WASHINGTON (Legal Newsline) - Multiple news sources are reporting that the Biden administration is resurrecting a corporate shakedown scheme established during the Obama years that funneled millions to left wing, community activist groups.
Under the scheme, the Department of Justice (DOJ) directed businesses it targeted for prosecution (the vast majority of which were financial institutions) to send a portion of the settlement money to the groups. In all, the government squeezed nearly $3 billion from the businesses it targeted, according to some estimates.
The Biden version of the slush fund will likely expand the list of those benefiting from the payouts, according to business defense lawyer, Victor Schwartz, who for many years has addressed civil justice issues.
“A new iteration of the DOJ Slush Trust fund may broaden its recipients, which may include groups sympathetic to the trial lawyers,” Schwartz said.
The practice was originally devised by Tony West in 2013, an associate attorney general in the Obama Administration. The financial institutions were targeted over the securities implosion at the start of the Great Recession. Nearly all the institutions settled, and sent money to a list of activist groups compiled by the DOJ.
Beneficiaries included the National Association of IOLTA Programs and Virginians Organized for Interfaith Community Engagement – both classified as left wing by the Capital Research Center.
“This dirty deal also inflated the number of claimants, creating a $60 million windfall for plaintiff’s lawyer Joseph Sellers, a member of former President Barack Obama’s transition team,” wrote Dan Huff, former counsel to the House Judiciary Committee, in the Washington Examiner. “The exaggerated settlement size also resulted in $380 million in leftover money. Rather than return it to the taxpayer-funded account where it came from, DOJ directed that Sellers hand it to nonprofit organizations.”
The DOJ was able to direct the payments to the groups because the businesses “voluntarily” settled the claims, “unlike an actual court judgment levying a fine or ordering restitution,” wrote James Copland of the Manhattan Institute in an opinion piece published in the Wall Street Journal.
“But will billions of dollars of liability on the line, in additional to potential crippling losses of government licenses and contracting permits, corporations negotiating with the Justice Department might as well be negotiating with Don Corleone: It’s an offer they can’t refuse.”
In 2016, the House approved legislation introduced by former Congressman Robert Goodlatte (R-Virginia) to prohibit the practice. In 2017, the Trump Justice Department ended it.