UPDATE: In a June 10 article, Mother Jones reported that a Department of Justice official said of Operation Choke Point, “There's been a lot of misunderstanding, there's been accusations were going after gun owners...None of our cases involve gun merchants”:
Nonetheless, Issa's report alleges that the Justice Department is using the FDIC guidance as a hit list. “The FDIC's policy statements on firearm and ammunition sales carry additional weight in light of FDIC's active involvement in Operation Choke Point,” the report reads. But a Justice Department official tells Mother Jones that this conclusion is incorrect. “We're not using the FDIC's list at all,” the official says. “There's been a lot of misunderstanding, there's been accusations were going after gun owners...None of our cases involve gun merchants or porn.”
ORIGINAL POST:
Conservative media are advancing baseless claims about a Department of Justice program that targets fraud in order to manufacture a conspiracy theory that the Obama administration is trying to put gun retailers out of business.
The DOJ program in question is called Operation Choke Point and was conceived as a project of the DOJ Consumer Protection Branch in November 2012. Based on the suspicion that some banks -- acting with knowledge or willful blindness -- conducted business with fraudulent merchants or those merchants' third-party payment processors, an assistant United States attorney drafted a proposal to investigate banks for possible civil or criminal violations. As an early memo stated, Choke Point was designed as “a strategy to attack Internet, telemarketing, mail, and other mass market fraud against consumers, by choking fraudsters' access to the banking system.” The memo called for an initial investigation of 10 banks and the creation of a “database to map relationships among fraudulent merchants (beneficial owners and trade names), third-party payment processors, and banks.”
In April 2014, The Washington Post reported DOJ had “issued 50 subpoenas to banks and payment processors.” In a May 7 blog post, DOJ described a settlement it obtained from Four Oaks Bank in North Carolina. The bank agreed to $1.2 million in fines to settle allegations it profited from its business relationship with a clearly fraudulent third-party payment processor. While touting the settlement, DOJ also noted, “We're committed to ensuring that our efforts to combat fraud do not discourage or inhibit the lawful conduct of these honest merchants.” On May 29, The Wall Street Journal reported the existence of at least 15 DOJ investigations under Choke Point.
Conservative media, however, are hyping the evidence-free claims of various gun retailers that they have been targeted by Choke Point because of the Obama administration's supposed antipathy for guns. (Hysteria over Choke Point falls within a pattern of conservative media's embrace of conspiracy theories about the Obama administration attacking gun rights.) But recently released DOJ documents show that Choke Point is entirely focused on fraud, not firearms retailers.
Essentially, if a gun retailer attributes any banking problem that they encounter to Choke Point, conservative media can be counted on to run with the story. To account for a lack of evidence for the allegations, for conservative media, the connection between Choke Point and firearms retailers is bridged by a 2011 guidance issued by the Federal Deposit Insurance Corporation (FDIC) on third-party payment processors that listed firearms dealers among merchants termed “high-risk.”
On January 8, House Oversight Committee Chairman Darrell Issa (R-CA) opened an investigation into Choke Point, alleging that the program may have “inappropriately target[ed] two lawful financial services: third-party payment processing and online lending,” as he wrote in a letter to DOJ. Making no mention of firearms, Issa charged that the “true goal” of Choke Point was to “eliminate legal financial services to which the Department objects.”
Soon after this letter, Cam Edwards, the host of the National Rifle Association's radio and televised news shows, connected Choke Point to bank-related issues that had been reported by firearms retailers.
Claims about Choke Point targeting firearms retailers subsequently took off with a May 18 Washington Times article where reporter Kelly Riddell credulously advanced claims by gun sellers that they had been targeted by Choke Point. No actual evidence was offered to substantiate the claims.
For example, the Times extensively discusses the April 2012 conflict between McMillan Group International and Bank of America and posits that McMillan was “targeted in the executive branch's efforts.” At the time of the dispute, Bank of America called McMillan's allegations that the bank refused to do business with him because he manufactured firearms “completely false.” Since the existence of Choke Point became public, owner Kelly McMillan has conducted multiple interviews where he alleges he is a victim of the operation. However it would later be revealed Choke Point was conceived on November 5, 2012, nearly seven months after McMillan's Bank of America dispute. McMillan also has a financial interest in the idea that Choke Point targets gun retailers. After his dispute with Bank of America, McMillan launched McMillan Merchant Solutions, a payment processing service tailored for gun retailers. McMillan told the Times that the business is his way “to give back.”
On May 19 the Times editorial board relied on Riddell's reporting to argue that “Obama wants to use the banks to void the Second Amendment.” Also on May 19, Fox News contributor Katie Pavlich appeared on America's Newsroom to falsely suggest Choke Point began in 2011 with the FDIC's “high risk” guidelines and to repeatedly claim that DOJ is “discriminating” against gun retailers.
A report released on May 29 by Issa's House Oversight Committee led to more conservative media falsehoods about Choke Point. While the report concluded Choke Point “was primarily focused on the payday lending industry,” it also alleged that firearms retailers had been affected by Choke Point. The citation for this allegation, however, was Riddel's flawed May 18 Times article. In a further blow to conservative media's claims, 850 pages of DOJ internal material released with the report do not contain the words “gun” or “firearm” in describing the design and operation of Choke Point. (The word “gun” is mentioned once in the context of DOJ's gun violence prevention efforts.)
DOJ spokesperson Emily Pierce responded to the release of the report and accompanying DOJ internal material by stating, “We only investigate banks and third-party payment processors that violate federal law, and these documents suggest nothing to the contrary.” Conservative media, along with the NRA, nonetheless seized on Issa's report as vindication for their conspiracy theories.
Citing Issa's report, which cited her own flawed reporting, Riddell wrote for the Times that a “House panel says the Obama administration is using the Justice Department to target and 'choke out' businesses it finds objectionable, from gun dealers and payday lenders to drug paraphernalia sellers and porn merchants.” Later that night, the House of Representatives -- urged on by firearms industry trade group the National Shooting Sports Foundation -- amended a DOJ appropriations bill by voice vote to defund Choke Point.
On May 30 the NRA's lobbying arm published a column at the conservative Daily Caller alleging that Issa's report offered evidence that “the true goal of the operation is to 'choke out' certain industries, including legal businesses like sellers of firearms and ammunition.” That night, Fox News' The Kelly File credulously adopted right-wing media's line on Choke Point, with correspondent Trace Gallagher telling viewers, “Congress just gave a very big boost” to gun store owners with the defunding vote.
Issa's report continues to be credulously adopted by conservative media. At FoxNews.com Emily Miller -- chief investigative reporter for Washington D.C.'s Fox affiliate -- wrote,“The Obama administration, after failing to get gun control passed on Capitol Hill, has resorted to using its executive power to try to put some in the firearms industry out of business, House Republican investigators say.” Miller's article quoted an NRA spokesperson who posited Choke Point was “another example” of Obama's "'phone and pen' style of imperial governance."
The Choke Point conspiracy theory also demonstrates a misinformation feedback loop between conservative media and Issa, who has long manipulated media to advance the Oversight Committee's agenda. Riddell's May 18 Times article contains a serious flaw; it relies on the claims of McMillan who could not have been targeted by Choke Point. This article, however, is extensively cited by Issa's May 29 report, which coincidentally was released alongside information that debunks McMillan's claim. In turn, Issa's report is positively cited by conservative media figures, and the Operation Choke Point conspiracy marches on.