June 13, 2013

U.S. Attorney Seeks $33 Million Lobbying Disclosure Act Penalty

Complaint Signals a More Aggressive Enforcement Policy
Holland & Knight Alert
Christopher DeLacy

The U.S. Attorney's Office for the District of Columbia filed a complaint on June 7, 2013, seeking up to $33 million in fines against a consulting firm for violations of the Lobbying Disclosure Act of 1995 (LDA), as amended. It appears that the LDA registrant in this case ignored numerous communications from the Secretary of the Senate, the Clerk of the House and the U.S. Attorney's Office. (Civil Action No. 13-0853)

This action appears to signal a more aggressive LDA enforcement policy, as all previous LDA cases involved negotiated settlements. From 1995 to 2007, the U.S. Attorney's Office settled three LDA enforcement cases for undisclosed amounts. In 2007, the Honest Leadership and Open Government Act (HLOGA) increased civil penalties and provided criminal sanctions for LDA violations. Since 2007, the U.S. Attorney's Office has entered into negotiated settlements three times — once in 2011 for $45,000 and twice in 2012 for $50,000 and $30,000. This latest case marks the first LDA enforcement complaint. In addition, according to a Government Accountability Office (GAO) LDA report issued in April 2013, the U.S. Attorney's Office is considering pursuing criminal penalties for LDA violations for the first time.  

It is unclear how many LDA enforcement actions are currently underway, but the Secretary of the Senate has referred a total of 11,906 potential LDA violations to the U.S. Attorney’s Office since 1995 and the GAO has audited over a thousand LDA filings since 2007.    

What does this mean for my organization?

Always respond in a timely manner when contacted by the Secretary of the Senate, Clerk of the House or U.S. Attorney's Office about an LDA matter. Entities and individuals subject to the LDA should also take this opportunity to review their current procedures to ensure that they are in compliance with the LDA. All LDA registrants should have an updated LDA compliance program in place and should be prepared to respond to a GAO audit or Department of Justice (DOJ) investigation.

What is the LDA?

The LDA is a federal lobbying statute that applies to legislative and executive branch contacts. It is administered by Congress, and LDA reports are audited by the GAO. The LDA does not apply to state or local lobbying. It requires registering and disclosing certain lobbying activities, including the issues lobbied, individual lobbyists and lobbying costs. The LDA is enforced by the U.S. Attorney’s Office for the District of Columbia and violations are subject to fines of up to $200,000 and up to five years in prison for certain violations.

What should an LDA compliance program include?

The following procedures are currently considered industry best practices for an LDA compliance program:

  1. ensure that all filings are complete, accurate and are submitted in a timely manner
  2. submit any missing filings in a timely manner once the omission is discovered
  3. amend any defective filings in a timely manner
  4. respond to any inquiries from the Secretary of the Senate, Clerk of the House, DOJ or GAO in a timely manner
  5. review and update, if necessary, internal policies to ensure compatibility and compliance with the LDA, as well as with House and Senate gift and travel rules
  6. notify employees about the LDA and House and Senate gift and travel rules
  7. provide employees with current copies of House and Senate gift and travel rules
  8. provide key employees with annual LDA and House and Senate gift and travel rules compliance training
  9. require expense reimbursement certifications regarding lobbying expenses and House and Senate gift and travel rules
  10. collect accurate data related to the LDA, such as issues lobbied, individual lobbyists (with covered positions, if applicable), lobbying expenses, and certain political contributions and expenditures
  11. create a document outlining the methodology used to create the good-faith estimate of lobbying expenses each quarter
  12. develop and maintain a set of LDA records to be provided during a GAO audit or DOJ investigation
  13. require employees to certify compliance with House and Senate gift and travel rules
  14. review the House and Senate gift and travel rules and consult with the House or Senate Ethics Committees, as appropriate, prior to providing anything of value (including food or drink, local transportation or travel) to House or Senate members and staff
  15. consult with counsel

An LDA compliance program should be incorporated into your organization’s political law (campaign finance, lobbying, government ethics and pay-to-play) compliance program and into your organization’s comprehensive compliance program.

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