Lawsuits 2013-2014

On February 13, 2013, Citizens for Responsibility and Ethics in Washington (CREW) filed a complaint against the U.S. Department of Justice (DOJ) based on its refusal to provide CREW under the Freedom of Information Act with any records from its now-closed criminal investigation of former Rep. Alan Mollohan (D-WV). DOJ investigated Rep. Mollohan for earmarks he made to five non-profit organizations that benefited Rep. Mollohan’s campaign contributors. In 2010, DOJ notified Rep. Mollohan it was closing its investigation and taking no further action. Despite this public acknowledgment, DOJ is refusing to release any documents to CREW based on Rep. Mollohan’s claimed privacy interests.

On February 19, 2013, CREW and former congressional candidate Dr. David Gill filed a lawsuit against the Internal Revenue Service (IRS) challenging an IRS regulation that authorizes section 501(c)(4) organizations to engage in political activity, even though the Tax Code bans such activity for these groups.

Groups such as the American Action Network (AAN) have relied on an IRS-created tax loophole to spend hundreds of millions of dollars on electioneering activity without disclosing their donors. AAN, which received substantial financial contributions from the health insurance giant Aetna and the Pharmaceutical Research and Manufacturers of America, funded false and misleading ads against Dr. Gill, apparently targeting him because of his support of a single-payer, national health care plan. After leading in reputable polls throughout the campaign, Dr. Gill lost his race by 0.3 percent of the vote.

Federal law states 501(c)(4)s must operate “exclusively for purposes beneficial to the community as a whole.” In contrast, IRS regulations allow a group “primarily” engaged in activities that promote the public welfare to take advantage of 501(c)(4) status. The lawsuit alleges the IRS regulation is invalid because it creates a loophole that allows 501(c)(4) organizations to flood elections with dark money.

On May 21, 2013, CREW filed a lawsuit against the Internal Revenue Service (IRS) to compel the agency to initiate a rulemaking procedure to address serious conflicts between the Tax Code’s requirements for section 501(c)(4) groups and implementing IRS regulations. Current IRS regulations grant tax-exempt status under section 501(c)(4) of the Tax Code to groups “primarily engaged” in promoting social welfare. The tax laws, however, require such groups to be “operated exclusively” for social welfare purposes.

Groups seeking or claiming 501(c)(4) status have interpreted the IRS regulation to mean they can spend up to 49 percent of their annual expenditures on electoral activities, while still maintaining tax-exempt status. During the 2012 election cycle, section 501(c)(4) groups spent nearly $255 million on elections. In April, following up on its earlier lawsuit against the IRS, CREW filed a rulemaking petition with the agency seeking a revision to this regulation to eliminate the glaring loophole that allows these tax-exempt groups to engage in substantial political activity while keeping the identities of their donors secret.

On June 5, 2013, CREW filed a lawsuit against the IRS, after the agency failed to provide documents related to the regulation of 501(c)(4), (c)(5), and (c)(6) organizations involved in political activity. In December 2012, CREW made a Freedom of Information Act request for all records of communications between the IRS and Congress regarding regulation of these entities. CREW also asked for records related to an IRS work plan focused on identifying allegations of impermissible political intervention and ensuring those matters received greater scrutiny.

On July 30, 2013, CREW filed a lawsuit against the Department of Justice challenging the failure of its component, the FBI, to produce any documents in response to CREW’s June 26, 2013 FOIA request for records concerning the FBI’s use of drones to conduct domestic surveillance.

After FBI Director Robert Mueller revealed in testimony before the Senate Judiciary Committee in June 2013 that the FBI has used drones to conduct domestic surveillance, CREW filed a FOIA request for documents showing the source of the FBI’s drones, the funding for their use, who provided the FBI with training to conduct domestic surveillance with drones, and records reflecting any policy about this use.

At the time of the lawsuit, the FBI had yet to produce any documents in response to the request. In the interim, the FBI had responded to a letter from Sen. Rand Paul (R-KY) with a claim it has used drones on 10 separate occasions, and that it follows specific rules and regulations, but had declined to disclose publicly more detailed information.

Separately, CREW filed a FOIA request with DOJ’s Office of Legal Counsel for any OLC opinions concerning the FBI’s authority to use drones. OLC responded it had no responsive records, suggesting the FBI did not seek outside guidance on the lawfulness of this practice.

On August 27, 2013, CREW filed a lawsuit in U.S. District Court seeking to compel the Department of Justice (DOJ), Attorney General Eric Holder, and Assistant Attorney General Virginia A. Seitz to make Office of Legal Counsel (OLC) opinions available to the public as the law requires.

The government has relied on OLC opinions to justify a broad range of controversial policies, including extraordinary rendition, the use of torture, and the killing of Americans abroad.  These opinions constitute unpublished statements of policy and interpretations of the law that have been adopted by the executive branch and its agencies.  By effectively creating a body of secret law, OLC and DOJ are undermining our democratic government.

The Freedom of Information Act requires executive branch agencies, including DOJ, to make public “final opinions” and “statements of policy which have been adopted by the agency.”  Formal opinions from OLC are binding, definitive interpretations of what the law means.  DOJ does not prosecute individuals who act in reliance on those opinions, even if those actions are later determined illegal.  These opinions help shape government policies and dictate government actions, yet DOJ makes only a few available to the public.

In a July 3, 2013 letter to Assistant Attorney General Seitz, CREW asked that OLC opinions be released, but OLC refused, claiming the opinions are confidential, pre-decisional legal advice that can be withheld.

On September 24, 2013, CREW filed a lawsuit against the Department of Justice (DOJ) challenging its failure to produce any documents in response to CREW’s Freedom of Information Act request pertaining to current Georgia Governor and former member of Congress Nathan Deal. CREW sought records of communications between DOJ and the Georgia Government Transparency and Campaign Finance Commission concerning potential violations by Gov. Deal of the Ethics in Government Act or the Georgia Government Transparency and Campaign Finance Act. These investigations arose from Gov. Deal’s use of his position while in Congress to influence Georgia state officials in furtherance of his personal financial interest. In the course of its investigation, the Office of Congressional Ethics discovered that in addition to apparently violating congressional ethics rules, Mr. Deal provided incorrect information on his financial disclosure forms. Then-Rep. Deal quit before the investigation progressed further, but the OCE nevertheless took the unusual step of publishing its 160-page report of Mr. Deal.

On Thursday, November 21, 2013, CREW filed a lawsuit against the Department of the Treasury challenging the agency’s failure to respond to a Freedom of Information Act request for written memos discussing the president’s authority to unilaterally raise the debt ceiling. CREW’s FOIA also sought expedition in light of the deadline of February 7, 2014, by which Congress had to either act to raise the debt ceiling or allow the government to go into default.

On December 10, 2013, CREW, on behalf of Stephen W. Silberstein, an Aetna, Inc. shareholder, filed a lawsuit against Aetna, its chairman, CEO, and president Mark T. Bertolini, and its board of directors for violating the Securities Exchange Act of 1934 by sending out false and misleading proxy statements to shareholders in 2012 and 2013. Section 14a of the Exchange Act prohibits companies from providing inaccurate information in proxy statements to procure votes for or against shareholder proposals. To defeat two shareholder proposals that would have required greater disclosure by Aetna of its political contributions and greater Board oversight of the company’s political contributions, the company issued proxy statements claiming it was engaging in extensive disclosures that were subject to robust oversight by the Board. In fact, however, Aetna’s political contribution disclosures omitted significant contributions, including roughly $7 million to the American Action Network and the Chamber of Commerce.

On March 26, 2015, United States District Court Judge Alison J. Nathan of the Southern District of New York dismissed the lawsuit.

On December 18, 2013, CREW filed a lawsuit against the Department of Justice (DOJ) based on its refusal to provide CREW under the Freedom of Information Act with any records from the now-closed investigation of Rep. Vern Buchanan (R-FL).

In August 2011, CREW requested the FBI commence an investigation into whether Rep. Buchanan tampered with a witness and obstructed a Federal Election Commission investigation by trying to coerce his former business partner into signing a false affidavit. On September 11, 2012, Rep. Buchanan’s attorneys publicly announced DOJ had closed its investigation and would not be pursuing charges against the congressman. The next day, CREW filed FOIA requests with three of DOJ’s components — including the Criminal Division, FBI, and Executive Office for U.S. Attorneys — seeking agency records pertaining to the investigation.

Despite the public acknowledgement from Rep. Buchanan’s attorneys that DOJ decided not to bring criminal charges against the congressman, DOJ refused to release records from its investigation based on Rep. Buchanan’s claimed privacy interests.

On June 5, 2014, CREW filed a complaint against the Department of Justice for failing to respond to CREW’s Freedom of Information Act request for records related to DOJ’s now closed investigation of Angelo R. Mozilo and Countrywide Financial Corp. As DOJ had acknowledged, it investigated Mr. Mozilo and Countrywide for their role in the financial meltdown in 2008.

Despite extensive public record evidence of wrongdoing, DOJ declined to prosecute either, leading to concerns that Countrywide was viewed as “too big to prosecute.” In a civil fraud case brought by the SEC, Mr. Mozilo agreed to a $67.5 million settlement. Countrywide’s practices also were the subject of several congressional investigations, as well as an investigation by the Financial Crisis Inquiry Commission.

On October 22, 2014, CREW sued the Environmental Protection Agency (EPA) for failing to provide documents regarding oil industry efforts to influence the 2014 Renewable Fuel Standard (RFS). In May 2014, following a Reuters article describing how the Carlyle Group and Delta Airlines had lobbied members of Congress and the administration to reduce the amount of renewable fuel required to be blended into transportation fuel, CREW asked for an investigation by the EPA’s Office of Inspector General and filed a Freedom of Information Act request for records. It took months for the EPA to release even the documents the agency already had provided to Reuters, and it has yet to hand over all relevant documents.