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FILED

u.s. D!:;TI~rCT COURT DIS rnic T or COLfJR /, DO



2010 MA Y - 7 Pt1 3: 27

TN THE UNITED STATES DISTRICT COURT FOR THE DISTRICT OF COLORADO

~R EGOf~ '( C. L,\NGHAH CLERi<:

CiVilActionNo~10 - CV - 0 1 0 7 lC"'A'6~&

By-- DEP. Cu(

STEESE, EVANS & FRANKEL, P.c.,

Plaintiff,

v.

UNITED ST.r\TE~ SECURITIES AND EXCH-\NGE COMMISSION,

Defendant.

COMPLAINT PURSUANT TO FREEDOM OF INFORMATION ACT

STEESE, EVANS & FRANKEL, P.c. ("SE&F") brings this action against the UNlmD

STATES SECURITIES AND EXCHANGE COMMISSION ("SEC") for the improper and

unlawful refusal b)' the SEC to produce documents and information requested by SE&F

pursuant to the Freedom of Information Act ("FOIA"), 5 U.S.c. § 552 & 17 C.P.R. §

200.80. As explained below, SE&F has exhausted its administrative remedies.

THE PARTIES

1, SE&F is a Professional Corporation registered, licensed to do business, and in

good standing in the State of Colorado. SE&F is located ae 6400 S, Fiddlers Green Circle,

Suite 1820, Greenwood Village, Colorado 80111.

FOt.'!' Complaint.docx

2. The SEC has a Regional Office located in Colorado at 1801 California Street,

Suite 1500, Denver, Colorado 80202.

JURISDICTION AND VENUE

3. The Court has jurisdiction over this case, and venue is proper in this District,

pursuant to 5 US.c. § 552(a)(4) (B). As explained below, SE&F has exhausted its

administrative remedies.

SEC IS IN VIOLATION OF FOIA

4. On February 4, 2010, SE&P served its FOIA request (the "Request") on the

SEC in accordance with the procedures set forth in 17 C.P.R § 200.S0(d). A copy of the

Request is attached hereto as Exhibit 1. The Request stated:

Pursuant to 5 U.S.c. §§ 552 et Jeq., I hereby request copies of the following records and information pertaining to use by present and former employees and contractors of the United States Securities and Exchange Commission ("SEC") of SEC computers to access or attempt to access, view, or otherwise search pornographic web sites since January 1, 2005:

• Documents reflecting the name of each present and former employee and contractor found to have engaged in such activity (in lieu of producing actual internal documents you can provide me with a list of the names of those individuals together with a description of their position with the SEC);

• The pages of material produced to The Washington Times in response to its open records request for similar material; and

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• Documents reflecting disciplinary action suggested, and disciplinary action in fact taken, if any, against such persons (in lieu of actual internal documents you can provide me with a list containing such persons names, the disciplinary action suggested, and the disciplinary action taken, if any).

5. On March 18, 2010, the SEC responded to the Request by producing some

documents, all of which were redacted in part. A copy of the SECs March 18, 2010

response (the "Response") is attached hereto as Exhibit 2. The SEC said that "[a]ccess is

granted in part," but went on to note that it was asserting FOJA Exemptions 6 and 7, 5

u.s.c. §§ 552(b)(6) and (7)(C), to deny access to other documents and information; namely,

the SEC refuses to disclose the names of employees and contractors (past and present)

involved and any disciplinary action suggested and taken. In addition to the fact that the

SEC improperly invokes FOJA Exemptions 6 and 7 in an effort to avoid producing

documents and information responsive to the Request, the SEC also failed to comply with

17 c.P.R. § 200.80(d) (S)0v) , which states that "[tjhe decision shall estimate the volume of

records that are being withheld in their entirety."

6. The documents the SEC did produce demonstrate that several unnamed SEC

employees have been voracious voyeurs of pornographic and sexually explicit web sites

using SEC computers during SEC work hours. Indeed, recent generic revelations to

Congress (which the SEC failed to produce to SE&F) indicate that at least some of the

unnamed SEC employees held high ranking positions, and the hours spent searching

pornographic and sexually explicit SItes were shocking. Among the pornographic and

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sexually explicit websites frequented by SEC employees using SEC computers during SEC work hours were the following:

.:. www.bdsgay.net;

.:. www.ncxrgay.com;

.:. www.downloadingpornwithdavo.com;

.:. www.scatmen.com;

.:. www.pornzlO.com;

.:. www.gaydemon.com;

.:. www.jays-xxx-links.com;

.:. pornographic and sexually explicit images through searches on craigslist.com;

.:. www.tgirlhotspot.com;
.:. www.ladyboyx.com;
.:. www.ladyboyjuice.com;
.:. www.ladyboys-xxx.com;
.:. www.trannytit.com;
.:. www.anal-sins.corn; .:. w\-vw. fuck-rny-wife.corn; .:. w ... vw.legayblog.com;

.:. www.gayplanet.com;

.:. www.fetishland.com;

.:. www.pimpandhost.com; FOI.\ Cornplaint.docx

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.:. www.maleandbeautiful.com;
.:. www.arginetinernen.com;
.:. youporn.com;
.:. crazybabe.com;
.:. fernjoy.com;
.:. thedailybabelog.com;
.:. magicnude.com;
.:. girlfolio.com;
.:. kindgirls.com;
.:. babcs.coolios.net;
.:. photo. porntube.com;
.:. epicgals.com;
.:. gay-dicks.com;
.:. www.static.megaerotic.com;
.:. ads.xxxstash.corn;
.:. www.naughty.corn;
.:. www.ercctionphotos.corn;
.:. www.hiboobs.com;
.:. www.playboy.de;
.:. torontoexoucs.corn; 5

FOL\ Cornplaint.docx

.:. sd-exotics. com;
.:. vacouvercxotics.corn;
.:. trackinpimp.corn;
.:. image s. adultplex. com;
.:. photos.carns.com/ images;
.:. vrsr», tashookup.info;
.:. www.tsdating.com;
.:. sexvideos blog. com;
.:. lcsbian.wazzabe.com;
.:. rabbitxx.corn;
.:. lazygirls.info;
.:. kinkycornrnents.com;
.:. media.scxinfo 1 01.com; .:. femdomblog.net;

.:. youdo.ru;

.:. radikal.ru.com;

.:. www.sexyavatars.net;

.:. spankwire.corn; and

.:. passionweiss.corn

SEC employees also downloaded pornography and sexually explicit Images on SEC

computers.

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7. On March 25,2010, SE&F submitted its Freedom of Information Act Appeal

(the "Appeal") in accordance with 5 U.S.c. § 552(a)(6) and 17 C.P.R. §§ 200.80(d)(S) & (6). A copy of the Appeal is attached hereto as Exhibit 3. In it SE&F explained in detail why FOIA Exemptions 6 and 7 do not apply and why the SEC must produce all of the requested documents and information in their entirety. Among other things, SE&F explained:

~ "One of the seminal cases in this area is United Statu Department ofJusti"e v.

Reporters Committee for Freedom oftbe Press, 489 U.S. 749 (1989). As the Supreme Court noted, the 'general philosophy' behind the FOlA is 'full agency disclosure.' Id. at 754. The FOTA 'was designed to create a broad right of

access to "official information," , id. at 772, and 'focuses on the citizens' right to be informed about "what their government is up to.'" Id. at 773 (citations omitted). '''[T]he basic purpose of the [FOIA is] to open agency action to the light of public scrutiny." [d. at 774 (citation omitted). For this reason, '[o]fficial information that sheds light on an agency's performance of its statutory duties falls squarely within that statutory purpose.' Id. at 773. Moreover, 'the rOJA expressly places the burden "on the agency to sustain its action" ... .' Id. at 755 (footnote omitted)."

);> "Indeed, it is well established that the FOJA 'limited exemptions do not obscure the basic policy that disclosure, not secrecy, is the dominant objective of the Act. "These exemptions are explicitly made exclusive, ... and must be narrowly construed.'" fum, 425 U.S. at 361 (citations omitted). See also

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tFasJJington Post Co., 690 F.2d at 260 ('Moreover, these exemptions are to be "narrowly construed." , (citations omitted)). This is particularly true with respect to Exemption 6. [d. at 261 ('Exemption 6's requirement that disclosure be "clearly unwarranted" instructs us to "tilt the balance (of disclosure interests against privacy interests) in favor of disclosure."

Thus, under Exemption 6, the presumption in favor of disclosure is as strong as can be found anywhere in the Act.' (citations omitted))."

};;> "The SEC is wrong to claim that the withheld information pertaining to the misuse of public trust and taxpayer money by SEC personnel constitutes a 'private affair' or 'an invasion of personal privacy,' let alone a 'clearly unwarranted invasion of personal privacy.' This is particularly true here, as SEC employees intentionally and deliberately took action that they admitted and knew was wrong at the time they engaged in such activity. Certainly, a public employee who knowingly and intentionally uses government (i.e., taxpayer financed) property to engage in conduct that the employee knows at the time to be wrong has no attendant claim to privacy with respect to such conduct, and thus access to such information cannot amount to a 'clearly unwarranted invasion' of the employee'S 'personal privacy.' There simply is no privacy right or interest to search pornography on SEC computers, particularly during work hours."

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» "The SEC's suggestion that 'public identification of Commission staff ,'ould (xmmi1abfy subject them to harassment and annoyance in the conduct of their official duties and in their private lives' . , . is equal1y fallacious. If the person is no longer with the SEC, then his or her 'official duties' could not conceivably be impacted, In addition, as the Supreme Court explained in RoJI!, '[tJhe legislative history is clear that Exemption 6 was directed at threats to privacy interests more palpable than mere possibilities:' 1d. at 381 n.19 (emphasis added). See also An4fv. U.S. Department ~lthe Na1!}, 712 F.2d 1462, 1467 (D.c. Cir. 1983). Furthermore, in balancing the interests here, as must be done, it simply cannot be said that any invasion of any privacy interest would be clearly unwarranted given the strength of the public interest at issue - the determinative test. See Washington Post Co., 690 F.2d at 264 ('the public has a singularly strong interest in disclosure'); National .Association rif .Atomic Veterans, Inc. u. Dimtor, Defense Nuclear Agenry, 583 F. Supp. 1483, 1488 (D.D.C. 1984) ('Balancing the competing interests, the Court readily concludes that the singularly strong interest in disclosure outweighs what appears to be the mere potential for invasion of privacy.'). Indeed, in the context of rejecting the applicability of Exemption 7(C), the court in Sullivan u. Veterans Administration, 617 F. Supp. 258 (D.D.C. 1985), noted that the report in issue regarding the plaintiffs misuse of government property and funds did not delve into aspects of the plaintiffs personal life. 'Thus, plaintiffs interest in nondisclosure is not

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In continued privacy of personal matters, but in anonymity so that he can avoid criticism for violations of government regulations.' Id. at 261 n.S. If such an assertion of privacy is insufficient under Exemption 7(C), it certainly cannot form the basis for avoiding disclosure under Exemption 6."

);> "Moreover, the SEC cannot in good faith contest that information sought in the FOIA request constitutes '[o]fficial information that sheds light on the agency's performance of its statutory duties.' Reporters Committee for Freedom of tbe Press, 489 U.S. at 773. See also Anifl, 712 F.2d at 1468 (,Providing

information "material for monitoring the Government's activities" is the "core

purpose" of the FOIA.' (citation omitted». Particularly in light of developments over the last several years, the SEC's performance of its statutory mandate has come under increasing scrutiny. How SEC employees use and, in this case misuse, working hours and government property is pertinent to that inquiry. Given the circumstances here, which obviously were more than passing or isolated incidents at the SEC ... , and the increasing scrutiny of the SEC based on its of-late questionable performance, the public has a right to know how the SEC dealt with the employees in question, who knowingly and intentionally cheated not only the SEC but the very public whose interests these employees were being paid (by taxpayers) to represent and protect."

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~ "The public, for example, has a right to decide for itself whether any special

treatment was accorded to SEC personnel based on name or position and

whether appropriate action in fact was taken; in the words of the Supreme

Court in fuporters Committee for Freedom of the Press, " , "what their government is

t "'"

up o.

~ "On the way to reaching its conclusion, the Eleventh Circuit in Cochran [which

found that the Army's press release detailing misuse of government resources

by the named government employee and the ensuing reprimand did not

violate the government employee'S privacy rights] also noted other similar

cases in which courts had found that Exemption 6 did not preclude disclosure:

Therefore, courts favor disclosure under the FOrA balancing test when a government official's actions constitute a violation of public trust. For example, in Columbia Pm'king Co. 1). United States Department of Agrimlture, 563 F.2d 495 (1 st Cir. 1977), the First Circuit upheld an order requiring disclosure under the FOrA of personnel records of two former federal meat inspectors who had been convicted of accepting bribes from meat packing companies, stating that 'the public has an interest in whether public servants carry out their duties in an efficient and law-abiding manner.' [d. at 499. The court emphasized the important deterrence function served by public disclosure of the information, expressing hope that disclosure would 'forestall similar occurrences' in the future. [d. at 499; see also Congressional News Syndimte u. United States Department qIJusti,'e, 438 F.Supp. 538, 544 (D.D.C. 1977) (court required FOIA production of certain records, compiled by Watergate Special Prosecution Force, listing contributors and recipients of secret political fund-raising organization which violated Federal-Corrupt Practices Act); Tax ~form Researd: Group v. Internal Revenue Servi~'e, 419 F.Supp. 415, 418 (D.D.C. 1976) (FOIA balancing

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test weighs 'obvious public interest in a full and thorough airing of the serious [government] abuses that did in fact occur').

[770 F.2d at 956] ... As in Cod/ran and the cases cited above, the public is

entitled to disclosure of all of the requested information of violation of the

public trust and misuse of taxpayer money by SEC personnel; such disclosure

would serve the added benefit of deterring such conduct and forestalling

future abuses."

};> "The remarks by the court in Washington Post Co. are particularly apropos here:

[T]he purpose of FOJA is to permit the public to decide for itself whether government action is proper. Congress was all too aware of the '(i)nnumerable times' that agencies had withheld information under prior law 'only to cover up embarrassing mistakes or irregularities.' ForA was designed to prevent such incidents and establish instead "(t)he right of the individual to be able to find out how his government is operating." .. , In light of that purpose, the public interest in disclosure is not diminished by the possibility or even the probability that [the agency] is doing its reviewing job right.

690 F.2d at 264 (citations omitted) (footnote omitted). See also National

Assoiiation rif Atomic Veterans, Inc., 583 F. Supp. at 1487 (' "[T]he purpose of

FOIA is to permit the public to decide for itself whether government action is

proper.'" (citations omitted) (emphasis in original». The public is entitled to

the information identified in the FOJA request so that it can decide for itself

whether the action taken by the SEC was appropriate and proper."

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~ "As an initial matter, the SEC 'has the burden of showing that the records it seeks to shelter under Exemption 7 were compiled for ... paw] enforcement purposes.' Stem v. FBI, 737 F.2d 84, 88 (D.c. Cir. 1984). '[A]n agency's general internal monitoring of its own employees to insure compliance with the agency's statutory mandate and regulations is not protected from public scrutiny under Exemption 7 .... ' ld. at 89. 'There can be no question that an investigation conducted by a federal agency for the purpose of determining whether to discipline employees for activity which does not constitute a violation of law is not for "law enforcement purposes" under Exemption 7.' ld. at 90. '[A]n agency's investigation of its own employees is for "law enforcement purposes" only if it focuses "directly on specifically alleged illegal acts, illegal acts of particular identified officials, acts which could, if proved, result in civil or criminal sanctions.'" Id. at 89 (citation omitted). As is evident from the redacted reports the SEC did produce, the reports were the result of an internal investigation of SEC employees to determine whether those employees had complied with SEC policy and rules and whether discipline was in order. The SEC docs not demonstrate that the conduct at issue constituted 'illegal acts' within the meaning of Exemption 7. Absent such a demonstration, Exemption 7 does not apply as a threshold matter."

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);> "Even if the SEC now were to assert that the conduct of the SEC employees in question amounted to 'illegal acts' . . . , production of the requested documents and information could not reasonably be expected to constitute an unwarranted invasion of personal privacy. In Stern, the court rejected the Bureau's attempt to invoke Exemption 7(C) to withhold the identity of an agent (the Special Agent in Charge of the FBI's New York office) who had been found to have knowingly participated in a cover-up during a 1974 GAO audit of the FBI's domestic intelligence operations (the Bureau had produced a letter of censure, but had redacted the name of the agent and all other identifying information). The court noted that the public had a right to know the identity of the agent 'in order to hold the governors accountable to the governed.' ld. at 92. The court also observed other possible public interests in such instances: 'the public may have an interest in knowing that a government investigation itself is comprehensive, that the report of an investigation released publicly is accurate, that any disciplinary measures imposed are adequate, and that those who are accountable are dealt with in an appropriate manner.' Id. These also are interests that we assert in connection with the FOJA request. In concluding that the public interest in disclosure outweighed the privacy interest of the agent, the court determined it significant that the agent 'was found to have participated deliberately and

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knowingly' in the conduct in question. Id. at 93-94. The same thing holds

true for the SEC employees in question here."

~ "Similarly, the court in Sullivan concluded that a report regarding the violation

by the then Director of the V A Medical Center of certain regulations

governing the use of government property and his reprimand was not subject

to Exemption 7 (C). In so concluding, the court stated:

Thus, the privacy interests at stake are limited to whatever embarrassment or reputational injury plaintiff might suffer as a result of being associated unwarrantedly with the alleged wrongdoing which is the subject of the report. ... On the other side of the balance, is the public's interest in knowing what public servants may be involved in wrongdoing. . ..

Upon balancing these competing interests, the Court concludes that whatever legitimate privacy interests plaintiff may have had in keeping the report secret, they were clearly outweighed by the public's interest in disclosure. To begin with, the privacy interests of plaintiff, in his capacity as a federal employee, are diminished due to the public interest in knowing how public employees are performing their jobs - (in order to hold the governors accountable to the governed'. '"

Furthermore, this is not a case where plaintiff was associated unwarrantedly with wrongdoing. While plaintiff continues to protest his innocence of any criminal wrongdoing, he has never denied the essential facts underlying the allegations made by Carter which were investigated by the Inspector General's Office. In fact, the VA found that plaintiff had engaged in improper and illegal activities ....

617 F. Supp. at 260-61 (citations and footnotes omitted). The court also

observed:

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As previously noted, the VA report concerns an investigation into plaintiffs alleged misuse of government property and funds, but it did not delve into any aspects of plaintiffs personal life. Thus, plaintiffs interest in nondisclosure is not in continued privacy of personal matters, but in anonymity so that he can avoid criticism for violations of government regulations.

lei. at 261, n.S. These very same observations apply equally with respect to the

SEC's improper attempt here to use Exemption 7 (C) to keep the requested

information secret."

8. The SEC did not respond to the Appeal (see letter attached hereto as Exhibit

4, noting SEC's failure to respond). Thus, SE&F has exhausted its administrative remedies.

RELIEF REQUESTED

The SEC improperly withholds and refuses to produce information responsive to the

Request. Accordingly, SE&F respectfully requests that the Court enter judgment in its favor

and:

A. Enjoin the SEC from withholding and refusing to produce all information responsive

to the Request;

B. Order that the SEC must comply with the Request and produce all requested

information in unredacted fashion;

C. Order that the SEC must produce documents reflecting the name of each present

and former employee and contractor found to have engaged in the conduct described in the

Request;

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D. Order that the SEC must produce documents reflecting disciplinary action suggested,

and disciplinary action taken, against such persons identified in the documents so produced;

and

E. Award SE&F its attorneys' fees and costs pursuant to 5 U.S.c. § 552(a)(4)(E)(i).

Dated: May 7, 2010.

STEESE, EVANS & FRANKEL, P.c.

J/ Kevin D. E1Jans

By:

Kevin D. Evans Phillip L. Douglass

6400 South Fiddlers Green Circle Suite 1820

Denver, Colorado 80111 Telephone: 720.200.0676 Facsimile: 720.200.0679 Email: kdevans@s-e1aw.com

pdougbss@s-claw.com

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EXHIBIT 1

STEESE • EVANS • FRANKEL7P.C.

Kevin D. Evans: (720) 200·0613 kdeYilDsril~Ij·c1aw.cQm

February 4, 2010

VIA EMAIL (foiapa@sec.gov) FASCIMILE (202.772.9337) and UNITED STATES MAIL

United States Securities and Exchange Commission Attn: Freedom of Information Act Office

100 F Street NE

Mail Stop 2736

Washington, DC 20549

To \,(.'hom It May Concern:

Pursuant to 5 U.S.c. §§ 552 e/ seq., I hereby request copies of the following records and informacion pertaining to use by present and former employees and contractors of the United States Securities and Exchange Commission ("SEC") of SEC computers to access or attempt to access, view, or otherwise search pornographic web sites since January 1, 2005:

• Documents reflecting the name of each present and former employee and contractor found to have engaged in such activity (in lieu of producing actual internal documents you can provide me with a list of the names of those individuals together with a description of their position with the SEC);

• The pages of material produced to The Washington Times in response to its open records request for similar material; and

• Documents reflecting disciplinary action suggested, and disciplinary action in fact taken, if any, against such persons (in lieu of actual internal documents you can provide me with a list containing such persons names, the disciplinary action suggested, and the disciplinary action taken, if any).

I am willing to par the CO:HS associated with the production of this material, but request that you first contact me to apprise me of the amount of such costs.

Denver > 1.-1: -~n.21111.(](,-(,' l- ~,. -21l . .!UU 11(1-') • ()'IOIl SUllth hJJlcr, l;W<:1l <'lr.J~· \llll~' llWI. Denver, C"I<l[.ld" HOIll

W~S/tjIlJ;tHn, D.C. • Id: .!!l2 . .!'.H.h!l'IO. b~: .!1I.!..!'I.I.hK·,.!· J he Army .II\J NJVV Club IlI"JJlII~' Ill.!: I \ue~[. N\\' .. 'i\IH~ II~O. WJ,hiuf,TI>n. 11(' .:!UIlOI', iuht(" , .. ddw.Lunl .. WW\\: .... -el.iw.curn

United States Securities and Exchange Commission Attn: Freedom of Information Act Office February 4, 2010

Page 2

Furthermore, please note that I do not believe that any of the information I have requested (particularly given the alternative means I have offered of providing me with this information) is subject to any legitimate claim of privilege. Thus, if you decline to produce any of this material to me, my intention is to me suit and seek a Court order to compel you to produce this in formation,

Should you have any questions regarding this request, please contact me directly.

EXHIBIT 2

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION STATION PLAce

100 F STReET, NE

WASHINGTON. DC 20549

Olfk:e 01 Freedom at Inlormatlon &. Privacy Acl Operallonl

Mail Stop 2736

March 18, 2010

Mr. Kevin E.vans

Steese, Evans, Frankel PC

6400 S. Fiddlers Green Circle, Suite 1820 Denver, CO 80111

Re: Freedom of Information Act (FOIA), 5 U.S.C. § 552 Request No. lO-04179-FOIA

Dear Mr. Evans:

This letter is in response to your request, both dated and received in this office on February 17, 2010, for certain Office of Inspector General records pertaining to the use of Commission computers to access pornography. Access is granted in part to the following reports:

- OIG-S03; Misuse of Government Computer Resources and Official Time at the Los Angeles Regional Office;

- OIG-506; Misuse of Government Computer Resources and Official Time at the Atlanta Regional Office;

- PI No. 08-48; Misuse of Government Computer Resources and

Official Time;
- PI No. 08-49; Misuse of Government Computer Resources and
Official Time;
PI No. 09-19; Misuse of Government Computer Resources and
Official Time;
- PI No. 09-20; Misuse of Government Computer Resources;
- PI No. 09-21: Misuse of Government Computer Resources:
- PI No. 09-25; Misuse of Government Computer Resources and Official Time;

PI Nos. 09-80 through PI No. 09-85; Misuse of Government Computer Resources and Official Time;

- OIG-484; Misuse of Government Computer Resources and Official Time at the Chicago Regional Office; and

- OIG-497; Misuse of Government Resources and Official Time.

Mr. Kevin Evans March 181 2010 Page 2

lO-04179-FOIA

Pursuant to 5 U.S.C. s 552 (b) (6) and (7) (e) I 17 eFR § 200.80(b) (6) and (7) (iii) certain personal information has been redacted. Under Exemption 6 the release of the withheld information would constitute a clearly unwarranted invasion of personal privacy. Under Exemption 7(e) release of the withheld information could reasonably be expected to constitute an unwarranted invasion of personal privacy. Furtherl public identification of Commission staff could conceivably subject them to harassment and annoyance in the conduct of their official duties and in their private lives.

You have the right to appeal our decision to our General Counsel under 5 u.s ,c. § 552{a) (6), 17 eFR s 200.80{d) (5) and (6). Your appeal must be in writing, clearly marked "Freedom of Information Act Appeal," and should identify the requested records. The appeal may include facts and authorities you consider appropriate.

Send your appeal to the FOIA/Privacy Act Office of the Securities and Exchange Commission located at Station Place, 100 F Street NEI Mail Stop 2736, Washington, D.C. 20549, or deliver it to Room 1120 at that address. Also, send a copy to the SEC Office of the General Counsel, Mail Stop 96121 or deliver it to Room 1120 at the Station Place address.

If you have any questionsl please contact me by email at sifordm@sec.g!~ or by telephone at (202) 551-7201.

Sincerely,

Mark P. Siford

rOIA/Privacy Act Attorney Advisor

Enclosure

EXHIBIT 3

FREEDOM OF INFORMATION ACT APPEAL

Before The UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

IN RE FREEDOM OF INFORMATION ACT REQUEST No. 10-04179-FOIA

FREEDOM OF INFORMATION ACT ApPEAL By STEESE, EVANS & FRANKEL, P.c.

Pursuant to 5 U.S.c. § 552(a)(6) and 17 C.F.R. §§ 200.80(d)(5) & (6), STEESE, EVANS

& FRANKEL] P.c. C'SE&F")] hereby appeals the denial in part of its February 4, 2010

Freedom of Informacion Act ("FOJA") request. If the SEC maintains its refusal to produce

in full the requested records and information, SE&F will bring suit pursuant to 5 V.S.c.

§ 552(a)(4)(B) and 17 C.F.R. § 200.80(d)(5)(vi) for the reasons set forth below.

BACKGROUND

On February 4, 2010, SE&F served its FOL·\ request (the HFOL~ request") on the

SEC via email, facsimile and United States mail. (1\ copy of the FOJA request is attached

hereto as Exhibit 1). The SEC responded on March 18,2010, received by SE&F on March

22] 2010, by producing 138 pages of redacted documents. (A copy of the SEC's cover letter

accompanying the production is attached hereto as Exhibit 2). In its response, the SEC also

noted that it is invoking Exemptions (i and 7(C), 5 U.S.c. §§ 552(b)(6) & (7)(C) and 17

C.FR. §§ 200.BO(b)(6) & (7) (iii), to withhold requested documents and information from

production. It is apparent that in addition to the redactions, the SEC also is withholding

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FREEDOM OF INFORMATION ACT ApPEAL

responsive documents in their entirety, although the SEC has failed to comply in this regard

wirh 17 C.P.R. § 200. 80(d) (5) (iv) , which states that "[rjhe decision shall estimate the volume

of records that are being withheld in their entirety."

As noted in the FOIJ\ request (Exhibit 1 hereto), SE&F requested

copies of the following records and information pertaining to usc by present and former employees and contractors of the United States Securities and Exchange Commission ("SEC') of SEC computers to access or attempt to access, view, or otherwise search pornographic web sites since January 1, 2005:

• Documents reflecting the name of each present and former employee and contractor found to have engaged in such activity (in lieu of producing actual internal documents you can provide me with a list of the names of those individuals together with a description of their position with the SEC);

• The pages of material produced to The \'(.'ashington Times in response to its open records request for similar material; and

• Documents reflecting disciplinary action suggested, and disciplinary action in fact taken, if any, against such persons (in lieu of actual internal documents you can provide me with a list containing such persons names, the disciplinary action suggested, and the disciplinary action taken, if any).

As explained below, the SEC improperly invokes Exemptions 6 and 7 (C) [0 redact

rhc documents it did produce and to refuse to produce other documents and information

responsive to the rOrA request.

ARGUMENT

I. Policy Behind And Purpose Of The Freedom OfInformation Act.

One of the seminal cases in this area is United Slaies Department qlJzlJti.·c v. RJPortm

Committee for Freedos» 0/ the Press, 489 u.s. 749 (1989). ..-\S the Supreme Court noted, the

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"general philosophy" behind the FOIA is "full agency disclosure." Id. at 754. The FOrA

"was designed ro create a broad right of access to 'official information,' ., id. at 772, and

"focuses on the citizens' right to be informed about 'what their government is up to:" [d. at

773 (citations omitted). "'Plhe basic purpose of the [FOlt\ is} to open agency action to the

light of public scrutiny.''' ld. at 774 (citation omitted). For this reason, "[ojfficial

informacion that sheds light on an agency's performance of its statutory duties falls squarely

within that srarurory purpose." Jd. ar 773. Moreover, "the FOIJ\ expressly places the

burden 'on the agency to sustain its action' .. ,." lei. at 755 (footnote omitted).

II. The SEC Improperly Invokes Exemption 6 To Redact And Withhold Information.

Exemption 6 allows the SEC to withhold "personnel and medical files and similar

files the disclosure of which would constitute a dcarb' «nwarranted invasion of personal

privacy." 5 USc. § 552(b)(6) and 17 C.F.R. § 200.BO(b)(6) (emphasis added). The Supreme

Court, quoting from the Senate Report regarding the FOIA, explained: « 'The phrase

"clearly unwarranted invasion of personal privacy" enunciates a policy that will involve a

balancing of interests between the protection of an individual's ptiuat« 4lair; from

unnecessary public scrutiny, and the preservation of the public'S right to governmental

information.''' Department oftb« Air Fon» v. Rose, 425 U.S. 352, 372 (1976) (emphasis added).

Thus, "the policies underlying the Freedom of Informacion Act] 1 [require the] opcn[ing of]

public business to public "jew when no 'dearly unwarranted' invasion of privacy will result."

Id. ar 381. See a/so (,odJran 1', United States, 770 F.2d 949, 956 (111h Cit. 1985) ("ITJhe basic

purpose of the FOrA is {co ensure an informed citizenry, vital to the functioning of a

democratic society, needed to check against corruption and to hold the governors 3

FREEDOM OF INFORMATION ACT ApPEAL

accountable to the governed.''' (citations omitted)); Washington Post Ca. u: United J/alu [)epurlmml a/Health and Human Scrokes, 690 F.2d 252, 259 (D.C. Cir. 1982) ("[1]11 rOIA cases 'the presumption in favor of disclosure is at its zenith.' II (citation ornittedj); id. at 260 ("~1e must keep in mind Congress's 'dominant objective' to provide full disclosure of agency records." (citations omitted)).

Indeed, it is well established that the FOJA "limited exemptions do not obscure the basic policy that disclosure, not secrecy, is the dominant objective of the Act. 'These exemptions are explicitly made exclusive, ... and must be narrowly construed.''' Rase, 425 U.S. at 361 (citations omitted). See also Wasbington Post Co., 690 F.2d at 260 ("lvlorcover, these exemptions arc to be 'narrowly construed.' " (citations omitted)). This is particularly true with respect to Exemption 6. Id. at 261 ("Exemption 6>5 requirement that disclosure be 'clearly unwarranted' instructs us to 'tilt the balance (of disclosure interests against privacy interests) in favor of disclosure.' ... Thus, under Exemption 6, the presumption in favor of disclosure is as strong as can be found anywhere in the Act." (citations omitted)).

The SEC is wrong to claim that the withheld information pertaining to the misuse of public trust and taxpayer money by SEC personnel constitutes a "private affair" or "an invasion of personal privacy," let alone a "clearly unwarranted invasion of personal privacy." This is particularly [rue here, as SEC employees intentionally and deliberately took action that they admitted and knew was wrong at the time they engaged in such activity. Certainly, a public employee who koowingly and intentionally uses government (t:e., taxpayer financed) property to engage in conduct that the employee knows at the time to be wrong has no attendant claim to privacy with respect to such conduct, and thus access to such information

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cannot amount to a "dearly unwarranted invasion" of the employee's "personal privacy." There simply is no privacy right or interest to search pornography on SEC computers, particularly during work hours.

The SEC's suggestion dun "public identification of Commission staff ~'()UJd cGnL'civabIJ subject them to harassment and annoyance in the conduct of their official duties and in their private lives" (Exhibit 2 hereto at p. 2) is equally fallacious. If the person is no longer with the SEC, then his or her "official duties" could not conceivably be impacted. In addition, as the Supreme Courr explained in Rose, "Itjhe legislative history is clear that Exemption 6 was directed at ducats to privacy interests more palpable than fHere pOJ'IibiJilitS." Jd. at 381 n.19 (emphasis added). Jee also /ln4/v. U.S. Department l?fthe Nary, 712 F.2d 1462, 1467 (D.c. Cir. 1983). Furthermore, in balancing the interests here, as must be done; it simply cannot be said that any invasion of any privacy interest would be clearly unwarranted given the strength of the public interest at issue - the determinative test. See Washington Post Co., 690 F.2d at 264 ("the public has a singularly strong interest in disclosure"); National .Assoaation o/A/omitVeterans, lnc. II. Dim-tor, Defense Nlldear AgeIlD'. 583 F. Supp, 1483, 1488 (D.D.C. 1984) ("Balancing the competing interests, the Court readily concludes that the singularly strong interest in disclosure outweighs what appears to be the mere potential for invasion of privacy."}. Indeed, in the context of rejecting the applicability of Exemption 7(C); the court in S"llri'tlll /'. Veterans Administration, 617 F. Supp. 258 (D.D.c. 1985), noted that the rep on in issue regarding the plaintiff's misuse of government property and funds did not delve into aspects of the plaintiff's personal life. "Thus, plaintiff's interest: in nondisclosure is not in continued privacy of personal matters, but in anonymity so that he can avoid criticism for

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violations of guvecnrnenr regulations." [d. at 261 n.5. If such an assertion of privacy is insu fficicnt under Exemption 7 (C), it certainly cannot form the basis for avoiding disclosure under Exemption 6.

Moreover, the SEC cannot In good faith contest that information sought in the FOI:\ rC9uest constitutes "[o]fficial information that sheds light all the agency's performance of its statutory duties." IvporterJ Committee for Freedom oj the Press, 489 U.S. at if3 .. )e'1' also /lri~!;: 712 F.2d at 1468 ("Providing informacion 'material for monitoring the Government's activities' is rhe 'core purpose' of the FOJA" (citation omitted). Particularly in light of developments over the last several years, the SEes performance of its statutory mandate has come under increasing scrutiny. How SEC employees usc and] in this case misuse, working hours and government property is pertinent to that inquiry. Given the circumstances here, which obviously were more than passing or isolated incidents at the SEC (again raising questions about the operation and supervision at the SEC), and the increasing scrutiny of the SEC based on irs of-late questionable performance, the public has a right to know how [he SEC dealt with the employees in question, who knowingly and intentionally cheated not only the SEC bur the very public whose interests these employees were being paid (by taxpayers) to represent and protect

The public also has a right to know the identity of these SEC employees] whose salaries they paid. The public, for example, has a right to decide for itself whether any special treatment was accorded to SEC personnel based on name or position and whether appropriate action in fact was taken; in the words of the Supreme Court in Rtp()rters C()mmiflee

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lor Freedom q/ the Press, " 'what their government is up to.''' 489 U.S. at 773. Full disclosure

would serve the added public interest of deterring future abuses of this nature.

Codmm p. United States is instructive. There the question was whether the Army's

issuance of a press release identifying the plaintiff and informing the public that he had been

officially reprimanded and fined $2,000 for two incidents of misuse of government resources

violated the plaintiffs right of privacy. The Eleventh Circuit concluded that because the

information in question was 110t exempt under Exemption 6, the Army did not violate the

plaintiffs privacy interests:

We agree that the balance struck under FOlA exemption six overwhelmingly favors the disclosure of information relating to a violation of the public trust by a government official, which certainly includes the situation of a misuse of public funds or facilities ... , As the district court noted, appellant's actions in intentionally diverting government property directly affected the public, since "misappropriation of government facilities constitutes a misuse of taxpayer's money.... To forestall future abuses, the public has an interest in any deterrent effect disclosure might provide."

770 F.2d at 956.

On the way to reaching its conclusion, the Eleventh Circuit in Cocbran also noted

other similar cases in which courts had found that Exemption 6 did not preclude disclosure:

Therefore, courts favor disclosure under the FOIA balancing test when a government official's actions constitute a violation of public trust. For example, in Columbia Pel~'king Co. v. United States Department of Agni:lIltllre, 563 F.2d 495 (1 ~I Cir. 1977), the First Circuit upheld an order requiring disclosure under the FOlA of personnel records of two former federal meat inspectors who had been convicted of accepting bribes from meat packing companies, stating [hat "the public has an interest in whether public servants carry out their duties in an efficient and law-abiding manner." [d. at 499. The court emphasized the important deterrence function served by public disclosure of the information, expressing hope that disclosure would "forestall similar occurrences" in the future. Id. at 499; see also Congres.fional NewI Syndkate 1'. United Statu Department OfJ1/Ili~'f!J 438 F.Supp. 538, 544 (DD.C. 1977) (court required FOIA production of certain records, compiled by Watergate Special

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Prosecution Force, listing contributors and recipients of secret political fundraising organization which violated Federal-Corrupt Practices Act); Tax R.efimn Ruearch CrollP 1'. Infernal Revenue Servifl!, 419 F.Supp. 415, 418 (D.D.C. 1976) (I'-OT:\ balancing test weighs "obvious public interest in a full and thorough airing of the serious [government] abuses that did in fact occur").

ld.; fee also infra at 10-11. As in Cochra« and the cases cited above, the public is entitled to

disclosure of all of the requested information of violation of the public trust and misuse of

taxpayer money by SEC personnel; such disclosure would serve the added benefit of

deterring such conduct and forestalling future abuses.

The remarks by the court in W/(ubington Post Co. arc particularly apropos here:

[Tlhe purpDse of FOIA is to permit the public to decide for itself whether government action is proper. Congress was all too aware of the "(i)nnumerable times" that agencies had withheld information under prior law "only to cover up embarrassing mistakes or irregularities." '" FOL\ was designed to prevent such incidents and establish instead "(t)hc right of the individual to be able to find out how his government is operating." '" In light of that purpose, the public interest in disclosure is not diminished by the possibility or even the probability that [the agency] is doing its reviewing job right.

69[) F.2d at 264 (citations omitted) (footnote omitted). See also National .Association of A/omit'

Veterans, Inc; 583 F. Supp. at 1487 (" '[Tlhe purpose of FOIA is to permit the public to

decide .lor iIJ'eij' whether government action is proper.' l' (citations omitted) (emphasis in

original)). The public is entitled to the information identified in the FOI1\ request so that it

can decide for itself whether the action taken by the SEC was appropriate and proper.

III. The SEC Improperly Invokes Exemption 7(C) To Redact And Withhold Information.

The SEC also has invoked Exemption 7(C), which if applicable would permit the

SEC to withhold "records or information compiled for law e'!!on:ement purposes, but only to

the extent that the production of such law enforcement records or information ... could 8

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reasonably be expected to constitute an unwarranted invasion of personal privacy." 5 U.S.c.

§ 5S2(b)(7)(C) and 17 C.P.R. § 2DO.80(b)(7)(iii) (emphasis added). Exemption 7(C), however,

does not apply here, and even if it did, the production of the documents and information in response to the FO[,\ request would not amounr to an unwarranted invasion of personal pnvacr·

As an initial matter, the SEC "has the burden of showing that the records it seeks to shelter under Exemption 7 were complied for ... [law] enforcement purposes." Stem %1. 1'131, 737 F.2d 84, 88 (D.c. Cir. 1984). "[A]o agency's general internal monitoring of its OWn employees to insure compliance with the agency's statutory mandate and regulations is not protected from public scrutiny under Exemption 7 .... " ld, at 89. "There can be no question that an investigation conducted by a federal agency for the purpose of determining whether to discipline employees for activity which does not constitute a violation of law is not for 'law enforcement purposes' under Exemption 7." 1£1. at 90. "[AJn agency's investigation of its own employees is for 'law enforcement purposes' only if it focuses 'directly on specifically alleged illegal acts, illegal acts of particular identified officials, acts which could, if proved, result in civil or criminal sanctions." ItI. at 89 (citation omitted). As is evident from the redacted reports the SEC did produce, the reports were the result of an internal investigation of SEC employees to determine whether those employees had complied with SEC policy and rules and whether discipline was in order. The SEC docs not demonstrate that the conduct at issue constituted "illegal acts" within the meaning of

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Exemption 7.1 Absent such a demonstration, Exemption 7 docs not apply as a threshold

matter.

Even if the SEC now were to assert that the conduct of the SEC employees in

question amounted to "illegal acts" (begging the question of why they have not been

prosecuted), production of the requested documents and information could not reasonably

be expected to constitute an unwarranted invasion of personal privacy. In Stern, the court

rejected the Bureau's attempt to invoke Exemption 7(C) to withhold the identity of an agent

(the Special Agent in Charge of the FBI's New York office) who had been found to have

knowingly participated in a cover-up during a 1974 GAO audit of the FBPs domes ric

intelligence operations (the Bureau had produced a letter of censure, but had redacted the

!1nn1C of the agent and all other identifying information). The court noted that the public

had H fight CO know the identity of the agent "in order ro hold the governors accountable to

the governed." ld. at 92. The court also observed other possible public interests in such

instances: "the public may have an in terest in knowing that a government investigation itself

is comprehensive, that the report of an investigation released publicly is accurate, that any

disciplinary measures imposed arc adequate, and that those who are accountable arc dealt

with in an appropriate manner." lei. These also are interests that we assert in connection

with the FOrA request. In concluding that the public interest in disclosure outweighed the

privacy interest of the agent, the court determined it significant that the agent "was found to

I 1 f the SEC now suggests that the conduct of each of its employees in question amounted to illegal acts, then why didn't the SEC refer each of these employees IO the Department of Justice for possible civil or criminal prosecution?

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have participated deliberately and knowingly" in the conduct in question. ld. at 93~94. The

same thing holds true for the SEC employees in question here.

Similarly, the court in Sullivun concluded that a report regarding the violation by the

then Director of the VA Medical Center of certain regulations governing the use of

government property and his reprimand was not subject to Exemption 7(C). In so

concluding, the court stated:

Thus, the privacy interests at stake are limited to whatever embarrassment or reputational injury plaintiff might suffer as a result of being associated unwarrantedly with the alleged wrongdoing which is the subject of the report. . .. On the other side of the balance, is the public's interest in knowing what public servants may be involved in wrongdoing. . ..

Upon balancing these competing interests, the Court concludes that whatever legitimate privacy interests plaintiff may have had in keeping the report secret, they were clearly outweighed by the public's interest in disclosure. To begin with, the privacy interests of plaintiff, in his capacity as a federal employee, arc diminished due to the public interest in knowing how public employees are performing their jobs - «in order to hold the governors accountable to the governed".

Furthermore, this is not a case where plaintiff was associated unwarrantedly with wrongdoing, While plaintiff continues to protest his innocence of any criminal wrongdoing, he has never denied the essential facts underlying the allegations made by Carter which were investigated by the Inspector General's Office. In fact, the VA found that plaintiff had engaged in improper and illegal activities ....

617 F. Supp. at 260~61 (citations and footnotes omitted). The court also observed:

As previously noted, the VA report concerns an investigation into plaintiffs alleged misuse of government property and funds, but it did not delve into any aspects of plaintiff's personal life. Thus, plaintiff's interest in nondisclosure is not in continued privacy of personal matters, but in anonymity so that he can avoid criticism for violations of government regulations.

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Id. at 261, n.S. These very same observations apply equally with respect to the SEC's

improper attempt here to use Exemption 7(C) to keep the requested information secret."

CONCLUSION AND RELIEF REQUESTED

W'H EREf'ORE, for the reasons explained above, the SEC improperly invokes

Exemptions G and 7(C) to redact and withhold documents and information from production

in response to the 1"01,\ request. SE&F respectfully requests the following relief:

>- The SEC comply in full with 17 C.P.R. § 200.80(d)(S)(iv);

~ The SEC produce all documents accompanying its March 18, 2010 letter in full and without redaction;

The SEC produce the documents reflecting the name of each present and former employee and contractor found to have engaged in the conduct described in the FOIA request;

y The SEC produce the documents reflecting disciplinary action suggested, and disciplinary action taken, against such persons identified in the preceding bullet point; and

If the SEC persists in refusing to produce all such information and documents, the SEC specifically identify by type and subject matter the information and documents that it refuses to produce.

:! The policy of the Department of Justice in this regard likewise is instructive. DO] discloses the results of investigations by the Office of Professional Responsibility of DO) attorneys when there is a finding of intentional or knowing misconduct and the public interest outweighs the attorney's privacy interests and any law enforcement interests.

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Dated: :\1arch 25, 2010.

STEF.~tt !\\NKEt, P .•.

By: 1 ~.

evin D. Ev;~-s--_!!!-_,j!~_::_

Phillip L. Douglass

) 00 South Fiddlers Green Circle Site 1820

Denver, Colorado 80111 Telephone: 720.200,0676 Facsimile: 720.200.0679 Email: kdcvans@s-claw.com

pdouglass@s-elaw.com

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FREEDOM OF INFORMATION ACT ApPEAL

CERTIFICATE OF SERVICE

I hereby certify that on this 25th day of March, 2010, I caused a true and correct copy of the foregoing FREEDOM OF INFORMATION ACT APPEAL BY STEESE, EVANS & FRANKEL, p.e. to be served by United States Mail, postage prepaid, on each of the following:

FOrA/Privacy Act Office

Securities and Exchange Commission Station Place, 100 F Street NE,

?\-fail Stop 2736

Room 1120

\,(Iashington, DC 20549

Securities and Exchange Commission Office of the General Counsel Station Place, 100 F Street NE,

Mail Stop 9612

Washington. DC 20549

(J_~~ /d,tA c--____

Courtney W. l'v~ear

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EXHIBIT 4

STEESE • EVANS • FRANKEL, P.C.

Kevin D, Evans: (720) 200·0613 kllo'jl n$'s, djlW ,!:om

April 28, 2010

VIA FEDERAL EXPRESS Securities and Exchange Commission Office of the General Counsel Station Place, 100 F Street NE

~-1ail Stop 9612

Washington, DC 20549

Re: Freedom of Information Act Appeal

To Whom I t May Concern:

The statutory time for the requisite response to our Freedom of Information Act Appeal, attached hereto as Exhibit 1, has expired. Accordingly, we will be filing the Complaint Pursuant to freedom of Information Act, attached hereto as Exhibit 2,

Denver> 1,-1: -:- ,'!Cl.2 fI(lJI('7(' • Fax: -,'!Il,.:!(J(j 11(,';'<) ·64(111 ",,11th l-nldlerv (if~"n Clrd~ • Snill' IIC,n • Denver, Cu)..raJ" /'lUll I

WuhinS'on. 1J.c. • Tel In.:!.2'I,U,S'!11 • r.u.: .!Ol.2.IJ t61H2. • 'lhe Armv .md :->:J\')' (:1,,1> Ihuldlll,:' 161';" I Strccr, N\,(~, Sl\jl~ 6"0· WJ,hinl!l"n. DC 201lU(, I n 1i.~I·!-. d,lW.l tun t. \\,,\\·W.~~ddW ... nrn

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