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June 7 2017

DOJ Ends Obama Era Shadow Slush Fund for Activist Organizations

by Charlotte Hays

Kudos to the Justice Department for abolishing an Obama-era shadow slush fund for activists that was financed by suing banks and other financial institutions and obtaining hefty settlements. Fox News reports:

The Justice Department announced Wednesday it will no longer allow prosecutors to strike settlement agreements with big companies directing them to make payouts to outside groups, ending an Obama-era practice that Republicans decried as a “slush fund” that padded the accounts of liberal interest groups.

In a memo sent to 94 U.S. attorneys' offices early Wednesday, Attorney General Jeff Sessions said he would end the practice that allowed companies to meet settlement burdens by giving money to groups that were neither victims nor parties to the case.

Sessions said the money should, instead, go to the Treasury Department or victims.

“When the federal government settles a case against a corporate wrongdoer, any settlement funds should go first to the victims and then to the American people—not to bankroll third-party special interest groups or the political friends of whoever is in power,” Sessions said in a statement.

As noted in a previous blog, citizens are generally in the dark about this slush fund. Here is a glance at how some of this money is dispensed:

Sometimes this money goes to government groups that many would like to see curtailed. Congress appropriated $47 million for HUD Housing Counseling, but HUD Counseling received $30 million from Bank of America lawsuit settlements. The Legal Services Corporation received $385 million from Congress but thanks to lawsuit settlements, it will be getting an additional $412 million.

Among the organizations that have received contributions from money raised by federal lawsuits: the National Council of La Raza, the National Community Reinvestment, which, according to a congressional report, promotes illegal immigration, Coalition and the National Urban League. The report raises an interesting question: are some of the groups protesting at town halls being funded from this money? (Just for the record: they have the right to protest but not a right to DOJ funding for their protests.)

It was a convenient way for the Obama administration to direct funds to organizations that supported them. But it likely circumvented the law. 

Paul Larkin, senior legal research fellow at The Federalist Society, said that such practices are prohibited by the Appropriations Clause, Antideficiency Act, and the Miscellaneous Receipts Act. 

 

 

Independent Women’s Forum’s mission is to improve the lives of Americans by increasing the number of women who value free markets and personal liberty. Sister organization of Independent Women’s Voice.
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