercise of state authority.”

While government lawyers are required to serve the public interest when pursuing prosecutions, lawyers working on contingency-fee deals have an interest in winning the maximum possible settlement. Mr. Grady says this conflict of private with public interests violates his Fifth and Fourteenth Amendment due process rights.

The principles Mr. Grady invokes are well established in the courts. In Berger v. U.S (1935), the Supreme Court wrote that a prosecutor’s job isn’t to guarantee that the government “win a case, but that justice shall be done.” Addressing the use of private lawyers, the High Court wrote in Young v. United States ex rel. Vuitton et Fils S.A. (1987) that private attorneys “should be as disinterested as a public prosecutor who undertakes such a prosecution.”

There are few less disinterested lawyers than those seeking big tort paydays. The contingency fee model is pitched as a bargain to taxpayers who don’t have to pay up front, but one check on excessive prosecution is limited resources. Prosecutors normally have to decide to bring the best cases against the worst violators.

When government makes the trial bar a business partner, the incentive shifts to bringing suits that offer the biggest potential settlements or verdicts. The goal becomes the private payday, not justice in the public interest. This trial lawyer-government business model is widespread, so Mr. Grady’s suit is one to watch.


The Climate Police Blink

Well, well. Where are all the “News Releases!”?
WSJ 6-16-2016

The Climate Police Blink

There are few more rewarding sights than a bully scorned, so let’s hear it for the recent laments of Attorneys General Claude Walker (Virgin Islands) and Eric Schneiderman (New York), two ringleaders of the harassment campaign against Exxon and free-market think tanks over climate change.

Consider Mr. Walker’s recent retreat in District of Columbia superior court. In April he issued a sweeping subpoena to the Competitive Enterprise Institute, demanding a decade of emails, policy work and donor names. The goal is to intimidate anyone who raises doubts about climate science or the policy responses.

CEI fought back. It ran a full-page newspaper ad highlighting the Walker-Schneiderman effort to criminalize speech, and it countersued the Virgin Islands, demanding sanctions and attorneys fees.

The District of Columbia has a statute to deter what is known as a Strategic Lawsuit Against Public Participation (SLAPP). The law exists to curb malicious lawsuits that are designed solely to chill speech, and they put the burden on filers like Mr. Walker to show why their actions are likely to succeed.

Mr. Walker quietly withdrew his subpoena on May 20 (though retaining the right to reinstate it). CEI is pressing ahead with its suit anyway, and in an extraordinary filing on June 2 Mr. Walker essentially said “never mind.” He asked the court to dismiss CEI’s motion for sanctions and fees, writing that the think tank had “wasted enough of [his office’s] and the Court’s limited time and resources with its frivolous Anti-SLAPP motion.” So having violated CEI’s First Amendment rights, subjected the group to public abuse and legal costs, and threatened its donors, Mr. Walker blames CEI for burdening the courts. Mr. Schneiderman is also on defense for his subpoena barrage and claim that Exxon is guilty of fraud on grounds that it supposedly hid the truth about global warming from the public. The AG felt compelled to devote an entire speech at a legal conference to justify his actions. He accused Exxon and outside groups of engaging in “First Amendment opportunism,” which he said was a “dangerous new threat” to the state’s ability to protect its citizens. So exercising free speech to question government officials who threaten free speech is a threat to free speech.

He also cited a 1978 opinion in First National Bank of Boston v. Bellotti by then Justice William Rehnquist that the AG said supported his action against Exxon. Mr. Schneiderman failed to note he was quoting a Rehnquist dissent, meaning the law is the opposite of what the AG suggests.

The left keeps losing the climate political debate, so it resorts to imposing its policies by regulatory diktat as President Obama has, and now it is trying to use government power to intimidate and silence opponents. Congrats to CEI and Exxon for insisting that these political prosecutors obey the law