Barack Obama - Inspector General Walpin

Last Updated : Feb 24, 2011

Summary

Inspector General Gerald Walpin completed two separate investigations in 2009 which showed a great deal of financial malfeasance was occurring under the Corporation for National and Community Service (CNCS). Specifically, IG Walpin discovered that the head of the St Hope Academy and an assistant had misused federal funds for personal and political gain, and that the AmeriCorps project known as the Research Foundation for the City University of New York (RFCUNY) was granting teachers funds for the last two years of their education for doing nothing more than they would have done normally.

Kevin Johnson was the leader of the St Hope Academy and is a friend of the Obama administration. When the report was concluded by IG Walpin, he was in the middle of a successful campaign bid for mayor of Sacramento, California. The report detailed the financial problemsat St Hope and recommended that Mr Johnson be suspended from receiving federal funds for three years. After his election to Mayor, this would have meant that the City of Sacramento could not receive stimulus funds.

Despite the protests of IG Walpin, the Attorney General's office began to work directly with the CNCS and the involved parties to reach a settlement in the case. This was despite the fact that neither Mr Johnson, nor any other party in the case, had responded to the accusations. The Attorney General's office issued an ethics complaint against IG Walpin, and removed the suspension against Mr Johnson and all other accused parties. A repayment system was put in place to return the misused funds. IG Walpin wrote detailed letters to Congress noting his opposition to the settlement on both moral and legal grounds and rebutting the ethical complaint against him. He noted that the organization was not likely to repay any funds given its financial problems and that the a suspention was being lifted for no other reason than the fact that Mr. Johnson was now a Mayor.

Days after issuing his second report on the misuse of funds at the AmeriCorps RFCUNY project, IG Walpin was terminated in a phone call. The following day, the President issued a letter to the leaders of Congress stating that IG Walpin was to be terminated in 30 days and giving the reason that he had lost confidence in the IG's ability. When members of Congress noted that the President must give 30 days notice and sufficient reasoning before terminating an IG, White House spokesmen cited a recent meeting where IG Walpin was confused and disorientated as partial reasoning.

Since that time, it has been noted that IG Walpin was immediately removed from his position as IG when the law requires a 30 day notice of eventual dismissal and not an immediate termination with 30 days of pay. IG Walpin's account of the meeting in question remains that he was interrupted and his papers disheveled without time given to recover his position before being asked to continue. This account has been verified by others present at the meeting.

Additional controversy has been raised since it was discovered that the Chief of Staff for the First Lady was moved to a position of a Senior Advisor at the CNCS only days before the termination of IG Walpin, and that the Chairman of the CNCS Board was a fundraiser for President Obama.

IG Walpin has brought a lawsuit against the CNCS and the acting CEO of the CNCS. That lawsuit has generated more controversy as judges with clear ties to Attorney General Eric Holder - one of them being bold enough to claim that he "had AG Holder's back" - have repeatedly ignored deadlines and dismissed motions with no explanation given for their judicial misconduct.

The termination of IG Walpin was therefore controversial for the following reasons:

  • the termination seemed to be reprisal for previous investigations
  • the termination seems to violate the law requiring 30 days notice and appropriate reasoning
  • the White House has put forth reasons for the termination that have been questionable at best
  • the chair of the board at the CNCS acted inappropriately and is an Obama fundraiser
  • the Chief of Staff for the First Lady was moved to a board position at the CNCS days before his termination
  • Judges involved with the case have shown a marked apathy towards applying the law 

 

Inspectors General Reform Act (2008)

The 2008 Inspectors General Reform Act requires the President to provide thirty days prior written notice to both Houses of Congress and an explanation of cause, before firing an Inspector General. The Inspectors General Reform Act was designed to strengthen protections for Inspector Generals, who have the responsibility of investigating allegations of waste, fraud and abuse within federal agencies, against interference by political appointees or the White House.

Although President Obama co-sponsored the Senate version of the bill as a Senator, it was ultimately the House version that became law.

 

Inspector General of the CNCS

Gerald Walpin was nominated to be Inspector General of the Corporation for National and Community Service (CNCS) by President George W. Bush on August 3, 2006.  Walpin's job consisted of conducting independent and objective audits, investigations, and inspections of the CNCS and its service programs. These programs include AmeriCorps, Volunteers in Service to America (VISTA), and Senior Corps.  Walpin was confirmed by the U.S. Senate on December 9, 2006 and he was sworn in on January 8, 2007.

 

Misuse of AmeriCorps Funds

St. Hope is a California nonprofit that was run by former NBA star Kevin Johnson. The group received an $850,000 AmeriCorps grant in 2008 for the purposes of: tutoring for Sacramento-area students; the redevelopment of buildings; and theatre and arts programs.

In April of 2008, the CNCS asked Mr. Walpin to investigate reports of irregularities at St. Hope and the possible misuse of funds. Mr. Walpin's investigators discovered 6 areas of impropriety.

  1. Using AmeriCorps members to “recruit[ ] students for St. HOPE Academy;”
  2. Using AmeriCorps members for political activities in connection with the “Sacramento Board of Education election;”
  3. Taking grant-funded AmeriCorps members “to New York to promote the expansion of St. HOPE operations in Harlem;”
  4. Assigning grant-funded AmeriCorps members to perform services “personally benefiting . . . Johnson,” such as “driving [him] to personal appointments, washing [his] car, and running personal errands;”
  5. “Supplementing staff salaries by converting grant funds designated for AmeriCorps members,” by enrolling two St. HOPE Academy employees “into the AmeriCorps program for the 2004/2005 grant year” without changing their duties, thereby improperly using grant funds so that one St. HOPE employee’s “salary was then paid through the AmeriCorps program,” plus she “received an [AmeriCorps] living allowance and an education award,” and the other employee’s salary, which was not paid from the grant, “was supplemented by both an AmeriCorps living allowance and an education award;” and
  6. Improperly using AmeriCorps “members to perform non-AmeriCorps clerical and other services” that “were outside the scope of the grant and therefore were impermissible” for “the benefit of St. HOPE.”

As per the grant received by AmeriCorps, the funding they received was for the three stated purposes and they were not allowed to alter the allocation of those funds without prior written consent from the grantees.

Mr. Walpin's office recommended that Mr. Johnson, an assistant, and St. HOPE itself be "suspended" from receiving federal funds for three years.  The CNCS's official charged with suspensions agreed. In September of 2008, Mr Johnson was made aware that he could no longer receive federal funds and that a civil and/or criminal referral was sent to the U.S. Attorney for the Eastern District of California.

 

Mayor of Sacramento and Stimulus Funds

Mr. Johnson became Mayor of Sacramento, California in the November, 2008 elections. When President Obama began discussing federal stimulus spending, news of Mr. Johnson's suspension from receiving federal funds became public. The news caused an uproar and there was worry that Sacramento might be barred from receiving stimulus funds. Although Mr. Walpin had referred the case to the U.S. Attorney's office and reported the anomalies and grant expenditures, U.S. Attorney Lawrence Brown decided not to pursue criminal charges.

 

Settlement

After Mr Johnson's election, media a political pressure began to mount for the Inspector General's office and the Attorney General's office to come to a settlement agreement with Mr Johnson and St Hope that would lift the suspension on federal funds to Mayor Johnson so that stimulus funds could be dispersed to Sacramento. IG Walpin disagreed with such a settlement, noting that St Hope was in fiscal trouble and not likely to pay much funds, and that the very point of the suspension was to prevent those with a demonstrated history of misusing funds from receiving future funds.

When IG Walpin objected, AG Brown's office began to negotiate directly with the CNCS, which was now chaired by a top fundraiser for President Obama - Alan Solomont.

On April 9, 2009 the Justice Department announced that they had reached an agreement which did not punish Mr Johnson and required that some of the funds be returned. That annoucement is shown below.

 

Attorney General Brown Complaint

On April 29, 2009, the Attorney General Brown sent a complaint to the Counsel of the Inspectors General on Integrity and Efficiency. This 3 page complaint alleged that IG Walpin displayed a lack of ethics in his handling of the investigation of St Hope. It alleges that IG Walpin spoke to the press about the St Hope investigation and that he left out evidence that showed that St Hope indeed tutored students at at least one school.

 

Response to Settlement

In response to the settlement and to the process in which it was carried out, IG Walpin sent a 29 page letter to congress on May 6, 2009 which outlined the violations and the flawed procedure used to arrive at the settlement. The full text of that report can be found here and the summary is reproduced below.

 

Responses to Complaint

On May 13, 2009 IG Walpin sent a letter to Senator Kennedy, advising him that the allegations made in the complaint against the IG were both unmerited and not related to the facts of the investigation into St Hope. He states that this complaint is nothing more than a stalling tactic and he urges the Senator's committee to seek a response relating to the charges against the CNCS.

On May 20, 2009, IG Walpin sent a 17 page response to the allegations made by Attorney General Brown in his complaint. In it, he notes that at no point in time, neither in the settlement or the complaint, has anyone cited a fact that contradicts the 6 financial acts of malfeasance he reported at St Hope. In the opening remarks of the document, he states that the claims themselves should be dismissed.

 

AmeriCorps Investigation

On June 4, 2009 the CNCS issued  an Agreed-Upon Procedures Report and an accompanying Evaluation Letter Report which they claimed raises serious questions about the validity of an AmeriCorps program operated by the Research Foundation for the City University of New York (RFCUNY). An announcement on one of their web pages describes the program which would give grants for people to become teachers, after they had already agreed to become teachers. As the report notes, IG Walpin was heavily involved in the matter.

 

Termination

On June 10, 2009 IG Walpin was called by Norman Eisen, the Special Counsel to the President for Ethics and Government Reform. IG Walpin states that Mr Eisen stated the following:

IG Walpin states that he then reminded Mr Eisen that he had recently finished not only a report on the Sacramento probe but also the investigation into extensive misuse of AmeriCorps money by the City University of New York, which is AmeriCorps' biggest program. IG Walpin then stated the timing of the termination was "very interesting", but Mr Eisen responded that this was only a coincidence. After asking for an hour to consider, he was called back in 45 minutes for a response and refused to resign.

The very next day on June 11, 2009, President Obama announced his decision to fire the Inspector General.  He sent letters to leaders of the Senate and House, notifying them of the termination, which would take effect in thirty days.  As for the reason stated for the termination, the President wrote 

Senator Charles Grassley sent a letter to the President reminding him of the purpose of Inspectors General, which was to combat "waste, fraud, and abuse and to be independent watchdogs" to ensure that federal agencies are "accountable" and that they are to be "free from undue political pressure" so they can operate "independently."

In response, White House counsel Gregory Craig stated that a U.S. attorney, while communicating with an integrity committee for inspectors general, had criticized Walpin's handling of the St. HOPE investigation.  Craig wrote:

 

Response by Congress

On June 16 and 17, Senator McCaskill released a press statement noting that the Obama administration was in violation of the Inspector General Reform Act and that the reason given for IG Walpin's termination - that the president had lost confidence in him - was not satisfactory. She also noted that in her opinion the letter sent to Senators to explain the termination was sufficient.

 

Letter to Senators - Confused and Disoriented?

Mr. Eisen provided more details on Walpin's termination in a letter to senators Joe Lieberman and Susan Collins, with a copy to Senator Claire McCaskill.  Eisen stated that Walpin was terminated following a review that had been unanimously requested by the "bipartisan Board of the Corporation."  He described Walpin's behavior in a board meeting in May 2009,

Walpin has argued that far from being confused, he simply gave the board information it didn't want to hear and chastised it for "what appeared to be the board's refusal to perform its duty, independent of management, in overseeing what management was doing, particularly as it regards determining the merits of the two reports I had issued."  He told the board it was its duty to evaluate all the evidence objectively and not "just to accept what management says."  He claimed the board was "angry" at his "temerity in telling them they should not be acting in the manner of many for-profit boards, which have been recently criticized." 

As for his alleged confusion at the May meeting, Walpin said he had not been feeling well that day, and that board members repeatedly interrupted him as he was delivering his prepared presentation.  At one point they asked him to leave the room so they could handle unrelated business.  When he returned, he found the board had rifled through his papers and left them in disorder, but board members wouldn't allow him time to reassemble his notes.  He said the only confusion in the room was that of board members "as to their responsibilities."  (Crimes Against Liberty, David Limbaugh) (Some text taken directly from sources)

Walpin also denied he was working from home against the wishes of the board.  He said that the CEO and general counsel of the corporation had approved the arrangement, and he also cleared it with the chairman and vice chairman of the board. Walpin said he worked out an agreement with corporation leaders under which he would travel to Washington two or more times a week, and spend the rest of the time working from home in New York.  He said some board members had initial reservations, but they were resolved. 

Interestingly enough, the Washington Times reported that it found a witness who was able to corroborate Walpin's statement that the corporation's general counsel and CEO had no issue with him working from home.  The witness was also able to confirm Walpin's account of the May meeting.  Specifically, the witness confirmed that Walpin was denied time to reorder his papers after they had been rifled through. (Text taken from source)  

 

 

Stonewalling

In the following days, numerous letters were sent from members of Congress to the White House and to the CNCS CEO Nicola Goren, asking for clarification as to why Mr Walpin was terminated. These include a June 15 letter from Congressman Darrell Issa to the White House, a June 17 letter from Senator Grassly to the White House, and letters from Congressman Issa to the CNCS.

On June 30, White House counsel Gregory Craig warned Senator Grassley:

On July 6, CNCS general counsel Frank R. Trinity repeatedly refused to answer congressional investigators' questions about the White House's communications with his office regarding any review of Mr. Walpin's performance, telling staff members that it was White House prerogative. Asked if he was somehow asserting "executive privilege" -- a privilege not his to claim -- Mr. Trinity repeated his "White House prerogative" line. Told that no such prerogative exists in law, Mr. Trinity still declined to answer. (Text taken from source)

 

Lawsuit

In June 2009, Walpin filed a federal lawsuit against CNCS and Nicola Goren, the acting CEO of the Corporation, Frank Trinity, its general counsel, and Raymond Limon, the Corporation's "chief human capital officer."  The suit requests the court to declare Walpin's firing unlawful and restore him to his position as the Corporation's inspector general.  In the suit, Walpin alleges that there were three actions that were violations of the job protections given to inspectors general. 

The Walpin suit has languished for many, many months, without the benefit of a single preliminary hearing. First the Obama administration asked for an extension of the ordinary time period to respond to the suit.  Then, the administration made a motion to dismiss without a hearing or trial.  Mr. Walpin countermoved on Dec. 16, 2009 for summary judgment in his favor.  One week later, the administration filed another motion to delay.  Briefs went back and forth on that motion for another month, but the Federal District Judge, Richard W. Roberts, made no rulings.

Finally, noting that a scheduling hearing should by law be held no later than 90 days after the defense's first "notice of appearance" and that 90 days expired on Dec. 15, 2009, Mr. Walpin on Feb. 3, 2010 filed a motion demanding a scheduling conference.  Still no answer from the judge.  However, on Friday [Feb. 12, 2010], the administration moved to block all legal discovery on the numerous outstanding motions. Through all these delays, the Obama administration wards off the day when Mr. Walpin can use the legal discovery process to unearth documents or other evidence that might embarrass the White House. (Text from Source

In July 2010, after being pressed by a higher court to justify his delays, Judge Roberts ruled completely in the administration's favor - tossing out the suit, without trial, of Gerald A. Walpin.  Rightly so, Mr. Walpin appealed Judge Robert's decision.  The court ruled, for example, that Mr. Walpin had not been "removed" from office prematurely, even though he had been denied all access to his office, files and staff.  The judge even ignored a contemporaneous administration letter saying Mr. Walpin had been "removed."  In addition to the appeal to get the case reinstated, Mr. Walpin asked that it be reassigned to a different judge.

Reassignment makes sense, given Judge Robert's personal relationship with Attorney General Eric H. Holder Jr.  In a speech at Vassar College on April 22, 2010, Judge Richard Roberts said "I've got your back" to Holder when introducing him.  At that time, Judge Roberts was ignoring several legal deadlines to the benefit of Mr. Holder's administration on numerous motions and countermotions in a key lawsuit for which Mr. Holder's underlings effectively were acting as defense attorneys, specifically the Walpin lawsuit.  Additionally, when Mr. Holder was U.S. attorney for Washington, D.C., he made Mr. Roberts his principal deputy. When Mr. Holder was deputy attorney general in the Clinton Justice Department, Mr. Roberts served him as head of the Civil Rights Division's criminal section.  Mr. Holder also had some authority in vetting Mr. Roberts' 1998 judicial nomination. 

 

Involvement of First Lady Obama

On June 4, 2009, the Chief of Staff to First Lady Michelle Obama, Jackie Norris was appointed to be Senior Advisor to the CNCS. This was the same day that IG Walpin issued his report on the AmeriCorps Program RFCUNY and following his report on the St Hope project. It was also only days before the termination of IG Walpin.

On Dec 11, 2009 Congressman Issa wrote a letter to Mr Solomont:

 

References

[1] Website: The Wall Street Journal Article: The White House Fires a Watchdog Author: NA Accessed on: 09/24/2010

[2] Website: The Washington Examiner Article: Gerald Walpin speaks: The inside story of the AmeriCorps firing Author: NA Accessed on: 09/24/2010

[3] Website: The Washington Times Article: EDITORIAL: A witness to Walpin-gate Author: NA Accessed on: 09/24/2010

[4] Website: The Washington Times Article: Stonewalling on Walpin-Gate Author: NA Accessed on: 09/24/2010

[5] Website: The Washington Examiner Article: NEW: House Republicans raise questions about Walpin firing Author: Byron York Accessed on: 09/24/2010

[6] Website: The Washington Times Article: EDITORIAL: Walpin-gate gets rusty Author: NA Accessed on: 09/24/2010

[7] Website: The Washington Times Article: EDITORIAL: Walpin-gate may snag Mrs. Obama Author: NA Accessed on: 09/24/2010

[8] Website: Office of the Inspector General - CNCS Article: Office Of Inspector General Questions Validity Of AmeriCorps Program At City University Of New York Author: William Hillburg Accessed on: 09/24/2010

[9] Website: ABCNews Article: Response of IG Gerald Walpin and the OIG To the Complaint Author: Gerald Walpin Accessed on: 09/24/2010

[10] Website: ABC News Article: Complaint Against IG Walpin Author: Attorney General Lawrence Brown Accessed on: 09/24/2010

[11] Website: Department of Justice Article: Settlement between AG and St Hope Author: Department of Justice Accessed on: 09/24/2010

[12] Website: Pajamas Media Article: Proof: New Records Show DOJ Lied About New Black Panther Dismissal Author: J. Christian Adams Accessed on: 09/27/2010

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