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Judicial Watch, Inc. is a conservative, non-partisan educational foundation, which promotes transparency, accountability and integrity in government, politics and the law.

Judicial Watch, Inc. is a conservative, non-partisan educational foundation, which promotes transparency, accountability and integrity in government, politics and the law.

Because no one
is above the law!


Tom Fitton's Judicial Watch Weekly Update

JW Goes to Court Over Obamacare Scandal

January 7, 2011

From the Desk of Judicial Watch President Tom Fitton:

Judicial Watch Sues HHS to Obtain Documents Regarding Obamacare Waivers

According to an official estimate by the Obama Department of Health and Human Services (HHS), at least 222 companies and unions have received waivers from Obamacare so far. Yet, as this number continues to soar, HHS refuses to explain to the American people how decisions are being made regarding which organizations receive a waiver and which do not.

One certainly cannot find any explanation in the Obamacare law itself. The Obama administration did not anticipate (despite repeated warnings) how much chaos would be created by the requirements of their massive healthcare overhaul. And so they have been forced to resort to a slapdash and politicized approach where officials at HHS are reviewing requests on a case-by-case basis with no set standards in place.

Now, here’s why this seemingly arbitrary and capricious policy is so dangerous: Companies able to secure these coveted Obamacare exemptions are given an unfair competitive advantage over their rivals — which, of course, blows the door wide open to influence peddling and corruption. Just yesterday, Karl Rove pointed out that the leftist Obama ally AARP, which spent millions on ads for Obama’s health “reform” effort, received an “extravagant gift” from Obama in the form of the very waivers Judicial Watch is investigating.

In order to make sure this doesn’t happen, we need transparency.

That’s why Judicial Watch filed a Freedom of Information Act (FOIA) lawsuit against HHS on December 3, 2010. We want the truth behind these Obamacare waiver decisions and here’s what we’re after:

A. All records concerning the decision to grant waivers of the Annual Limits Requirements of PHS Act Section 2711; and

B. All communications between McDonald’s Corp. and HHS concerning Annual Limits Requirements.

(The time frame for this request is from March 2010 to the present.)

We filed our original FOIA request on October 7, 2010, and HHS was required by law to respond by November 8, 2010. However, to date, HHS has failed to produce any records or provide a justification for withholding responsive records. Nor has the agency indicated when a response is forthcoming.

Regarding these waivers, you may recall that McDonald’s corporation tipped the first domino.

In September 2010, McDonald’s announced it would have to eliminate a health insurance program for nearly 30,000 low wage employees due to an Obamacare requirement that 80 to 85% of all insurance premium revenue be spent on patient care. Due to the high administrative costs associated with this type of health coverage program (known as a mini-med plan), McDonald’s insurer indicated it could not possibly meet the Obamacare requirement. HHS provided McDonald’s a one-year waiver concerning the Obamacare mandate and has been deluged with waiver requests from hundreds of other companies and unions since.

The Wall Street Journal deemed the McDonald’s waiver request, “one of the clearest indications that new [Obamacare] rules may disrupt workers’ health plans as the law ripples through the real world.”

But there are others. For example, in September 2010, The Wall Street Journal also reported that health insurers have been forced to raise premiums “as a direct result of the health overhaul.”

And yet, despite all of the chaos created by Obamacare “rippling” through the real world, all we get from the Obama administration is deafening silence and flagrant stonewalling. It appears Kathleen Sebelius’ HHS is more than willing to violate the Freedom of Information Act to keep Americans in the dark about these Obamacare failures. Secretary Sebelius might want to begin her implementation of Obamacare by obeying federal law regarding public records.

The Obama administration must make this waiver process completely transparent to the American people so they can be assured, at the least, that the process is not infected by corruption.

JW Asks Court to Review Government Documents on Decision to Seize Control of Fannie and Freddie

The Obama administration is keeping secret two documents that could shed light on the government’s unprecedented September 2008 decision to seize control of mortgage giants Fannie Mae and Freddie Mac. And Judicial Watch continues to battle in court to put an end to the stonewalling.

Judicial Watch filed a motion on December 17, 2010, with the U.S. District Court for the District of Columbia, asking the court to force the Federal Housing Finance Agency (FHFA) to abide by the Freedom of Information Act (FOIA) and release documents related to the federal government’s September 2008 decision to place Fannie Mae and Freddie Mac into “conservatorship.”

Judicial Watch filed its motion pursuant to a July 12, 2010, FOIA lawsuit filed on behalf of former FDIC and Federal Reserve employee Vern McKinley as part of Judicial Watch’s comprehensive investigation of the federal government’s unprecedented response to the so-called financial crisis.

This is just one of four lawsuits we’ve filed on behalf of Mr. McKinley related to the bailouts. And to see how we ended up in court over this particular matter, let’s step back to September 2008, when the economic crisis struck.

According to Judicial Watch’s motion, the federal government had available two primary options to address Fannie and Freddie’s “capital problems” in 2008: receivership and conservatorship. Conservatorship is a process designed to restore a weak financial institution to sound financial health while preserving and conserving assets. Receivership, the approach initially favored by then-Treasury Secretary Henry “Hank” Paulson, entails a liquidation of the institution through the sale of assets and payment of claimants.

The FHFA chose conservatorship. Once the decision was made to place Fannie Mae and Freddie Mac into conservatorship, Ben S. Bernanke, Chairman of the Board of Governors of the Federal Reserve System, described “the catastrophe that would occur if we did not take these actions” in a meeting with the boards of Fannie Mae and Freddie Mac. Yet, this catastrophe scenario and the justification for choosing conservatorship over receivership have not been detailed publicly, Judicial Watch argued in its court motion.

According to Judicial Watch’s motion, FHFA continues to improperly invoke the “attorney work product doctrine” and the “deliberative process privilege” to withhold information from the American people.

The “attorney work product doctrine” protects documents prepared by an attorney in preparation for litigation. The “deliberative process privilege” is intended to protect a government agency’s decision making process. Neither applies to important information being withheld by FHFA, according to Judicial Watch’s motion:

[FHFA] improperly claims that [the documents] may be withheld in their entirety pursuant to the attorney work product doctrine.

[FHFA] currently is withholding two responsive records that are not alleged to outline types of legal challenges and potential responses to such challenges. Instead, [FHFA] is withholding in their entirety two records “that were created for meetings with senior executives at FHFA to discuss various policy options that the agency could take with regard to the Enterprises (Fannie Mae and Freddie Mac) and were provided to these senior policymakers in order to assist their decision-making” [Emphasis added].

…Because [FHFA] has failed to show that the disclosure of the material would expose [FHFA’s] decision-making process in such a way as to discourage candid discussion and thereby undermine [the agency’s] ability to perform its functions, FHFA improperly claims that the…records may be withheld in their entirety pursuant to the deliberative process privilege.

We’re asking the court to conduct an in camera review of the documents in question so it can determine whether or not the documents should be released to the public. (In other words, we just want the judge to examine the documents in private to make a determination.)

With its FOIA lawsuit, Judicial Watch continues to seek the following information on behalf of Mr. McKinley:

[A]ny and all communications and records concerning or relating to the assessment of an adverse impact on systemic risk in addressing Fannie Mae and Freddie Mac, and in particular how the FHFA and the Department of the Treasury determined that conservatorship was the preferred option to avoid any systemic risk of placing Fannie Mae and Freddie Mac into receivership.

Mr. McKinley filed his FOIA request on May 23, 2010. FHFA was required to respond to the FOIA request by June 28, 2010, but failed to produce any documents, to demonstrate why documents should be withheld, or to indicate when a response was forthcoming. Judicial Watch, therefore, filed its lawsuit on July 12, 2010, on behalf of Mr. McKinley.

American taxpayers have spent at least $145 billion dollars on Fannie and Freddie so far, with analysts estimating the ultimate cost could be hundreds of billions of dollars more. The Obama administration has said that there is no upper limit to the level of taxpayer support of Fannie and Freddie.

It is beyond the pale that the Obama administration continues to choose secrecy over transparency regarding these bailouts, even as the associated costs continue to mount at an astonishing rate.

Thanks to the Fannie/Freddie bailout, the Obama administration has taken government control of the mortgage market. And taxpayers are exposed to over $5 trillion in potential liabilities through the government mortgage giants.

Simply put, the Obama administration’s lack of transparency on the bailouts is a crisis for government accountability and the rule of law.

You may recall, in separate litigation being pursued by Judicial Watch, the Obama administration maintains that no documents from Fannie and Freddie are subject to public disclosure under the open records Freedom of Information law.

Much more to come…

Good News and Bad for Congressional “Ethics”

Let me start with the good news.

On December 3, 2010, Judicial Watch joined with a number of other government watchdog organizations — from both the Left and the Right — to hold a press conference on Capitol Hill focused on protecting the Office of Congressional Ethics (OCE).

Press reports had suggested that the Republican leadership contemplated eliminating the OCE, an independent board that reviews ethics complaints and refers those deemed legitimate to the Committee on Standards of Official Conduct — also known as the House Ethics Committee — for further investigation. (The new Republican majority in the House has renamed it officially as the Committee on Ethics.)

Well, it appears this pressure campaign worked. The House Republican leadership left the OCE intact and it now continues in the 112th Congress which convened a few days ago.

So the Office of Congressional Ethics, the most important ethics reform for the House in a generation, appears to be safe for now. As I said in my statement to the press on this victory for accountability, while Republican leadership has never liked the idea of the OCE, this was the right thing to do.

Of course, the OCE’s work will be for naught if the House Ethics Committee ignores its recommendations, which is exactly what happened this week in the per diem scandal pursued by Judicial Watch. (The bad news begins now.)

You may recall, back in March 2010, Judicial Watch sent a letter to the OCE requesting a full investigation of members of Congress who illegally pocket leftover per diem travel funds. (House rules mandate all leftover per diem funds be returned.)

“In the least, there is evidence of a general misunderstanding among lawmakers that unused per diems may be converted for personal use. At worst, members may be illegally pocketing taxpayer funds,” Judicial Watch stated in its letter of complaint, while noting it is a federal criminal offense to convert public money for personal use.

Well, the OCE did its job well — investigating the matter and recommending the House Ethics Committee pursue its own investigation. (The OCE investigation focused on six Members of Congress. They are: Rep. Robert Aderholt, R-AL; Rep. G.K. Butterfield, D-NC; Rep. Eliot Engel, D-NY; Rep. Alcee Hastings, D-FL; Rep. Solomon Ortiz, D-TX; and Rep. Joe Wilson, R-SC.) But that’s not going to happen. According to The Washington Post:

“The House ethics committee has decided not to pursue an investigation of lawmakers’ use of travel stipends, despite findings from an independent ethics board that six members of Congress improperly kept or spent money estimated to total $7,575.”

But wait, here’s the truly confounding part, as related by the Post:

“In recommending a dismissal of the matter, ethics committee staffers wrote that although the lawmakers admitted to using per diem money for gifts, which ‘the Committee would agree would not be appropriate, there is no evidence that per diem was actually used for such expenses.’”

No evidence? Members of Congress admitted to the wrongdoing. Rep. Aderholt said he used the money to buy t-shirts for his son, postcards, a wallet and some leather goods. All at taxpayer expense. That’s what he told investigators. Since when is a full confession not considered evidence of misconduct? Only in Washington, DC.

This decision by the House Ethics Committee is astonishing. (You can read the full House Ethics Committee report here.)

Unfortunately, this is not the only bad news I have to report regarding ethics in the House of Representatives (or lack thereof).

There are now credible reports of apparent corruption by members of the House Ethics Committee themselves! And this alleged corruption is benefiting the contemptible partners-in-crime, Maxine Waters and Barney Frank. Waters was set to be tried by the Committee months ago, but the probe has been thrown off the rails.

The Washington Post politely contends the recent ethics morass is due to “infighting” among committee members over how to proceed with the investigation of Waters, described by the Post as “one of the most prominent investigations” ever undertaken by the committee. (As you may recall, this probe involves Waters’ efforts to secure a TARP grant for the failing OneUnited Bank, in which her husband had a significant investment. Click here to read evidence of the criminal behavior uncovered by Judicial Watch.)

But the problem isn’t infighting at all. It’s obstruction by then-House Ethics Committee Chairman Zoe Lofgren (D-CA), who appears to be sabotaging the Waters investigation at every turn. (Lofgren remains on the committee, the membership of which is evenly divided between Republicans and Democrats.)

According to the professional committee staff leading the investigation, Lofgren has refused to issue subpoenas for records related to the scandal, instead waiting for “voluntary compliance” on the part of Waters and her co-conspirator, Rep. Barney Frank. (Click here to read more on Frank’s participation.)

Then, after hamstringing the committee by refusing to allow the subpoenas, Lofgren delayed the ethics committee hearing, blaming the staff for “failing to collect needed documents,” the Post reported. (Despite Lofgren’s stonewall tactics, committee staff told Lofgren they were prepared to move forward with a hearing immediately, but to no avail.)

Lofgren also reportedly told staff members they must shorten their presentation of the evidence from 30 hours, which they requested, to just 6 hours, which they said would compromise their ability to present a “fair, thorough and effective” case.

By the way, slipped into the end of the Post’s account of the Waters investigation is one very important detail. The person on Waters’ staff who was “at the center of her office’s interactions with OneUnited,” was none other than her own grandson and Chief of Staff, Mikael Moore. (This OneUnited scandal is a true “family affair” for Waters.) Moore, for his part, refuses to comply with a subpoena for emails from his private account that might provide further evidence of corruption.

As a result of Lofgren’s shenanigans, House Ethics Committee staff have resigned or been put on paid leave. Maxine and Barney must be laughing.

We appreciate that the Tea Party Congress kept the Office of Congressional Ethics. Now it needs to fix the awful Ethics Committee. True to our non-partisan and educational mission, Judicial Watch assisted then-Speaker Nancy Pelosi and her team as they tried to reform the House ethics process. Our partnership resulted in the establishment of the Office of Congressional Ethics. And we stand ready to help Speaker Boehner and his team in any reform effort.

Clearly we have our work cut out for us in 2011.

Until next week…

Tom Fitton

Judicial Watch is a non-partisan, educational foundation organized under Section 501(c)(3) of the Internal Revenue code. Judicial Watch is dedicated to fighting government and judicial corruption and promoting a return to ethics and morality in our nation’s public life. To make a tax-deductible contribution in support of our efforts, click here.

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