The $33 Million Penalty for Lobbying Disclosure Violations | Davidson
Posted at 2:53 p.m. on June 18, 2013
Q. I am a lobbyist with a question about lobbying disclosure forms. Technically, I know am supposed to file these forms a few times each year, and I always do. But sometimes I wonder why I bother. I know of other lobbyists who often miss the deadline for filing their forms and some who don’t file them at all, and they never seem to face any consequences. Am I wasting my time by filing the forms? Or does the requirement to file them actually have teeth?
A. Does a $33 million penalty count as teeth? That’s how much a lobbying firm could face in fines in a lawsuit the government brought this month for lobbying disclosure violations.
Lobbying disclosure forms are required by the Lobbying Disclosure Act of 1995, and must be filed by all federally registered lobbyists and organizations with lobbyists.
According to a House report at the time of the act, the disclosures serve several purposes. First, “representative government requires public awareness of the efforts of paid lobbyists to influence the public decision making process in both the legislative and executive branches of the Federal government.” Moreover, disclosure of lobbying efforts increases “public confidence in the integrity of government.”
The requirements have been amended several times over the years, and there are now two kinds of forms required. The first, an LD- 2, must be filed four times a year and reports quarterly lobbying activities, including clients, lobbying contacts and the subject matter of those contacts.
The second, an LD-203, must be filed twice a year and reports certain federal campaign contributions made by the lobbyists or organizations. It also includes a certification that the lobbyist or organization is familiar with the congressional gift rules and has not violated them.
Failure to file any of these forms typically results in a noncompliance notification from the House and Senate. The lobbyist or organization in violation then has 60 days to get in compliance.
Failure to do so within those 60 days results in referral to the U.S. Attorney’s Office for the District of Columbia, which has authority to seek civil fines of up to $200,000 per violation. For “corrupt” violations, the U.S. attorney’s office may even seek criminal liability of up to five years in jail.
Much of the office’s enforcement efforts focus on chronic offenders, and last year two such offenders agreed to fines for repeated disclosure violations. Then, earlier this month, came the shot heard around the lobbying world. The office filed suit against a lobbying firm for disclosure violations that, at least in theory, could expose the firm to as much as $33 million in fines.
In the suit, the U.S. attorney’s office alleges 124 instances in which lobbying firm Biassi Business Services Inc. either failed altogether to file a LD-2 or LD-203 or did not do so in a timely fashion. The suit also alleges 41 instances in which BBSI failed to remedy its noncompliance after receiving notification from the House and Senate.
The 124 instances of failing to file and the 41 instances of failing to remedy total 165 alleged violations, and the government alleges that “BBSI is subject to a civil penalty or fine of not more than $200,000 for each.” The maximum possible fine, then, for the alleged 165 violations is $33 million. In sum, the lawsuit states, “The Government alleges that BBSI knowingly failed to comply with the periodic reporting requirements of the Lobbying Disclosure Act, and to remedy delinquent filings after being notified.”
In response, BBSI has said that it no longer does any lobbying and has made no contributions. Indeed, in the time since the government filed its lawsuit, BBSI has filed some of the missing lobbying disclosure forms, reporting no lobbying activity or contributions in the periods covered by the forms.
But the lack of lobbying activity and contributions does not absolve BBSI of its obligation to file those forms. That obligation is triggered by registering as a lobbyist, which BBSI did many years ago. Once a lobbyist or organization registers, they must continue to file lobbying disclosure forms unless and until they file a termination of their lobbying registration.
Truth be told, BBSI may settle the suit against it for much less than $33 million. But the action against the firm is nevertheless a cautionary tale for lobbyists and organizations that employ them. Ignore the law at your own risk.
C. Simon Davidson is an attorney with the law firm McGuireWoods. Submit questions to email@example.com. Questions do not create an attorney-client relationship. Readers should not treat his column as legal advice.