In a memo last week, Attorney General Jeff Sessions brought an end to an Obama-era slush fund scheme that involved funneling taxpayer dollars to left-wing activist groups.
The Obama Justice Department, headed by Loretta Lynch, forced corporations embroiled in litigation to settle their lawsuits by “donating” the settlement to groups like La Raza, the Urban League, and the National Community Reinvestment Coalition.
A Fox News report from March stated:
Findings spearheaded by the House Judiciary Committee point to a process shrouded in secrecy whereby monies were distributed to a labyrinth of nonprofit organizations involved with grass-roots activism.
When big banks are sued by the government for discrimination or mortgage abuse, they can settle the cases by donating to third-party non-victims. The settlements do not specify how these third-party groups could use the windfall.
However, critics argue that those monies belong to taxpayers and should be used to pay off the victims with the rest going back to the Treasury Department, not Obama’s pet projects.
President Trump’s DoJ said in its memo:
Attorney General Sessions today issued the attached memo to all Department of Justice components and 94 United States Attorney’s Offices prohibiting them from entering into any agreement on behalf of the United States in settlement of federal claims or charges that directs or provides for a settlement payment to non-governmental, third parties that were not directly harmed by the conduct.
Under the last Administration, the Department repeatedly required settling parties to pay settlement funds to third party community organizations that were not directly involved in the litigation or harmed by the defendant’s conduct. Pursuant to the Attorney General’s memorandum, this practice will immediately stop.
“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.”
Conservative watchdog group Judicial Watch is suing the DoJ in a Freedom of Information Act lawsuit for records relating to this malpractice. JW’s president Tom Fitton said, “It is hard to imagine a more abusive practice by the Obama Justice Department than shaking down corporations in order to funnel billions of dollars that should belong to the taxpayers into the pockets of the former president’s pet liberal causes. We’re pleased that Attorney General Sessions shut down this racket but now we need accountability to the American people.”