Penalty against lobbying firm sends message to an industry unfamiliar with prosecution

It was the biggest settlement since lobbying reforms were passed two decades ago.

The Justice Department announced that one of Washington’s top lobbying firms would pay a fine after being charged with repeatedly failing to disclose its activities.

The $125,000 civil penalty the Carmen Group agreed to this summer was not Earth-shattering in its sum. But it reverberated through an industry in which no one has been prosecuted for failing to comply with a disclosure law passed in 1995 that lobbyists routinely flout.

Lobbying, once seen as a way to ply lawmakers with steak dinners and cigars in exchange for favors or at least consideration, has evolved into a vast, multibillion-dollar industry that involves bundled campaign contributions, media campaigns and other operations that often glide under the public’s radar. And in its attempts to limit lobbyists’ influence and increase their disclosures, law enforcement has been forced to play catch-up.


There are weaknesses in the lobbying disclosure laws that need to be addressed.

Fred Wertheimer, a longtime lobbyist and reform advocate

“We get no information about the public media campaigns and the organized lobbying efforts outside of the Congress,” said Fred Wertheimer, a longtime lobbyist and reform advocate. “There are weaknesses in the lobbying disclosure laws that need to be addressed.”

President Ulysses S. Grant is sometimes credited with coining the term “lobbyist” to refer to the men who sought his assistance by buttonholing him in the lobby of a hotel near the White House. As early as 1876, lobbyists were required to register with Congress. But neither registration nor reports were mandated by law until the 1930s, according to “Dirty Deals?: An Encyclopedia of Lobbying, Political Influence, and Corruption,” published last year.

Many lobbyists also work as lawyers, public relations experts, researchers, economists and advertising executives, all trying to inform or influence lawmakers on behalf of their clients using newly available tools.


“Social media makes it very easy to spread a campaign,” said Paul Miller, a former president of the American League of Lobbyists. “You’re not just meeting with reporters, you’re sending them press releases, emailing them, tweeting them and doing a whole lot of different things with websites, Facebook, Twitter, you name it.”

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A lobbyist is legally defined, in part, as anyone who spends 20% or more of his or her time lobbying. Grass-roots campaigns, strategic planning and other services employed by corporations, trade associations, labor unions, public interest groups and others are not legally required to be disclosed as lobbyists, and the number of active registered lobbyists in Washington is now at the lowest recorded total in nearly two decades.

Experts complain that disclosure reports provide only bare-bones information and lack meaningful data to analyze.


Jim Thurber, director of the Center for Congressional and Presidential Studies at American University, is skeptical of figures that do not include unregistered lobbyists, grass-roots campaign consultants, those who market companies for government contracts and others who he estimates total about 100,000.

“It’s pretty clear if you look at lots of law firms, consulting firms or whatever, there is a tremendous amount of lobbying business,” said Thurber, who worked with Congress on the 2007 lobbying reforms.

The enforcement staff of the U.S. attorney’s office for Washington, assigned by Congress to enforce the law, has been described by critics as inadequate, although Keith Morgan, deputy chief in the office’s civilian division, disputes that assessment.

The Justice Department does not maintain data on criminal prosecutions outside of Washington that are tied to lobbying. The few lobbyists who have served time were almost always convicted on other charges, such as in the case of Jack Abramoff, who pleaded guilty to fraud, public corruption and tax evasion in 2006.


A year after Abramoff’s guilty plea, the original 1995 Lobbying Disclosure Act was amended to double the frequency of disclosure reporting and increase penalties.

From 2008, when the revised act went into effect, to 2011, there were no settlements with the Justice Department. Prior to 2008, there had been just three settlements, totaling about $47,000.

In a 2008 report, the Government Accountability Office criticized the U.S. attorney’s office for lacking a “structured approach for targeting its resources to the most significant noncompliance cases.”

Morgan has adopted many of the GAO’s recommendations, including maintaining a computer database. The database has grown to include a range of information about lobbyists, such as the number of times they’ve been flagged for suspected violations and copies of communications requesting information from them.


He has also increased the number of staff members who work on enforcing the law, including a criminal attorney.

Still, only a handful of the more than 14,000 suspected lobbying violations referred to authorities have been singled out for possible prosecution.

Nevertheless, that is an upward trend in enforcement. And observers are wondering whether the first criminal charge could be next.

“I still don’t think people take the [Lobbying Disclosure Act] quite as seriously as they should,” said Chris DeLacy, a partner at the law and lobbying firm Holland & Knight who advises clients on lobbying regulations. “Certainly, a criminal prosecution would get a lot of people’s attention.”


Criminal action was considered against two firms in 2013, according to a GAO report that cited a memo from an assistant U.S. attorney. The Justice Department declined to elaborate on its investigations, but Morgan noted the higher burden of proof for a criminal case compared with a civil case.

Morgan, who has worked in the Justice Department for 26 years, said his efforts were directed toward “chronic offenders” who continuously neglected disclosure requirements.

“The public has a right to know about lobbying activities occurring in D.C.,” he said.

The Carmen Group was accused of failing to disclose some lobbying work in quarterly reports. The government also alleged that some registered lobbyists at the firm failed to file semi-annual political contribution reports.


Founded in 1985, the Carmen Group has been among the 20 highest-earning lobbying firms over the last two decades. It counts colleges, hospitals and governmental entities among its clients, including the California State Coastal Conservancy, Metropolitan Water Reclamation District of Greater Chicago, New York-Presbyterian Hospital and Dillard University in New Orleans.

Like the other firms that have settled with the Justice Department, the Carmen Group did not admit wrongdoing. It was charged with repeatedly failing to file lobbying and contribution disclosure reports, and ignoring inquiries.

“Administrative lapses,” the Carmen Group said in a statement, were the fault of its former general counsel. It agreed to file timely reports in the future.

“The settlement amicably resolves the matter as the most efficient way to minimize cost,” the firm said.


Timothy Jenkins, a Washington attorney who lobbied Congress when the disclosure act was being negotiated, tells clients to take the settlements seriously. “We are certainly using the Carmen Group’s settlement as sort of a teaching tool for our clients to reinforce that this not some laissez-faire regime — there are teeth here,” he said.

For all the arguments calling for greater disclosure, however, there seems to be little desire among elected officials to increase the regulations governing lobbying. Weeks after John A. Boehner (R-Ohio) declared he was stepping down as House speaker, it was announced that the head of his political operation was joining AT&T’s lobbying shop.


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