Emails: Obama DOJ Officials Sought to Route 'Slush Fund' Cash to Orgs of Their 'Choosing'

Emails also show effort to exclude conservative causes

Associate Attorney General Tony West / Getty Images
October 24, 2017

Former President Obama's Department of Justice sought to route settlement money to organizations of their "choosing" while seeking to exclude conservative groups, documents obtained by the Washington Free Beacon show.

The practice in question began in August 2014 when the Justice Department entered into a $17-billion settlement with Bank of America for selling residential mortgage-backed securities leading up to the 2008 financial collapse. Similar arrangements were made with J.P Morgan Chase and Citigroup that brought the total amount to $36.65 billion.

The DOJ settlement program has come under fire by a number of critics who refer to it as a "slush fund" that allows money to be funneled to third-party activist groups.

In some cases during settlement, the companies agreed to pay financial penalties that consisted of "donations" to nonprofits instead of giving the money directly to the Treasury. The Bank of America and Citigroup settlement included a provision that required $150 million in donations to groups that help people who have been harmed by corporate actions, with the donations counting for twice as much as money that is paid towards the settlement total.

Approved nonprofits included groups such as UnidosUS (formerly the National Council of La Raza), NeighborWorks America, and the National Urban League, which gives grants to left-leaning community organizing groups.

The documents obtained by the Free Beacon show that individuals in the Justice Department sought to route money to allied groups while excluding conservative groups.

"I'm sorry to be a pest. We keep tinkering with the settlement agreement and I want to make sure we are doing it right," Elizabeth Taylor, then the principal deputy associate attorney general, wrote in a November 6, 2013 email. "Can you explain to Tony the best way to allocate some money to an organization of our choosing?" she later added, referring to Associate Attorney General Tony West. (Emails are below)

Another message from a redacted email address shows that West's group had made it a point to make sure conservative groups are not a part of the process:

Got it. Ok, this will hopefully address the concerns we'd like to avert:

Donations to state-based Interest on Lawyers' Trust Account (IOLTA) organizations (or other statewide bar-association affiliated intermediaries) that provide funds to legal aid organizations, to be used for foreclosure prevention legal assistance and community development legal assistance.

Concerns include: a.) not allowing Citi to pick a statewide intermediary like the Pacific Legal Foundation (does conservative property-rights free legal services) or a statewide pro bono entity (will conflict out of most meaningful legal aid) we are more likely to get the right result from a state bar association affiliated entity; b.) making sure that it's legal assistance provided, not a scenario where the bank can direct IOLTA or other intermediary to give to even a legal aid organization but to do only housing counseling, for example, under the umbrella "foreclosure prevention assistance." This get you closer?

(Emphasis added.)

Documents Show Obama DOJ's 'Slush Fund' Sought to Route Money To Organizations of Their 'Choosing' by Joe Schoffstall on Scribd

Leaders from outside groups also spoke to Peter Kadzik, the former assistant attorney general for legislative affairs, in March 2014 to push for making donations "mandatory in all future settlements," the documents show.

Months later, the Justice Department announced the bank settlements would include mandatory donations to community groups. This would additionally offer enhanced credit for the donations.

Additional emails showed some of the organizations showering praise on West for his efforts.

"I would be willing to build a statue [of West] and then we could bow down to this statue each day after we get out $200,000+," wrote one activist.

Rep. Bob Goodlatte (R., Va.), who has expressed concern for some time now over these actions, spoke on the House floor Tuesday on the issue.

The DOJ did not immediately return a request for comment regarding the documents.