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From Banking and Finance Law Daily, July 10, 2015

Justice didn’t unlawfully target industries for Operation Choke Point, report

By Colleen M. Svelnis, J.D.

The Justice Department’s Office of Professional Responsibility has finished its inquiry into allegations raised by a Congressional staff report that Justice Department attorneys abused their authority and improperly targeted objectionable businesses or industries under Operation Choke Point; concluding that none of the individuals committed professional misconduct.

The Justice Department report was requested by Rep. Blaine Luetkemeyer (R-Mo), along with 31 other members of Congress, to examine the issue of whether Justice Department lawyers unlawfully targeted Internet payday lenders and to pressure banks not to do business with them. A staff report released by the House Oversight and Government Reform Committee accused the Justice Department of abusing their authority. The report, The Department of Justice’s “Operation Choke Point”: Illegally Choking Off Legitimate Businesses?, claimed that the true goal of Operation Choke Point is to target industries deemed objectionable by the Obama Administration (see Banking and Finance Law Daily, May 30, 2014).

Focus of operation. According to the inquiry report, “neither the design nor the initial implementation of Operation Choke Point specifically focused on Internet payday lenders or their lending practices.” The report did note, however, that emails and memoranda indicated that some Civil Division attorneys did view payday lending “in a negative light.”

The inquiry did not find evidence of efforts to improperly pressure lawful businesses. Additionally, there was no evidence to support a conclusion that Department attorneys provided inaccurate information to Congress about the design, focus, or implementation of Operation Choke Point.

FIRREA subpoenas. The OPR found that the Civil Division’s interpretation and use of the Financial Institutions Reform and Recovery Act statute was supported by current case law. Of the 60 subpoenas issued as part of Operation Choke Point, few related in any way to Internet payday lenders, according to the report. Instead, Civil Division attorneys focused on a small number payday lenders they had reason to suspect were involved in fraudulent practices. The report also referenced the three cases that were filed as a result of Operation Choke Point, that have been resolved by negotiated settlements and consent judgments, and been accepted by U.S. District Courts.

In addition, the report stated that the evidence did not establish that Operation Choke Point compelled banks to terminate business relationships with other lawful businesses. OPR also determined that Civil Division attorneys did not mislead Congress regarding the focus of Operation Choke Point.

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