Following The Money Trail For The 2019 DOJ Opinion Reversal Exposes Special Interests

The Department of Justice memo released in 2019 changed the way domestic gambling industries operate. The decision ultimately adjusted an earlier memo released in 2011 by the DOJ regarding the application of the 1961 Federal Wire Act in modern times.

The new “adjusted” DOJ memo released in January of 2019 provided a 90-day grace period for industries to meet new compliance standards set by the Justice Department, these standards would essentially localize domestic gaming information, data, payment providers, and so on rather than allowing any component of gaming to cross a state’s border.

What Created the Environment For This Decision?

Sheldon Adelson, the owner of the Sands Las Vegas and several notable brick and mortar casinos across the globe, poured millions of dollars into the 2016 election cycle to support Republican candidates and then-Presidential candidate Donald Trump. Adelson has a long history of lobbying US Senators, Representatives, and Republicans to support his goal of terminating all online gambling (i.e. competition) in the United States.

Adelson was also considered one of Trump’s biggest donors in the 2016 election and shortly after the President’s inauguration, shared his concerns over online gambling with Trump during a White House dinner.

In 2017, Jeff Sessions expressed clear discontent with the 2011 DOJ Memorandum concerning the Wire Act and online gambling stating he would “revisit it” as Attorney General during his Senate confirmation hearing to be the US Attorney General after US Sen. Lindsey Graham directly asked Session his opinion on the Wire Act and 2011 memo.

Adelson has long lobbied to reverse the DOJ opinion, at first under legislation known as the Restoration of America’s Wire Act, otherwise known as RAWA, pledging to spend whatever it takes to ban online gaming. Adelson also created the Coalition to Stop Internet Gambling as a means to further advance his lobbying goal.

A former lobbyist for the Coalition to Stop Internet Gambling, Charles Cooper and his law firm drafted a memo detailing the incorrect stance of the 2011 Wire Act memo one month after Session’s confirmation hearing. Several months later, Darryl Nirenberg, a longtime lobbyist for Adelson delivered the legal memo written by Cooper’s firm to a top ranking official in the DOJ. In May, the DOJ’s criminal division forwarded the drafted memo to their Office of Legal Counseling for reconsideration on the 2011 opinion.

Sessions and Cooper became closely intertwined after the Attorney General asked him to represent him in the Russia-U.S. election meddling investigation. One month later, Sessions recused himself from all gambling matters given his lawyer’s involvement with gambling in previous work. Sessions then recused himself from the Mueller probe and later resigned after supposed pressure from the President and the Republican party regarding his recusal in the Russia investigation and unwillingness to fire Mueller.

This vacuum allowed Rod Rosenstein to become the US Deputy Attorney General, however, it is likely he positioned himself as an enemy to Trump after he stepped in to oversee the Mueller probe and publicly refused to fire Mueller unless he engaged in some misconduct. Within a year of him being the new AG, Rosenstein was pressured to leave but released statements saying it the reassignment was on his own free will.

While the 2019 DOJ memo came as a surprise to many states and gaming providers, the decision itself has been long under consideration as the memo was dated November 2nd, 2018 – during the transitional period of Attorney Generals. Rod Rosenstein, the new US Attorney General, was listed in the 2019 memo as the issuer, despite his lack of real concern for gambling matters during administrative investigations.

After Rosenstein resigned, President Trump tapped Matt Whitaker to act as Attorney General but due to scandals regarding a conservative charity he runs known as the Foundation for Accountability and Civic Trust, or FACT, and its undisclosed donors the official nomination was pulled.

Since the charity’s inception, 100% of the nonprofit’s income year after year came from DonorsTrust, a stealth dark money funnel designed to allow wealthy individuals and foundations to anonymously provide funds through. The creator of FACT, previously known as Free Market America Education Foundation, is Ray Wotring who is tied to yet another dark money group such as like Americans for Limited Government.

FACT’s board member and treasurer Neil Corkery and his wife, sit at the head of other dark money groups which influence public policy and promoting Trump’s agenda such as the Judicial Crisis Network (which spent $10 million on supporting and influencing support for Justice Brett Kavanaugh’s confirmation) and its sister group, Judicial Education Project, as well as, the Wellspring Committee, and the BH Group, LLC.

With the AG position left vacant again, nominations for William Barr surfaced and Adelson saw clear opposition. While Barr had not been confirmed as AG until February 14th, 2019, Barr made it clear he was in favor of state’s rights and refused to revisit the 2011 opinion even before his AG confirmation hearings.

Sen. Graham did not pose any questions on the memo or the Wire Act during Barr’s confirmation hearing but released a public statement praising the new memo released in 2019 which placed harsher restrictions on state’s ability to operate domestic gaming.

It is likely the DOJ scrambled to release the 2019 DOJ memo before Barr’s placement as AG during the 2019 Government shutdown. Word is acting AG Whitaker and other DOJ officials plotted to finalize the overturning of the 2011 memo. The evening before the start of Barr’s hearing, the DOJ circulated and released the new memo authored by the Assistant Attorney General of the Office of Legal Counsel, Steven A. Engel.

However, a significant signature was lacking leaving many to question the legitimacy of the document. The new stance made by the 2019 memo conspicuously mirrored many statements, arguments, and wording found in the Cooper memo submitted in 2017.

If those crumbs weren’t clear enough, the Coalition to Stop Internet Gambling released a thankful press release praising the Justice Department, one hour after the news of the new policy broke.

Who Was Involved In The New Memo’s Confirmation?

Steven Engel, officially label as the author of the new 2019 DOJ memo, is the appointed Assistant AG for the DOJ’s OLC by Trump. Engel also served as the #2 official in the OLC under the George W. Bush administration when the Wire Act was “interpreted” by the DOJ and several cases to apply to online gambling access. Engel has a legal background as the former Dechert, LLP partner, an international law firm also known to donate funds to Republicans and Conservatives while he was a partner.

It is worthwhile to note, Steven Engel along with several other political appointees by Trump and their immediate families donated at least 6 million to Trump and his allied super PAC during the 2016 election. Think: You scratch my back…I’ll scratch yours.

Another Trump appointee for the Assistant AG position of the DOJ’s Criminal Division, Brian Benczkowski, was once the Director of the DOJ and has a legal background as a former partner at Kirkland & Ellis LLP, a firm focused on white collar crimes and, under previous work, linked to the largest Russian bank, Alfa-Bank – a central suspect in the Russia-U.S. investigation.

However, Benczkowski formally recused himself from the issues surrounding the new 2019 DOJ policy approach to the 2011 memo under promises to reduce conflicts of interest in any matters which overlap with his previous work.

With Benczkowski’s recusal, the 2019 DOJ memo was addressed to John P. Cronan, was acted as assistant AG for Criminal Division in place of Benczkowski. This allowed Cronan to approve of the Criminal Division’s request to the OLC to revisit the 2011 Memorandum Opinion.

Adelson’s Funding

While it seems indirect, Sheldon Adelson was the only lobbyist with skin in the game in regard to the passing of the new DOJ policy on the Wire Act and the 2001 Opinion. In fact, Adelson was making several large contributions to Republicans and Republican organizations during 2018.

In regard to significantly large donations, Adelson donated 30 million to the Congressional Leadership Fund (in two separate transactions between himself and his wife, and himself alone) on May 3rd, and 25 million to the Senate Leadership Fund on July 26th (in two separate transactions).

On September 12th, Adelson once again donated 25 million to the Senate Leadership Fund (in two separate transactions) and 20 million to the Congressional Leadership Fund (in two separate transactions). On September 13th, Adelson donated 10 million to the America First Action organization (in two separate transactions), and on October 25th donated 5 million to the Congressional Leadership Fund (in two separate transactions) and 5 million to the New Republican PAC (in two separate transactions).

Trump’s Pro-Business, Anti-Regulation – So Why?

With Adelson’s influence and an impending investigation regarding Trump’s election as President and Russia’s involvement in the 2016 election, the change of guards regarding the Justice Department may have conveniently provided Trump with some false sense of security – rid the department of obvious enemies and replace them with those in favor of his administration and policies.

Despite Trump’s career history as a businessman and his stance to reduce regulations across industries, the DOJ’s new position places several restrictions on states and their legalized and regulated sovereign businesses regarding gambling while implementing loads of red tape in terms of legal boundaries and limitations. It seems Adelson may have played Trump, presenting new Justice Department official suggestions based on whether they supported his anti-online gambling initiative.

Ironically, the man who is known to use people and resources for his own gain was used by his top donor, Adelson - to further the casino mogul’s own goal. However, this is not to say Adelson wants to see Trump out of office and is thus protecting the President in some way.

That being said, if the investigation obtains substantial evidence and national support for some kind of reprimanding then Adelson may be forced to cut ties- but that’s alright the Sands owner has already gotten what he’s wanted so long as Barr does not overturn the new memo.