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House Passes Legislation to Reform Justice Department Settlement Practices

With the support of Congressman Bill Posey (R-Rockledge), the House of Representatives passed H.R. 5063, the Stop Settlement Slush Funds Act, which prevents federal agencies from incorporating mandatory “donations” in settlement agreements – a practice that has diverted approximately $880 million in settlement money away from deserving victims and American taxpayers and instead lined the coffers of left-leaning activist groups. An ongoing joint investigation by the House Judiciary and Financial Services Committees revealed that in many cases activist groups were directly involved in placing these provisions into settlement agreements.

“There is a strong perception that the Department of Justice is using this practice of mandatory donations to line the pockets of the Administration’s allies,” said Congressman Posey, a member of the Financial Services Committee and cosponsor of the legislation. “This bill will ensure that settlement money goes to the victims and that agency employees are held directly responsible for the settlements they reach.”

The House investigation determined that settlements from major financial institutions are being pilfered away from deserving victims and directed to unharmed activist groups such as La Raza, NeighborWorks, and the National Urban League. Furthermore, in some cases, settlement money went to restoring funding that Congress specifically cut. The Stop Settlement Slush Funds Act will preserve Congress’ power of the purse, make settlement agreements more transparent, and reform practices to ensure victims and taxpayers are properly compensated.

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