GOP alleges quid pro quo between Justice Dept. and St. Paul

By JOHN O'BRIEN

WASHINGTON (Legal Newsline) - Republican members of Congress are questioning why a member of the Department of Justice convinced the city of St. Paul, Minn., to drop a pending lawsuit.

Last week, four lawmakers sent a letter to U.S. Attorney General Eric Holder, inquiring about a possible quid pro quo agreement engineered by Assistant Attorney General Tom Perez that resulted in St. Paul dropping a lawsuit over the Fair Housing Act.

The four are: House Judiciary chairman Lamar Smith, R-Texas; House Oversight and Government Reform chairman Darrell Issa, R-Calif.; Senate Judiciary ranking member Chuck Grassley, R-Iowa; and House Oversight Financial Services Subcommittee chairman Patrick McHenry, R-N.C.

"One of the features of this quid pro quo, distinguishing it from a standard settlement or plea deal, was that it obstructed rather than furthered the ends of justice," the letter says.

"It was possible only because Mr. Perez knew the disparate impact theory he was using to bring fair lending cases was poised to be overturned by the Supreme Court. So he bargained away a valid case of fraud against American taxpayers in order to shield a questionable legal theory from Supreme Court scrutiny in order to keep it."

Fearing a St. Paul victory in the Fair Housing case, Perez told the City that the federal government would not intervene in a whistleblower case filed against the City if it dropped the Fair Housing case.

The case, Magner v. Gallagher, is the challenge filed by a group of rental property owners of the housing code used by the city of St. Paul.

The issue in the case is whether an act that is not discriminatory on its own but has a discriminatory effect can result in a claim for relief under the Fair Housing Act. The owners allege the housing code requiring renovations to low-income housing was discriminatory because most of the tenants in those properties were minorities.

The housing code resulted in in condemnations and evictions in a city in which African Americans made up 60 to 70 percent of low-income renters despite making up only 12 percent of the city's population, California Attorney General Kamala Harris said when announcing an amicus brief filed with the Supreme Court by 12 AGs, including West Virginia's Darrell McGraw.

St. Paul's housing code was challenged by the rental property owners under the Fair Housing Act, which is part of the Civil Rights Act of 1968.

The City on Feb. 10, the day before oral arguments, dropped its appeal of a decision by the U.S. Court of Appeals for the Eighth Circuit.

"Mr. Perez fretted that a decision in the City's favor would dry up the massive mortgage lending settlements his division was obtaining by suing banks for housing discrimination based on disparate effects rather than any proof of intent to discriminate," the letter said.

"In exchange for St. Paul dropping its case before the high court, the Justice Department declined to intervene in an unrelated False Claims Act case that had the potential to return over $180 million in damages to the U.S. Treasury."

That case alleged the City falsely certified it was using federal funds to create jobs for low income workers of all races, when it was only focused on employing minorities.

"Reviewing the emails and voice messages, it is clear many of the attorneys involved felt there was an inappropriate quality to the quid pro quo," the letter said.

From Legal Newsline: Reach John O'Brien at jobrienwv@gmail.com.