Filing Cites Overbroad and Otherwise Improper Claims of Privilege to Withhold Important Documents
February 12, 2016 05:30 PM Eastern Standard Time WASHINGTON--(BUSINESS WIRE)--Yesterday, Fairholme Funds, Inc., (“Fairholme”) filed the public version of its reply brief in support of its request that the Court of Federal Claims order the federal government to turn over documents it is unlawfully withholding in Fairholme Funds, Inc. v. United States, No. 13-465 (Fed. Cl.). In that case, Fairholme is challenging the so-called “Net Worth Sweep” – the federal government’s unprecedented decision in August 2012 to expropriate private shareholders’ investments in Fannie Mae (“Fannie”) and Freddie Mac (“Freddie”) by requiring those highly profitable companies to pay their entire net worth to the Department of Treasury every quarter in perpetuity.
“overbroad and otherwise improper claims of privilege to withhold some of the most important documents in this case” Tweet this In February 2014, the Court of Federal Claims authorized Fairholme to receive documents from the federal government related to the Net Worth Sweep. During these last two years, the Department of Justice has employed “overbroad and otherwise improper claims of privilege to withhold some of the most important documents in this case” (see relevant filing here) – particularly documents that show the government’s case is based on outright falsehoods.
“Today’s filing challenges the latest example of foot-dragging and evasion by those attempting to defend the government’s indefensible decision to enrich itself by putting Fannie and Freddie on the permanent brink of insolvency,” said Bruce Berkowitz, Founder and Chief Investment Officer of Fairholme Capital Management. “It is outrageous that the government has unjustifiably withheld key documents at every turn, only to hand some of them over at the eleventh hour when challenged. The government’s persistent obfuscation has the purpose and effect of inflicting economic harm on our tens of thousands of shareholders and other innocent investors,” said Mr. Berkowitz.
A decision on this matter could come from the Court at any time.
The Funds’ investment objectives, risks, charges, and expenses should be considered carefully before investing. The prospectus contains this and other important information about the Funds, and it may be obtained by calling Shareholder Services at (866) 202-2263 or visiting our website www.FairholmeFunds.com. Read it carefully before investing.
Fairholme Distributors, LLC (2/16)
Contacts For Fairholme Funds, Inc. Sard Verbinnen & Co. George Sard or Paul Scarpetta, 212-687-8080
White House Role In 3rd Amendment Net Worth Sweep February 12, 2016 at 12:05 am, No comments Cooper & Kirk, plaintiffs' counsel in the Fairholme case in the Court of Claims, summed up its objection to the government's assertion of the Qualified Presidential Communications privilege as follows: [color=red]But White House officials played a unique role in the decision to impose the Net Worth Sweep, and this fact cannot be seriously disputed in light of the materials attached to the plaintiffs' motion...As this Court has already observed, "[h]igh-ranking officials within an agency, corporation, or other institution are not fungible," [.] and the communications of such officials are not fungible either.[/color] Otherwise, the law firm made a very compelling case against the government's assertion of the Deliberative Process Privilege and the Bank Examination Privilege. One sure bet, the government won't accede to the requests for additional information without a fight.
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