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In April, the US Department of Justice brought an indictment against the Southern Poverty Law Center, a prominent left-of-center nonprofit, charging it with offenses including making false statements to a federally insured bank and wire fraud at the expense of its donors. On Friday, August 7, federal judge Emily Marks of the Middle District of Alabama denied a defense motion to dismiss the indictment as vindictive, saying the defense had not met the (substantial) burden of showing that the charges were improperly motivated by retaliation against protected speech.
Leaving aside the question of how courts are to distinguish vindictive prosecutions from the regular kind at a time when the president of the United States openly instructs the Department of Justice to go after his political opponents, the merits of the complaint are likely to emerge into sharper focus.
From the outset, it has seemed clear that the counts based on misinforming banks are much stronger than those based on supposed fraud against donors. In May, Alex Tabarrok wrote a helpful post summarizing a long column by payments expert Patrick McKenzie, noting that federal law criminalizes (with stringent penalties) “almost any false statement made to influence a bank, no matter how small.” As McKenzie has pointed out, these statutes are highly prosecution-friendly in part because they were drafted specifically to advance the interests of prosecutors (what, you thought it was banks?), who know that they can often prove covert actors to have falsified bank records even if it is inconvenient or impossible to prove whatever underlying criminal behavior they have engaged in, if any.
In this case, DOJ has adduced evidence that SPLC told untruths to banks in the course of its longstanding and very successful program to recruit covert informants and agents within groups known for advancing racial hatred. There is no exception in the false bank statements law allowing a defense in situations where the underlying purpose in using the accounts was lawful or even praiseworthy.
The wire fraud charges based on supposedly deceiving donors, by contrast, seem extremely weak. The SPLC’s use of informants inside racist organizations was hardly a secret, least of all to the federal government, which cooperated with it over decades. There is much reason to think that the secrets of SPLC’s success in disrupting and discrediting these groups not only would not have been unwelcome to the class of persons who responded to their fund-raising appeals but, in fact, would have been applauded by most of them, assuming they were not already aware of the covert program. First Amendment specialist Eugene Volokh has a fuller discussion, as does legal analyst Chris Geidner.
In the Trump Justice Department’s ostensible solicitude for the best interests of SPLC donors—in reality, a group that would take less than a millisecond to sort onto the “foe” side of its friend/foe identification screen—I see echoes of other enforcement actions whose sincerity invites question. I wrote a couple of years ago about how conservative Missouri Attorney General Andrew Bailey, stirring up legal trouble for the left-wing group Media Matters, framed his action as motivated by “concern for the well-being of Media Matters donors, whom he paint[ed] as the victims on behalf of whom he [was] acting.” As I argued then, “This is every bit as convincing as former New York AG Eric Schneiderman’s insistence that in bringing a securities fraud case over Exxon’s climate statements, he was deeply concerned for the welfare of Exxon’s shareholders.”
As the case proceeds further into discovery, the government’s knowledge and actions, both now and earlier, are likely to come under greater scrutiny. The SPLC has already let it be known that in at least a dozen instances, the FBI also obtained help from its stable of informants or acted on information provided by the SPLC to disrupt dangerous actors.
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