RICO Update: Was HSUS Involved in a Pay-to-Play Racket?

When we formally launched HumaneWatch in February 2010, one of the first things we reported on was that the Humane Society of the United States and two of its lawyers were defendants in a federal racketeering lawsuit. There are some key updates that you should be aware of.

First, some background: A decade ago, animal-rights groups sued Feld Entertainment (parent company of the Ringling Brothers circus) alleging elephant abuse in violation of the Endangered Species Act. That lawsuit was dismissed by a US District Court, and a US Court of Appeals upheld the dismissal the other week.

The key witness in that case was a former circus employee named Tom Rider. The case dragged through the court system for years before a federal judge ruled in December 2009 that the animal-rights plaintiffs, which included the Fund for Animals (which merged with HSUS in 2004/2005), had engaged in essentially a pay-to-play scheme with Rider, who received at least $190,000 as the lawsuit made its way through the courts (his “sole source of income,” according to the ruling). Here’s part of the ruling (Markarian is an HSUS executive who used to run the Fund for Animals):

Beginning in December 2001 and continuing until at least the beginning of 2008, the organizational plaintiffs made payments to [the Wildlife Advocacy Project] for the purpose of funding Mr. Rider. While FFA/HSUS (Mr. Markarian) testified that it was not certain whether WAP used its “donations” for other purposes as well, this testimony is undermined by the documents underlying FFA/HSUS’s “donations,” which indicate that the money was specifically for use in connection with this litigation. FFA/HSUS’s testimony also is questionable given that in 2003, plaintiffs’ counsel, Ms. Meyer, specifically sent an email to the representatives of the organizational plaintiffs, including Mr. Markarian, requesting funds to support Mr. Rider’s advocacy efforts regarding the elephants and the lawsuit, and expressly suggesting that the funds for Mr. Rider could be contributed to WAP so that they would be tax deductible.

Meanwhile, in 2007, Feld filed a countersuit under the Racketeer Influenced and Corrupt Organization Act, better known as RICO, using this scheme as the key allegation. That case is still in pre-discovery wrangling (a good lawyer is paid to delay, after all), but named among the defendants are HSUS and two of its lawyers, Kimberly Ockene and Senior VP Jonathan Lovvorn (both of whom came to HSUS a few years ago after being employed at a DC law firm named as a separate defendant).

A key question in the case is whether HSUS is liable—after all, it wasn’t a party in the original suit and didn’t merge with the Fund until 2004.

In a June hearing on various motions from the animal-rights defendants in the RICO case, we saw that Feld’s counsel made some interesting allegations on this point (accessible through PACER):

HSUS is in it as an independent racketeer.…They sent six payments to WAP that were earmarked for Tom Rider, and those payments were made, as we showed, out of a HSUS bank account, on HSUS stationary, a HSUS check sent by a HSUS employee, Jonathan Lovvorn, who had been a partner in that firm before he came over there [to HSUS]. So the idea that they didn’t know about this, that they were innocent, that they were duped, it’s ridiculous. They were in the middle of this.

They are also clearly a conspirator, as is Lovvorn and Ockene. In United States v. Salinas…you just have to further the object of the endeavor, intend to further the object of the endeavor. How is that not satisfied by HSUS making six of the payments? How is that not satisfied by Lovvorn and Ockene being counsel of record in a fraudulent case, and proceeding in a fraudulent case, which is what we’ve alleged; but in addition to what we already know, participating in the obstructions themselves, and also participating in any payments.

The other interesting part of Feld’s allegations is that the animal-rights plaintiffs used the lawsuit to promote a legislative agenda across the US, and that they were able to use the case to raise money in the years during which it was in the courts. We can explore that at a later time.

In the end, Feld claims that the animal-rights lawsuit it defended cost $20 million in legal defenses, and they can be awarded treble damages–$60 million–under RICO. (Defending a frivolous case for so many years tends to rack up the billable hours.) It certainly appears that HSUS could be on the hook for a good chunk of that.

However the case turns out, it’s one more reason to keep your money local. Pet shelters—the ones primarily doing hands-on work—can’t engage in legal shenanigans. They’re too busy spending their money to care for animals. But when you’re a $200-million behemoth with 30 lawyers on staff that donates very little to help these shelters, that’s a different situation.