Attorney General Jeff Sessions has issued a memo that ended a controversial Obama-era practice of settling litigation against individual corporations by requiring them to pay money to third party special interest groups. Henceforth, any money extracted from a corporate wrongdoer will go to the actual victims of whatever practice the corporation is alleged to have done or to the United States Treasury.

How did the third party payments work?

According to Fox News, during the Obama administration, when a corporation such as a bank or an oil company was targeted for federal prosecution it was given the option of settling before an actual indictment was handed down by paying money to a third party, usually left-wing organizations.

The beneficiaries included environmental groups, community organizers, and other groups pursuing liberal causes. These millions of dollars in payments were on top of whatever other fines may have been accessed.

What was wrong with the practice?

The practice of requiring litigants in a federal prosecution to pay third parties was, on its face, illegal. It constituted a slush fund that allowed the Obama administration to award its allies. It provided an incentive for the Justice Department to go after deep-pocked corporations, threaten them with a prosecution, and then give them a way out by allowing them to pay off interest groups. What the Obama Justice Department was doing was prohibited by the Appropriations Clause, Antideficiency Act, and the Miscellaneous Receipts Act.

No other litigation would allow a lawyer to give away settlement money belonging to his or her client to a third party not involved in the case.

The practice also allowed the Obama Justice Department to pursue corporations and shake them down for money without judicial review. Since in these cases that involved what was in effect a plea deal was agreed to before the matter in question ever went to court, a judge who might be counted on to stop the ethically suspect, illegal practice would not be involved.

In effect, the Obama administration was acting like an organized crime group, selling protection to corporations, not from physical harm, but from the cost of prosecution. The businesses in questions were glad to make the payments since they were less than the cost of successfully being prosecuted.

Now how will the Justice Department handle settlements with corporations?

Settlements extracted from businesses, whether as the result of a plea deal or as part of a court ruling, will go first to the actual victims of corporate malfeasance. Anything left over will go to the United States Treasury, mostly to cover the costs of prosecution. Sessions’ decision returns Justice Department practices back to the rule of law.

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