U.S. Attorney General Larry Brown and CNCS Displeasure with Walpin's Investigation

One of the issues concerning Gerald Walpin's firing that is not being discussed much, is the displeasure of acting U.S. Attorney General Lawrence Brown with Walpin. Another not being discussed at all, is why the CNCS board turned hostile toward an investigation CNCS had tasked Walpin with, via Governor Arnold Schwarzenegger. See update 11-10-09 below.

Lawrence G. Brown

Acting Attorney General Lawrence G. Brown sent a letter to the "Integrity and Ethics" Counsel of Inspectors General, asking that Walpin be scrutinized for an ethics breach in the investigation of Kevin Johnson, Sacrament0 Mayor, and of course, former NBA "star."
At this point, the investigation had been completed.

Here are Brown's concerns about Walpin:

1) Walpin was not authorized to recommend Suspension and Debarment for Kevin Johnson and Dana Gonzalez - overstepping his authority.

2) Walpin's report and his conclusions seemed overstated and not reflective of the investigation

3) Walpin released information to the press that the case was being referred to the U.S. Attorney's office for a decision on whether to prosecute criminally or civilly, before notifying Brown's office. Brown asserts that he learned about it through the Sacramento Bee and not through proper channels.

4) Walpin withheld information from the U.S. Attorney's office.

5) Walpin did not achieve a "settlement agreement" quickly enough to allow Johnson to be released from the Suspension upon becoming Sacramento's Mayor.

The Sacramento Bee was calling for a quick resolution because it was believed that the City of Sacramento could not receive federal funds if their Mayor was under suspension. Brown wrote the letter to the Ethics Committee on April 29, 2009. You can read Brown's letter here.

Gerald Walpin responded with an 18 page letter [undated from what I can see]. You can read Walpin's letter here. Because he answers every accusation by Brown in detail, I cannot easily put it down in a bulleted list. I've outlined what I see as the pertinent points dispelling Brown's claims. This is important because after Walpin was fired, reports were everywhere that he mishandled the investigation of Kevin Johnson? But did he?

We have an acting U.S. Attorney General making the charge. How does Walpin fight back against that? Maybe his 18-page response "to the complaint" shows another side, and in fact, it does - if the media would just report it.

Here are snippets of Walpin's counter:  

About overstepping his authority: Walpin said it is his job to forward an investigation to the U.S. Attorney when he believes it may merit criminal or civil prosecution. He explained to Brown that the difference between "grant fraud" and the "contract fraud" that U.S. Attorney's offices are more familiar with, is an important difference. Walpin said I:

...quoted one of "Mr. Brown's ultimate supervisors, the Deputy Attorney General in emphasizing the importance of prosecuting "grant fraud," and support of "an energized and empowered IG community working in tandem with...Federal prosecutors" to achieve that end.

Walpin pointed out his procedure for submitting the case to the U.S. Attorney General was the same procedure his predecessors used:

I am informed that it has been the custom in my office, before I commenced as IG, to send a referral with such a covering letter. Aside from personally communicating the seriousness of the OIG’s decision to make the referral, it serves as an Executive Summary of the referral, which here was 33 pages long.

Most United States Attorney’s offices to which I have forwarded referrals with such an “executive summary” cover letter, always containing my explanation of why I believed the conduct warranted prosecutorial action, have expressed appreciation for such explanations and summaries.

Indeed, when I, together with Supervisory Special Agent (“SSA”) Morales and Special Agent Wingers, met with Mr. Brown and several of his fellow Assistant U.S. Attorneys, on August 25, 2008, they complimented us on our referral and the personal interest we took in it by traveling to California to meet with them.

Walpin responded that Mr. Brown's view that an IG has no further role is wrong:

The Senate Report, explaining the purpose of the Inspector General Act of 1978, specifies that the IG has the duty to “[a]ssume a leadership role in any and all activities which he deems useful to promote economy and efficiency in the administration of programs and operations or prevent and detect . . .waste in such programs and operations.” S. Rep. No. 95-1071, at 27 (1978), reprinted in 1978 U.S.C.C.A.N. 2676, 2702 (emphasis added).

Mr. Brown’s misunderstanding of the proper role of the IG is further shown in his assertion that the IG is the “investigative arm of the CNCS Agency.” The IG is statutorily made independent of the CNCS Agency, with responsibility to oversee and criticize what CNCS is doing if the IG believes that the agency is thereby wasting Federal funds -- including the waste of the right to recovery Federal funds from a grantee that misused Federal funds granted to it.

Of Brown's assertion that the IG "is not intended to act as an advocate for suspension or debarment," Walpin responds:

...the procedure exists to protect all Federal funds by denying new funds to an individual or entity who/which has shown by uncovered facts not to be trustworthy or responsible in the prior use of Federal funds....For the Suspension and Debarment procedure to work to protect Federal funds, the investigative agency, upon determining that the facts it uncovered warrant suspension, must make a recommendation of suspension to the agency's Suspension and Debarment official. That is exactly what OIG did here.

Walpin's response on When and How Mr. Brown Learned of the Suspension Recommendation:

Brown not only knew "long before" he says he knew, but "he and his office assisted OIG in its suspension recommendation by submitting a letter, requested by the Suspension and Debarment Official as needed before that official would issue the Suspension order.

Mr. Brown’s assertion of lack of advance knowledge and surprise at the suspension procedure is clearly without factual basis.

There's far more on Brown's alleged surprise notification in the letter on pages 4-6.  

Walpin's response on The Propriety of the OIG Press Release: The Sacramento Bee, on September 24, 2008 and it's morning edition on September 25th, reported "its own discovery of the names of suspended parties" from a list that the General Services Administration (GSA) maintains.

He says the OIG issued no press release on that date, as Brown accused. After The Bee's initial article was published, Walpin says the OIG issued a press release on September 25, 2008. In that press release, Walpin says he "largely repeated the grounds for suspension set out in the Notice of Suspension, issued by the Corporation's Suspension and Debarment Official and publicly posted on the GSA website.  

It's important to note that before the idea of firing Gerald Walpin became the thing to do, the corporation, CNCS, issued the Notice of Suspension of Kevin Johnson. Perhaps CSNC didn't know that their soon-to-be-President Obama would not be happy with their actions.

Walpin responds to The OIG Investigators' Alleged Withholding of Information From the U.S. Attorney's Office:

Brown said that Walpin held back a letter from an elementary school principal (Herinder Pegany) where the principal claimed that "St. HOPE AmeriCorps members had performed after-school tutoring at his school." Walton said the letter actually said that the principal "knew that members were assigned to his school to conduct tutoring," but "he did not know how many members were assigned to his school...because he did not directly supervise the members." The point, said Walton, was not whether or not AmeriCorps members had been assigned to the school, but if in fact, they had "performed such tutoring." That fact was not established through the Principal's testimony because he said he had "no personal knowledge" of such tutoring.

Simply put, OIG does not provide to U.S. Attorney’s office all documents prepared as memoranda of work done during an investigation (and OIG’s Special Agents so informed Mr. Brown when they met with him), but rather all documents which provide usable evidence, whether probative of guilt or innocence. Particularly given the lack of personal knowledge provided by Mr. Pegany, I fully understand, as I previously told Mr. Brown, the good faith judgment call made by these two experienced Agents not to include that memorandum in the referral to the United States Attorney’s office. That decision certainly does not warrant the charge against them of any intent to conceal.

Brown asserted that Walpin "misled" his office through a heading in OIG's referral letter, titled "AmeriCorps Members Performed No Tutoring." Walpin says below that heading was the explanation that substantiated interviews with staff. Brown's assertion that in the August 25th meeting he and his staff "expressed [their] concern that the Walpin's report conclusions "seemed overstated...."

What Mr. Brown and his colleagues said was that they would be studying all of the files that OIG had provided to see if criminal intent and knowledge could be established for a criminal prosecution; they never expressed any concern concerning the existence of a viable civil case.

Regarding the charge that Walpin failed to conduct an audit:

OIG then responded that an audit was neither feasible nor needed, and is not used in many investigations. OIG explained that the allegations in this case involved misuse of AmeriCorps members, and not to missing or misused funds, making an audit not warranted.

However, on September 11th, Assistant U.S. Attorney Newman asked OIG to prepare a report on St. HOPE's financial records to determine the extent of St. HOPE's liability to return any or all of the grant funds that it had received." At this time, a subpoena was served on October 1, 2008 on St. HOPE. As late as January 22, 2009 only partial information had been provided. Repeated letters to St. HOPE and St. HOPE's attorney on non-compliance were issued.

Yet, the U.S. Attorney's office took no action to enforce the subpoena.

On February 4, 2009, additional documents were provided, and AUSA Newman advised that OIG auditors "should base their report on the documents" available, "even though a big void in the required documents remained." Missing were:

“Source documentation for costs charged to the grant; complete general ledger (only a partial ledger was produced); reconciliation of costs charged on the Financial Status report to the general ledger, including match funds; explanation of the methodology for allocating costs between match and federal share; [and] identification of the accounting system used.” In other words, there were gaping holes in the documentation. But to demonstrate OIG’s cooperation with the USA’s office, OIG's audit staff prepared its report.

The conclusion:

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. 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. Instead, they were used for non-authorized and prohibited activities, including services that displaced St. HOPE employees, a violation of 42 U.S.C. § 12637 Non duplication and Non displacement. We also found instances where AmeriCorps living allowances and benefits were unlawfully used to supplement the salaries of St. HOPE employees. Another grant requirement is that all allowable cost must be adequately documented. . . . . 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.

After the U.S. Attorney General's office asked for an audit, and after a subpoena was largely ignored by Kevin Johnson, the Attorney General's office refused to enforce the subpoena. Note also that Executive Director of Kevin Johnson's St. HOPE Academy, Rick Maya, resigned due to misconduct by Kevin Johnson.

Maya claims that another board member deleted Kevin Johnson's emails during the federal investigation that Walpin was conducting. This article details 9 reasons for Maya's resignation. It's astounding. I hope you'll read it.

At the time of Walpin's firing he had also completed an investigation into City University of New York (CUNY), AmeriCorps largest program. Walpin said neither the CUNY report or the Kevin Johnson-St. HOPE Academy investigation were "well-received by top CNCS management." So what changed at CNCS, because after all, the investigation came at the request of Governor Arnold Schwarzenegger:

A Sacramento-based nonprofit run by former NBA star and Sacramento mayoral candidate Kevin Johnson is facing scrutiny after a teenager complained of inappropriate touching by Johnson.

Gov. Arnold Schwarzenegger’s office asked the federal government to investigate because the nonprofit, St. HOPE, has received money in the past from the federal AmeriCorps program.

One thing changed. Barack Obama was elected President and we know he has big plans for AmeriCorp. How can you achieve the huge expansion he has in mind, with millions, probably billions in federal funds funneled to them, with a-Gerald-Walpin reporting some nasty theft of taxpayer dollars?

Update 11-10-09:

Announced today that Gerald Walpin has been cleared of charges that he overstepped his authority in his investigation of AmeriCorps and Kevin Johnson. Read the story here.

Related and background:
Schwarzenegger Involvement: Kevin Johnson Investigation by Gerald Walpin
Michelle Malkin has news of The First Lady's coming speech at CNCS
Gerald Walpin Firing Update: AmeriCorp $75 Million Misused: Michelle Obama Hires?
Kevin Johnson - St. Hope Scandal: Rick Maya Resigns, Gerald Walpin Investigates
White House Charges Walpin Confused, Disoriented, Disruptive
Who is Sacramento Mayor Kevin Johnson - Walpin-Johnson Investigation