OCTOBER 17, 2014
Fraud Alert: Judicial Watch Files Taxpayer Lawsuit to Stop Congress from Participating in D.C.’s Small Business Exchange
Both houses of Congress were not exactly honest on the applications they filed with the District of Columbia’s Health Benefit Exchange Authority. In fact, the signatories who put their names to the applications seemed to make little pretense of providing truthful information. Under D.C. law, only those small businesses that have 50 or fewer employees can participate in the Small Business Exchange. Guess how many people are employed by Congress? And, guess how many employees Congress claims to have?
Congress employs upwards of 20,000 people. But the applications we obtained from the local District of Columbia government through a Freedom of Information request are shockers: the House and Senate claim to have 45 employees each. So that’s a total of 90 balanced against the actual number, which is more in the range of 20,000. Incredibly, the applications also falsely state that the House and Senate are “local/state governments.” The “electronic signature” section of the application includes the following language:
I’ve provided true and correct information to all the questions on this form to the best of my knowledge. I know that if I’m not truthful, there may be a penalty.
The actual names of the signatories, of course, were blacked out by the D.C. Exchange.
I’ve been at Judicial Watch for 16 years and I have seen a lot of government arrogance and corruption, but these documents are near the top of the pile in showing contempt for the rule of law. And I’m sure that they will outrage you and other law-abiding Americans who agonize over filing correct tax forms with the IRS, obtain overpriced and substandard health insurance as mandated by Obamacare, and who follow in good faith the many laws and regulations that govern the nation.
But in Washington, D.C., the political class is accustomed to breaking its own rules and regulations. That’s why Judicial Watch filed a taxpayer lawsuit against the D.C. Health Benefit Exchange Authority on October 15 aimed at preventing congressional figures from participating in the exchange. As it stands now, there are at least 12,359 members of Congress, congressional staffers, their spouses and dependents who now purchase their insurance through the D.C. Small Business Exchange. To put this in perspective, there are only a little over 14,000 participants in total on this D.C. Obamacare Exchange. So, practically speaking, this “Small Business Exchange” is nothing but a front for Congress to obtain insurance for Obamacare outside the law.
Our lawsuit, which was filed on behalf of Kirby Vining, a Washington, D.C., taxpayer, names the Exchange Authority and its Executive Director, Mila Kofman, as defendants. Vining is also a member of Judicial Watch. He worked for the federal government for 35 years before retiring in 2011. He is as outraged as any other Judicial Watch supporter would be at this scandal.
A little background is in order.
The D.C. Council enacted “The Health Benefit Exchange Authority Establishment of 2011” in March 2012. The Council appropriated $77,055,000 in general fund revenue to create, administer and operate the exchange. In simple language, a District taxpayer can sue to prevent the illegal use of public funds, such as improperly allowing Congress to participate in D.C.’s Small Business Exchange.
Here is what our lawsuit states:
- “Since November 2013, the Exchange Authority has allowed the U.S. House of Representatives (“the House”) and the U.S. Senate (“the Senate”) (collectively “Congress”) to use the Small Business Exchange to provide health insurance to members of Congress, certain congressional staffers, and their spouses and dependents.”
- “Beginning in early November 2013, the Exchange Authority conducted outreach efforts to the House and Senate about Congress’ participation in the Small Business Exchange and provided weekly support sessions to assist members of Congress and staff with enrollment. These outreach efforts, weekly support sessions, and Congress’ participation in the Exchange generally were discussed at a November 13, 2013 meeting of the Executive Board, and on November 20, 2013, Executive Director Kofmantestified [starting at 1:46:00] before the Senate’s Small Business and Entrepreneurship Committee about Congress’ participation in the Small Business Exchange.”
- “When Congress applied to participate in the Small Business Exchange, representatives falsely asserted that the House and the Senate each employ 50 or fewer full-time employees. Specifically, records provided by the Exchange Authority in response to a Freedom of Information Act request show that both the House and the Senate falsely claimed that they each employ only 45 full-time employees.”
- “On information and belief, the Executive Board and Executive Director Kofman knew that the House and the Senate each have more than 50 full-time employees and knew or should have known that Congress’ certifications to the contrary were false.”
- “At least 12,359 members of Congress, congressional staffers, and their spouses and dependents obtained health insurance through the Small Business Exchange as of February 9, 2014. These 12,359 persons represent approximately 86 percent of the 14,289 persons enrolled in the Small Business Exchange between October 1, 2013 and September 9, 2014.”
We are asking the court, on behalf of Vining, to declare that the House and Senate’s participation in the Small Business Exchange is unlawful. We are also asking the court to enjoin the defendants from continuing to allow the House and Senate to participate in the Small Business Exchange. For more details, be sure to click here. The case should proceed in the local District of Columbia courts over the next few months, and I’ll update as events warranted.
In the meantime, you should take a look at the false applications filed by the House and Senate and use them to ask your elected representatives in Congress what they think of the fraudulent means used to obtain, in contravention of Obamacare, health insurance for them or their colleagues.
Obama Administration Secrets: Operation Chokepoint Abuse of Power?
You can be a business owner who is on the right side of the law. But that may not matter in 21st Century America if you’re a business owner who on the wrong side of someone else’s political agenda. That should not be the case, which is why we filed a Freedom of Information Act (FOIA) lawsuit on September 4, 2014, against the Department of Justice (DOJ). This was done to obtain records relating to a highly controversial program known as Operation Chokepoint (OCP), which the DOJ started early last year.
Our lawsuit was filed in the U.S. District Court for the District of Columbia in accordance with a FOIA request we filed with the DOJ on May 1, 2014. The DOJ has been operating in collusion with the Federal Deposit Insurance Commission (FDIC) and the Consumer Financial Protection Bureau (CFPB) to pressure banks and other financial services to cut off law abiding businesses that the Obama Administration views as being politically incorrect.
When Operation Choke Point began, the FDIC targeted 30 merchant categories on its website as “high risk.” This list included the following: coin dealers, credit repair services, dating and escort services, firearms and firework sales, mailing lists, lottery sales, pay day loans, pharmaceutical sales, travel clubs and tobacco sales. So the Obama administration was up-front about which businesses it hates. In a 2011 bulletin, the FDIC left no room for equivocation or doubt when it warned banks that associating with these businesses could expose the banks to “reputational risk.” And if a bank is bold enough to resist a government directive to close down an account; it can be penalized even if the business in question has not broken any laws.
Operation Choke Point grew out of an executive order President Obama issued in 2009, which created the Financial Fraud Enforcement Task Force. The Task Force’s has been criticized for politicizing its enforcement against banks and other financial institutions, which have been forced to settle for billions even when there is no proof of wrongdoing. In August 2013, thirty-one members of Congress sent a letter to then-Attorney General Eric Holder and FDIC Chairman Martin Gruenberg requesting they provide congressional staff members with information on the OCP. This request did not produce any meaningful information. Although a DOJ official met with congressional staff, this same official declined to answer any questions, according to a report on Breitbart.com.
Our FOIA lawsuit asked for the following information:
- Any and all records regarding, concerning or related to the legal basis for the targeting of legal business entities under Operation Choke Point.
- Any and all records depicting the criteria for businesses and/or industries to be targeted for any type of scrutiny and/or enforcement or regulatory action under Operation Choke Point.
- Any and all records depicting the business types and/or industries targeted for any type of enforcement or regulatory action under Operation Choke Point.
Since the program’s inception, the DOJ has claimed the OCP was set to combat instances of massive consumer fraud. But there is plenty of evidence to the contrary. The House Committee on Oversight and Government Reform issued a May, 20, 2014, report that contains information showing the primary target of the OCP is the short-term lending industry.
Honest, law abiding long-time customers have had their accounts closed because their banks could not resist government pressure.
Those Americans who are exercising their Second Amendment rights appear to be on the receiving of the end of the worst OCP has to offer. The Washington Times has reported that a number of firearm businesses have experienced sudden disruptions in their relationships with banks. One example given:
“TD Bank does not support the Second Amendment and has contacted us here at the Powderhorn to say that due to our involvement in firearms sales, we as a business are no longer welcome to have an account at their bank,” the sporting goods store posted on northeastshooters.com, an online forum for shooting enthusiasts in New England states. “They classify us in the same gray area as the local weed shops sprouting up on the Cape.”
The good news is that there has been some push-back against OCP. The Independent Community Bankers’ Association recently released a position paper that concludes Choke Point “has deployed broad and overly aggressive enforcement tactics that sweep in many legitimate businesses, banks and third-party processors. The DOJ should focus its resources on businesses that are actually violating the law.”
A new organization has also emerged called the United States Consumer Coalition, which has a website devoted to the victims of Operation Choke Point.
The outside pressure and exposure has had impact. In July, the FDIC announced that gun retailers are no longer included in the “high risk” list. Still, this simply may be posturing. That’s why we saw fit to file a lawsuit to force compliance with our FOIA request and to continue our fight to restore constitutional rights.
Ironically, one of the “high risk” indicators of fraud is a lack of transparency and non-disclosure. The Department of Justice won’t obey the Freedom of Information Act and disclose basic information as required about Operation Choke Point. Indeed, Attorney Eric Holder has turned his Justice Department into an agency that is one of the worst violators of FOIA. Maybe the Obama administration should stop strong-arming banks, and focus on policing its own well-deserved “reputational risk” for fraud.
Court Update: Federal Appeals Court Hears Judicial Watch Arguments in Obamacare Lawsuit
This is where we are right now as a country. Even when you expend money to comply with federal law, you take a loss and experience no benefit whatsoever when the federal government blithely ignores the law and changes the rules. In July 2013, the Obama administration, unilaterally and without consent of Congress, illegally ignored a statutory deadline and announced that the “employer mandate” would be delayed until 2015 even though the law expressly requires it to take effect on January 1, 2014.
As a “large” employer, Kawa Orthodontics, LLP, owned by Dr. Larry Kawa, is subject to the employer mandate. Although it made every effort to comply with the new rules, those rules have been changed at the company’s expense. In July 2013, the administration announced that the mandate would be delayed until 2015 even though the law expressly requires it to take effect on January 1, 2014.
So what are law-abiding businesses supposed to do? Kawa Orthodontics could have generated about $1.2 million in new revenue for its practice had it not spent time and money (roughly 100 hours) determining how to comply with the employer mandate. This administration thinks its violations of law have no consequences, but American businesses like Kawa Orthodontics bear the damage and harm caused by DC’s lawlessness.
Judicial Watch took action by filing a lawsuit on behalf of Kawa Orthodontics against the U.S. Treasury Department, the IRS, the treasury secretary and the IRS commissioner. This past January, the lawsuit was dismissed on standing grounds by a Florida federal district court judge. Judicial Watch argues simply that its client is no different than any of the other challengers “across the country that were found to have standing to challenge various provisions of the ACA.”
Our attorneys appealed the ruling, and the U.S. Court of Appeals for the Eleventh Circuit heard oral arguments this week (October 14). Judicial Watch attorney Michael Bekesha presented argument on behalf of Kawa Orthodontics. Paul Orfanedes, Judicial Watch’s Director of Litigation, also assisted at the argument. I was able to attend the argument in person and can tell you that there is reason to hope for a reversal so our client’s case can proceed on the merits.
The merits are of national importance. In a December 2013 Motion for Summary Judgment, Judicial Watch attorneys, arguing on behalf of Kawa Orthodontics, laid out the core of the case against President Obama’s decision to violate the Affordable Care Act:
This lawsuit raises a single, straightforward legal question: does the Executive Branch have authority to ignore a clear, congressionally-imposed deadline affecting hundreds of thousands of employers and millions of employees across the country on a matter of unquestionable importance? … The answer to the question posed by this lawsuit is quite plainly ‘No.’…[The delay] exceeds [the Obama administration’s] statutory jurisdiction, authority, and limitations, is contrary to constitutional right, power, or privilege, and is otherwise not in accordance with law.
You can see how this lawsuit is an important challenge to President Obama’s “catch me if you can” approach to the rule of law and I’ll alert you when the appellate panel issues its ruling.
Until next week…