CREW highlights ethical risks of legal expense funds
CONTACT: Jordan Libowitz
202-408-5565 | [email protected]
Washington — Legal expense funds pose serious ethical risks for executive branch employees, and the Office of Government Ethics (OGE) should regulate them, according to a written comment filed today by Citizens for Responsibility and Ethics in Washington (CREW) with OGE.
Legal expense funds were traditionally structured as trusts whose money could only go to one designated beneficiary. But in January 2018, OGE broke from this established practice by allowing a political organization, the Patriot Legal Expense Fund Trust, LLC, to function as a multi-party legal expense fund that can give money to a large group of possible beneficiaries, including members of President Trump’s campaign, transition team and administration who are involved in the Russia investigations. The Patriot Legal Expense Fund is also allowed to coordinate with the Trump campaign, which appears to be acting as a gatekeeper for requests for distributions of cash. Under this structure, the Patriot Legal Expense Fund could potentially influence executive branch employees by distributing or withholding money based on how their testimony might affect the President, with input from the campaign.
“This radical departure from longstanding norms has created a heightened risk of ethical failure and an urgent need for action,” CREW’s letter reads. “Legal expense funds can be used to facilitate unlimited gifts of cash to executive branch employees from a variety of sources outside the government.”
CREW recommends that OGE issue a regulation requiring that legal expense funds be structured as trusts with only one beneficiary to reduce the risk of outside influence. Every executive branch legal defense fund established prior to the Trump administration employed this structure. The letter also calls on OGE to walk back its position on the Patriot Legal Expense Fund.
“CREW respectfully requests that OGE rescind its effective blessing of the Patriot Fund and exercise its authority to issue a regulation to guard against employees using the Patriot Fund as a model for future legal expense funds,” the letter continues. “The recommendations CREW made fall well within OGE’s regulatory authority and would strengthen the government ethics program by restoring the prior norm and going further to add new protections.”
CREW will testify in a virtual public hearing offered by OGE on May 22. CREW submitted this comment in response to the advance notice of proposed rulemaking and notice of public hearing issued by OGE.