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Resolved Interaction

Interaction Number: 14081

I
Initiation Date•:

2017-12-18

Title•:

Legal Defense Trusts- gift/Reporting questions

Question•:

1) The requester wanted to know whether an "alternative fee agreement" for "flaf' fees (e.g. a flat charge of "x" dollars) or "capped"
fees (e.g. a fee not to exceed "x" dollars) between a law firm and an employee could constitute a "gift" from the firm to the
employee?
2) The requester asked how to report the donations from individuals or entities to a legal defense trust fund set up for a named
individual federal government employee under E.I.G.A?
3) The requester wanted to know whether:
a) a 501 (cX3) organization that publicly advocates a position relevant to what an agency does, but does not contact the agency or
communicate with the agency in any way, would be considered a "prohibited source" for the agency,
b) when a 501 (c)(3) is a prohibited source for an agency, whether an individual or donor to that prohibited source becomes a
prohibited source for that agency merely by virtue of their donation, and
c) whether it would be considered a gift from a law firm representing an employee to the employee if the law firm entered into an
agreement with a legal defense trust stipulating that the LDF is the sole entity legally responsible for compensating the law firm for
these services?

-

-

Update:
Categories•:
Origin Of Interaction•:
Source•:

First Name:

-

Phone

- Non-Agency
-

Last Name:
Title:
Position:

-

Email:
Phone:
Other Contact Notes:

278s, Gifts from Outside Sources

Public Citizen
Brian
Marshall
Attorney - Perkins Coie

- Other
-

Attorney

....-

Rebecca Gordon & Emma Sharkey were also on the call. The phone number listed above is Ms. Gordon's phone number.

Assignment:

Seth Jaffe

Watching:
Temporary Notes:

l

created by: j sethJaffe

Resolution Information
Resolution Date•:

2017-12-19

Resolution Category•:

Resolved

Response•:

I provided the following advice:

I

1) I stated that a "flat" or "capped" fee agreement would not per se constitute a gift and provided advice consistent with and referred

I

 Agency Information Management System (AIMS) I US OGE
them to OGE Op. 99 x 1 (p. 4 - 8)
2) I provided advice consistent with and referred tham to OGE's on-line FD guide Part 9, FAQ- question #11. OGE's website
addresses how to report gifts made to a legal defense fund here.

3a) I indicated that organizations in these circumstances would not ordinarily constitute a prohibited source for the agency;
however, I cautioned that in many circumstances it will be the case that such an organization will have made communications to the
agency seeking to do or are doing with the agency. I also pointed out that the organization may meet other criteria of the ways in
which an organization can meet the definition of prohibited source (i.e. affected by the perfonnance or non performance of the
employees official duties)
3b) I indicated that a donor, in these circumstances, would not ordinarily constitute a prohibited source for the agency. Under 5 CFR

§ 2635.102(kXdefinition of "person") ordinarily an individual would need to be an officer, employee or agent of a prohibited source
to qualify as a prohibited source themselves. I also gave them further advice consistent with and referred them to 5 CFR §
2635.102(k) and 5 CFR § 2635.203(d).
3c) I indicated that an organizations in these circumstances would not ordinarily constitute a prohibited source for the agency;
however, I cautioned that the circumstances could potentially change if the trust indicates to a law firm that it has run out of money
and/or has no intention of providing any further compensation for services - and the law firm continues to provide the services. I
also indicated that this is another reason why it is a good idea that the law firm not be a prohibited source for the LDF beneficiary's
agency because at that point the gift of the pro bono services are only potentially permissibly accepted by the beneficiary if the law
firm is not a prohibited source.
(Assigned to.· Seth Jaffe)
Complexity (level):

5
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Time Spent (hours):
Contributor:

1-4 hours
Rachel K. Dowell

[ •m++*
Interaction History Log
Closed

~ow Assigned:
Seth Jaffe
Division(s) assigned : GCLPD

I 12/19/2017 05:41:37 PM by Seth Jaffe
12/19/2017 05:41:37 PM by Seth Jaffe

 Agency Information Management System (AIMS) I US OGE

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Resolved Interaction

Interac tion Number: 14013
copy press contact to new

F

Initiation Date•:

2017-12-11

Title*:

Question about legal defense funds (CNN)

Question•:

The reporter had questions about third parties paying the legal fees for WH staff.

Update:
Categories•:

Gifts from Outside Sources

Origin Of Interaction•:

-

Phone

Source•:

Non-Agency
Press

First Name:

Jeremy

last Name:

Diamond

Title :

Reporter, CNN

Position:

~

Email:

none provided

Phone:
Other Contact Notes:
Assignment:

1

Elizabeth D. Horton

Watching :

-·

Temporary Notes:
created by:

1

Elizabeth D. Horton

Resolution Information
Resolution Date•:

-

Resolution Category•:

-

Response•:

L
-

Complexity (level):

Resolved
I informed the reporter on background that we've been consulted by various entities about establishing legal defense funds and told
him that we provide guidance consistent with the recent legal advisory and the template. I helped him to navigate to the template
and LA 17-10 on OGE's website. I also told him that there is not reporting requirements for LDFs specifically but told him that public
filers would have to comply with reporting requirements for gifts.
(Assigned to.· Elizabeth D. Horton)
2
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Time Spent (hours):
Contributor:

.11·1·111.

2017-12-11

0-1 hour

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Interaction History Log
Closed

12/1112017 02:00:1 5 PM by Elizabeth D. Horton

Now Assigned:

12/1112017 02:00:1 5 PM by Elizabeth D. Horton

Elizabeth D. Horton

Division(s) assigned: PCD

·-

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Resolved Interaction

Interaction Number: 13934
copy press contact to new

F

Initiation Date":
Title":
Question":

2017-11-29
Question about legal defense funds (Washington Examiner)
Hello,
Is there currently a legal defense fund established for Leandra English?
And can someone describe the disclosure rules funders would need to adhere to?

Update:
Categories":

Gifts from Outside Sources

Origin Of Interaction": l Email

-

Source":
First Name:
Last Name:
Title:

Non-Agency
Press
Steven
Nelson
Reporter, Washington Examiner

Position:
Email: l -

-

.

Phone:
Other Contact Notes:
Assignment:

r

Elizabeth D. Horton

Watching :
Temporary Notes:
created by:

Elizabeth D. Horton

Resolution Information
Resolution Date":

-

Resolution Category":

-

Response":

2017-1 1-29
Resolved
I informed the reporter on background that OGE has provided guidance on legal defense funds consistent with its legal advisories
and template. I also told the reporter that a public filer would have to comply with reporting requirements and report gifts of more
than $390 on an annual or termination report.
(Assigned to.· Elizabeth D. Horton)

Complexity (level):

2
[Click to view/hide complexity guidelines]

-

Time Spent (hours):
Contributor:

*'M.IJ:*

0-1 hour

 Agency Information Management System (AIMS) I US OGE

Interaction History Log

J

11/29/2017 03:54:30 PM by Elizabeth D. Horton

Closed

!Now
I

Assigned:

Elizabeth D. Horton

Division(s) assigned: PCD

l

11/29/2017 03:54:30 PM by Elizabeth D. Horton

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Resolved Interaction

Interaction Number: 13932

I
Initiation Date•:

2017-11 -28

Title•:

Question concerning the set up of a legal defense fund (LDF)

Question•:

-

-

Update:
Categories•:
Origin Of Interaction•:

An attorney called inquiring about the requirements to set up a legal expense fund run either as a trust or as a 527 organization for
the benefit of a named federal government employee.

Gifts from Outside Sources

- Phone

Source•:

Non-Agency
Other
Attorney

First Name:
Last Name:
Title:
Position:
Email:
Phone:
Other Contact Notes:
Assignment:

L

Rebecca

-

Gordon
Attorney

- Other
-

Attorney- Perkins Coie

- -·

Brian Marshall and Emma Sharkey from Perkins Coie were also on the call.

-

Rachel K. Dowell, Seth Jaffe

Watching:
Temporary Notes:

-

created by:

Seth Jaffe

Resolution Information
Resolution Date•:

2017-1 1-28

Resolution Category•:

Resolved

Response•:

We provided advice consistent with and referred the attorney to: the OGE Model Legal Expense Trust Fund Document; 5 CFR §
2635.202(b)(1) & (2); 18 USC§ 209; LA-17-10 and D0-93x21_We indicated that, so long as all substantive aspects of the model
trust document were followed, it is permissible to set up the fund either as a trust or as a 527 organization. We also indicated that
the gift is a gift to the employee at the moment it is donated to the trust and that the source of the gift is the donor. We also
indicated that, consistent with 5 USC App. § 102, all gifts over $390 from one donor in one year would have to be reported on the
FD Report of a FD filer. We also recommended, to avoid appearance of corruption concerns, that all donors be voluntarily
disclosed, but we indicated that is not strictly required by ethics rules.
Finally, we indicated that it is fine for her to indicate to others that she received advice from OGE and that she plans to receive
further advice as necessary - so long as she does not state that OGE has approved the arranged set up - as we have not yet
reviewed the proposed set up of any LDF in this case. We recommended that she seek further advice if she planned to deviate
from the trust template in any material way.
(Assigned to.· Rachel K Dowel/; Seth Jaffe)

Complexity (level):

4

I

I

 Agency Information Management System (AIMS) I US OGE
[Click to view/hide complexity guidelines]
Time Spent (hours):

1-4 hours

Contributor:

*H.!J:*
Reopen Information
Date:
Reason:

I 2018-05-16
Fix Typo

Interaction History Log

-

Closed

05/16/2018 05:07:27 PM by Rachel K. Dowell

Reopen

05/16/2018 05:07:15 PM by Rachel K. Dowell

r-Closed

11/29/2017 03:12:16 PM by Seth Jaffe

Now Assigned:

11/29/2017 03:12:16 PM by Seth Jaffe

Seth Jaffe
Rachel K. Dowell

Division(s) assigned: GCLPD

I

 Agency Information Management System (AIMS) I US OGE

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Resolved Interaction

Interaction Number: 13931

I

-·

Initiation Date":
Tit le":
Quest ion":

2017-11-28

---

Question concerning setting up a legal defense fund (LDF)
I have been retained by an EPA employee to establish and serve as Trustee for a Legal Expenses Trust Fund to raise funds and
pay the legal expenses incurred by virtue of a bar complaint alleging violation of the Code of Professional Responsibility because
the employee previously filed suit against the agency. Stefan Passantino forwarded to me the template document from your office
regarding such trusts. I have several questions which I would like to discuss with you, so if you could please let me know a
convenient time to talk, I will call you at that time.
New questions from 4/27/18:
1. May the Beneficiary contribute to the Legal Expenses Trust Fund?
2. Is a company or industry that has no business before the agency, has never had such business before the agency and does not
anticipate having any business before the agency, a prohibited source - there is a 'fear' that "everything is someday, somehow
going to be subject to the EPA".... With no specific transactions, business, matter, proceeding, in the past or in the present, is that a
'prohibited source'?
3. If a person is an investor, not an owner, but a passive investor in an LLC, or owns stock in a publicly traded company, or has
some other investment in an entity that may have transactions or business before the agency - is that investor a prohibited source?
New questions from 7/11/18:
Question 1 - Whether a filer is required to report outstanding legal bills on his financial disclosure report.
Question 2 - Whether the gift rules still apply to a former employee.
Question 3 - What are the reporting requirements for gifts received by a legal defense fund?

Update:
Categories":

F

Orig;, Of

"'"""''~4
Source":

Phone
Non-Agency
Other
Private Law Firm
Cleta

Last Name:

Mitchell

Title:
Position :

I_

Gifts from Outside Sources

First Name:

Attorney - Foley & Lardner LLP
Other
Attorney

Email:

-

Phone:
Other Contact Notes:
Assignment:

Rachel K. Dowell, Seth Jaffe

Wat ching:
Temporary Notes:

-

created by:

-

Seth Jaffe

Resolution Information
Resolution Date":

2017-1 1-28

I

---------------------·-

 Agency Information Management System (AIMS) I US OGE
Resolution Category•:

I Resolved

Response•:

We provided advice consistent with and referred the attorney to: the OGE Model Legal Expense Trust Fund Document; LA-17-10
and D0-93x21 . We also informed the attorney that the requirement that the Beneficiary also not be the grantor is based on the
appearance of corruption concerns, but is not strictly prohibited by the gifts rules at 5 CFR § 2636 subpart B. We indicated that a
LDF set up where the beneficiary and the grantor were the same person would not be consistent with the guidance we have
provided. We also recommended, to avoid appearance of corruption concerns, that all donors be voluntarily disclosed, but we
indicated that it is not strictly required by ethics rules. Finally, we indicated that it is fine for her to indicate to others that she
received advice from OGE and that she plans to receive further advice as necessary - so long as she does not state that OGE has
approved the arranged set up- as we have not yet reviewed the proposed set up of any LDF in this case. We recommended that
she seek further advice if she planned to deviate from the trust template in any material way.
On 4/12/18, the attorney left a voicemail requesting technical assistance concerning the parameters of who may donate to a legal
defense fund. We left a voicemail on 4/13/1 8 to set up a call and received no response. We left another voicemail on 4/16/1 8 to set
up a call, but again received no response. We provided no advice.
Call on 4/27/ 18 to discuss new questions: The attorney confirmed that the legal defense fund is now in existence (but did not
become active until CY18). OGE has not been provided a copy of the fund, but attorney confirmed that she followed the OGE legal
defense fund trust template exactly. We provided advice consistent with and referred her to OGE's Public Financial Disclosure
Guide, Gifts & Travel Reimbursement Section, FAQ #1 1. With regard to question 1, we told her that allowing the beneficiary to
make a contribution wouldn't be inconsistent with the template or prohibited by the gift rules per se, but we raised potential
appearance concerns. With regard to question 2, we referred her to the beneficiary's agency and gave her the contact information
for an ethics official there. We also pointed her to article 7, number 5, in OGE's template, and reiterated that the terms of the trust
require the trustee to confer with the agency ethics official as needed within 30 days of the receipt of any contribution or notification
by a potential donor of the intent to make a contribution, whichever is earlier, to seek a determination as to whether the contribution
is from a prohibited source. With regard to question 3, we explained that, to be considered the same "person• as the LLC or
company, the investor must be an officer, employee, or agent of the LLC or company. Accordingly, if an individual doesn't serve in
those roles, and is not otherwise a prohibited source in an individual capacity, then they would not be a prohibited source merely by
investing in the company. Finally, the attorney asked about the possibility of organizing the fund as a 527 organization. We told her
that , regardless of the way the fund is formed, the fund would need to be consistent with OGE's template. We also noted that the
fund would otherwise need to qualify for and comply with the requirements of a 527 organization.
Call on 7/1 1/18 to discuss new questions. Provided advice consistent with and referred attorney to subpart B; FD Guide, part 8,
FAQ #17; and FD Guide, part 9, FAQ # 11:
Question 1: We discussed how certain outstanding legal bills were likely reportable based on the attorney's description, but we did
not know all of the facts to determine if they were overdue and exceeded $10,000 at the end of the reporting period. We told the
attorney that the filer's representative should contact OGE if they have any questions about whether to report. Based on the limited
facts provided, though, it appears that some legal fees would be reportable.
Question 2: We confirmed that the gift rules do not apply to a former employee, but provided the prudential advice to continue
abiding by the terms of the trust as though the former employee continued to be employed (e.g., continue to not accept gifts from
prohibited sources, etc. ). We acknowledged that this was prudential advice and not a legal requirement. lfthe attorney decides not
to follow the terms of the trust, we discussed the possibility of creating a new fund. In either case, we cautioned against creating the
appearance of government endorsement or misuse of title. The attorney raised the possibility of establishing a new fund as a 529
organization. We explained that the rules for establishing a 529 organization are outside of OGE's jurisdiction, but reminded her
that the fund would otherwise need to qualify for and comply with the requirements of a 529 organization.

I
Complexity (level):

Question 3: We explained that a filer must report gifts to a legal defense fund totaling more than $390 from a single source that
were received during the reporting period. We noted that the gift is reportable at the time of donation, not distribution; and that the
source is the donor, not the fund. In other words, any donations to the fund totaling more than $390 that were donated while he was
an employee must be reported.
(Assigned to.· Rachel K. Dowell; Seth Jaffe)
5
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Time Spent (hours) :

1-4 hours

Contributor:

*H.!J:*
Reopen Information
Date:
Reason :

2018-07-11
Follow-up call

Interaction History Log

II

 Agency Information Management System (AIMS) I US OGE

I

Closed

I 07/12/2018 05:09:54 PM by

07111/2018 03:22:30 PM by Rachel K. Dowell

Update

r----

-

-

Rachel K. Dowell

Reopen

07111/2018 03:21 :51 PM by Rachel K. Dowell

Closed

04/30/2018 02:58:01 PM by Rachel K. Dowell

Reopen

04/30/2018 02:55:09 PM by Rachel K. Dowell

Closed

04/27/2018 01:14:17 PM by Rachel K. Dowell

Reopen

04/27/2018 12:44:36 PM by Rachel K. Dowell

Closed

04/19/2018 04:01 :33 PM by Rachel K. Dowell

Update

04/19/2018 08:37:02 AM by Rachel K. Dowell

Update

04/19/2018 08:33:51 AM by Rachel K. Dowell

Reopen

04/19/2018 08:31 :27 AM by Rachel K. Dowell

Closed

04/16/201810:32:17 AM by Rachel K. Dowell

Reopen

04/16/201810:31 :31 AM by Rachel K. Dowell

Closed

11/29/2017 03:14:03 PM by Seth Jaffe

Reopen

11/29/2017 03:13:05 PM by Seth Jaffe

Closed

11/29/2017 02:58:26 PM by Seth Jaffe

Now Assigned:

11/29/2017 02:58:26 PM by Seth Jaffe

-

-

-

r----

Seth Jaffe
Rachel K. Dowell

Division(s) assigned: GCLPD

I

 Agency Information Management System (AIMS) I US OGE

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Resolved Interaction

Interaction Number: 13912
copy press contact to new

F

Initiation Date•:
Title*:
Question•:

2017-11-28
Questions about legal defense funds (Daily Caller)
The reporter had questions about a legal defense fund for Leandra English where group of donors is not disclosed but the structure
was "approved by OGE."

Update:
Categories•:
Origin Of Interaction•:
Source•:

Gifts from Outside Sources
Phone
Non-Agency
Press

First Name:

Richard

Last Name:

Pollock

Title:

Reporter, Daily Caller Foundation

Position:
Email:

none provided

Phone:
Other Contact Notes:
Assignment:

Elizabeth D. Horton

Watching :
Temporary Notes:
created by·

Elizabeth D. Horton

Resolution Information
Resolution Date•:
Resolution Category•:
Response•:

Complexity (level):

2017-1 1-28
Resolved
I told the reporter that I could not discuss a specific individual but told him on background that OGE's guidance provides that
instruments establishing legal defense funds should include language stating that contributions shall not be accepted from
anonymous sources. I also told him that individuals must comply with the gift rules and the reporting requirements. I referred him to
LA-17-10 and 5 USC app. §102. I also told him that OGE advises individuals to consult with an agency ethics official or OGE before
establishing a legal defense fund, but it is not mandatory.
(Assigned to.· Elizabeth D. Horton)
2
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Contributor:

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Interaction History Log

-

Closed
Create

~ow Assigned:
Iizabeth D. Horton

Division(s) assigned: PCD

-

11/2812017 04:47:54 PM by Elizabeth D. Horton
11/2812017 04:27:37 PM by Elizabeth D. Horton
11/2812017 04:27:37 PM by Elizabeth D. Horton

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Resolved Interaction

Interaction Number: 13908
copy press contact to new

F

Initiation Date•:
Title*:
Question•:

2017-11-28
Questions about legal defense funds (CNBC)
The reporter had questions about legal defense funds and whether anonymous sources are permissible and whether or not OGE
has been consulted about a legal defense fund for Leandra English.

Update:
Categories•:
Origin Of Interaction•:
Source•:
First Name:
last Name:
Title:

Gifts from Outside Sources
Phone
Non-Agency
Press
Stephanie
Dhue
Reporter, CNBC

Position:
Email:

none provided

Phone:
Other Contact Notes:
Assignment:

Elizabeth D. Horton

Watching :
Temporary Notes:
created by·

Elizabeth D. Horton

Resolution Information
Resolution Date•:
Resolution Category•:

I

L
-

Response•:

Complexity (level):

Resolved
I informed the reporter that I could not discuss a specific individual but told her on background that OGE's guidance has been and
continues to be that legal defense funds should not accept donations from anonymous sources. I also referred her to the definition
of prohibited sources and told her that public filers must comply with reporting requirements.
(Assigned to.· Elizabeth D. Horton)
2
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Contributor:

.11·1·111.

2017-1 1-28

0-1 hour

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Interaction History Log

Closed

11/281201712:20:40 PM by Elizabeth D. Horton

Now Assigned:

11/281201712:20:40 PM by Elizabeth D. Horton

Elizabeth D. Horton

Division(s) assigned: PCD

·-

 Agency Information Management System (AIMS) I US OGE

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Resolved Interaction

Interaction Number: 13898
Initiation Date•:

2017-11 -25
O IIP<:.tinn ....v .......,. ""\!

Question•:

Update:

-

Categories• :

gift

'legal

, (LDF)

The attomey calling said that he was representing a employee who needed legal representation immediately. He stated that
he planned to provide either pro bono legal services or set up a fund for people to contribute - to cover the costs of legal expenses
for this employee. He stated that he would like advice on how to do this consistent with ethics rules and laws.

-

from Outside Sources

Origin Of Interaction• :
Source• :

Non-Agency
Other
Private Attomey
Deepak

-·

Gupta

Last Name:
Title:
Position:

-·

Assignment:
Watching:
Temporary Notes:
created by:

-

Other
Attomey

-

Email:

at Gupta Wessler

-

-

Seth Jaffe

Seth Jaffe

Resolution Information
Resolution Date•:
Resolution Category•:
Response•:

2017-1 1-27
Resolved
I referred him to, and provided him advice consistent with LA-17-10, as well as the legal defense trust fund template OGE has
previously provided to several other private attomeys - the same trust fund template linked to in a recent CNN article on the topic. I
also stated that any employee who files a financial disclosure form and accepts gifts of legal defenses - in kind or by payment of the
fees- would also need to abide by reporting requirements in E.I.G.A.
I also left a message for Mr. Gupta on 11127/ 17 where I reminded him that if his law firm is a prohibited source forth~ then
an employee of thecould not accept a gift of pro bono legal services from his firm under the gift rules. I expressed"'O opinion
as to whether his firm IS a prohibited source foand indicated that t~ would be in the best position to know whether or
not the agency considers his firm a prohibited source.
On 11/28/17 the questioner called back indicating that his firm was retained by a govemment employee to represent the employee
in a lawsuit and that the firm used their standard retainer agreement with the employee and does not plan to provide pro bono legal
services to the employee. He said that the firm expects to be paid a market value for their services. I confirmed that under such
circumstances that their services wold not implicate the gift rules for the employee as the provision of the services under this

 Agency Information Management System (AIMS) I US OGE

arrangement would not constitute a gift I did suggest that the employee seek advice from their ethics official at their agency to
receive advice on related ethics issues such as 5 CFR § 2635.502.

l

The attorney informed me that another law firm who may be considering establishing a LDF for the benefit of the employee may be
calling OGE for advice on how to set up such a fund in compliance with government ethics rules.
(Assigned to.· Seth Jaffe)

Complexity (level):

4

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r-

2017-11 -29

- Follow up Call from questioner.
r-

Interaction History Log

-

-

Closed

11/29/2017 02:36:52 PM by Seth Jaffe

Reopen

11/29/2017 02:27:42 PM by Seth Jaffe

Closed

11/27/2017 10:03:49 AM by Seth Jaffe

Reopen

11/27/2017 09:58:04 AM by Seth Jaffe

Closed
Now Assigned:

1

11/27/2017 09:29:36 AM by Seth Jaffe
I 11/27/2017 09:29:36 AM by Seth Jaffe

Seth Jaffe
I

Division(s) assigned : GCLPD