Senators Lankford, Hatch, Lee, Cruz and Cornyn Introduce Stop Settlements Slush Fund Act

WASHINGTON, DC Senators James Lankford (R-OK), Orrin Hatch (R-UT), Mike Lee (R-UT), Ted Cruz (R-TX), and John Cornyn (R-TX) today introduced the Stop Settlements Slush Fund Act (S.3050) to prohibit settlement agreements that require donations to third-parties. This legislation will prevent the Department of Justice’s (DOJ) practice that sometimes requires defendants who choose to settle lawsuits to contribute funds to preferred third-party groups selected by the Administration. In recent years, more than half-a-billion dollars have been transferred to outside groups, which include political activist groups, in the form of donations directed by the DOJ.

Specifically, the bill would prohibit officials or agents of the government from entering into or enforcing any settlement agreement on behalf of the US that provides payment in the form of donations to third-parties. The bill still allows payments for environmental damages and still allows losing parties to pay restitution for harm caused by the party. Last year The Wall Street Journal reported that the DOJ keeps a list of approved nonprofits that benefit from settlements. In 2011, the DOJ directed $30 million from a banking settlement to go towards left-leaning non-profit groups, like the National Community Reinvestment Coalition and NeighborWorks America.

“The Department of Justice’s continued action to circumvent Congress and direct money for their political agenda is the definition of abuse,” said Lankford. “When the Department of Justice agrees to settlements on behalf of the US government that include financial penalties, it is not their job to force penalty money to be paid in the form of donations to third parties of their choice. This bill will simply ensure the money awarded through settlements through the Department of Justice goes to victims. This will ensure the legislative branch can do their job to allocate spending through an independent, transparent process.”

“For too long, the Department of Justice has used its ability to require settling defendants to donate money to third parties as a way to skirt Congress’s spending authority and funnel money to favored groups,” said Hatch. “Settlement payments should be used to redress harm, not line the pockets of groups that government lawyers happen to favor. This bill will prevent the Department of Justice from continuing to treat settlement agreements as a source of free money for pet projects.”

“The Department of Justice is supposed to work for all Americans, not just whichever special interests are favored by whoever is currently in this White House,” Lee said. “This bill would provide a sorely needed check on executive power by making sure DOJ settlements go to the true victims of an injustice, not some third party group favored by political appointees.”

“Cronyism reigns supreme at President Obama’s DOJ, and its use of settlement agreements to funnel millions of dollars to left-wing political allies is perhaps the perfect example,” Cruz said. “This bill will put an end to that sordid practice and ensure that settlement money is only used for public purposes. Congress should pass it without delay.”  

“Our judicial process must be driven purely by a mission to do right by those wronged, and not be co-opted to advance ideological goals by whichever political party controls the White House,” said Cornyn. “Directing portions of financial settlements to partisan interest groups is a deceptive practice that has happened far too often with the Obama Justice Department. It is the job of Congress, not the Executive Branch, to decide how money recovered by government lawyers is spent, and this bill will put an end to this gross abuse of power.”

Lankford has been a leader on solutions that move the federal government towards more transparency, greater accountability, and remove duplicative programs and wasteful spending. In 2015, Lankford, along with Senator Elizabeth Warren (D-MA), introduced the Truth in Settlements Act to increase transparency around major settlements reached by federal enforcement agencies, which passed the Senate last fall. This legislation has also been introduced in the House by Judiciary Committee Chairman Bob Goodlatte (R-VA).