(VANITY) H.R.732 - Stop Settlement Slush Funds Act of 2017

H. R. 732 IN THE SENATE OF THE UNITED STATES October 25, 2017 Received; read twice and referred to the Committee on the Judiciary

AN ACT To limit donations made pursuant to settlement agreements to which the United States is a party, and for other purposes.

Be it enacted by the Senate and House of Representatives of the United States of America in Congress assembled, SECTION 1. SHORT TITLE.

SEC. 2. LIMITATION ON DONATIONS MADE PURSUANT TO SETTLEMENT AGREEMENTS TO WHICH THE UNITED STATES IS A PARTY.

(a) Limitation On Required Donations.—An official or agent of the Government may not enter into or enforce any settlement agreement on behalf of the United States, directing or providing for a payment or loan to any person or entity other than the United States, other than a payment or loan that provides restitution for or otherwise directly remedies actual harm (including to the environment) directly and proximately caused by the party making the payment or loan, and, to the extent any victim thereof was an identifiable person, suffered by the payee or lendee, or constitutes payment for services rendered in connection with the case or a payment pursuant to section 3663 of title 18, United States Code.

(b) Limitation On Cy-Près.—Amounts remaining after all claims have been satisfied shall be repaid proportionally to each party who contributed to the original payment.

(c) Penalty.—Any official or agent of the Government who violates subsection (a) or (b), shall be subject to the same penalties that would apply in the case of a violation of section 3302 of title 31, United States Code.

(d) Effective Date.—Subsections (a), (b), and (c) apply only in the case of a settlement agreement concluded on or after the date of enactment of this Act.

(e) Definition.—The term “settlement agreement” means a settlement agreement resolving a civil action or potential civil action, a plea agreement, a deferred prosecution agreement, or a non-prosecution agreement.

(1) IN GENERAL.—Beginning at the end of the first fiscal year that begins after the date of the enactment of this Act, and annually thereafter, the head of each Federal agency shall submit electronically to the Congressional Budget Office a report on each settlement agreement entered into by that agency during that fiscal year that directs or provides for a payment or loan to a person or entity other than the United States that provides restitution for or otherwise directly remedies actual harm (including to the environment) directly and proximately caused by the party making the payment or loan, or constitutes payment for services rendered in connection with the case, including the parties to each settlement agreement, the source of the settlement funds, and where and how such funds were and will be distributed.

(2) PROHIBITION ON ADDITIONAL FUNDING.—No additional funds are authorized to be appropriated to carry out this subsection.

(3) SUNSET.—This subsection shall cease to be effective on the date that is 7 years after the date of the enactment of this Act.

(1) IN GENERAL.—Beginning at the end of the first fiscal year that begins after the date of the enactment of this Act, and annually thereafter, the Inspector General of each Federal agency shall submit a report to the Committees on the Judiciary, on the Budget and on Appropriations of the House of Representatives and the Senate, on any settlement agreement entered into in violation of this section by that agency.

(2) PROHIBITION ON ADDITIONAL FUNDING.—No additional funds are authorized to be appropriated to carry out this subsection.

I think this explains the issue - it’s not the slush/hush fund for paying off sexual misdeeds that was just discovered - from link at bottom:

Attorney General Jeff Sessions on Wednesday issued a memo prohibiting U.S. attorneys’ offices from requiring defendants to make donations to unrelated third parties as a condition of settlements in federal cases.
The Obama administration frequently required settling parties, particularly banks, to make donations to third-party groups, including nonprofits and community organizations that were not directly harmed by alleged wrongdoing by the defendants.

“The department will no longer engage in this practice,” the memo states. “Effective immediately, department attorneys may not enter into any agreement on behalf of the United States in settlement of federal claims or charges, including agreements settling civil litigation, accepting plea agreements or deferring or declining prosecution in a criminal matter, that directs or provides for a payment or loan to any nongovernmental person or entity that is not a party to the dispute.”

Under President Barack Obama, the Department of Justice required millions of dollars in donations to legal aid funds and nonprofits like Habitat for Humanity and NeighborWorks America as part of a series of multibillion-dollar settlements with Bank of America, Citigroup and others related to the 2008 housing market meltdown.

The donations, and others like them, were considered by the DOJ as a way to offset damages caused by the alleged offenders. Donations from Bank of America as part of its $16.65 billion settlement were described at the time as helping communities recover from the financial crisis by supporting affordable housing.

But Republicans and conservative-leaning groups bristled at the practice, calling the payments to third parties “slush funds” and accusing the DOJ of steering the money toward liberal activist groups.

A bill in the U.S. House sponsored by Virginia Republican Bob Goodlatte, the “Stop Settlements Slush Funds Act,” would legally prohibit all federal agencies from including payments to third parties in settlement agreements. Goodlatte introduced a similar bill last year that passed the House but did not get a vote in the Senate.

“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 in the Wednesday statement. “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.”

The DOJ will continue to be allowed to enter agreements that provide for payments to directly offset harm from defendants’ alleged wrongdoing, including harm to the environment or official corruption, or to cover legal or other costs directly related to the proceedings.

Lisa A. Rickard, president of the U.S. Chamber of Commerce’s Institute for Legal Reform, cheered the move, saying the third-party payments undermined congressional authority to make decisions on federal spending.

“We commend Attorney General Sessions for directing Department of Justice officials to seek justice in a manner consistent with the public interest, not how much money they can generate for outside interest groups unconnected with the underlying enforcement action,” Rickard said.

But proponents of the Obama administration policy decried Sessions’ move.

“Attorney General Sessions’ new policy is ill-advised and ignores the tens of thousands of families who were helped by housing service providers across the country in the wake of the financial crisis,” Amy Spitalnick, press secretary for New York Attorney General Eric Schneiderman, told Law360.

https://www.law360.com/articles/932069/sessions-stops-3rd-party-donation-settlements

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