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Carmen Group's $125,000 Penalty Latest in Increased Lobbying Disclosure Act Enforcement

August 31, 2015

On August 27, 2015, Carmen Group, one of the highest grossing Washington, D.C., lobbying firms of the past decade, reached a settlement with the United States Attorney's Office for the District of Columbia in which it agreed to pay a $125,000 civil penalty for Lobbying Disclosure Act ("LDA") violations, the largest penalty since the LDA became law in 1995.  Carmen Group also agreed to undergo a three-year period of lobbying compliance monitoring by the United States Attorney's Office, Clerk of the House, and Secretary of the Senate.

This settlement is important for two reasons: (1) it demonstrates why even an established beltway actor with years of LDA experience should periodically retain outside specialists to conduct a comprehensive LDA compliance review, and (2) it is the latest development in the broader trend toward increased LDA enforcement. 

The settlement does not detail Carmen Group's alleged violations, but its terms suggest it involved repeatedly failing to file quarterly lobbying reports (LD-2s) and semi-annual political contribution reports (LD-203s) in a timely manner, and failing to properly list and terminate individual lobbyists from its registration.  In 2014, Carmen Group came under fire for its vague description of its lobbying efforts on behalf of Xavier University (disclosed simply as "Hurricane Katrina related recovery issues.").  While it is not clear if this attracted DOJ attention (the Clerk of the House and Secretary of the Senate also made a referral based on missed reporting deadlines), it certainly could not have helped.  This is because the LDA requires disclosing the "specific issues" lobbied, and the House and Senate have advised that even listing a bill number, without adding additional information, is often inadequate. 

Carmen Group has publicly stated that its failures to file resulted from a lapse by the firm's former General Counsel, and the settlement indicates the failures occurred over a period of seven years, from 2008 to 2015.  An annual or biennial compliance review conducted by outside compliance specialists would very likely have identified and corrected these failures before attracting the attention of regulators and thereby averted the $125,000 penalty and associated reputational costs. 

In announcing the settlement, the Department of Justice reaffirmed their commitment to "seek significant penalties from repeat offenders who fail to meet their reporting obligations."  Additionally, last year the U.S. House of Representatives Office of Congressional Ethics referred at least one entity to the Department for purported LDA violations.  Regulators appear to be ramping up LDA enforcement amidst mounting attention to the purported increase in undisclosed lobbying activity

Caplin & Drysdale's Political Law Group counsels for-profit corporations, nonprofit entities, and their principals on these and other matters relating to political law compliance.  We work collaboratively with in-house personnel to craft tailored political activity policies and programs. If you have questions concerning this alert or for more information, please contact:

Trevor Potter
tpotter@capdale.com
202.862.5092

Matthew T. Sanderson
msanderson@capdale.com
202.862.5046 

Bryson B. Morgan
bmorgan@capdale.com
202.862.7836

________________________________________________

 

About Caplin & Drysdale
Having celebrated our 50th Anniversary in 2014, Caplin & Drysdale continues to be a leading provider of tax, tax controversy, and litigation legal services to corporations, individuals, and nonprofits throughout the United States and around the world. We are also privileged to serve as legal advisors to accounting firms, financial institutions, law firms, and other professional services organizations.

The firm's reputation over the years has earned us the trust and respect of clients, industry peers, and government agencies. Moreover, clients rely on our broad knowledge of the law and our keen insights into their business concerns and personal interests. Our lawyers' strong tactical and problem-solving skills - combined with substantial experience handling a variety of complex, high stakes, matters in a boutique environment - make us one the nation's most distinctive law firms.

With offices in New York City and Washington, D.C., Caplin & Drysdale's core practice areas include:

-Bankruptcy
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For more information, please visit us at www.caplindrysdale.com.

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Disclaimer
This communication does not provide legal advice, nor does it create an attorney-client relationship with you or any other reader. If you require legal guidance in any specific situation, you should engage a qualified lawyer for that purpose. Prior results do not guarantee a similar outcome.

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It is possible that under the laws, rules, or regulations of certain jurisdictions, this may be construed as an advertisement or solicitation.

© 2015 Caplin & Drysdale, Chartered
All Rights Reserved.

________________________________________________

About Caplin & Drysdale
Having celebrated our 50th Anniversary in 2014, Caplin & Drysdale continues to be a leading provider of tax, tax controversy, and litigation legal services to corporations, individuals, and nonprofits throughout the United States and around the world. We are also privileged to serve as legal advisors to accounting firms, financial institutions, law firms, and other professional services organizations.

The firm's reputation over the years has earned us the trust and respect of clients, industry peers, and government agencies. Moreover, clients rely on our broad knowledge of the law and our keen insights into their business concerns and personal interests. Our lawyers' strong tactical and problem-solving skills - combined with substantial experience handling a variety of complex, high stakes, matters in a boutique environment - make us one the nation's most distinctive law firms.

With offices in New York City and Washington, D.C., Caplin & Drysdale's core practice areas include:

-Bankruptcy
-Business, Investment & Transactional Tax
-Complex Litigation
-Corporate Law
-Employee Benefits
-Exempt Organizations
-International Tax
-Political Law
-Private Client
-Tax Controversies
-Tax Litigation
-White Collar Defense

For more information, please visit us at www.caplindrysdale.com.

Washington, DC Office:
One Thomas Circle, NW
Suite 1100
Washington, DC 20005
202.862.5000
        New York, NY Office:
600 Lexington Avenue
21st Floor 
New York, NY 10022
212.379.6000

___________________________

Disclaimer
This communication does not provide legal advice, nor does it create an attorney-client relationship with you or any other reader. If you require legal guidance in any specific situation, you should engage a qualified lawyer for that purpose. Prior results do not guarantee a similar outcome.

Attorney Advertising
It is possible that under the laws, rules, or regulations of certain jurisdictions, this may be construed as an advertisement or solicitation.

© 2017 Caplin & Drysdale, Chartered
All Rights Reserved.