DOJ Prohibits Third-Party Payments in Settlement Agreements

On June 7 Attorney General Jeff Sessions issued a memo that prohibits all Department of Justice (DOJ) components and 94 United States Attorney’s Offices from entering into any agreement on behalf of the United States in settlement of federal claims or charges that directs or provides for a settlement payment to non-governmental, third parties that were not directly harmed by the conduct. The DOJ noted that under the Obama Administration, “the Department repeatedly required settling parties to pay settlement funds to third party community organizations that were not directly involved in the litigation or harmed by the defendant’s conduct.” DOJ added, “Pursuant to the Attorney General’s memorandum, this practice will immediately stop.”

 

Some community groups relied heavily on such settlements as a source of funding for their organizations. Those organizations will have to locate a new source of funding or will have to curtail their activities.

 

Copy of the Memo

 

Copy of the Press Release

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