Call President Barack Obama a communist in Nebraska and you could pay a hefty price.
Just ask Robert Bennie Jr., a successful financial adviser and former leader of the tea party in the state capital of Lincoln.
Bennie and the employer that eventually fired him were hounded and harassed by the Nebraska Department of Banking and Finance for months, in large part due to Bennie’s political views, according to his attorneys.
And while a U.S. appeals court agreed with a lower court that the regulators “targeted Bennie partly in retaliation for his constitutionally protected political speech,” the agency’s harassing activities did not rise to a First Amendment violation — to “deter someone of ordinary firmness from continuing to speak.”
“Our First Amendment rights can be cancelled out if government can punish people for exercising those rights,” said PLF attorney Wen Fa. “That is what happened to Bob Bennie — he was the victim of a vendetta campaign by bureaucrats because they were offended by his political views.”
‘Hang him high’
In 2010, Bennie was working for Boston-based LPL Financial, which bills itself as “the nation’s leading independent broker-dealer.”
Court records show things got bad for Bennie not long after he was quoted in a Feb. 1, 2010, Lincoln Journal Star story about his political views and his leadership in the tea party.
The problem, apparently: Bennie called Obama a “communist” and said the president is “dishonest,” an “evil man.”
He said much more, much of which has been said by many, many other Americans concerned about the growth of government.
“The ultra-liberals are taking us from a freedom-loving capitalist economy to a socialist/communist country. Socialism is just a nice word for communism,” he told the newspaper. “In the 1700s, the citizens of this country finally had enough of oppressive government and they threw tea bags into Boston Harbor. What we have now is another freedom revolution. People versus the government.”
The Nebraska government, at least the folks at the Department of Banking and Finance, didn’t care for that kind of talk. And they were going to do something about it.
In late 2009, Rodney Griess, compliance supervisor at the time, took aim at a promotional CD Bennie had sent to clients. There was nothing illegal about the CD. Bennie actually had sent it out several years before under different disclosure rules, “but no one in the department knew that,” according to court documents.
Griess forwarded what he believed to be a disclosure violation to Jack Herstein, an assistant director of the department. Herstein responded, “Bob [Bennie] always is seen wearing a cowboy hat lately, so I say ‘Hang Him High.’”
Griess also didn’t seem to care for a commercial in which Bennie rode a horse and pledged he would give his customers “a hundred dollars towards the purchase of a firearm.” The government agent, who thought the offer “unusual,” suspected Bennie had not gotten the proper approval from LPL to run the commercial.
After the article appeared, Griess told a colleague that an upcoming call with Bennie’s employer would cover the financial adviser’s “recent string of activities; i.e., lack of… disclosure, gun slingin’ ads, and calling Obama a ‘communist’ and an ‘evil’ man issues.”
After the call, Griess wrote an email seeking a follow-up call with LPL and stating that it “would be nice to know” whether LPL anticipated imposing any “heightened supervision, more frequent/announced exam schedule, specialized advertisement approval process or other sanction(s) that may provide the Department with a little better sense that the firm is ‘on top of’ addressing this type of activity which in turn may be of some comfort to us and really is in the best interest of the public.”
Department agents asked whether LPL had any guidelines about agents like Bennie publicly communicating their political views. LPL said it did not.
‘Actions deemed necessary’
Next, Griess determined that Bennie’s invitation to prospective customers to discuss investment plans over dinner violated applicable laws. He emailed LPL asking for the name and contact information of Bennie’s senior-analyst supervisor, all notes and communications related to the review and approval of the invitation, a list of everyone in Nebraska it was sent to, and a list of everyone in Nebraska who had accepted.
Griess also ordered LPL to cancel any scheduled dinners and not to schedule any more until the invitation got the proper approvals (the company said it did). And Griess warned LPL that “[t]he Department may invoke whatever administrative action deemed necessary and appropriate under its authority against both Mr. Bennie and/or LPL Financial to insure compliance.”
The agency’s investigations and orders were occurring, coincidentally, at the same time Internal Revenue tax-exempt compliance agents, under the direction of manager Lois Lerner, were targeting conservative groups applying for nonprofit status.
Feeling quite harassed at this point, Bennie took his complaints about the agency to then-Gov. David Heineman, a Republican. Griess, in looking over his director’s draft response to the governor, was concerned that it did not note Bennie’s comments in the newspaper article. Griess explained he “felt compelled to at least mention it” because “while Bennie did not author the article, and does not appear to be subject to our regulatory purview regarding it, the comments made regarding the President etc., regardless of anyone’s political views, do tend to be quite polarizing to say the least, not all that dissimilar to the firearm purchase statement. Anyway, it’s another piece of the puzzle and just saw that it was missing.”
His boss included the point in a revised response.
Bennie’s case is filled with multiple examples of overly aggressive government regulators “going after” a businessman. In one case, not finding adequate evidence to support their belief that Bennie had committed a “classic example” of noncompliance, Griess and his boss decided to “keep this (advertisement) in a reserve file and move on.”
The price of political speech
After months of constant regulatory pestering, LPL fired Bennie in early November 2010.
In mid-2011, the financial adviser filed a public records request and received the department’s internal communications. It was then he learned how much he and LPL had been scrutinized and harassed.
That’s when he withdrew from the political process. That’s when, Bennie argues, his speech was truly chilled.
“According to Bennie, after learning what people in the department wrote about him, he stopped arranging Tea Party events and writing letters to the editor and restrained himself from criticizing President Obama publicly,” the appellate court documents states.
Bennie sued. He lost.
A federal district court found “the state regulators were partly motivated by Bennie’s speech and ‘(s)ome of the questions they asked LPL would not have been asked had it not been for [Bennie’s] political activity.” Nonetheless, the judge ruled in the state regulators’ favor because their retaliation would not have deterred an ordinary person in Bennie’s position from continuing to speak.
Bennie appealed. He felt more than deterred.
He lost again at the appeals court, for the same reasons.
The appeals court affirmed the lower court’s ruling even as it described the regulator’s actions as “unconstitutional.”
“For the state regulators to allow their apparent disagreement with or even distaste for what Bennie had to say politically, or how he said it, to influence how the department treated him and his employer was wholly inappropriate — and absolutely inconsistent with the First Amendment,” the court wrote in its decision. “That inappropriate, unconstitutional conduct was wrong, regardless of whether the state regulators revealed their retaliatory motives to LPL or anyone else or whether the consequences of their actions were severe enough to be actionable in this case.”
The Nebraska Department of Banking and Finance declined to comment.
“At this point, it probably wouldn’t be appropriate for me to comment,” said Mark Quandahl, director of the agency.
The Pacific Legal Foundation agrees that the regulators’ actions were unconstitutional, and that’s why it has taken Bennie’s case, free of charge. Fa, the attorney on the case, said PLF has won its last nine cases before the U.S. Supreme Court, and it intends to win again.
Bennie didn’t stay unemployed long, Fa said. The nationally recognized financial adviser operated in Nebraska for decades without any problems with regulators — until shortly after he joined and led the tea party, Fa said.
Bennie has had his encounters with lawsuits by former clients, such as the Lincoln couple who sued him in 2011 claiming he sold them “unsuitable” investments.
Fa said Bennie’s legal battles with the state have cost him hundreds of thousands of dollars. But the case, the attorney said, is bigger than one man.
“This case is important for millions of Americans around the country. Many people in their private time talk about politics,” Fa said. “The Constitution is there to encourage those political views, to facilitate individual liberty and public discourse. The Constitution prohibits government officials from retaliating against you because of your political views.”