Justice Department issues memo ending third party settlement practice

By Mark Iandolo | Jun 14, 2017

DALLAS (Legal Newsline) — The U.S. Department of Justice (DOJ) announced June 7 that U.S. Attorney General Jeff Sessions has issued a memo ending the DOJ’s third party settlement practice.

The memo was sent to all Department of Justice components and 94 U. S. Attorney’s Office. In the memo, Sessions barred them from giving settlement money on behalf of the United States to non-governmental, third parties that were not directly harmed by the conduct of the settling party.

“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.  

“Unfortunately, in recent years the Department of Justice has sometimes required or encouraged defendants to make these payments to third parties as a condition of settlement.  With this directive, we are ending this practice and ensuring that settlement funds are only used to compensate victims, redress harm, and punish and deter unlawful conduct.”

According to the DOJ, this practice began under Obama administration.

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