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Economy

Meet The Foreclosed Grandmas Facing Federal Charges For Protesting ‘Too Big To Jail’

Credit: Greg Basta

Seven women were arraigned Tuesday in Washington, D.C., on federal charges of “unlawful entry” stemming from last month’s homeowner sit-ins at the Department of Justice and a lawfirm called Covington and Burling. Protesters targeted Covington for its revolving-door relationship with a government that’s failed to prosecute Wall Street. When Lanny Breuer stepped down as head of DOJ’s criminal division this winter after Frontline revealed him as the primary culprit in the government’s apparent ‘too big to jail’ approach to foreclosure fraud, Covington provided him a new professional home. It’s also provided a moniker for the group formally charged on Tuesday: the “Covington Seven.”

The women face one of three different legal paths, their attorney Mark Goldstone told ThinkProgress. The charges bear a maximum penalty of six months jail time and/or a $1,250 fine. While a small fine is more likely to be the outcome, Goldstone said, that would come with a conviction on their permanent records. The women might be able to escape conviction provided they are not re-arrested and they do not return to Covington and Burling premises.

After their arraignment, members of the Covington Seven told ThinkProgress why they’d gotten involved.

Sherry Hernandez of Los Angeles told me her Countrywide mortgage ballooned after just four months, with her monthly payments jumping by $800. Her family decided to get a different loan and get out of the suddenly-unaffordable Countrywide mortgage, since they knew they had notarized paperwork showing their loan did not carry penalties for paying it back early. “But they held us to this prepayment penalty we didn’t agree to,” Hernandez said, which “raised our payment trying to get out of the predatory loan by $75,000 more.” Countrywide was the largest subprime lender, and implicated in much of the ugliest financial conduct of the housing bubble and bust. Yet a few years after it was bought by Bank of America, a firm called PennyMac sprang up, run almost entirely by Countrywide alumni. The Hernandezes sued Countrywide successfully, but meanwhile the second loan they’d taken out to replace the predatory one had been sold off…to PennyMac. “PennyMac has foreclosed,” Hernandez said. (PennyMac declined to comment on an individual case, citing privacy laws.)

Asked what she wanted to her message to be on the day she attended the sit-in, Hernandez chuckled. “Oh I have the perfect line. It’s the line they used on us when our hands were cuffed behind our backs, the seven little grandmas: ‘If you don’t arrest them, they’ll just do it again.’”

Deborah Castillo of St. Louis came home from voting on Election Day of 2012 to find an eviction notice on her front door. Castillo, 60, had seemed well positioned for her financial future just a few years earlier, with a good handle on her own mortgage and an investment property nearly paid off. “I had a two-family flat that was $3,000 from being paid for,” Castillo said, “but I had to refinance that in 2005 to help pay for the medical bills for my son, who’s schizophrenic.”

“That was my so-called nest egg, that was our security. And so I had to refinance that, unfortunately with Countrywide.” The same year, Castillo’s daughter contracted bacterial meningitis, and Castillo took 9 months away from her phone company job to care for her daughter. When the balloon payment hit, Castillo couldn’t keep up. Her husband lost his job amid the economic downturn, compounding their struggles. Just a few years on from nearly owning their “nest egg” rental property, Castillo found herself drawing down retirement savings to make ends meet.

And then, in the middle of the loan modification process, US Bank foreclosed on the Castillo family home. “[They] sat on the paperwork,” Castillo told ThinkProgress. The bank refused to accept payments while the modification was pending, yet charged Castillo penalties for missed payments. “Their lack of processing my document on time allowed them to put me in foreclosure,” she said. With eviction pending, Fannie Mae sought and won a $17,000 judgment against Castillo “for being in my home illegally.” (A representative of US Bank officially declined to comment, citing policy against discussing ongoing litigation.)

Castillo is clear-eyed about the culprits in her case. “Something can happen to you in life, no matter what, that can cause you to get into a bind,” Castillo said. “But US Bank, they’re not losing.” Thanks to bailouts, “there was no reason for the banks to settle or work with people, because the government guaranteed that they would win, that they would not be left holding the bag.” And now, with the initial crisis that sparked the government aid to the financial sector, no one in Washington was doubling back to address the paperwork rigmarole that the bailed-out companies used to boot the Castillos from their home. That’s how Castillo ended up getting handcuffed in the Covington and Burling lobby. “We wanted to get someone’s attention. And unfortunately, doing it the legal way through the court is not getting their attention,” she said.

"Covington Seven" member Deborah Castillo poses with President Barack Obama.

“I worked my ass off to help [President Obama] get elected,” said Castillo, whose volunteer work for the 2008 campaign earned her the photo-op at right. “And now I want him to work his ass off to keep not only me in my home, but everybody else. Because he didn’t get there on his own. I don’t think he’s forgotten, but he needs to put his foot up somebody’s ass and make them remember, we helped put them there.”

Castillo, Hernandez, and the other five, whose stories reflect the same themes of deception and bullying, have to choose how to respond to the unlawful entry charges prior to a July court date. But whichever path each decides to walk, they’ll face more punishment than any of the companies involved in these wrongful foreclosures have faced. “The charges are much harsher for those that sit in front of a doorway than those who steal billions of dollars, force people out of their homes, wreck the economy, and wreck people’s lives,” Goldstone, their lawyer, said. “It demonstrates there’s two systems of justice.”

Update

This post has been updated to reflect US Bank’s decision not to comment.

Health

The Other Reason Medicare Is Getting Stronger

The federal government banned almost 15,000 fraudsters from billing Medicare in just the last two years, new data from the Department of Health and Human Services (HHS) finds — over a two-fold increase from the two years before that. The crackdown is a consequence of Obamacare anti-fraud provisions and may be part of the reason that Medicare’s trustees recently projected that it will be solvent for two full years past what they originally believed.

Medicare providers can defraud elderly Americans on the program through shoddy practices such as “upcoding” the cost of their services, self-referring patients for unnecessary tests and procedures, and even stealing seniors’ Medicare beneficiary numbers to profit off of their government health coverage.

Anti-fraud provisions in Obamacare seek to end that status quo. The reform law allows HHS and the Justice Department to home in on potential Medicare fraudsters by analyzing data that indicates fraudulent behavior. The government has concentrated its policing efforts on regions that have histories of Medicare fraud.

Government officials were helped in large part by elderly Americans on Medicare who reported suspicious activity — also something that is encouraged by the health law. About 45,000 phone calls about possible fraud were made to the Medicare hotline last year alone.

The one-two punch of sifting through Medicare claims data for signs of fraud and enlisting seniors as whistle-blowers against fraudsters has paid off. Thursday’s new figures indicate that the government recovered $14.9 billion in Medicare fraud money over the past four years.

While that top line number is a drop in the bucket compared to Medicare’s $3 trillion budget, it obscures the true long-term savings of the anti-fraud efforts. The increasing frequency with which doctors, nurses, and providers are being banned from billing Medicare strengthens the underlying entitlement, since most major perpetrators of Medicare fraud are repeat and volume offenders. Now, they’ll be cut out of the system entirely.

That’s likely one reason that the Medicare Trustees concluded the program’s hospital insurance trust fund will be fully solvent through 2026. That’s two more years than they projected just last year, and over a decade longer than what the trustees predicted in 2009 before the passage of the Affordable Care Act.

The Obama administration plans to offer consumers further incentives to report fraud in the coming days. A new proposed rule would raise the potential government reward for Americans who report Medicare fraud from $10,000 to almost $10 million.

LGBT

‘Family’ Groups: Being Respectful To LGBT Coworkers Is An ‘Attack On Freedom’

Earlier this week, Liberty Counsel’s Matt Barber revealed a brochure that was distributed at the Department of Justice called, ““LGBT Inclusion at Work: The 7 Habits of Highly Effective Managers.” Developed by the DOJ Pride, the department’s LGBT and allies employee group, it outlines several simple suggestions for making sure the workplace is a safe and inclusive space. Barber claimed it was an “attack on freedom… riddled with directives that grossly violate – prima facie –employees’ First Amendment liberties.”

Tony Perkins echoed this ominous sentiment in the Family Research Council’s Washington Update Wednesday:

When the Justice Department is done violating journalists’ First Amendment rights, it looks like they’ll move on to employees’. In a chilling memo to DOJ staff, the Obama administration is warning managers that they’d better start embracing homosexuality–or else. The email, which a Justice employee leaked to Liberty Counsel, is a scary reminder of how far this administration will go to crush free speech and expression in America.

The full brochure can be read online. Here are some of the tips — suggestions, not rules — that Barber and Perkins object to and the context they leave out to make them sound more chilling:

  • DON’T judge or remain silent. Silence will be interpreted as disapproval. What neither Barber or Perkins mention is that this is advice given under the heading, “Know how to respond if an employee comes out to you.” The converse suggestion is, “DO respond with interest and curiosity. Asking respectful questions will set a positive, supportive tone.”
  • DO use a transgender person’s chosen name and the pronoun that is consistent with the person’s self-identified gender. Barber admits he believes this basic respect for a person’s identity constitutes lying. Objecting to this suggestion is blatant transphobia, more of which is apparent throughout the rest of his post.
  • DO assume that LGBT employees and their allies are listening to what you’re saying (whether in a meeting or around the proverbial water cooler) and will read what you’re writing (whether in a casual email or in a formal document), and make sure the language you use is inclusive and respectful. This has nothing to do with spying. It’s simply encouraging individuals to avoid making a joke or snide comment about LGBT people and assuming it’ll never get back to them.
  • DO communicate a zero-tolerance policy for inappropriate jokes and comments, including those pertaining to a person’s sexual orientation and gender identity or expression. Apparently encouraging people not to be rude and offensive constitutes chilling their free speech.

Though it is a bottom-up document with no enforcement whatsoever, the mere thought of creating an LGBT-inclusive workplace is apparently quiet disconcerting to these conservatives. Perkins even jabs, “Imagine the level of workplace harassment Christians would face if viewpoint coercion were official U.S. policy” — i.e. if the Employment Non-Discrimination Act were passed into law. Of course, if a guide were put out with suggestions for not harassing Christians, that would conceivably be just as chilling to free speech, at least by their standards.

Perkins takes exception that LGBT equality is about “forced acceptance,” but as blogger Alvin McEwen points out, it’s actually about “respect for a fellow human being.” Groups like Liberty Counsel and FRC specifically do not want LGBT employees to enjoy basic respect in the workplace, and that’s one of many reasons they are designated as hate groups.

Economy

Foreclosure Fraud Failures Come To A Head In Justice Department Protest

Credit: Greg Basta

Frustration with the failed execution of various weakly-constructed legal settlements stemming from widespread foreclosure fraud bubbled over today into a protest at Justice Department headquarters that culminated in homeowners being arrested.

Using tactics and rhetoric familiar from 2011’s Occupy Wall Street demonstration, a group of activists and foreclosed homeowners marched on the Justice building in downtown Washington, D.C. According to tweets and photographs from activists on the scene, protesters moved past a police barricade and attempted to establish a sit-in, at which point police began arresting homeowners and activists.

Why the renewed fervor? Despite agreeing to various settlements since 2008 requiring a total of $5.7 billion in payments to homeowners, “banks have paid less than half” that amount to date, according to the Washington Post:

Critics point to the 2011 agreement the Office of the Comptroller of the Currency (OCC) and the Fed struck with more than a dozen mortgage servicers as a prime example of the dysfunction. […]

After 12 months, no homeowners had received a dime. But the eight consultants managing the process on behalf of the banks were paid nearly $2 billion. […]

Problems are also emerging in the largest mortgage settlement — a $25 billion deal between state and federal authorities and five banks accused of using forged paperwork to quickly foreclose on struggling homeowners.

The banks agreed to pay $1.5 billion directly to borrowers. No checks have been sent, though the first are likely to go out later this month.

While banks have been slow to fulfill the meager direct payments provisions of the settlements, they’ve spent much more heavily to get properties empty and ready for resale.

These settlements are very small in relation to the problem they’re meant to ameliorate and the allegations they’re meant to justly resolve. Even if the banks had complied with alacrity, the $5.7 billion total direct payments to homeowners tallied by the Post pales in comparison to the total harm caused by “robo-signing” and other forms of mortgage origination and foreclosure fraud.

New York Attorney General Eric Schneiderman, a primary negotiator of the 2012 settlement, has announced he will sue Wells Fargo and Bank of America for failure to comply with the terms of that $25 billion package. But just $1.5 billion of that settlement was ever intended to come as direct compensation to “robo-signing” victims and other wrongfully foreclosed homeowners.

The total value of underwater mortgages in the market when that settlement was finalized – three years after the financial crisis – was estimated at $700 billion. The 2012 settlement was divisive at the time, with critics arguing it was insufficient and designed in such a way that banks could abuse its terms. Subsequent settlements have been similarly afflicted and ineffective.

Justice

White House Revives ‘Media Shield’ Bill To Protect Journalists

Under fire for the Justice Department’s surveillance of AP reporters’ phone records, the White House is pushing to revive a “media shield” bill to protect reporters who refuse to identify confidential sources. Sen. Chuck Schumer (D-NY) received a call Wednesday from the White House asking him to reintroduce his 2009 bill.

The last media shield bill was thwarted when Wikileaks exposed thousands of pages of secret government documents, killing the political will to bring the legislation to a floor vote. Even before that, however, the Obama administration refused to support Schumer’s legislation unless it excluded reporters who publish leaks deemed to cause “significant harm” to national security.

Though the administration’s renewed interest in the media shield could signal regret over the AP scandal, the compromise bill may not have protected the AP from the DOJ’s subpoena because of this exception for national security leaks. However, Schumer argued the legislation would have made a difference:

In a statement, Mr. Schumer referred to the A.P. subpoena: “This kind of law would balance national security needs against the public’s right to the free flow of information. At minimum, our bill would have ensured a fairer, more deliberate process in this case.

It is not clear whether such a law would have changed the outcome of the subpoena to The A.P. But it might have reduced the chances that the Justice Department would have demanded the records in secret, without any advance notice to the news organization, and it may have allowed a judge to review whether the scope of the request was justified by the facts.

As the New York Times notes, the media shield compromise language would actually help the government pursue reporters to root out leaks of classified information — “Judges could not quash a subpoena through a balancing test if prosecutors could show that the information sought might help prevent a future terrorist attack or other acts likely to harm national security.”

The bill would, however, protect journalists from civil suits attempting to force them to give up sources or information. It would also require the information seekers to prove why their need trumps the need for unfettered media.

Justice

GOP Congressman Defends DOJ Surveillance: ‘They Are Doing What We Asked Them To Do’

(Credit: AP)


In an interview with Fox News’ Greta Van Susteren last night, Rep. Trey Gowdy (R-SC) threw cold water on hopes that the Justice Department’s surveillance of Associated Press reporters’ phone records could lead to legislation preventing similar incidents in the future. Gowdy noted that the surveillance occurred in no small part because Republicans demanded such an investigation in 2012:

GOWDY: Greta, you were an attorney. There are lots of privileges — husband-wife, priest-penitent, attorney-client, none of them unqualified. So when you have a major national security leak, which is a compelling issue, and you juxtapose that with the right of the media to do its job and provide oversight, there’s a conflict. And there’s no federal statute on point. But the Supreme Court has said if there is a compelling interest, which there certainly is in national security cases, and the information is relevant which it has to be to justify a subpoena, and you have no alternative means of getting the information, then the Department of Justice had no choice. . . .

Think back a year ago. We had the attorney general and other Department of Justice employees, and we grilled them over national security leaks. And here they are doing what we asked them to do, investigate the leak.

While Gowdy’s admission that Republicans supported a probe into national security leaks like the one that led to the DOJ probe of AP is welcome, his willingness to largely excuse DOJ’s actions does not bode well for reform. When journalists face surveillance by law enforcement, many sources will be too frightened to talk to reporters, and that will lead to the public being less informed. The AP probe presents a strong argument for requiring law enforcement to obtain a warrant from a judge before they can obtain phone records from journalists — indeed, DOJ itself should support such a requirement, because a judicially issued warrant enables them to resist scandal after their investigations become public — but such a reform will almost certainly require an act of Congress.

Although there were initial signs that congressional Republican lawmakers would react to the DOJ probe with their typical degree of outrage, many GOP lawmakers are now responding with a collective “meh.” Sen. John Cornyn (R-TX), the second highest ranking member of the Republican caucus, said that he has “questions” about the AP surveillance, “but I’m wiling to wait and see how this plays out, whether it was narrowly targeted or whether it was a net that was too broadly cast.” Sen. John McCain (R-AZ) similarly offered up an uncharacteristic willingness to wait “before offering an opinion.”

Of course, there are still lawmakers, both Democrats and Republicans, who remain bothered by the probe. But the chances of reform now seem low.

Update

Maddowblog posts video of Gowdy demanding DOJ target reporters:

Justice

Attorney General Holder Recused Himself From AP Investigation

U.S. Attorney General Eric Holder

U.S. Attorney General Eric Holder

Attorney General Eric Holder told reporters on Tuesday that he recused himself early on in the Department of Justice’s investigation of the Associated Press and possible national security leaks.

Holder was speaking at what was meant to be a Health and Human Services announcement of stricter rules on going after Medicare fraud. Instead, Holder found himself answering a slew of questions related to the DOJ’s subpoena of multiple phone records belonging to the AP. In sum, twenty phone lines were pulled, including the home phone numbers of several reporters. Asked about his role in the matter, Holder told the assembled crowd that he had recused himself early on “to avoid a potential conflict of interest” as the FBI had previously interviewed him in relation to the case.

Holder also identified Deputy Attorney General James M. Cole as the Justice Department official who originally signed off on the subpoena of AP’s phone records, in conjunction with the U.S. Attorney in Washington, DC. Holder referred several questions about the investigation to a letter the Deputy Attorney General sent to AP in response to the scathing letter the wire agency released yesterday. In the letter, Cole sought to reassure the AP that their records “have not and will not be provided for use in any other investigations.” However, the Justice Department will not return the records to the AP as requested.

The Attorney General insisted that he was a strong advocate of protecting the First Amendment rights of the press, saying that sweeping, overbroad subpoenas are not a matter of administration policy:

HOLDER: That is certainly not the policy of this administration. If you will remember in 2009 when I was — my confirmation hearings, I testified in favor of a reporter shield law. We as an administration took a position in favor of such a law. It didn’t get the necessary support up on the Hill. It’s something this administration still thinks would be appropriate. We have investigated cases on the basis of the facts. Not as a result of a policy to get the press or to do anything of that nature. The facts and the law have dictated our actions in that regard.

While refusing to say exactly what was leaked to prompt the investigation into the AP, Holder lent credence to the idea that it was national security related, calling the subject matter a “very, very serious leak.” The lead “put the American people at risk,” Holder said. “That is not hyperbole. It put the American people at risk.” The Associated Press in 2009 published a story on a foiled terrorist plot in Yemen, which gave details related to a double agent planted among Al Qaeda in the Arabian Peninsula, and is likely the cause of the investigation.

“I’m proud of what we have done,” Holder said of the administration’s civil rights policies on the whole. “We have been, I think, very aggressive in our enforcement of the civil rights laws.” Despite that pride, the administration has been forced to confront a slew of troubling civil liberties issues in the recent weeks, including the use of actions deemed torture at Guantanamo Bay, the ongoing targeted killing program, the IRS possibly improperly targeting conservative groups, and now the possible curtailing of the free press.

Justice

What Can Be Done To Prevent DOJ From Spying On Journalists In The Future

(Credit: AP)

Yesterday, the Associated Press reported that phone records from nearly two dozen phone lines were obtained by the Department of Justice as part of what was likely an investigation into how AP reporters discovered the CIA’s involvement in foiling an Al Qaeda related bomb plot. As Hayes Brown explained yesterday, this investigation probably was motivated by concerns that reporting on CIA’s involvement could have compromised an intelligence operative working within Al Qaeda in the Arabian Peninsula.

Lawmakers on both sides of the aisle have expressed concerns over DOJ’s actions here, potentially providing a rare opportunity to enact law restricting government surveillance. Moreover, there are strong arguments for why DOJ should be required to obtain a warrant from a judge before obtaining journalists’ phone records, especially in a case such as this one where DOJ’s need for the information does not appear to be imminent, the information sought is particularly broad, and the records are likely to remain available even after a delay.

Yet, if change is going to happen, it will likely have to come from what is currently the most dysfunctional branch of government — Congress — rather than the one that is currently most capable of bold action — the judiciary. Ultimately, this incident is likely to be a test of whether Congressional Democrats who opposed expansive surveillance during the Bush Administration will also have qualms with DOJ’s actions now that one of their own is in the White House; and whether Republicans, many of whom had a very different view of media surveillance just a year ago, will be able to pause their political posturing to pass a law preventing similar incidents from occurring in the future.

While the full details of the investigation have not been revealed — AP’s reporting on the surveillance was based largely on a letter DOJ sent to AP informing them of the surveillance — it is unlikely that DOJ’s actions violate the Constitution as it has been interpreted by the Supreme Court. No evidence has emerged that DOJ obtained the contents of actual conversations by AP reporters. Rather, their investigation appears to be limited to discovering which numbers were dialed by AP employees subject to surveillance, and possibly a similar investigation of their incoming calls.

Under the Supreme Court’s 1979 decision in Smith v. Maryland, the Constitution’s ban on unreasonable searches and seizures simply do not apply to this kind of surveillance. According to the five justices who joined the majority opinion, individuals do not have a “reasonable expectation of privacy” in the numbers they dial on their phones because “[t]elephone users . . . typically know that they must convey numerical information to the phone company; that the phone company has facilities for recording this information; and that the phone company does in fact record this information for a variety of legitimate business purposes.” When information is voluntarily disclosed to a third party, the Court explained the person disclosing the information “assumed the risk that the information would be divulged to police.”

The best argument for applying a different rule to the AP is that journalists are different from other phone users. Journalists often depend on sources who will refuse to speak to a reporter if their conversation is not kept confidential. If government can discover who reporters have been speaking to, they will chill sources from providing information to journalists, and the public will ultimately be less well informed about the information they need to participate in a democracy. Most significantly, the First Amendment explicitly protects “the freedom of. . . the press,” so a strong textual argument can be made that activities that are essential to journalism enjoy heightened protection under the Constitution.

This argument, however, is unlikely to be embraced by our current Supreme Court. In Citizens United, the conservative justices did not just authorize corporations to spend unlimited money to influence elections, they also dismissed the idea that “the institutional press has any constitutional privilege beyond that of other speakers.” At least until one of these five justices leaves the bench, a robust interpretation of the First Amendment’s freedom of the press is unlikely.

The Constitution isn’t the beginning and the end of American law, and Justice Department regulations do place some significant restrictions on federal law enforcement’s ability to subpoena telephone records from journalists. Beyond requiring the surveillance of AP to eventually be disclosed to AP, they also typically require actions targeting journalists to be personally approved by the Attorney General. What they do not require, however, is for DOJ investigators to obtain a warrant before they conduct the surveillance at issue here. Placing this decision in the hands of the Attorney General is not nothing — the sheer volume of Eric Holder’s workload prevents him from personally reviewing and approving very many things — but it is also not an independent check on DOJ’s ability to target journalists.

At the moment, there appear to be a bipartisan consensus forming that the current checks on DOJ surveillance are not enough — at least in the media context. The question is whether Congress will actually decide to do something about it, or whether they will default to partisan posturing and reliance on a Supreme Court that shows little interest in protecting journalism.

Update

In this case, the decision to seek AP phone records was made by Deputy Attorney General James Cole. Attorney General Holder recused himself.

Justice

Why The Department Of Justice Is Going After The Associated Press’ Records

Attorney General Eric Holder

News broke on Monday that the Department of Justice secretly sought phone records of reporters at the Associated Press, likely as part of an investigation into several national security related leaks.

Last year, the Associated Press reported that an Al Qaeda in the Arabian Peninsula (AQAP) plot had been foiled, thanks to a timely intervention on the part of the United States. The plan, according to the AP’s March 2012 story, involved an upgrade of the “underwear bomb” used in the failed Christmas Day 2009 bomb plot that was meant to take down a passenger airplane in Detroit, MI.

Why that drew the attention of the Justice Department, however, is that the CIA was the one who foiled the plot, which the AP report made clear:

The FBI is examining the latest bomb to see whether it could have passed through airport security and brought down an airplane, officials said. They said the device did not contain metal, meaning it probably could have passed through an airport metal detector. But it was not clear whether new body scanners used in many airports would have detected it.

The would-be suicide bomber, based in Yemen, had not yet picked a target or bought a plane ticket when the CIA stepped in and seized the bomb, officials said. It’s not immediately clear what happened to the alleged bomber.

AP learned of the plot a week before publishing, but “agreed to White House and CIA requests not to publish it immediately” due to national security concerns. But, by reporting the CIA’s involvement in foiling the plot, they put AQAP on notice that the CIA had a window into their activities. The AP’s reporting also led to other stories involving an operative in place within AQAP, and details of the operations he was involved in. That operative, it was feared, would be exposed and targeted by AQAP as retribution for siding with the United States.

John Brennan, who is now the head of the CIA, said at his confirmation hearing that the release of information to AP was an “unauthorized and dangerous disclosure of classified information.” That the Department of Justice would be pursuing information on these leaks is also not new, given Attorney General Eric Holder’s appointment of federal prosecutors to look into the disclosures last year. What is surprising is the large amount of information the Justice Department seems to have acquired in its pursuit:

In all, the government seized those records for more than 20 separate telephone lines assigned to AP and its journalists in April and May of 2012. The exact number of journalists who used the phone lines during that period is unknown but more than 100 journalists work in the offices whose phone records were targeted on a wide array of stories about government and other matters.

The Associated Press released its letter to Holder denouncing the invasion of their records without their consent, calling it an “unprecedented step” and “a serious interference with AP’s constitutional rights to gather and report the news.”

In a statement on the case, the U.S. Attorney’s D.C. office claimed that “because we value the freedom of the press, we are always careful and deliberative in seeking to strike the right balance between the free flow of information and the public interest” in carrying out those laws. Despite that, this investigation appears unusually broad. And the full extent of the Department of Justice investigation, and whether other news outlets were targeted in the course of their inquiries, remains unclear.

Update

An earlier version of this story incorrectly stated that the Christmas Day bomb plot took place in 2011. It was actually foiled in 2009.

Health

How A Pharma Giant May Have Bribed Pharmacies, Swindled Transplant Patients, And Defrauded The U.S.

Novartis Pharmaceuticals Corp. isn’t having the greatest year — and things just got much worse for the drug giant. In a civil suit that builds on a separate, sealed whistleblower case, federal prosecutors charged Novartis on Wednesday morning with paying out kickbacks in an effort to get pharmacies to switch kidney transplant patients’ anti-transplant rejection generic drugs with the brand-name Novartis product Myfortic.

The scope of Novartis’ alleged fraud is staggering. In the civil complaint, prosecutors charge that the company’s U.S.-based wing “used a program of rebates and discounts to boost sales of its anti-rejection drug.” Since Myfortic is far more expensive than its generic counterparts, this market share-gouging cost government health entitlements such as Medicare and Medicaid “tens of millions of dollars in reimbursements to pharmacies for which they were never entitled,” with Myfortic sales at companies that received the bribes totaling over $100 million. Some of those pharmacies allegedly received kickbacks making up a full 20 percent of their total Myfortic sales, while the U.S. government drove an outsized 47 percent of the drug’s total sales by specialty pharmacies.

If the allegations are true, then not only did Novartis brazenly defraud the United States government — the corporation and its co-conspirators also compromised public safety and patient health. As the civil complaint states, “Hundreds, possibly thousands, of transplant patients have undergone switches in their medication as a result of the recommendations from pharmacies that were based on undisclosed financial, rather than independent critical, considerations.”

Medicare and Medicaid fraud by pharmaceutical companies is the main driver of Justice Department settlements under the False Claims Act — the same statute that Novartis is being sued under. In 2012 alone, the Justice Department nabbed $3 billion from doctors and pharmaceutical companies that swindled the public entitlement programs by charging the government more than their services were actually worth. In fact, in 2010, Novartis had to settle a separate case involving kickbacks and misuse of drugs, paying out $420 million in criminal and civil damages. The newest slate of charges against the drug giant prompted Manhattan U.S. Attorney Preet Bharara to call Novartis “a repeat offender.”

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