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Reagan Fired Slew Of IGs Upon Taking Office -- And Senate GOP Last Year Blocked Measure To Make Firing IGs Harder
On Friday we reported that, according to two board members, the impetus for firing the AmeriCorps inspector general, Gerald Walpin, came from the board, not the White House.
Still, just to put a nail in the coffin of any notion that the dismissal represents some sort of unprecedented partisan power play, it's worth considering some historical context. Take a look at this UPI report (via Nexis) from January 21, 1981 -- the second day of the Reagan administration:
Wasting no time in cleaning his administration of Democratic appointees, President Reagan Wednesday fired most of the nation's inspectors general and asked 200 other officials to resign.''We want people who are meaner than a junkyard dog at ferreting out fraud, waste and mismanagement,'' said press secretary James Brady in explaining the dismissal of the inspectors general, who are in charge of internal agency investigations.
Six of the total of fifteen IGs were rehired a short time later. Still, the Reagan example suggests there's ample precedent for a president removing an IG in whom he's lost confidence.
There's another reason why Republican suggestions of executive-branch high-handedness -- which have been pushed most prominently by Sen. Charles Grassley of Iowa -- ring hollow.
Last year, Congress passed the Inspector Generals Reform Act. During negotiations over the measure, House Democrats wanted a provision that would have allowed the president to remove an IG only for one of nine explicitly defined causes. But according to one expert, the Bush White House was adamantly opposed to that requirement, arguing that it would tie the president's hands. And Senate Republicans, lining up against the interests of their own branch of government, willingly carried the White House's water on the issue. Ultimately, thanks to the opposition of the Senate GOP, the provision was removed.
In other words, it was Grassley's Senate GOP colleagues who made it easier for the White House to fire Walpin without citing a specific pre-approved cause. As Danielle Brian of the good-government group POGO blogged last week: "[I]f the Congress is annoyed because they think the President's reason for dismissal ... is not good enough, they only have themselves to blame."
None of this means that Walpin himself, aided by the conservative echo chamber, won't keep up his campaign to turn this into the US Attorneys part deux. But it's looking like an increasingly quixotic effort.
Josh
Zachary
Reagan then appointed an astonishingly huge number of corrupt people. The Washington Post printed a list of them. It was a very long list even before Reagan was finished with his campaign of corruption (dated April 27,1986). The list is of those who resigned under fire, under investigation or accused of improper conduct, etc. Most resigned. Included were 2 IGs, those for EPA and DOI. Also on the list were what appear to be the highest appointees (based on their title, such as Chairman, Administrator, etc.) of: Labor, Interior, Justice (two), FAA, EPA, NASA, CIA, Post Office, SBA, FERC, OSHA, OPM, MSPB, CPSC, FTC, VA, ASCS, NCUA, BCM, LSC, SFC, FHLBB, ASCS and maybe FEMA. Now there was a man who new how to spread corruption widely! The list includes a much larger number of high-ranking appointees who were not quite as high up as the ones I've listed above. E.g., I counted at least 8 total at EPA alone. But I found another list for EPA (where I worked) that list 22 names for EPA. So the Post may have been sticking to the highest-level appointees.
June 22, 2009 4:19 PM | Reply | Permalink
In the list above I count 110 names. Including William Casey, Lynn Helms, Ed Meese, Lyn Nofziger, Ted Olson, Richard Perle, William French Smith, Tom Tancredo, and James Watt.
June 22, 2009 4:28 PM | Reply | Permalink
Great catch. I'll also point out that the Bush administration replaced Luise S. Jordan, the Clinton appointed IG who served in the same post as Walpin, because they wanted to put someone else in her job. That was the stated reason. Jordan was given the option to resign or be fired, and she chose to resign because she didn't want to cause a public disruption like Gerald Walpin.
I've pointed out this conundrum to many Republicans, but they don't see the equivalence. They tell me the law was different then (which is true) and that Obama broke the law (which is false). I've got a lot more here on why the firing of Walpin was legal and is a total non-story.
June 22, 2009 6:40 PM | Reply | Permalink
Not to mention that Reagan gave his reason as a simple "I need to have confidence" in his IGs. And no one complained that his reasons were insufficient.
After all, the requirement of notice of reasons took effect in the Inspector General Act of 1978,
June 23, 2009 6:26 AM | Reply | Permalink
Weird, you're now essentially equating Clinton's asking all attorneys for resignation at the beginning of his term with Bush selectively firing those not partisan enough mid-term. How we've come full circle.
Walpin was likely targeted for earlier having recommended suspending the newly elected Mayor of Sacramento, an Obama ally, which would prevent Sacramento from receiving stimulus money. No one has successfully shown that Walpin was out of line in noting the misuse of grant money (not embezzlement - misuse).
I've outlined this here:
http://tpmcafe.talkingpointsmemo.com/talk/blogs/desidero/2009/06/waxing-on-walpin-defending-the.php
The 2 papers by Walpin are well worth reading - they provide the answers to what a lot of people seem to be scratching their heads about, including "leaks" to The Bee, the duties of the OIG, the OIG's filings in this matter, the nature of the misuse of Americorps money by Johnson/St. Hope.
June 23, 2009 9:48 AM | Reply | Permalink
Weird: I don't remember referencing Clinton at all. I was comparing the reasoning given by Bush and Obama for firing the CNCS IG. Maybe it was a mistake for me to bring that up at all, because there's better issues to focus on.
First off, Obama's firing of Walpin was completely legal. To comply with the Inspector General Reform Act of 2008, the president must give Congress 30 days notice of an IG's termination and supply a reason for firing him.
Obama did both of these. Contrary to what's widely been reported, Obama suspended Walpin with pay and informed him he would be terminated after 30 days. (This is why you should view pro-Walpin reporting with healthy skepticism.) Obama provided Congress with a reason before Norman Eisen wrote Congress with a more thorough rationale for firing Walpin, which satisfied the concerns of Sen. Claire McCaskill.
The "feeble excuse" has become the centerpiece of the Republicans argument that Obama was in the wrong to fire Walpin, along with the false claim that the firing was illegal and that Obama was doing a favor for political crony Kevin Johnson - even though there's no substantial proof that Johnson, a Democrat, was anything more than a supporter of Obama's presidential campaign.
Republicans haven't rebutted the more substantive claims for relieving Walpin of his post.
U.S. Attorney Lawrence G. Brown wrote a letter to the Council of the Inspectors General on Integrity and Efficiency condemning Walpin's actions during his investigation of Johnson. Brown accused Walpin of overstepping his authority, compromising his impartiality, and withholding information from the U.S. Attorney’s Office.
"The Inspector General is not intended to act as an advocate for suspension and debarment," Brown wrote. "He sought to act as the investigator, advocate, judge, jury and town crier."
If you, the Democratic president, were presented with these facts by a Bush-appointed U.S. Attorney, how would you react?
The validity of the rationale for firing Walpin relies on Walpin's word vs. Brown's. You may trust Walpin's word more, but I personally put more faith in Brown's. Walpin has turned his firing into a publicity tour, into a Whitewater-type 'scandal' that helps his own party. His actions make clear what Brown meant by "town crier."
June 23, 2009 12:29 PM | Reply | Permalink
Re: "Weird" - no, Zachary didn't say it. Yes, it made me think of it.
What are the "more substantive claims" for removing Walpin from his post?
Regarding the 30 days and "pro-Walpin reporting", why didn't Zachary report it as part of "anti-Walpin reporting"?
Certainly I would presume the OIG would recommend suspension and other remedial measures, but the OIG is not who approves these. Suspension however was approved, and then 6 months later, viola!!! Let's just take it away!!!
I don't value Walpin's "word" - I value his organization, the detail and methodicalness in which he writes both of his responses.
You mix 2 aspects to the story, before his removal and after. It does not appear that Walpin was playing "town crier" before his dismissal, even by going to Congress. I would expect the OIG to report unreasonable actions in safeguarding taxpayer money.
I would also trust Zachary's reporting more if he referred to Walpin's specific letters that addressed these issues, rather than some of the more hearsay emotional reactions of the board: "he took 1-2 minutes to respond, he seemed confused". As I noted, if suddenly the Board was trying to reverse a well-established suspension simply to get Sacramento back in the stimulus money game, it's not surprising that an OIG would feel a little out of whack. I've been to meetings where people are prepared to attack, and it's no fun. But what are the moral and legal justifications for reversing this decision?
Here's Walpin:
http://a.abcnews.go.com/images/Politics/PCIE_Response_Report_FINAL_5_20_09.pdf
http://www.cncsig.gov/PDF/StHope/StHOPEFIN.pdf
Tell me what seems unreasonable. Should St. Hope be allowed to not keep financial records for grants? Should they be allowed to take grant money and use it for something else? Should a suspension from receiving grants be reversed because the person got elected to an important position?
June 23, 2009 1:42 PM | Reply | Permalink
I don't know where to start.
"Re: "Weird" - no, Zachary didn't say it. Yes, it made me think of it."
What the hell are you talking about?
"What are the "more substantive claims" for removing Walpin from his post?"
See: "U.S. Attorney Lawrence G. Brown wrote a letter to the Council of the Inspectors General on Integrity and Efficiency condemning Walpin's actions during his investigation of Johnson. Brown accused Walpin of overstepping his authority, compromising his impartiality, and withholding information from the U.S. Attorney’s Office." -- Is that not enough for you? What else do you want? Please tell.
"Regarding the 30 days and "pro-Walpin reporting", why didn't Zachary report it as part of "anti-Walpin reporting"?"
Again, what the hell are you talking about?
Instead of writing gibberish, why don't you read this Salon story?
June 23, 2009 2:26 PM | Reply | Permalink
A lot of guilt by paltry association in that story - Conason's seen better days.
Look, I started out responding to Zachary's post, not to you. If you read them that way, maybe they will start to make more sense.
June 23, 2009 3:03 PM | Reply | Permalink
Desidero, you are mistaken on a few points here.
First, suspensions are extremely rare, and are usually only imposed when there has been conviction of a crime; repayment is the norm, and occasionally, a fine. According to the Sacramento Bee, the corporation has only ordered 5 suspensions in its entire 15 years of existence.
http://www.sacbee.com/opinion/story/1751474.html
Next, as to your claim that you don't think Walpin was playing "town crier" before his dismissal, you ignore the fact that the reference comes from the ethics complaint submitted long before Walpin's dismissal, by acting US Attorney Lawrence Brown. I suggest you take another long look at that letter. It is full of examples of Walpin going to the press through the course of the investigation, despite repeated instructions not to. Please remember that the original US Attorney instructing Walpin not to speak to the press was a Bush appointee; his replacement, Brown, also took office during the Bush administration.
http://a.abcnews.go.com/images/Politics/Brown_letter_to_Kenneth_Kaiser.pdf
As to your theory that Walpin was "out of whack" because the board "was trying" to reverse the suspension, I suggest you look at that timeline again. The settlemen, including the lifting of the suspension, was finalized and published on April 9. Walpin submitted his 29-page "special report" in response to the settlement in early May. The meeting took place on May 20, after Walpin had completed his full report, and nearly six weeks after the settlement itself. Why shouldn't he be prepared to discuss the matter?
June 24, 2009 7:54 AM | Reply | Permalink
Walpin I think adequatly responds to Brown's complaint, as I posted above, including noting that he was misquoted by Brown, giving the timeline re: The Bee, what his role is as IG, etc. You can note Brown's spin in saying he got a "very favorable" settlement by potentially getting half of the funds in question repaid over 10 years time.
Here's Walpin:
http://a.abcnews.go.com/images/Politics/PCIE_Response_Report_FINAL_5_20_09.pdf
http://www.cncsig.gov/PDF/StHope/StHOPEFIN.pdf
Regarding being bushwhacked at a meeting on May 20, my guess is that he knew that he was walking into a hornet's nest, which doesn't make the experience any more pleasurable. People wanted that suspension reversed no matter what, and he was the problem.
Thanks for The Bee *EDITORIAL*. I hadn't realized that the suspension was only for 1 year. Walpin did not "act" to suspend Johnson - he recommended it, and the deciding official, outside Walpin's chain, agreed and suspended Johnson. Why not blame him? The US Attorney did not find "no criminal conduct" - the US Attorney at most would say they are not pursuing a criminal case. Walpin explained adequately in your reference as to why the DoJ was trying to firm up investigation of grant fraud starting in 2006, so the comparisons of how few busts and suspensions there were before are either meaningless or supporting evidence. The statement that because Johnson had resigned from St. Hope's, the suspension could be removed is so foolish. If a bank robber promises to not go near the bank he last robbed, can he be freed? Johnson misused grant money, whether through negligence or criminal fraud. The suspension is about that, not a conviction. If someone wants to wave a wand and dismiss the suspension, be brave enough to answer for the core issue: Johnson was elected mayor, and people don't want Sacramento to be penalized because they chose someone under sanctions.
And digging up 45-year-old coverage on Walpin is another exercise in slinging shit at someone hoping some of it sticks. If the reporting back then was as bad as the reporting now, I'm sure we can find some other sides of the story to tell.
June 24, 2009 12:01 PM | Reply | Permalink
Last first, as to that "45-year-old coverage" on Walpin's stint as a federal prosecutor, you yourself have praised it on these threads, and his prosecution of Roy Cohn is one of the major talking points in his defense. The idea being that the guy had an unblemished record up until June 11, 2009 and these complaints are so unfounded and so unfair.
Well, it turns out that his superiors had something to say about his conduct, and it wasn't flattering. And interestingly, for some of the same reasons: withholding important information, disingenuity bordering on subterfuge, and overzealousness that nearly derailed the case. And as to that "bad reporting," those claims that he "mishandled" the case, and that his conduct was "shocking" were direct quotes from his superiors and from the judge.
As to Walpin's "response" to Brown's ethics complaint, first, the only "misquote" was that Brown attributed a statement to Walpin when in fact it came from HIS SPOKESMAN. That's it. And far from claiming the US Atty "only" heard of developments in the case by seeing Walpin's statements in the Bee (as Walpin claims), Brown was quite clear that they first learned of the case through his statements to the Bee, before he turned over the referral, and then subsequently throughout the case. Never did he claim that was the "only" way they learned of developments - more less-than-honest exaggeration from Walpin.
The Bee editorial did not claim that Walpin imposed the suspension they were quite clear that he recommended it and the board approved it. The criticism was that "Walpin decided to act before any legal body determined whether irregularities in the administration of grants from 2004-2007 reflected inadvertent errors and ignorance of regulations or actual fraud."
Yes, the US Attorney said they were not going to press criminal charges (the same conclusion drawn by local authorities); the point being that suspensions have typically been imposed only after there has been a criminal conviction. Refer back to the Bee quote above. And yes, providing the historical context is actually quite meaningful.
June 24, 2009 3:38 PM | Reply | Permalink
I noted Walpin was a long-time attorney, not hanging around Washington looking for hack appointments. I'm not going to debate with you a single questionable action going up against Roy Cohn 45 years ago, for Christ's sake - didn't these guys squirm around Bobby Kennedy and make MLK squirm and thank them? Without spending a bit of time on it without some context, I have no way of knowing.
I still don't understand how Walpin "acted" if he turned the recommendation over to the deciding official. The deciding official "acted". What are you saying Walpin did about the suspension aside from recommending it? Are you saying the deciding official should have waited for suspending, or after the deciding official had suspended Johnson, Walpin should have waited for a review of that suspension? Neither matters - the deciding official suspended, and the federal registrar for grants than prohibits *further* grants while on suspension. But suspension isn't just about criminal wrongdoing - people can be suspended for inadvertant mistakes as well. If you don't have your act together well enough to keep records, you don't get grants. Is that a bad thing?
They keep attacking Walpin, but no one seems to deny that Johnson & St. Hope did misuse grant money. There's some sort of unwarranted assumption that Johnson didn't mean to, so should get to keep the money. This is one of the misguided assumptions that the DoJ reform of 2006 wanted to combat.
June 24, 2009 5:06 PM | Reply | Permalink
I didn't ask you to debate anything about the Roy Cohn case here. I posted the comment to everyone, pointing out that Walpin has a history of high-profile screw- ups. You chose to respond, with some snide remarks about "slinging shit" and bad reporting.
I responded to you by pointing out my reasons for posting the comment and what was actually being "reported." Period.
I beg your pardon if I misinterpreted your comment (on another thread) about Walpin's federal service indicating he wasn't a partisan hack as praise for that service. Which makes me wonder, of course, why you would be so defensive on the issue now. But very well.
I gave you the exact context in which the Bee editorial used the word "act." Once again, they said he acted in making a recommendation, and I never said anything different.
Please give examples of CNCS "suspending people for inadvertant [sic] mistakes," and the context of those suspensions. Be specific.
And sorry, I have absolutely no idea what you mean by "the DoJ reform of 2006."
June 25, 2009 12:14 AM | Reply | Permalink
You mean the CNCS cannot suspend someone for inadvertent [sic] mistakes? Wow, "ignorance of the law is no defense" is now turned on its head. So the government has to prove I meant to not keep records, that I meant to lose $400,000 or they can't suspend me?
Recommending suspension is now "acting". What is suspending? Why don't people blame the Suspension and Debarment Official for actually suspending Johnson if this is the issue? Certainly that Official could have said, "this is unprecedented" or something else if he/she disagreed.
The reference to the 2006 DoJ is in the PDF you referenced, page 11, of the National Procurement Fraud Task Force:
http://a.abcnews.go.com/images/Politics/Brown_letter_to_Kenneth_Kaiser.pdf
The reason I get test about the Cohn bit is everyone can be made to look bad if you go sifting through a career or look through their laundry. Did they inhale, did they sleep with someone, did they not pay a nanny's taxes, did they not pay their own taxes, etc. An incident from 1964 or whatever is turned into "Walpin has a history of high-profile screw-ups". 2 is a "history". So be it, so did Winston Churchill, but he got one or two right. Does that mean we dismiss anything he did in WWII because he screwed up at Gallipoli?
June 25, 2009 10:11 AM | Reply | Permalink
You have a habit of waving strawmen when you cannot answer a question. I asked you to please provide examples of CNCS suspending people "for inadvertant [sic] mistakes." Surely there must be several, given the number of grants made in any year and the millions and millions of dollars received by grantees.
(Oh, and by the way, this suspension was imposed for a period of up to 12 months or until the investigation was concluded, whichever was sooner.)
I already explained - twice - the exact context in which the Bee used the word "act." All the spinning in the world will not change that.
Thank you for pointing out the reference to the procurement task force in Walpin's letter. However, it appears he mentions it in supporting his initial referral of the case to DoJ for prosecution, period.
In this connection, after months of investigation, US Attorney McGregor Scott (like the local authorities) concluded that no criminal charges were warranted. He then entered into negotiations for a civil settlement. As Johnson was required to repay the misused funds, there quite obviously no "unwarranted assumption that Johnson didn't mean to, so should get to keep the money" as you claim.
And finally, it actually is relevant to look at someone's "history" if that history has been touted again and again in his defense. The Wash. Times, Glen Beck, and the others hadn't made a point of touting ad nauseum Walpin's "sterling record" and his prosecution of Roy Cohn as some sort of evidence of the untruthfulness of the current criticism, it would be a sidenote. But the fact is that Walpin does NOT have a sterling record and his prosecution of the Cohn case was botched because he exhibited some of the same ethical and professional failings of which he is now accused.
June 25, 2009 3:49 PM | Reply | Permalink
Correction: "IF the Wash. Times, Glenn Beck, and the others hadn't made a point ...."
June 25, 2009 3:51 PM | Reply | Permalink
PS, as to your claim that the settlement was
favorable for "potentially getting half of the funds in question repaid over 10 years time," how about you provide a link saying that there was a determination that $800,000 was misused?
Especially since Walpin, in his special report, only claimed to have suggested repayment in the amount of $470,000 - $570,000.
June 24, 2009 3:58 PM | Reply | Permalink
They asked for Walpin's compromise amount. Then they took Walpin's compromise and undercut it drastically and proclaimed it a great deal.
Walpin was pretty clear - St. Hope did not document the spending, and there were numerous cases of clear misuse. The grant money in total should have been returned under the basics of how the grant money was to have been spent. St. Hope couldn't show tutoring administered, St. Hope employees were paid from Americorps funds in violation, personal favors were discharged from Americorps funds, activities outside the grant were paid for by Americorps funds. How badly do you want to beat this into the ground? The only defense was "others are sloppy too, and no one suspended them". Brilliant.
June 24, 2009 4:53 PM | Reply | Permalink
You said the settlement "potentially [got] half of the funds in question," which is demonstrably false.
Now you swing into an alternative, "well they undercut his compromise drastically." His compromise was $470,000 over 5 years, with $100,00 of that up front; the negotiated settlement was for $424,000 over 10 years, with $74,000 of that up front. Yep, they came in with a total that was less than 10% lower over a longer period ... boy, that is one drastic cut!
Care to compare that to other settlements in which an IG makes a recommendation?
As to your claim that "[t]he grant money in total should have been returned," well, your argument is with Walpin himself, who never made such a recommendation (see above). Nor did he or anyone else suggest that the entire grant had been misspent or that none of the spending documented.
June 25, 2009 12:31 AM | Reply | Permalink
Dig your hole deeper:
"“Contrary to . . . grant requirements and prohibitions, we found that St. HOPE
AmeriCorps members performed little, if any, of the service agreed to and stipulated under the grant."
"We found an almost total lack of documentation to support St. HOPE’s performance of the grant, despite our repeated requests to St. HOPE for
grant-related documents."
"But to demonstrate OIG’s cooperation with the USA’s office, OIG’s audit staff prepared its report. The report’s conclusion was straight forward:
“None of the costs charged to the grant are allowable, primarily because the AmeriCorps members’ service activities were not consistent with the grant requirements."
"Further, the settlement agreement... is devoid of any protection of the Corporation’s right to receive the even small amount of money St. HOPE agreed to pay in settlement. As St. HOPE is insolvent, the absence of any obligation imposed on either Johnson or Gonzalez, and the absence of any guarantee or security to ensure payment, makes the settlement a farce."
"Mr. Brown knows that the Settlement Agreement was carefully drafted so that no
obligation is imposed on Mr. Johnson to pay to the Corporation a single penny of the amount
supposedly to be paid to the Corporation by St. HOPE."
"In an e-mail to Supervisory Special Agent Morales, the Corporation’s Office of Grants Management gave a value of $250,000 - $335,000, exclusive of penalties. Remarkably, the low figure is lower than the offer that St. HOPE had made."
“to assist St. HOPE in paying” the initial $73,836.50 amount, Johnson agreed to pay St. HOPE $72,836.50 and Gonzalez agreed to pay St. HOPE $1,000.00 “in time for St. HOPE to make the Initial Payment . . . pursuant to the terms of this Settlement Agreement.” Further, it provides that “Johnson and St. HOPE may enter into an
agreement whereby St. HOPE agrees to repay Johnson when St. HOPE has the financial
ability to do so while still meeting all of its other financial obligations.”
What that means in reality is that St. Hope is broke, will not pay back more than the $74K that Johnson is loaning them, almost certainly will not pay $35K/year as per the "settlement", and Johnson is obligated to pay nothing, though may lose his $74K.
Regarding press announcements:
"As already discussed above (p. 5 n.2), the GSA’s website report of the suspension was on September 24, 2008, while OIG’s press release on the suspension was issued on September
25, 2008. It is therefore impossible to understand Mr. Brown’s reference to this press release as being “on the eve of the Mayoral Election,” which was more than a month later. Likewise, as to Mr. Brown’s assertion that the U.S. Attorney “felt compelled to inform the media that our office did not intend to file any criminal charges,” because “of Mr. Walpin’s public
pronouncements on the [supposed] eve of the mayoral election:”the newspaper did not report
that statement until November 6, 2008, after the November 4, 2008 run-off election."
June 25, 2009 10:32 AM | Reply | Permalink
Wow, way to obfuscate.
Nowhere do you mention the fact I pointed out: that Walpin himself did not suggest the entire amount be repaid. His compromise recommendation: $470,000 total. Hint: that's a little over half the grant total.
And you fail to mention other recommendations made by IGs in similar cases, as I requested.
No idea why you're bringing up the press releases, but very well. First of all, early voting and mail voting began in Sacramento on October 6, 2008, so Walpin's September 25 press release pretty much WAS "on the eve of the mayoral election." And I don't see anywhere that Brown claims that Scott released his statement re criminal charges before the election.
June 25, 2009 4:40 PM | Reply | Permalink
Oh and by the way, that business about the settlement providing no "protection of the Corporation’s right to receive the even small amount of money St. HOPE agreed to pay in settlement" is a flat-out lie on Walpin's part.
The Stipulation for Consent Judgment entered into as part of the settlement specifically gives the federal government an enforceable judgment against St. Hope for the full amount owed, and to record a lien against St. Hope's real property until the full amount is paid. FAIL.
http://www.cncsig.gov/PDF/StHope/ResponseToSenate.pdf
As to Walpin's little blurb from the OIG audit staff that "none of the costs charged to the grant are allowable," take special notice of what the corporation's chief financial officer had to say about that:
"OIG auditors did not perform an audit of the Federal assistance provided to St. HOPE
Academy; rather, they performed a review of information in the investigative files and formed
their conclusions based on that limited record. In my opinion, while there was evidence that there would be some level of disallowed costs related to these awards, there was also evidence in OIG's investigative files that appropriate grant activities had taken place including tutoring, and therefore, it would be inappropriate and unsustainable to disallow all costs incurred under the grants." (linked above)
June 25, 2009 7:36 PM | Reply | Permalink
Walpin notes here on page 9 the question of not including specific tutoring hours from Pegany as they did not reflect actual knowledge of whether the hourse were completed, only that they were scheduled, amongst other details
On pages 10-12 he addresses the issue of an audit, noting that it is frequently not used in cases such as this, and that St. Hope had not responded to subpoenas for information that would allow closer analysis, though they did provide some analysis from incomplete data in March.
http://a.abcnews.go.com/images/Politics/PCIE_Response_Report_FINAL_5_20_09.pdf
As for Walpin's settlement recommendation:
http://www.cncsig.gov/PDF/StHope/StHOPEFIN.pdf p. 15:
"Therefore, on April 2, 2009, the IG provided the following to AUSA Newman in a telephone conversation: (i) an opening counter-offer of $170,000 immediately (covering the amount paid for education awards from the National Service Trust funds) and $400,000 over five years; (ii) the minimum of $100,000 immediately, an additional $70,000 in one year, and $300,000 over the following four years; (iii) sufficient guaranties of payment;"
Walpin's preferred scheme would mean $250,000 returned by the end of year 1. His minimum would return $170K by end of year 1. Both would finish repayments of $570K or $470K respectively in 5 years. The settlement Brown got returns $109K by end of year 1, $249K by end of year 5. Walpin notes that St. Hope is insolvent, so it's a good question what of value Brown can put a lien on (Used computers & desks?) and whether St. Hope has any chance of surviving 5 years, much less 10. Sure, if you're a huge optimist, money 10 years from now might be close to the same as money up front. Walpin's point was that they should have penalized Johnson and held him legally responsible for repaying, as he and Gonzales misused the funds, as noted on 19-20. As it is, he is only providing a loan (which he can likely deduct if not repaid) and not legally bound to anything.
[The same document has extensive explanation of why St. Hope's claims of tutoring and other grant activity was simply insufficient as proof - pages 13-14, 16-18].
Regarding what IG's did in similar cases, I noted that the 2006 changes were attempting to increase prosecution of grant fraud and accountability, so noting what IGs did before then would not be any help - they were supposed to get stricter. If KBR/Halliburton were ripping off military contracts through non-performance, employee padding and other fraudulent acts, would you be just as complacent? Additionally, I would have to guess as whether the other institutions were as messed up as St. Hope was to compare them (with St. Hope claiming that many grantees don't keep records).
June 26, 2009 4:13 PM | Reply | Permalink
Way to go with irrelevant information.
Please note my quote was from the CFO of the corporation. When you look at his statement again, please read his attached estimate from the Grants Management unit. For example:
"Some of the hand-written notes on conversations OIG staff had with St. Hope AmeriCorps members indicate that members were engaged in some activities not within the scope of the grant, but some of the activities were also within the scope, such as serving as teaching assistants. The St. Hope attorneys also interviewed six AmeriCorps members, at least one of whom was also interviewed by the OIG staff. All six members provided evidence that they were tutoring children, serving in the community art space, and rehabilitating community buildings, all as described in the grant documents. Six members is about 10% of the members in the program over the two year period (12 full-time and 20 part-time each year). In addition, the attorneys interviewed staff and others who supervised members. All three of those individuals confirmed
that members were doing service within the scope of the grant activities."
The point about the audit was that OIG's conclusion that "none of the costs are allowable" was based not on an audit, but on its own interpretation of the data. Walpin himself must not have agreed with his own auditor's conclusion, because he certainly didn't recommend repayment of the full $800,000+.
As to your analysis of the repayment schedule, please be sure to include the cumulative interest incurred over a ten year period. Of course since your bottom line argument (without any evidence except Walpin's claim) is that St. Hope is "insolvent," it isn't clear how trying to force an impossible payment schedule over one more likely to be met is a net benefit for anyone. Of course St. Hope warranted to the court and to the United States government in the settlement agreement that it WAS solvent and would remain solvent following payment of the settlement amount (note that Walpin completely misquotes this). Aside from the obvious problems associated with intentional misrepresentation of a substantive claim in a binding legal document, to assume that two separate federal agencies entered into such an agreement without even looking into the financial record is quite simply absurd.
And again, Walpin's claim that the government had no guaranty of, or security for, the settlement payments is flat-out false. His claim that the government "has no recourse" to force Johnson to pay the $74,000 if repayment of his loan forces St. Hope into insolvency, displays - to put it charitably - a woeful ignorance of the law (see General Counsel's memo linked in prior, pp. 4-5).
Perhaps you will point me to the place where Walpin, aside from claiming that Johnson would be financially able to foot the whole bill himself, actually suggested that he should do so. And if so, why was that not specified in his recommendation? In fact, why didn't Walpin specify anywhere in his recommendation that Johnson should pay any part of the settlement?
Walpin mentioned the National Procurement Fraud Task force in his referral letter, to bolster his reasons for referring the case to the DOJ for prosecution, period. As he said, the task force "encourage[s] agencies to refer more cases for civil and criminal prosecution." I didn't ask you what the rate of referral for prosecution was, I asked you what the typical recommendation for settlement might be.
But sure, let's say Walpin took all this encouragement to heart in making a settlement recommendation (because recommending repayment of half the money with security and separate consideration of lifting the suspension is probably WAY stricter than usual). The fact is that membership on, or encouragement by, a task force does not change or expand the statutory authority of an IG. Please note the memeo of the CNCS General Counsel (linked in prior), which explains that an IG "has no statutory entitlement to participate in an agency's deliberative process, including the settlement of a civil matter or a suspension." Which also means that he has no entitlement to sputter and make accusations when his "recommendations" aren't followed to the letter.
June 26, 2009 10:45 PM | Reply | Permalink
By the way, it seems Walpin has a history of high-profile screw ups:
NYT: Walpin an "embarrassment" to DOJ for "mishandling" Roy Cohn case
June 24, 2009 8:02 AM | Reply | Permalink
Calling my comments "irrelevant" is plain insulting bullshit. I addressed what you talk about, but you don't like the answers.
You know very well that Walpin's compromise proposal was a compromise, not the "they should pay everything back" that the report concluded. He was asked for a compromise to what his report gave, and he followed up in that spirit, but noting strongly that he didn't feel that suspension should be taken out. Then for the guy who's supposed to be intransigent and partisan, you say his compromise is what he thought was fair or the best he could do, and then wave your magic wand to disappear the differences between Walpin's recommendation and the actual settlement.
You can talk about interest on a debt that won't be repaid because the non-profit goes out of business, and it doesn't make the lambs come home. St. Hope now has to raise $350K plus interest not for new services but to pay back money for mismanagement. Tell me how many charitable donors you know who find that attractive. Lessee, I can give to a charity that helps kids, or I can give to one that is under sanctions, what should I do, or what should I do? Getting half of the compromise amount the first year at least keeps the issue from being kicked down the road, but of course that's all you want - out of sight, out of mind, let St. Hope's obituary come after Obama's re-election perhaps. And I also noted that if Johnson's loan to St. Hope is unpaid, he likely can take a tax deduction on that, so realistically he's out $40K maybe for misusing $800K. Wonder what his CEO salary was for St. Hope.
Walpin noted he tried to get records and tried to get interviews, and had limited success with both - St. Hope wouldn't give contact info to some of the people Jacobs talked to by phone. After-the-fact statements that "some of the activities were proper" doesn't quite live up to keeping records as part of a grant, nor assure that really it even happened that way. Walpin notes that Jacobs took phone comments and wrote them down in email - that's a trustworthy "audit" indeed. Any problem with a written, sworn-to statement of fact these days?
As for Walpin saying Johnson should repay, read page 19:
http://www.cncsig.gov/PDF/StHope/StHOPEFIN.pdf
Walpin was shut out of the settlement agreements. Some of what he said to Brown was said by phone. Where specifically he addressed this, you can peruse the documentation or just guess. He noted "sufficient guaranties of payment" in his compromise, and he was insistent on holding Johnson responsible, so a deal that lets Johnson off the hook with a loan is hardly that. Case closed.
June 28, 2009 3:27 AM | Reply | Permalink
Referring to mutliple paragraphs of nonresponsive cut and pastes as irrelevant is a factual observation.
You are unable to find anywhere in his special report or in any subsequent statement that Walpin made an official recommendation for full repayment of the $800,000. An internal memo from an auditor - again, not based on an audit but private interpretation - is not an official recommendation of the IG, no matter how you'd like to parse it.
I'd be interested to see a single criticism Walpin has made about CNCS for not settling on the entire $800,000.
Have you seen an actual accounting of St. Hope's assets? Just curious. See, I'm kinda guessing the two federal agencies who entered into the settlements actually have.
Not to mention - well actually, you keep forgetting to mention - that the federal government has an enforceable judgment against St. Hope, and authority to put a lien on their real assets.
Walpin was quite clear in what he recommended to Brown, by phone or not. Yet nowhere does he say that he recommended that Johnson be personally liable for all or any of the settlement amount. Given that he seems to see that as such a big problem in retrospect, you'd think he'd take care to point out that he recommended it in the first place. But...nope.
June 28, 2009 4:29 PM | Reply | Permalink
You are indeed a fucking moron. Read the 2 reports I've referenced time and again, and the OIG recommends that all payments to St. Hope be disallowed, and that full repayment of funds be required. It's not that hard to read, is it? I think its about 40 pages total. Here they are again so you don't endure Repetitive Stress Syndrome in scrolling back up:
http://a.abcnews.go.com/images/Politics/PCIE_Response_Report_FINAL_5_20_09.pdf
http://www.cncsig.gov/PDF/StHope/StHOPEFIN.pdf
You're guessing the 2 agencies have accounting because the IG already stated St. Hope didn't account, and half the paperwork they turned over was guesswork. But keep beating this into the ground. Belief in magic is revered around the world.
St. Hope doesn't have any real assets, so you can kiss that "hope" goodbye.
Walpin recommended "sufficient guarantees of payment" in his proposal for settlement. Where and in what fashion he stated the name Johnson, I don't care - property liens on an insolvent non-profit are not guarantees, they're futile gestures. You know this, but you want to play the fool. Anyway, enough time on a dead thread, sayonara.
June 28, 2009 6:53 PM | Reply | Permalink
Oh my, indignant over any criticism of your information, but perfectly willing to hurl foul-mouthed personal insults. Aren't you the class act!
Actually I was just about to post that I found the unsigned memo to the DoJ, dated March 19, 2009, and withdraw that portion of my prior comment. I am always willing to correct myself in the interest of accuracy.
As to that accounting thing, I'm actually not really "guessing" too on that. Walpin himself mentions - well, selectively mentions - certain dollar amounts of assets and liabilities specified in the settlement. (Hint: balance sheets aren't the same as documenting grant allocations.) As a side note, it's interesting that he finds the corporation's worth to be so minimal as to be made insolvent by smaller payments over a longer period, but evidently doesn't have the same concern over proposing a schedule that (according to his own calculations) would have destroyed them after the first payment.
And all the sputtering and blathering in the world doesn't change the fact that Walpin, though he was happy to document his own recommendations, and quick to criticize the settlement for not imposing liability on Johnson, nevertheless did not claim that he had actually recommended such a thing.
Yeah, I bet you're done.
June 28, 2009 10:08 PM | Reply | Permalink
Correction: not "guessing" too on that = not "guessing" too much on that
June 28, 2009 10:15 PM | Reply | Permalink