The Federal Government’s Financial Reporting Violates the United States Constitution and the Antifraud Provisions of the Nation’s Securities Laws


Testimony given at the Federal Accounting Standards Advisory Board’s public hearing held on August 28 in Washington D.C. presents the reasons why the federal government’s current and proposed financial reporting violates the U.S. Constitution and the antifraud provisions of the nation’s securities laws.

Understanding the federal government’s fraudulent reporting is critical at a time when the President and Congress are trying to garner public support for their conflicting views of a proper outcome regarding the budget deficit and debt ceiling negotiations. None of the figures that are being used as the basis of public discourse have any relevance to the nation’s true finances. For example, the federal government’s existing legal obligations exceed $90 trillion so the very carefully defined debt ceiling limit of $16.7 trillion is largely irrelevant. Furthermore, the reported budget deficit for fiscal 2012 was $1.1 trillion when the actual deficit was at least $5.8 trillion.

How could financial reporting be so poor and why does it matter? Our political leaders have subverted the democratic process to protect their self interests. Fraudulent reporting is a direct result of the Executive and Legislative branches having a vested interest in under-reporting expenditure amounts. They have failed to comply with an important Constitutional check on power, the requirement for the publication of a complete and truthful statement and account of the nation’s finances. As a result, several constitutional rights of Americans have been violated including the right to vote, freedom of speech, due process, equal protection, the right to financial information and the right to political accountability.

The basic framework for Mr. Marren’s analysis was created for a first-of-its-kind conference “Representation Without Accountability” which was hosted by the Fordham Corporate Law Center in 2012. The nonpartisan panel of speakers included Hon. David Walker, former Comptroller General, David Mosso, former Chairman of FASAB, Professor Brian Fitzpatrick, a constitutional law professor at Vanderbilt Law School and Mr. Marren. Professor Sean Griffith, Director of the Fordham Law Corporate Center delivered opening remarks and acted as moderator. A video of the conference, a transcript and all presentations can be found here.

Mr. Marren’s biography can be found here. All views expressed are solely Mr. Marren’s and do not represent the views of KStone Partners LLC or any of its other Members.

Video of Testimony by Joseph Marren, FASAB Public Hearing  (NOTE ON VIDEO: The government’s recording began a few minutes into Mr. Marren’s remarks. See the transcript for his opening comments.)

Transcript of Testimony By Joseph Marren, FASAB Public Hearing


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Fordham Journal of Corporate & Financial Law