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Government and People
DISTRICT OF COLUMBIA
REPORT OF INVESTIGATION CONCERNING INADEQUATE OVERSIGHT AND MISCONDUCT AT THE DISTRICT OF COLUMBIA BOARD OF ELECTIONS AND ETHICS AND THE OFFICE OF CAMPAIGN FINANCE
OIG NO. 2002-0252
THIS REPORT IS PROVIDED TO YOU FOR OFFICIAL PURPOSES ONLY AND THE CONTENTS MAY NOT BE RELEASED WITHOUT THE PRIOR WRITTEN APPROVAL OF THE INSPECTOR GENERAL OF THE DISTRICT OF COLUMBIA
May 22, 2003
GOVERNMENT OF THE DISTRICT OF COLUMBIA
Benjamin F. Wilson, Esq.
Dear Chairman Wilson:
Transmitted with this letter is a report captioned "Report of Investigation Concerning Inadequate Oversight and Misconduct at the District of Columbia Board of Elections and Ethics and the Office of Campaign Finance, Investigation 2002-0252."
The enclosed report includes 14 recommendations concerning issues identified in the report for you to address. Please review the report and advise this Office, by July 7, 2003, as to what actions will be taken with regard to these recommendations. When responding, please refer to OIG Control Number 2002-0252.
If you have any questions or need additional information, please contact me or Robert G. Andary, Assistant Inspector General for Investigations, at (202) 727-1039.
Report of Investigation Concerning Inadequate Oversight and Misconduct at the District of Columbia Board of Elections and Ethics and the Office of Campaign Finance
Investigation 2002-0252This report summarizes the investigation conducted by the Investigations Division of the District of Columbia Office of Inspector General (OIG) into allegations of certain improprieties by officials and employees of the District of Columbia Board of Elections and Ethics and the Office of Campaign Finance.
Overall, the investigation disclosed a significant number of serious issues at the District of Columbia Board of Elections and Ethics and the Office of Campaign Finance, which indicate that oversight of these offices is limited and ineffective. Our contacts with the Chairman of the Board of Elections and Ethics during the investigation demonstrated that the Chairman lacks the objectivity to exercise effective oversight or to address the issues disclosed by our investigation.
We found that executive-level officials of the District of Columbia Board of Elections and Ethics (BOEE) and Office of Campaign Finance (OCF) have used their positions improperly to enrich themselves at the expense of District of Columbia taxpayers and to selectively enforce campaign finance laws. In addition, we found that these same officials failed to refer potential violations of law to the appropriate authorities, failed to cooperate with the OIG investigation, and may have retaliated against employees who did cooperate with our investigation. A synopsis of these findings is set forth below.
The lack of cooperation from responsible District officials made an administrative remedy in this case more practical than a prosecution. The United States Attorney decided against a criminal prosecution regarding the scheme by Cecily Collier-Montgomery and Alice P. Miller to obtain improper salary increases and back pay. The decision was made on April 22, 2003, and communicated to the OIG on April 23, 2003. In his letter memorializing the decision, United States Attorney Roscoe C. Howard, Jr. told the Inspector General that --
The Initial Complaint. Information from a confidential source was initially received by the OIG Audit Division, which referred the information to the OIG Investigations Division. The confidential source alleged several improprieties in the Office of Campaign Finance (OCF).
Specifically, the source alleged that Councilmember Vincent Orange had made unauthorized withdrawals of approximately $36,000 from his 1998 election committee funds. When the Supervisory Auditor referred this information to the OCF General Counsel, no action was taken. The source also alleged that procurements were a problem at OCF.
The source further informed the OIG that Collier-Montgomery, the Director of OCF, and Miller, the Executive Director of the Board of Elections and Ethics (BOEE), had engaged in a scheme to adjust the payroll system in order to increase their annual salaries from $109,515 to $121,406. It was alleged that Vialetta Graham, now the Chief Technology Officer at BOEE, assisted them in the scheme. In addition to the salary increases, the alleged scheme resulted in Collier-Montgomery and Miller each receiving $22,880 in back pay. Finally, the source alleged that Councilmembers Jack Evans and Carol Schwartz had improperly permitted members of their staff, who are District employees, to work on their election campaigns in 2000.
The OIG Investigation. Based on this information, a case was opened in the Investigations Division on April 4, 2002, and initially focused on the allegation that Collier-Montgomery and Miller engaged in a scheme with Graham to obtain improper salary increases and back pay.
During April 2002, the OIG conducted interviews of various officials at OCF and BOEE, and a series of Inspector General subpoenas were issued in April and May, 2002, for personnel and payroll records, e-mail records, records of BOEE sessions, and other material relevant to the investigation.
The OIG presented the facts of this matter to the Office of the United States Attorney for the District of Columbia (USAO). The USAO accepted the case for investigation and possible prosecution. Thereafter, Special Agents from the Investigations Division continued to investigate the pay raises and back pay issues under the direction of the Assistant United States Attorney (AUSA) assigned to the case.
As part of this continuing investigation, on July 19 and August 2, 2002, the OIG and the Federal Bureau of Investigation (FBI) executed District of Columbia Superior Court search warrants at BOEE offices. Computer diskettes, servers; and back-up tapes were seized pursuant to the warrants, and were later examined by FBI and the United States Secret Service Computer forensic computer experts.
The Management Alert Reports. The OIG issues Management Alert Reports (MARS) to identify serious matters revealed during an audit, inspection, or investigation that require immediate attention. This investigation disclosed that Vialetta Graham, the Chief Technology Officer at the BOEE; had apparently falsified her academic achievements on two District government employment applications, including the application she filed with the BOEE at the time she was hired by the BOEE in December 2001. As a result, on August 6, 2002, the Inspector General sent a Management Alert Report (MAR-1) to the Chairman Wilson, informing him of Graham's misconduct, and recommending that he evaluate the matter and take disciplinary action as appropriate. See Exhibit A. The Inspector General asked Chairman Wilson to inform the OIG in writing of the action taken concerning Graham. MAR-1 noted that § 1603.3 of the DPM's Standards of Conduct, for the purpose of determining cause for disciplinary action, defines the term "cause" as, inter alia, "any knowing or negligent material misrepresentation on an employment application."
On August 22, 2002, Chairman Wilson responded that the Board would conduct an investigation into whether Graham misrepresented her academic qualifications or experience to obtain her position as Chief Technology Officer at the BOEE. On November 18, 2002, Chairman Wilson wrote that the Board had decided to suspend Graham without pay for 60 consecutive calendar days. However, Graham was allowed to charge any of her accrued annual leave for each day of absence, until such leave was exhausted. Wilson wrote that this was done pursuant to DPM §1615.11. However that section of the DPM concerns "enforced leave," which appears inappropriate to Graham's situation. Enforced leave is used when a decision on disciplinary action is pending, as when a criminal charge made against an employee has not yet been resolved. See id. § 1615.14 (requiring employees to remain on enforced leave until disciplinary action is taken on the event that gave rise to the same). Since this was not the case, the administrative action taken appears to be inadequate.
During the course of the OIG investigation, several other allegations of mismanagement and misconduct were reported to the OIG by third parties. Therefore, on January 7, 2003, the Inspector General issued a second Management Alert Report (MAR-2) to Chairman Wilson. See Exhibit B. MAR-2 directed the following six additional personnel and management issues to the Chairman:
On March 13, 2003, the Chairman responded to MAR-2 by transmitting a report of an investigation conducted by the Board's General Counsel, Kenneth McGhee. In his investigation, McGhie addressed the various issues identified by the Inspector General, and he reported .no mismanagement or improper actions on the part of any OCF employee, except for the employee who embezzled funds. That case was never reported to the OIG, he found, because Collier-Montgomery believed that the OIG would have ultimately returned the case to the OCF for administrative action.
Finally, on March 17; 2003, McGhie referred the issue raised in MAR-2 regarding the embezzlement of agency funds to the OIG. The referral included a copy of a September 27, 2000, memorandum from Collier-Montgomery to the Supeivisory Auditor explaining her decision not to refer this same matter to the OIG. Collier-Montgomery wrote that, based on her experience, the OIG would have returned the matter to her for disposition anyway. See Exhibit C.
Collier-Montgomery's decision violated the clear requirements of the D.C. Personnel Regulations, Chapter 18, Section 1803.9, which require an agency head to immediately report information concerning conduct involving criminal activity to the OIG. As a result of her failure to refer the matter, information concerning the embezzlement of District funds was not officially reported to a law enforcement agency for over two years.
Moreover, Collier-Montgomery allowed the employee suspected of the embezzlement to resign in October 2000, without making restitution for any of the embezzled funds. Over two years later, the individual has moved to Georgia, complicating OIG efforts to resolve the case.
The Final Stage of the OIG Investigation. Because Chairman Wilson's response to MAR-2 did not adequately resolve the issues identified in the report, the Investigations Division continued the investigation of improprieties at the OCF and the BOEE. Beginning on March 27, 2003, employees from both agencies were subpoenaed to testify at the OIG and to provide a variety of official documents. However, as described more fully below, the agencies resisted the Inspector General's efforts to investigate. Consequently, no progress could be made in resolving the remaining issues. An OIG investigation was conducted into the embezzlement of funds issue, and the results of that OIG investigation are also set forth below.
On April 22, 2003, the United States Attorney decided against a criminal prosecution regarding the scheme by Collier-Montgomery and Miller to obtain improper salary increases and back pay. The OIG continued its investigation; however, the investigation was no longer criminal but administrative in nature. After the threat of prosecution had been removed, Miller and Collier-Montgomery could now be required to testify to the OIG about their roles in the scheme to obtain pay raises. A request that they appear at the OIG on April 28 and 29, 2003, was delivered to Chairman Wilson on April 24, 2003. Chairman Wilson, however, declined to make them available.
In light of these serious allegations, the OIG expected Chairman Wilson to demonstrate a commitment to help investigators ascertain all of the facts that would enable him to review the OIG findings objectively and to implement reform at the two agencies immediately. That commitment did not materialize. Instead, he has condoned an adversarial posture that has constrained the progress of this investigation. A few examples of actions by Chairman Wilson and his subordinates that are counterproductive to the spirit of our investigation are as follows: attempting to ratify the spurious raises rather than confront the underlying misconduct; asserting the attorney-client privilege for audit reports and other government records that should be produced under the Inspector General statute; refusing to permit employee interviews except in the presence of OCF or BOEE general counsels; threatening to report OIG attorneys to the bar counsel; and intimidating whistleblowers and others.
Although the lack of cooperation from OCF and BOEE officials -and certain Council members - made the continuation of this investigation impractical, the OIG findings set forth below provide convincing evidence that the present Board failed to provide proper oversight for the two agencies.
a. Scheme to Obtain Pay Raises and Back Pay
This investigation centered around the successful efforts of the District's top two ethics officials - Alice Miller, Executive Director, BOEE, and Cecily Collier-Montgomery, Director, OCF - to enrich themselves by fraudulent and secretive means. Each obtained salary increases that raised their annual salaries from $109,515 to $121,406. Additionally, each received a retroactive supplemental gross payment of $22,880. The retroactive supplemental payment represented twenty-three months of retroactive pay designed to account for the monetary difference that existed between their former and their current annual compensation pursuant to service re-classification.
Background. The District of Columbia Merit Personnel System (MPS) sets forth the rules and regulations relating to District employee compensation. Among the provisions in the MPS are various "Schedules" which set forth the salaries (grades/steps) for District government employees. Examples of these schedules are " Excepted Service," "Management Supervisory Service," and, starting in 1999, the "Legal Service." The salary for each of the services, as well as their respective salary limitations, are governed by law, and administrative safeguards are used to ensure compliance.
The salary increases were a direct result of the reclassification of Miller and Collier-Montgomery out of the District's General Schedule (DS) for Excepted Service personnel (Series 301, Service Code A01), and placement into the DS-Special Rate Schedule for Corporation Counsel (Series 905, Service Code A33). The reclassification was done in a manner that circumvented administrative safeguards intended to ensure that employees receive the appropriate salary levels. The latter employment classification (Series 905) is entitled Legal Service (LS). Attorneys within the LS classification, in addition to their base salary, receive an Annual Retention Allowance (ARA), which is a payment allowance tied to the employee's performance appraisal and is specifically reserved for attorneys. The Service Code A33 corresponds to a rating of "Exceeds Expectations" and entitles an employee to compensation in the amount of twenty percent of his or her base salary.
According to D.C. Code § 1-608.51(2) (2001), a Legal Services "attorney" is one whose position is classified as part of the 905 Series Code, except for those positions that involve hearing cases as an administrative law judge or as an administrative hearing officer. Although Miller and Collier-Montgomery are both attorneys and members of the District of Columbia Bar, their positions historically have not been classified in the 905 series because the BOEE and OCF Directors do not perform the functions of an attorney. Therefore, they were not entitled to be paid as if they were in the Legal Service schedule.
The MPS specifically addresses the Director position within OCF. D.C. Code § 1-609.08(3) (2001) provides that the Director of Campaign Finance shall be in the Excepted Service. Moreover, D.C. Code §1-1103.01(a)1 states "the Director of the Office of Campaign Finance shall be entitled to receive compensation at the maximum rate for Grade 16 for the District Schedule pursuant to subchapter XI of Chapter 6 of this title." There is no specific statute providing for the salary for Miller.
Findings. In early 2000, Kenneth McGhie, the General Counsel of BOEE, received a salary increase as a direct result of the re-classification of the District's general schedule for attorneys from Excepted Service positions to the LS schedule. This change in service entitled McGhie, with Board approval, to a pay increase from $109,515 to $121,406, and was made retroactive to October 1999, in accordance with the legislation implementing the Legal Services.
In the summer of 2000, shortly after McGhie's salary increase, both Miller and Collier-Montgomery sought pay increases. According to BOEE Chairman Wilson, this was not unusual because pay parity among the three positions was "historical," and McGhie's salary increase upset the parity of the three individuals' salaries.
The investigation revealed that during a BOEE Executive Session, Miller and Collier-Montgomery raised the issue of receiving salary increases equal to that of McGhie. At that meeting, McGhie informed the Board that he did not object to giving Miller a salary increase, but that Collier-Montgomery could not receive an increase in salary due to statutory constraints. Then, in early August 2000, at Wilson's instruction, McGhie prepared proposed legislation to amend the statute to permit the increase for Collier-Montgomery. The proposed legislation was addressed to the attention of Councilmember Kathy Patterson, then Chairperson for the D.C. Council's Committee on Government Operations. Entitled the "Director of Campaign Finance Compensation Amendment Act of 2000," the proposed legislation sought to delete the language in D.C. Code §11103.01(a) that addressed the salary limit for the OCF Director, and replace the cap with language granting the Board the authority to fix the salary for this position. See Exhibit D. However, this legislation was never enacted by the D.C. Council.
In an interview with the OIG, McGhie recalled that after Miller and Collier-Montgomery first presented the subject of their pay raises to the Board in June or July 2000, he researched the issue and discovered that the Board had the authority to raise Miller's salary, but that Collier-Montgomery needed statutory permission. He stated that he shared this information with Miller, and that, " [t]hey went to Wilson and got it done."
BOEE Board member Stephen Callas recalled in an OIG interview that he understood at the time of the Board's Executive Session meeting that McGhie had received a raise through the Legal Service and that Miller and Collier-Montgomery were going to "take appropriate action" (e.g., complete the necessary research and forms) in regard to their request for pay parity. Approximately eight months later, he received a call from the Directors who inquired if he was still in favor of the salary increases. At the time, his only concerns were whether the Board had the authority and funds to complete the action. He stated that the Board approved the pay raises "based on our authority and unanimity." He remarked that "they were lawyers," and he understood that they were going from Excepted Service to Legal Service. However, according to Callas, "The Board was never provided any specifics regarding the methodology, and no one brought up the technical factors." When shown a copy of Wilson's April 28, 2001, memorandum authorizing the pay increases (discussed infra), Callas stated that he never saw the document.
The Scheme. The OIG investigation determined that, in August 2001, Miller along with Vialetta Graham, then Comprehensive Automated Payroll and Personnel Systems (CAPPS) Coordinator for the Office of the Chief Financial Ofcer's (OCFO) Enterprise Office, prepared and submitted deceptive and misleading documents to Wilson to justify pay raises for Miller and Collier-Montgomery and their retroactive supplemental compensation. To convince Wilson that the pay raises were permissible (both prospectively and retroactively), Miller drafted two memoranda for Wilson's review.2
The first of these documents was drafted on OCFO letterhead, addressed to Wilson from Graham, and dated August 21, 2001. See Exhibit E. In full, the memorandum assures Wilson that:
This memorandum is deceptive for several reasons. First, the purported author of the memorandum, Graham, had no authority to approve District personnel matters, nor did she have any background in this area. Indeed, when Graham was interviewed by the OIG and this document was presented to her for review, she denied drafting the body of the memorandum, or having any knowledge of personnel matters. However, Graham did admit that she signed the memorandum.
Second, the document omits reference to the fact that a salary of $121,406 is available only to an attorney classified in the Legal Service who, upon enactment of the Legal Services Establishment Amendment Act of 1998 (D.C. Law 12-260), was entitled to a salary on the Legal Services scale retroactively to October 1, 1999. As stated supra, neither the BOEE Executive Director position nor the OCF Director position are attorney positions classified within the 905 Series.
Third, the memorandum's assertion that retroactive pay is consistent with District government policy "when generated by an adjustment to salary and approved by the appropriate personnel authority" is incorrect. The DPM provides that an employee may only receive back pay where the employee has "undergone an unjustified or unwarranted personnel action that has resulted in the withdrawal or reduction of all or any pay...." DPM, Chapter 11B, Subpart 8, § 8.1 (emphasis supplied). Furthermore, the DPM -- specifically prohibits retroactive promotions, and affirmatively states that promotions are "effective only from the date administrative action is taken by the administrative officer vested with the proper authority to take such action." Id. at Subpart 2, § 2.15( J)(1). In this case, the pay raises did not meet the criteria set forth by the DPM and, therefore, were inconsistent with District policy.
The second document, dated August 28, 2001, is equally deceptive. This document is addressed to Graham from Wilson and requests that the salaries of Miller and Collier-Montgomery "be adjusted to be commensurate with the statutory provisions creating the position held by these employees." See Exhibit F. The memorandum then goes on to cite these statutory provisions; however, Miller selectively chose language from the D.C. Code to justify the request and failed to mention applicable statutory impediments. This was done by deleting pertinent parts of the relevant statutes as quoted.
In reference to the statutory provisions governing Collier-Montgomery's salary, Miller quotes the "salary cap" language in D.C. Code § 1-1103.01(a), but omits that the OCF Director is to be paid "pursuant to subchapter XI of Chapter 6 of this Title." Subchapter XI sets forth the District government's classification and compensation policies, which mandate that all positions must be grouped by classes and grades according to specific duties and responsibilities and "indexed and cross referenced in the incumbent classification and compensation system." D.C. Code § 1-611.01(a)(1). By simply deleting the "pursuant to" language and replacing it with ellipses, Miller left out qualifying language that provides that Collier-Montgomery is to be paid in accordance with the appropriate classification corresponding to her duties as OCF Director.
Miller also omitted the D.C. Code provision that specifically designates the OCF Director position as an Excepted Service position. See D.C. Code § 1-609.08(3) (2001). Had Wilson been apprised of this statute, he would have been put on notice that Collier-Montgomery could not receive the same salary as an attorney in the Legal Service.
In regard to her salary, Miller quoted the statute that authorizes the Board to set the salary for the BOEE Executive Director, but she omitted language limiting the Board's authority to do so. Miller simply states that this D.C. Code provision "authorizes the Board to 'select, employ, and fix the compensation for an Executive Director. . .'", where the provision actually provides that "The Board shall select, employ, and fix the compensation for an Executive Director and such staff the Board deems necessary, subject to the pay limitations of §1-611.16." D.C. Code § 1-1001.05(e)(1) (2001) (emphasis supplied).3 Section 1-611.16 generally provides (with exceptions not applicable here) that "no employee of the District government shall be authorized to receive pay in excess of that provided for in [Subchapter XI], and any such provision of law that is inconsistent with this section shall be deemed superseded to the extent of such inconsistency." Accordingly, similar to Collier-Montgomery's position, Wilson was not informed that the Board could not set Miller's salary in excess of the amount for which the position had been classified (e.g., Excepted Service).
Finally, Miller misrepresented that Graham worked in "Payroll and Retirement," thus giving Wilson the impression that Graham was authorized to increase the Directors' salaries. As stated above, Graham acknowledged in her OIG interview that she did not possess any knowledge of payroll or personnel matters. Judy Banks, former Director of Payroll and current Interim Director for the D.C. Office of Personnel, confirmed that Graham did not work in the payroll office and that Graham did not have any authority over such matters as CAPPS Coordinator.
In an attempt to hide the illegal pay raises, Miller engaged the assistance of Marvin Ford, BOEE Chief of Staff, and Graham to circumvent normal personnel procedures. Miller knew Ford through her association with Nativity Catholic Church, Washington, DC., a church where Ford was the Director of Liturgical Services. Ford had few qualifications for the position of BOEE Chief of Staff. He had no college degree and before being hired at BOEE, served as the Director of Liturgical Services for approximately 8 years. Ford began his BOEE employment in November 1999, at a salary of $56,510, and in June 2000, Miller approved a $10,000 cash award to Ford for outstanding performance. On August 1, 2001, Miller awarded Ford another bonus of $7,500. Ford's salary at the time was $63,436. Both of Ford's awards exceeded the District's bonus limit of 10% of an employee's salary. See D.C. Code § 1-619.02 (2001).
On August 20, 2001,4 Ford, at the direction of Miller, entered information into the District's CAPPS to change Miller's employment classification from Excepted Service to Legal Service and increase her salary from $109,515 to $121,406. See Exhibit G.
However, because Ford could not gain access necessary to implement the salary and employment classification changes in CAPPS for employees outside of the BOEE, Ford obtained the assistance of Graham to effectuate Collier-Montgomery's pay raise on August 27, 2001. See Exhibit H. Graham informed the OIG that "When he [Ford] brought me the memo, I told him I don't make salary changes." As the CAPPS Coordinator for the OCFO, Graham was one of the few individuals in the government who could effectuate the change for Collier-Montgomery. It should be noted that the appropriate person within OCF who should have effectuated the salary change for Collier-Montgomery - the Chief of Staff - was left out of this process because Collier-Montgomery did not want her employees in OCF involved.
While it is the practice of the District government to execute a D.C. Form 52 to provide support and authority for any changes in employee personnel status (e.g., promotions, pay adjustments, and employment classifications), this form was not properly completed for either Miller's or Collier-Montgomery's pay raise. Historically, the completion of a Form 52 was a routine practice within BOEE and OCF, as a review of the agencies' Official Personnel Folders revealed that each salary change prior to the subject pay raises for Miller and Collier-Montgomery was supported by a Form 52 with appropriate signatures.
The investigation determined that Ford drafted a Form 52 sometime in September 2001 for Miller's pay raise, but failed to obtain Wilson's signature to authorize the personnel action. See Exhibit I. Similar to any official personnel document, a Form 52 must possess the appropriate signature of authority in order to be executable. No Form 52 was ever prepared in support of Collier-Montgomery's pay raise.
In or about October 2001, Ford prepared and submitted two District Supplemental Adjustment Forms for retroactive payments for Miller and Collier-Montgomery to the District's payroll office. This action was supported by the August 21, 2001, memorandum from Graham to Wilson outlining the District's authorization for the issuance of retroactive pay. See Exhibit E.
According to Barbara Jumper, Deputy Chief Financial Officer, OCFO, a Form 52 must be generated before an employee can receive a promotion or a salary increase. Her office receives the Form 52 to ensure that funds are available to meet the fiscal needs precipitated by the action. Prior to "signing off' on the form, Jumper reviews it for the appropriate authorizations from the head of the requesting agency. When the OIG informed Jumper that Form 52s were not executed in the subject case to change Miller and Collier-Montgomery from Excepted to Legal Service, she replied, "That's impossible. It goes through us before [DC] personnel. It's my understanding that only personnel could make the change." Jumper did recall that Ford sought her advice as to how to make the salary changes. She further recalled that she informed him that he needed a Form 52, .in addition to agency authorization.
When interviewed about his role in implementing the pay raises, Ford informed OIG investigators that the raises were done at the Board's request pursuant to its budget and personnel authority. He further asserted that, "[t]here are no checks and balances for me, I do what the Board tells me to do." Ford claimed that he was involved in both Collier-Montgomery's and Miller's pay raises because he services both BOEE and OCF. He additionally stated that the Board did not want a lot of people involved in the matter, and Collier-Montgomery specifically did not want her employees involved.
Soon after the salary increase/retroactive pay scheme was a fait accompli, Graham was initially hired as a Management Supervisory Service (MSS) employee as BOEE's Information Technology Manager on December 4, 2001. See Exhibit J. On February 2, 2002, Miller appointed her as BOEE's and OCF's Chief Technology Officer. District personnel regulations stipulate that all MSS positions must be advertised and fairly competed. See D.C. Code § 1609.53 (2001). In Graham's hiring, neither personnel requirement was met.
This transfer created at least an appearance. of a quid pro quo payback for Graham since Graham's assistance was necessary to enter Collier-Montgomery's salary increase into the payroll database and to pose as the relevant authority to authorize the salary increases and retroactive supplemental payments for each Director.
Conclusion. The investigation revealed that high-level officials at BOEE and OCF devised a scheme to place the Directors into the Legal Services salary schedule to achieve pay parity with the BOEE General Counsel that was not authorized by law. Not only were the Directors able to increase their annual salaries by approximately $12,000, but they also ensured that the salary changes applied retroactively for two years (approximately $22,000 for each).
When first approached with the facts of this issue in an OIG interview, Wilson attempted to justify Miller and Collier-Montgomery's actions as follows:
Soon after the interview, Wilson informed the OIG that Miller and Collier-Montgomery were put in the Legal Service by mistake. Wilson then "corrected" the situation by transferring Miller and Collier-Montgomery back to the Excepted Service via the execution of two Form 52s. See Exhibits K and L. However, he placed both Directors at Grade 17, and justified his action by offering a new interpretation of D.C. Code § 1-1103.01(a); specifically, that the statute provided a "floor" for the OCF Director's salary and not a maximum limits.5
In contradictory fashion, McGhie revised BOEE/OCF's legislative proposal to delete the salary cap language from the statute. In May 2002, in an effort to thwart the OIG investigation, McGhie transmitted his draft of the "Director of Campaign Finance Compensation Amendment Act of 2002," in a package with several other proposed bills, to Councilmember Vincent Orange.6 See Exhibit M. It is noteworthy to mention that the BOEE/OCF sought this legislative change even though they - in response to this investigation - requested and received a conclusory and nonbinding opinion from the D.C. Council's General Counsel on May 31, 2002, that agreed with the Board's "floor" interpretation. See Exhibit N.
Regardless of this opinion, the legislation (Bill 14-735) was introduced by Councilmember Orange on June 21, 2002, and discussed at a televised Public Roundtable on November 21, 2002. For reasons unknown, the Bill never made it out of committee and, thus, never became law.
It is important to note that when Collier-Montgomery was interviewed by the OIG on April 26, 2002, she recognized that she holds a statutory position as OCF Director, and confirmed that "I should be paid in the Excepted Service at the highest level of a grade 16." However, as of the date of this report, the statute remains unchanged and Collier-Montgomery's salary continues to be in excess of "the maximum rate for a Grade 16 of the District Schedule."
b. Failure to Complete Audits/Selective Enforcement
Requirements were established in District law since 1974 that OCF conduct periodic audits and field investigations of the campaign finance reports of candidates for elective office. D.C. Code § 1-1103.03(8) (2001). In 2000 OCF hired an experienced supervisory auditor who was tasked to redefine and enhance the function of the agency's Reports Analysis and Audit Division. The auditor supplemented the "desk audits" of campaign forms with a more robust audit conducted in the field. These investigative, or "field audits," were intended to be a comprehensive review of all underlying campaign finance documentation designed to verify information submitted by candidates to OCF.
Several of these field audits were conducted and resulted in the discovery of significant numbers of irregularities and possible violations of campaign finance and other laws. According to the auditor, these possible violations should have been presented to the candidates for resolution. Instead, many of the findings were squelched and, to date, no field audit report has been issued. As a result of a:: interim OIG Management Alert Report which addressed this matter, Chairman Wilson has committed to issue reports publicly by the end of June 2003.
In a March 13, 2003, response to MAR-2, Chairman Wilson and General Counsel McGhie stated that there was no statutory requirement to make audits available for public. inspection, to conduct audits in a particular manner, or to conduct audits at periodic intervals. The response asserted that since February 2002, OCF conducted six field investigations into the 2000 election cycle campaign finances of one former Councilmember and two current Councilmembers, as well as of two School Board members. The BOEE has directed that all reports be completed and posted on the OCF website by the end of June 2003.
According to the March 13, 2003, response, OCF conducts a large number of desk audits of campaign finance reports, and the lack of completed field audits was the result of staffing issues that were resolved by the beginning of 2002. The Chairman and the General Counsel found nothing irregular in the processing of the six field audits, and found that the auditing procedures used by OCF are consistent with the governing statutes and regulations.
Because the March 13, 2003, letter did not respond sufficiently to the issues identified in MAR2, the OIG was required to investigate the allegation. However, our investigation was hindered by the refusal of OCF to turn over any documents relating to ongoing field audits or to permit its Supervisory Auditor or the General Counsel to testify about ongoing audits. By letter of April 4, 2003, in response to an OIG subpoena for such documents and testimony, McGhie stated: " [h]owever, please be advised that any ongoing audits or investigations will not be turned over until closed... [t]he OIG has absolutely no oversight as to how or when the OCF conducts its audits and investigations." However, information previously received by the OIG indicated that the OCF Supervisory Auditor had discovered numerous violations of law and regulations when he audited the campaign finance reports of Councilmembers Carol Schwartz and Jack Evans for their 2000 election campaigns, and of Councilmember Vincent Orange's 1998 election campaign. See Exhibits O, P, and Q.7 When the violations were set forth in draft audits to be sent to Councilmembers Schwartz and Evans, the OCF General Counsel, Acting OCF Director at the time, ordered the deletion of several of the Supervisory Auditor's significant findings.. Deleting findings which reveal potential violations of law and regulations violate OCF's own audit policies and procedures, as well as the Government Auditing Standards issued by the General Accounting Office, and adopted by the OCF for use in conducting audits.8
(1) Councilmember Carol Schwartz
With respect to Councilmember Carol Schwartz, the auditor found that her campaign committee failed to exercise adequate controls over campaign contributions in that it accepted contributions after the November 2000 General Election although total receipts were sufficient to cover debts and obligations at the time the contributions were received; and received campaign contributions from individuals and business entities that were excessive and violated the campaign contribution thresholds.
The committee's July 31, 2001, Report of Receipts and Expenditures Report (R&E) filed with OCF disclosed a beginning cash-on-hand balance of $7,462.56 as of January 31, 2001, and total debts and obligations totaling $7,000.00. The report further disclosed that the committee nevertheless continued to receive $14,513.89 in contributions between January 2001 and April 2001.
On September 8, 2000, the accounting firm of Thompson, Cobb, Bazilio, and Associates (TCB), Washington, DC, made a corporate contribution to the committee in the amount of $500.00. On October 17, 2000, Jeffrey E. Thompson made a personal contribution in the amount of $500.00, and two additional contributions in the same amount for D.C. Chartered Health Plan, Inc. (CHP), Washington, DC, and Chartered Family Health Center (CFC), of the same address. On October 30, 2000, the committee received a contribution in the amount of $500.00 from Rapidtrans, Inc., Washington, DC. Photocopies of the five checks totaling $2,500.00 appear to bear Thompson's signature.
The OCF Auditor learned that Thompson owned 79.5% of TCB, and was the Chairman, Chief Executive Officer, and sole stockholder for CHP and CFC, and that Rapidtrans, Inc. is a wholly owned subsidiary of CHP. As a result, the audit found that Thompson exceeded the campaign contribution limit by $1,397.50.9
It was also discovered that Alexandra Armstrong! contributed $1,000.00 to the committee on July 2, 2000, and October 9, 2000, respectively, thereby exceeding the threshold by $1,000. Between October 2000 and December 2000, Robert J. Kable made five separate donations totaling $1,050, thus exceeding the limit by $50.
Furthermore, the auditor found that employees from Councilmember Schwartz's D.C. Council office may have violated provisions of the Hatch Act10 and District regulations by participating in the candidate's partisan re-election campaign activities in 2000. Jim Slattery, a Council employee, served as the Schwartz Committee's finance director and was compensated a total of $13,300 for full time campaign-related work covering the period of July 2000 - November 2000. According to employment information obtained from the Secretary of the Council on March 13, 2002, Slattery was not on leave-without-pay status from his Council position while serving as the committee's finance director.
Committee documents disclosed that on July 3, 2000, Slattery was reimbursed $116.76 for leave. However, there was no supporting documentation to establish the designated leave category or that: (a) Slattery was in leave-without-pay status; (b) the amount of leave time Slattery was reimbursed; (c) Slattery resigned from his official position at the Council at any time.
It was also disclosed that City Council employees Sharona D. Morgan and John Abbot each entered into leave-without-pay status for a period covering June 12, 2000 November 18, 2000, and were compensated by the Schwartz Committee $17,169.00 and $18,854.00, respectively. However, both Morgan and Abbot continued to earn sick and annual leave while in leave-without-pay status.
For all three employees, the audit determined that the District government did not derive any direct benefit from the employees' leave. The audit also determined that because the employees took leave solely to participate in Schwartz's re-election campaign, their leave may have violated provisions of the Hatch Act.11
The audit also indicated that Schwartz regularly tasked her staff employees to perform multiple campaign-related activities from her City Council office during normal government business hours. These activities included traveling to vendor locations to purchase miscellaneous supplies for campaign operations and coordinating an election night (November 2000) party. Although the Schwartz committee entered into a lease for office space in June 2000, Schwartz and her Council employees continued to use her City Council office for campaign-related activities.
The auditor's draft also disclosed that Councilmember Schwartz's committee failed to implement adequate internal controls governing campaign-related expenditures in accordance with OCF regulations. On several occasions, the committee failed to adhere to OCF regulations regarding petty cash transactions, and failed to, maintain supporting documentation for campaign-related expenditures.
A review of the committee's petty cash fund records uncovered eight petty cash transactions totaling $939.95. The audit deduced that the committee did not have sufficient supporting documentation to validate the expenditures. It also discovered that four of the aforementioned transactions involved cash expenditures to a single individual in excess of the $50 limit, and one single transaction was in the amount of $450.
The audit identified 10 transactions, totaling $2,382.05, that were not properly documented. Three of these transactions, totaling $1,002.56, were for advertising, but the committee did not produce an invoice or a copy of an advertisement to support the transactions. Committee records also disclosed a payment in the amount of $500 for a band to perform at an election night party, and a $100 payment to an individual for campaign poster assistance, but neither transaction was supported by an invoice or any other form of documentation.
Committee records revealed that during the calendar year 2000, the committee disbursed $48,923 in salaries to three employees, $19,050 in rent to a private landlord, and payments to three vendors of $1,750, $1,160, and $2,280, respectively. Yet, the audit disclosed that the committee may have failed to file Internal Revenue (IRS) Form SS-4, Application for Employer Identification Number, and IRS Form 96, Annual Summary and Transmittal of United States Information Returns, to permit the committee to prepare and issue IRS Form 1099, Miscellaneous Income, to committee employees and other individuals who earned at least $600 in rents, services, prizes, awards, and other income during a calendar year.
It was reported that the committee was unaware of its requirement to file the necessary forms with the IRS, but the audit did not indicate that the committee took any corrective measures. As a result, campaign employees and other individuals may have failed to report income received from the committee ors their personal income tax returns.
The OIG also received information that Cecily Collier-Montgomery and Kathy Williams ordered that much of the information developed in the audits of Councilmembers Schwartz's and Evans' campaign finances be removed from the draft audit reports prior to the reports being submitted to the Councilmembers for comment. With respect to Councilmember Schwartz, Williams12 instructed the auditor to remove information relating to: (a) Hatch Act violations and unpaid leave of District government employees without an identifiable benefit to the District government; (b) contributions from corporations; and (c) the committee's lack of administrative controls over campaign operations.
As a result, in March 2003, OCF issued a Discussion Draft of the audit to the candidate which omitted all issues involving Hatch Act violations, potential acts of misconduct, excessive contributions by a ,contributor, and the committee's failure to file the necessary forms with the IRS. Over -the Supervisory Auditor's objections, the total of monetary exceptions was reduced from $30,378.15 to $15,563.89 in the Discussion Draft. Set forth below in Table 1 is a side-by-side comparison of the two draft audits, which illustrates the changes the Supervisory Auditor was instructed to make.
(2) Councilmember Jack Evans
With respect to Councilmember Evans, the auditor found that John Ralls, an employee in Evans' City Council office, also served as the campaign manager for the Evans Committee, and that Councilmember Evans used employees from his District Council office to perform a variety of campaign-related activities during normal District government business hours. On March 13, 2002, the Secretary to the D.C. Council confirmed for the auditor that a total of six Evans Committee employees were simultaneously employed by the Council. According to the Secretary, Ralls entered into a leave without pay status on August 27, 2000.13 Evans Committee payroll records disclosed that Ralls received compensation in the amount of $3,000.00 for the period of July 30, 2000, through August 26, 2000. There was no indication that Ralls took leave of any kind from his D.C. Council position prior to August 27, 2000, raising the issue of how Ralls was able to serve as the Evans Committee Campaign Manager while being employed as a full-time D.C. Council employee. On March 25, 2001, Ralls was compensated $20,000 in performance bonuses from campaign funds.
The audit also discovered that another D.C. Council employee, Karen Armagost, entered into a leave without pay (LWOP) status on July 3, 2000, through September 30, 2000. However, Evans Committee records revealed that Armagost was participating in campaign-related activities for approximately six months prior to her change in leave status. Records further revealed that after her return to work on October 1, 2000, she continued to work for the Evans Committee as a volunteer. On March 16, 2001, Armagost received $5,000 as a performance bonus from Evans' campaign fund.
The audit further disclosed that Evans used employees from his D.C. Council office to perform a variety of campaign-related activities during normal District government business hours. These activities included: (a) traveling to vendors to purchase miscellaneous supplies pertinent to the campaign's operations; (b) attending campaign-related functions with the candidate; and (c) shipping and receiving campaign-related materials from the D.C. Council office, despite entering into a lease agreement for office space in July 2000.
A review of the Evans Committee's contributor records disclosed excessive contributions in the amount of $29,425.08 from 32 individuals who held a partnership and/or controlling interest in 101 business entities, and 11 companies that had a partnership or individual ownership interest in 19 entities. For example, the audit discovered that seven individuals, who had established a business consortium involving seven corporations with interlocking ownership, contributed personal and corporate contributions to the Evans Committee totaling $7,300.15. The audit identified six contributors who gave excessive contributions totaling $2,750.
The auditor also discovered that the Evans Committee incurred and paid $36,056.12 in expenditures that were not directly related to the campaign, and which occurred after the 2000 General Election. The audit discovered that the Evans Committee expended a total of $6,058.04 for automotive repairs to the candidate's personal vehicles. Evans Committee records documented the use of two vehicles for campaign-related activities; however, there was no documentation available to indicate that the candidate entered into an official lease agreement to use the vehicles for that purpose in violation of 3 DCMR § 3013.2(i), in that campaign funds may not be used for reimbursement for the use of personal property, unless the campaign committee (and not the candidate) holds the title or lease to the vehicle, and vehicle use is directly related to a campaign purpose. In addition, of the total amount spent, $4,095.74 was paid for repairs that occurred after the November 2000 General Election.
The audit recommended that the Evans Committee recover: $4,095.74 expended for automobile repairs to the candidate's personal vehicles; $30,000 in performance bonuses to two Evans Committee employees and two vendors without contractual agreements; and $1,960.38 in other funds expended for courier services, parking meter or other traffic infractions, and phone or internet services. All of these expenses were deemed ineligible expenditures and occurred after the November 2000 General Election.
In addition, the auditor cited the Evans Committee for failing to file a Statement of Candidacy within five days of receiving a contribution or incurring campaign related expenditures. See 3 DCMR §§ 3002.1 and 3002.2. Evans filed his Statement of Candidacy on November 10, 1999. However, on September 30, 1999, the candidate received two contributions in the amount of $500.14 Moreover, during the period of May 24, 1999, through October 28, 1999, the Evans Committee incurred $4,914.66 in expenses for computer-related services.
Similar to the audit of Councilmember Schwartz discussed above, the Director of OCF and her General Counsel ordered that much of the information developed in the audit of Councilmember Evans campaign finances be removed from the draft audit report prior to the reports being submitted to the Councilmember for comment. The OCF auditor was directed to remove information in his draft report of Councilmember Evans' campaign finance report that related to: (a) potential violations of the Hatch Act and the District's Standards of Conduct; (b) District employees' LWOP status without a clear benefit to the District government; (c) corporate contributions; and (d) ineligible expenditures and the lack of controls over campaign operations.
As a result, in the March 2003 Discussion Draft of the audit that was disseminated to Councilmember Evans' Committee, the monetary exceptions were reduced from $70,294.22 to $11,117.54, over the supervisory auditor's objection. Set forth below in Table 2 is a side-by-side comparison of the two draft audits which illustrates the changes the Supervisory Auditor was instructed to make.
(3) Councilmember Vincent B. Orange, Sr.
In April 2000, the OCF Supervisory Auditor conducted a desk audit of the financial reports for the "Committee for New Leadership in Ward 5: Orange `98" (the Committee or Orange 98 Committee), Vincent Orange's 1998 election campaign for the Ward 5 seat on the Council of the District of Columbia. The desk audit indicated three principle violations of the D.C. Code and the District of Columbia Municipal Regulations during the course of the campaign and in the financial reports submitted to OCF.
First, between June 1998 and September 1998, Orange made five personal loans to his campaign totaling $36,292.48. D.C. Code §1-1131.01(h)(1) states:
Cf. 3 DCMR § 3011.7 (requiring a written instruction for loans by candidates to their campaign committees). The OCF Supervisory Auditor discovered that the Committee summarily repaid the loan to Orange; however, there was no evidence of a loan instrument as prescribed in the aforementioned statute.
Second, on May 26, 1998, Orange's .three minor children, Vincent, Jr., Paul, and Jannie, each made contributions in the amount of $500. The District of Columbia Municipal Regulations (DCMR) provide that contributions from minor children (under the age of 18) shall be attributed to their parents or legal guardians except where the ". . .decision to contribute is made knowingly and voluntarily by the minor child[ren]" and where "the funds, goods or services contributed are owned or controlled exclusively by the minor child[ren]." 3 DCMR § 3011.10 (emphasis supplied).
The third issue concerned a contribution of $500 made by the Committee on October 12, 1998, to the [Marion] Barry Legacy Tribute. The auditor questioned this contribution because 3 DCMR § 3013.1 provides that campaign funds "shall be used solely for the purpose of financing, directly or indirectly, the election campaign of a candidate." (emphasis supplied.)
On May 9, 2000, the OCF Supervisory Auditor and a member of his staff met with Councilmember Orange to discuss the issues identified by the desk audit. Instead of dispelling any questions related to the audit issues, Councilmember Orange's responses to the issues raised additional issues of legality and propriety.
In regard to the first issue, of the personal loans purportedly made by the Orange to his campaign, four were evidenced only by personal checks. Two of these checks, totaling $14,000, appear to have come from the Escrow Account for Orange's law practice, raising issues regarding his compliance with the D.C. Bar Rules of Professional Responsibility relating to attorney escrow accounts and the commingling of personal and client funds. See D.C. RULES of PROF'L CONDUCT R. 1.15(a) (1988).
Moreover, a loan of $2,000 was evidenced only by a receipt for cash signed by the Committee Treasurer, and there was no additional information to indicate that the funds came from Orange personally. In addition, the loan would appear to violate D.C. Code § 11131.01(c), which prohibits any contribution in legal tender in an amount of $25.00 or more.15 See also 3 DCMR § 3011.5 (same).
Councilmember Orange documented another of his loans with a copy of a NationsBank Cashier's Check Number 0073458, drawn by Orange on August 21, 1998, in the amount of $4,000. Yet, Orange failed to provide any tangible proof that the funds used to purchase the check were actually his.
On or about June 21, 2000, Councilmember Orange officially responded to the OCF audit. In his response, Orange asserted that the OCF Form 16, Schedule E, Loans, was a sufficient loan document and argued that it was a written instrument that contained the information prescribed by law.
In his written response, Councilmember Orange also contended that his sons, Vincent, Jr., and Paul (who were ages 14 and 10 at the time) earned, owned, and controlled their own funds. He also stated that his daughter Jannie (then age 3) had maintained a bank account since 1997, and although she receives funding from him, the account and the funds therein are owned by her. He declared that each of his children had knowingly and willingly contributed $500 each to his political campaign, even though Orange had custodial control over all three accounts, and his daughter Jannie was only three years old at the time her contribution was made.
Councilmember Orange also stated that he openly campaigned at the Barry Legacy Tribute by disseminating Orange '98 campaign material, and by dialoguing with the city's "power brokers." Because this had enhanced his political position, the funds expended were campaign-related, according to Orange.
In the MAR issued to Chairman Wilson on January 7, 2003, the OIG identified the issue of the agency's reluctance and failure to take any action against Councilmember Orange for failing to provide sufficient evidence of a loan instrument with respect to his loans to his campaign. In McGhie's response, he found that Orange publicly disclosed each loan on Schedule E, OCF Form 16, when the Committee filed its campaign financial report, and agreed with Orange that OCF Form 16, Schedule E, qualifies as a written instrument. McGhie concluded that Orange was, therefore, in compliance with the law.
However, OCF's response in regard to this issue contradicts an internal opinion issued by Collier-Montgomery at the time the auditor initially raised these issues. See Exhibit R. Internal OCF opinion 01-02 states that, pursuant to D.C. campaign finance law, a loan or advance made by a candidate or an immediate family member requires the execution of a writing, which discloses the terms, conditions and parties to the loan agreement or advance. Further, Collier-Montgomery opined that the loan or advance must evidence standards that are consistent with repayment policies of lending institutions in the District of Columbia (i.e., a repayment schedule representing dates certain by which payments are due and payable pending full satisfaction of the debt, interest rates, etc.).
The opinion went on to state that, absent any of the aforementioned characteristics, the loan or advance falls into the category of a contribution. Contributions from immediate family members are subject to limitations, while contributions from the candidate are not. Further, where there is no evidence of a loan agreement, neither the candidate nor the immediate family member should have any reasonable expectation of repayment. According to this rationale, OCF should have considered the more than $36,000 in loans from Orange to his campaign as contributions rather than loans, and disallowed Orange from recouping these funds.
Furthermore, the OIG found evidence that loans by other Councilmembers (e.g. Schwartz and Evans) to their 2000 campaigns were evidenced by legally binding documents, separate from Schedule E. On April 28, 2000, Councilmernber Schwartz executed a loan agreement between herself and "The Committee to Re-elect Carol Schwartz" for a loan in the amount of $20,000.00. See Exhibit S. The document clearly delineates the terms, conditions, and parts of the loan. Similarly, on November 4, 1999, Councilmember Evans entered into a loan agreement with "The Committee to Re-elect Jack Evans" in the amount of $15,000. See Exhibit T. The agreement between candidate Evans and his Committee clearly documents the terms prescribed by the statutes, and removes any ambiguity as to whether the transaction is a loan or contribution.
c. Insurance Commissioner's Non-Reporting of Insurance Fees
One of the issues identified in MAR-2 was that OCF did not timely resolve the issue of an Insurance Commissioner (Lawrence H. Mirel) who failed to report $85,000 in insurance fees on the Financial Disclosure Statement (FDS) he filed with the OCF. In his response to the MAR, McGhie asserted that Mirel had earned the fees as a lobbyist before he took office as Insurance Commissioner. Mirel reported the fees on a lobbyist activity report submitted to OCF, but did not include them on his FDS because he wrongly assumed that the FDS applied only to that part of the year when he held office as Insurance Commissioner.
The Insurance Commissioner submitted a notarized letter to Kathy Williams stating that he had misunderstood the FDS form. OCF, in its response, stated that it will accept and implement the recommendation of the BOEE General Counsel that the FDS form clarify that disclosure must be for the whole calendar year, not just for that part of the year in which the filer holds office or is employed by the District government.
In view of the OCF response to this issue, the OIG did not conduct further investigation into the matter.
d. Failure to Deposit Checks
The third issue described in MAR-2 was that approximately 10 checks received by OCF in payment of fines were never deposited. The checks were allegedly held until they were no longer negotiable. McGhie's response addressed this allegation and further investigation by the OIG failed to substantiate this issue as described in the MAR. The OIG interviewed OCF attorney William SanFord and OCF General Counsel Kathy Williams, both of whom stated that no checks became stale because they were held too long within OCF, and that no fines had to be dismissed because a check had not been timely deposited.
e. Embezzlement of Funds
The fourth issue of the MAR concemed an allegation that in or about May 2000, an internal review of OCF petty cash and non-revenue receipts determined that the custodian of these funds could not account for approximately $3,000. Furthermore, it was alleged that Cecily Collier-Montgomery, Director, OCF, had knowledge of the alleged embezzlement yet failed to report it to the OIG or to any other law enforcement agency. In response, McGhie informed the OIG that the embezzlement was never reported to the OIG because Collier-Montgomery believed that the OIG would have ultimately returned the case to the OCF for administrative action.
As stated previously in this report, it was not until March 17, 2003, that McGhie finally referred the matter of the alleged embezzlement to the OIG for review. The OIG reviewed the materials submitted by OCF, which revealed that, on March 8, 2000, the Supervisory Auditor, Report Analysis Audit Division (RAAD), OCF, observed an employee of the Public Information and Records Management Division receive cash for the payment of a fine. The employee issued the customer a receipt, placed the cash in an envelope, and transmitted the envelope to Althea Smith, Auditor/Budget Liaison, OCF, who was responsible for depositing all monies received by OCF into a District Government depository.
On March 8, 2000, the Supervisory Auditor informed Collier-Montgomery that he had observed the employee accept cash for a fine, which was submitted to Smith without a transmittal document. The Supervisory Auditor concluded that the lack of an effective internal control system over the receipt of monies and their subsequent deposit permitted an employee to misappropriate monies without culpability. On April 6, 2000, the Supervisory Auditor also notified Collier-Montgomery that an audit survey of cash receipts received by OCF employees during the period of November 18, 1998, through March 6, 2000, revealed 26 instances where employees had received cash that totaled $384.20, which could not be traced to a deposit record filed at the D.C Treasurer's Office. (DCTO).
As a result, the survey was expanded into an audit (RAAD-00-0001, Revenue Receipts Program). RAAD performed this audit from March 8, 2000 - April 24, 2000. The audit reviewed OCF revenue receipts for Fiscal Year (FY) 1998 through the date of the audit in FY 2000, and disclosed that $1,540.83 could not be traced to a deposit record at DCTO. In addition, the review disclosed that seven checks totaling $268.40, received during the period September 1998 to November 1998, could not be traced to a deposit ticket at DCTO. The auditors did not determine the disposition of the misappropriated funds. RAAD made four recommendations in this audit. The second recommendation was to contact the OIG's Investigation Division to determine whether the misappropriated monies warranted investigation.
Then, at the request of Collier-Montgomery, a staff attorney in the BOEE Office of General Counsel conducted an investigation into the missing cash receipts identified by the auditors. In a memorandum dated July 18, 2000, the staff attorney submitted the results of her investigation to Collier-Montgomery. In the memorandum, the staff attorney indicated that she reviewed 100% of all receipts issued for cash and checks received by the OCF's employees during FYs 1998 through 2000. The staff attorney identified the amount of missing cash receipts as $1,460.43, rather than the $1,540.83 identified by the auditors. However, similar to RAAD, she was unable to account for the disposition of the missing funds.
During this period, RAAD also performed an Imprest Fund Review (RAAD-00-0003) from April 10, 2000 - July 18, 2000. Consequently, on April 12, 2000, RAAD conducted an unannounced audit of OCF's Imprest Fund. The audit disclosed that there was $51 in cash and coins in the fund. Smith, as the Imprest Fund Custodian, informed RAAD that she did not maintain an accounting log to account for the receipts and expenditures made to the fund. Therefore, RAAD was unable to reconcile the Imprest Fund per the cash vault to an accounting record on this date.
RAAD concluded that Smith removed the funds from the safe without authorization, replaced $122 in cash only after the unannounced audit was conducted, and used nonrevenue funds to supplement the Imprest Fund. Smith failed to maintain adequate records to show the purpose and the amount of non-revenue funds used. Additionally, RAAD could not vindicate Smith in this matter due to the fact that she maintained the accounting log, made reimbursements, and had unregulated access to the safe.
RAAD made two recommendations as a result of its review of the Imprest Fund. The first recommendation was to contact the Inspector General relative to the missing cash from the Imprest Fund's cash vault on the date of the surprise inventory cash count.
In a memorandum dated September 27, 2000, Collier-Montgomery responded, in writing, to RAAD's draft reports relating to their review of the Revenues Receipts Program and the Imprest Fund. Collier-Montgomery stated that she was declining to refer these matters to the OIG. Collier-Montgomery wrote, "Based on my experience, because these matters ultimately involve personnel issues, the OIG would have returned the cases to me for disposition under the personnel regulations. Therefore, I elected to have RAAD-00-0001 investigated by the Office of the Board's General Counsel." Based upon the results of BOEE's investigation and RAAD-00-003, Collier-Montgomery said that she would pursue a personnel action against the employee found to be responsible for the misconduct.
On October 3, 2000, Smith was given 15-day advance notice of termination based on charges of dishonesty, misuse of government funds, and inexcusable neglect of duty. On October 5, 2000, Smith submitted her letter of resignation to Collier-Montgomery. Upon receipt of Smith's resignation letter, however, the Notice of Adverse Action was withdrawn. The OIG found no evidence that OCF required Smith to repay the missing funds, or that these funds were ever repaid.
As a result of the referral, the OIG interviewed each of the OCF employees involved, except for one who was on maternity leave, and Smith, who had moved to Georgia. Smith, who was contacted telephonically, referred us to her attorney who declined to make Smith available for an interview.
f. Failure to Adhere to Contracting and Procurement Rules
The fifth issue reported to Chairman Wilson in the January 7, 2003, MAR was that the OCF and BOEE Directors failed to adhere to contracting and procurement rules and regulations by intentionally splitting a large procurement into segments below the agencies' $10,000 contracting authority in order to avoid scrutiny by the Office of Contracts and Procurement (OCP). It was also alleged that the Directors awarded small contracts to their friends and acquaintances as sole source, non-competitive contracts.
In his March 7, 2003, response, Chairman Wilson adopted McGhie's findings, who was unable to find any pattern of intentionally keeping contracts below the contracting authority of his agency. McGhie did report one contract, for $9,999 that was below the $10,000 threshold for requiring three oral quotations from vendors before a procurement can be made. That contract was with Mark Walcott for Information Technology consulting. The General Counsel suggested that the contract was justified because of Walcott's significant knowledge of the OCF computer system.
McGhie also found no instance where a sole source contract was awarded to a friend or acquaintance of either Director. He stated that Miller has awarded no sole source contracts in the past three fiscal years. OCP, which is a separate agency, did award two sole source contracts. for BOEE for a new optical scan voting system and for ballot cards. Likewise, McGhie found no evidence of contract splitting. He was unable to find recurring contracts for any vendor that in the aggregate amounted to more than $10,000.
Contrary to the findings of the BOEE General Counsel, the OIG investigation found evidence of contract and procurement irregularities, including contract steering, contract splitting, and conflict of interest, at OCF and BOEE.
The OIG received information that, in July 2002, OCF procured the services of an information technology (IT) consultant, TransGlobal, Inc., Lanham, Maryland, to assess the agency's current IT status in anticipation of an overhaul. TransGlobal, Inc. is owned and operated by Mark Walcott, and was initially a subcontractor to OCF's primary IT contractor, Haynes & Associates. The allegation asserted that, although OCF employs an Information Director (Vialetta Graham), TransGlobal, Inc. was contracted to duplicate, not supplement, Graham's professional responsibilities. It was further alleged that TransGlobal, Inc. is not certified to do business in the District of Columbia.
The initial TransGlobal proposal to perform the IT assessment was for $17,535. The OIG received a memorandum dated July 3, 2002, in which the Chief of Staff, OCF, documented a discussion she had with an OCP Contracting Officer. According to the memorandum, the Contracting Officer informed the Chief of Staff that any unsolicited IT proposal that exceeds $10,000 requires that the agency have at least three bids on file for the same services. He further informed her that is an "unofficial" policy of OCTO, and a "waste of government resources," to put any IT contract under $15,000 through the "normal" contracting and procurement process. If the services can be procured for a total of less than $10,000, the agency can execute a Purchase Order without meeting the threebid requirement. The OCF Chief of Staff apparently contacted Walcott, who agreed to perform the assessment for $9,999.Accordingly, on July 8, 2002, Purchase Order Number 118416 was issued in the amount of $9,999 for IT consulting to be perfonned by TransGlobal, Inc. The OIG was informed by the District of Columbia Department of Consumer and Regulatory Affairs that TransGlobal, Inc. is not certified to do business in the District of Columbia, nor is the company certified as a Local Small Disadvantaged Business.
We received no explanation why the parties decided to keep the contract under $10,000 in this case. However, by doing so OCF was able to avoid having to submit the contract to OCP for post-execution review of OCF's justification for the sole source award.16 Such a review would have revealed that TransGlobal, Inc. is not certified to do business in the District of Columbia, or as a Local Small Disadvantaged Business.
In 2003, OCF decided to contract again with Walcott, this time for the overhaul of the OCF computer system according to the assessment that TransGlobal, Inc. performed under the prior contract. Notes17 prepared by Kathy Williams, OCF General Counsel18 regarding a January 7, 2003, meeting with Walcott (See Exhibit U) indicate that OCF intended to award the contract for overhauling the system directly to Walcott without following the District's contracting and procurement procedures, and to bill Walcott in increments of $25,000. By splitting the contract into $25,000 increments, OCF was able to stay within its statutory small purchase authority and avoid review of the sole source procurement prior to solicitation and execution. See D.C. Code §2-303.21 and 27 DCMR §§1701.3(a) and 1705.1.
Williams provided an April 30, 2003, memorandum to the OIG to clarify the purpose of the January 7, 2003, meeting with Walcott. In the memorandum, she stated that the OCP Contracting Officer advised her that, according to D.C. Code §2-303.05(a)(3) (2,001), OCF may enter into a sole source contract with Walcott without engaging in competitive bidding.
This statement was contradicted by Nancy Hapeman, the General Counsel, OCP, who was interviewed by the OIG on May 6, 2003. She stated that according to D.C. Code §2303.20, neither BOEE nor OCF are exempt from the Procurement Practices Act (PPA). She stated that although some agencies are independent from the Office of the Mayor, they are still bound by the PPA unless they are explicitly identified in the statute. She went on to say that OCP currently handles all contract and procurement services for BOEE.
When asked about the issue of contract splitting, Hapeman referenced D.C. Code §2-303.21. Small Purchase Procurement, which states the following:
[p]rocurement requirements shall not be parceled, split, divided, or purchased over a period of time in order not to exceed the dollar limitation for use of these small purchase procedures. An employee who violates the provisions of this subsection shall be subject to suspension, dismissal, or other disciplinary action pursuant to District law.Hapeman stated that if TransGlobal, Inc. were awarded the IT system overhaul contract after being contracted to perform the feasibility assessment, it would represent an organizational conflict of interest. Specifically, contracting officers must "seek to prevent the existence of conflicting roles that might bias a contractor's judgment and  seek to prevent unfair competitive advantage." 27 DCMR § 2220.3.
She stated that OCF must sufficiently justify the sole source procurement in accordance with Chapter 17 of the DCMR. See id. § 1705.1 (requiring a written determination and findings (D&F) for sole source contracts). Hapeman was informed that OCF cited D.C. Code § 2303.05(a)(3) as the legal basis for a sole source contract with Walcott. She stated that the provisions outlined in 27 DCMR Chapter 17 and D.C. Code § 2-303.05 are separate requirements. Regardless of the basis for the award under the statute, a written D&F is also required by the regulation. It is the OIG's understanding that as of this writing, the contract to Walcott has not been let due to budgetary constraints.
A separate set of contracts presents additional issues regarding the procurement practices at BOEE and OCF. In January 2002, OCF and BOEE procured the services of Grillo & Co. to perform public relations and public awareness services to educate District residents of the services both agencies provide. The owner of Grillo & Co., Rose Grillo, is believed to be a personal friend of the Director of BOEE, Alice Miller.
On January 8, 2002, Miller awarded an $18,400 contract to Grillo & Co. for public relations consulting services for BOEE. There is no evidence that Miller justified the sole source contract with a D&F. Awarding a contract under such circumstances may constitute a violation of DPM § § 1803.1(b), (d), and (e), which prohibit any action which might result in, or create the appearance of giving preferential treatment to any person, losing complete independence or impartiality, or making a government decision outside official channels. In addition, a contracting officer must promote competition for small purchases and may not "solicit on a personal preference basis." 27 DCMR § 1802.7.
On January 28, 2002, OCF also procured Grillo's services for $14,850. This was after OCF received bids from two other public relations companies on November 19, 2001. It appears that the only constant variable in all three bids was the billable hourly rate. Each of the respective bids contained different performance parameters, and it is not clear how OCF made the decision to award the contract to Grillo & Co., especially since it appears that Grillo's bid was priced higher than one of the other bids. Collier-Montgomery signed the contract with Grillo & Co. on January 31, 2002. The contract stipulated that the contractor would be paid a 50% retainer ($7,425) at the commencement of the project and the balance would be divided up into two payments (of $3,712 each) on March 15 and April 15, 2002. The record indicates that on February 5, 2002, Grillo submitted an invoice for $7,750 ($325 over the agreed upon retainer). Three days later, on February 8, Collier-Montgomery issued a purchase order in the amount of $14,850. Thus it appears that OCF paid Grillo the full contract amount well in advance of the payment schedule stipulated by the contract. See 27 DCMR §3205.1 (prohibiting advance payments to contracts, except where mandatory criteria are met).
g. Leave Issue - Ms. Collier-Montgomery
The final issue in the January 7, 2003, MAR concerned an allegation that Collier-Montgomery had been on extended leave due to an illness and had depleted all of her accumulated sick and annual leave. As a result, she had been placed on administrative leave with pay, the decision allegedly approved by Chairman Wilson. The administrative leave amounted to over $18,000 in salary paid to Collier-Montgomery. In the MAR, Wilson was advised that the DPM did not provide for the use of administrative leave for an employee who was absent due to an illness, and was requested to provide to the OIG the regulatory authority justifying his actions.
In the March 13, 2003, response to the MAR, General Counsel McGhie asserted that Collier-Montgomery exhausted the balance of her accumulated sick leave from October 9, 2002, through November 11, 2002. According to McGhie, the Board authorized that Collier-Montgomery be placed on administrative leave beginning on November 12, 2002. Subsequently, the Board requested that McGhie review the appropriateness of administrative leave for Collier-Montgomery, and he ultimately concluded that administrative leave for purposes of along term illness was not appropriate. Due to that determination, the Board allegedly approved advanced sick leave for Collier-Montgomery in the. amount of thirty days, thus permitting her to apply it retroactively from November 12 through December 28, 2002.
Despite concluding earlier in the response to the OIG's MAR that the granting of administrative leave for purposes of an illness was inappropriate, McGhie later stated that in his judgment, the Board took appropriate action with respect to Collier-Montgomery's sick leave. He contends that the Board did not ultimately use administrative leave for Collier-Montgomery, and that each day she missed work has been accounted for through the use of regular sick leave, advanced sick leave, or annual leave.
The OIG's subsequent investigation indicated that the OCF response to the OIG MAR on the leave issue was not entirely candid. McGhie claimed in the response to the OIG MAR that he was tasked by the Board in late November to early December 2002 with investigating whether advanced leave was an alternative the Board could utilize to address Collier-Montgomery's illness. Other language in the response appears to have been designed to create the impression that the Board, on its own accord, made the decision to investigate the appropriateness of its own directive. However, documents and communications subsequently obtained and reviewed by the OIG demonstrate that only after receipt of the OIG MAR identifying the issue did BOEE attempt to correct their earlier impropriety.
The OIG finds that it was inappropriate for the Board to extend administrative leave with pay to Collier-Montgomery. The Board attempted to deceive the OIG in its response to the OIG MAR by indicating that their inappropriate action had been corrected prior to the date on which they submitted their response to the MAR. In fact, requests for leave and handwritten notes dated after the Board's response clearly demonstrate that the inappropriate action had not been corrected at the time BOEE claimed. For example, in . correcting the improper use of administrative leave, the OCF Director attempted to approve her own advanced sick leave on February 4, 2003. After District payroll personnel alerted OCF that the Director could not authorize her own request for advanced sick leave, the advanced sick leave was finally approved by Chairman Wilson on April 4, 2003. (See Exhibit V)
3. FAILURE TO COOPERATE WITH THE OIG INVESTIGATION
Submission of False Affidavits. During the course of the OIG investigation, Chairman Wilson submitted two affidavits executed by Ford and Graham, in which each employee explained his/her role in effectuating the pay raises for Miller and Collier-Montgomery in August 2001. See Exhibits W and X. In his affidavit, Ford claimed that on or about August 28, 2001, he delivered Wilson's memorandum to Graham authorizing the pay raises. See Exhibit F. According to Ford, Graham informed him that she was not authorized to make the changes, but agreed to "train" him how to effectuate the changes. Ford then claimed that he initially was "unable" to enter the salary of $121,406 for either Miller or Collier-Montgomery, but that with Graham's advice, he was able to make the change in CAPPS. The information in Graham's affidavit mirrors Ford's assertions.
However, evidence adduced during this investigation indicated that Ford was able to make a salary reclassification for Miller. Indeed, Ford reclassified another BOEE attorney from the Excepted to the Legal Service in June of 2001, and Miller claimed on his June 2000 performance evaluation that Ford had "mastered the CAPPS system." In addition, Ford did not make the salary change for Miller on or about August 28th; rather, the evidence indicates that Ford entered the information in CAPPS for Miller on August 20, 2001, prior to Wilson's August 28th memorandum. See Exhibit G. Finally, the CAPPS change register indicates that Collier-Montgomery's salary reclassification was completed by Graham - not Ford - on August 27th, the day before Wilson's memorandum. See Exhibit H.
Execution of Search Warrant. Because of the AUSA's and the OIG agents' belief that BOEE officials might destroy electronic evidence related to the unlawful salary increases, OIG and FBI Special Agents executed a Superior Court search warrants for word documents and e-mail records at the offices of the BOEE on July 19 and August 2, 2002, at the same time that BOEE was responding to an election controversy. When the investigators executed the warrant, they were met with passive resistance by the BOEE employees who were present. The room in the BOEE that contained computer servers was locked when the investigators arrived to execute the search warrant. Vialetta Graham, the BOEE Systems Administrator, claimed not to have a key and stated that Miller had a key but had lost it. However, when the investigators indicated that they would have to forcibly enter the room, the BOEE employees quickly located a key.
Once inside the server room, the investigators asked Graham to identify the server containing word documents and e-mail records. Graham claimed not to know or understand exactly what information was contained on each of the six servers, thereby requiring that the investigators search each of the servers. Later, Graham and Miller minimized the extent of their non-cooperation, and blamed the OIG investigators for seizing the records of the voter roll when it was their lack of cooperation that caused the OIG to seize the records in the first instance.
Campaign to discredit the Inspector General. Following the execution of a search warrant at the Office of the BOEE on August 2, 2002, Chairman Wilson, with the assistance of Councilmember Orange, has engaged in a campaign to unfairly discredit the OIG and its investigation. The controversy created by Chairman Wilson concerns the OIG seizure of a number of computer servers at the BOER Wilson has continuously sought to create the impression that the OIG seizure was unnecessary and disrupted the Board in verifying the signatures on the Mayor's nominating petition and on two initiative petitions, which had to be completed by the Board by August 5, 2002.
The server containing the information needed by the Board was seized by the OIG only because the Board's Director of Computer Security, Graham, would not tell the seizing agents the identity of the server on which the responsive information was stored. Graham later denied that she had failed to cooperate with the OIG agents.
Moreover, Chairman Wilson has sought to create the impression that the servers were kept by the OIG for an extended period of time, thereby affecting the Board's ability to accomplish its verification of voters' signatures. In reality, OIG and FBI agents made every effort to return the servers in question as quickly as possible, and in fact had the computer servers back to BOEE and on line within a few hours of their seizure.
In a similar manner, Chairman Wilson's General Counsel, Kenneth J. McGhie, made spurious allegations against the OIG in an April 24, 2003, letter sent to the U.S. Attorney and to the Inspector General. Without any evidence, McGhie recklessly accused the OIG of obtaining certain documents illegally - of entering a BOEE office to obtain the documents, and of unlawfully breaking into a BOEE office and stealing an employee's notes.
In fact, the documents about which McGhie complained were provided to the OIG by a whistleblower employee of Wilson's own agency. The documents were not solicited by the OIG, the OIG was assured they were obtained through lawful means, and the OIG had no reason to believe otherwise. Wilson also wrote to the Inspector General on April 24, 2003, accusing the OIG of attempting to circumvent the right to counsel on the part of two employees the OIG sought to interview. Wilson asserted that the OIG, by asking that two employees be available to be interviewed, was trying to "circumvent counsel by speaking to Ms. Miller and Ms. Collier-Montgomery without the prior consent of counsel." He stated that he would refer the matter to Bar Counsel if the OIG continued to attempt to talk to the two employees.
Chairman Wilson's complaint in this regard was without merit. The Inspector General responded that the request for interviews with Miller and Collier-Montgomery postdated the declination by the U. S. Attorney's Office in the criminal investigation concerning their improper salary enhancements and backpay. The OIG request for Wilson's cooperation in making his employees available did not relate to the criminal matter in which they were represented by counsel, but instead to an administrative investigation. The two employees were at all times free to seek counsel to represent them in the administrative matter. The Inspector General reminded Wilson, however, that all District government employees are required 'to cooperate in administrative inquiries, including those who work in independent agencies.
Threatened retaliation against an OIG source. On January 13, 2003, the OCF Chief of Staff was detailed to the General Counsel, BOEE, to perform duties as assigned. This had the effect of removing her from her position, and jeopardizing her standing in the Management Supervisory Service (MSS) because she no longer supervised any employees. The employee complained to the Inspector General on February 13, 2003, that Miller and Collier-Montgomery were retaliating against her because of her cooperation with the Inspector General's investigation. The employee believed that she was about to be fired for providing information during the OIG investigation.
Therefore, on February 14, 2003, the Inspector General wrote to Chairman Wilson to remind him that District of Columbia employees are required to cooperate by providing any documents or testimony needed in an investigation by the Inspector General. See D.C. Code § 2-302.08 (f-3) (2001). The Inspector General told Chairman Wilson that District law provides certain whistleblower protections to District employees, and that supervisors are prohibited from threatening to take or from taking a prohibited personnel action or otherwise retaliating against a District employee because the employee makes a protected disclosure. See D.C. Code § 1-615.53 (2001); see also Id. §2-302.08(f-4) (prohibiting reprisals for disclosing information to the OIG). Chairman Wilson responded that he was unaware of any administrative action being taken against the employee and that the employee would not be fired. Despite Wilson's response, during a recent D.C. Council oversight hearing, Councilmember Orange and Chairman Wilson remarked that BOEE/OCF employees could not "hide behind" Whistleblower protections when they provide the OIG with documentation deemed confidential by the agency. This mindset is contrary to the intent of the Whistleblower statute and would have a chilling effect on government disclosure in public corruption matters.
Disruption of OIG interviews. On several occasions when OIG investigators attempted to interview employees at the OCF or the BOEE, they had to curtail the interviews because the General Counsels of OCF and BOEE insisted on sitting in on the interviews. When an employee was subpoenaed to come to the OIG to be interviewed and submit documentation, an OCF staff attorney also appeared and asked to speak to the employee. Informed of this, the employee decided not :::5 be interviewed or submit any documents to the OIG.
Each agency counsel is a witness to the matters being investigated, and each was involved in the decisions and actions that are part of this investigation. In addition, their . simultaneous representation of agency employees and the agency itself presents an inherent conflict of interest as the interests of each "client" in this situation do not coincide. Because of this conflict of interest, their presence at an interview of an agency employee would have a chilling effect on any employee who might be inclined to testify about misconduct by OCF and BOEE officials. The General Counsel, BOEE, actually told witnesses at the beginning of OIG interviews that he was sitting in on the interviews to make sure that the investigators did not ask anything "inappropriate."
Claimed exemption from OIG oversight. On April 4, 2003, exactly one year after the commencement of the OIG investigation, the BOEE General Counsel asserted for the first time, in response to an OIG subpoena, that: "[t]he OIG has absolutely no oversight as to how or when the OCF conducts its audits and investigations." This is because, according to the General Counsel, the OCF is an independent agency and the legislation establishing the OCF provides that the agency shall not be subject to the direction of any nonjudicial officer of the District. The BOEE General Counsel's newest argument was made notwithstanding the fact that the statutory authority of the Office of Inspector General to conduct audits, inspections, to conduct audits, inspections-and investigations relating to the programs and operations of District government departments and agencies and investigations relating to the programs and operations of District government departments and agencies, specifically includes independent agencies within its terms. D.C. Code § 2-302.08(a-1)(1) (2001).
Refusal to turn over certain audit documents. In the January 7, 2003, MAR, the first issue identified by the Inspector General was that although OCF has initiated audits concerning at least three incumbent D.C. council members, no audit of a D.C. council member's campaign finances has ever been completed. In one instance, O CF commenced an audit in 2000 that has not yet been completed.
When the OIG attempted to investigate this issue by subpoenaing documents from the agency's Supervisory Auditor, the BOEE General Counsel informed the Inspector General that any ongoing audits or investigations will not be turned over until closed. The General Counsel thereby foreclosed any OIG inquiry into OCF's failure to complete audits of D.C. council members' campaign finances.
The General Counsel, BOEE, also objected to the testimony of OCF's Supervisory Auditor, to whom the OIG issued a subpoena on March 27, 2003, to provide testimony and agency documents to the OIG on March 28, 2003.19 The General Counsel's objections to the subpoena and claim of privilege delayed the agency's response to the OIG subpoena until April 25, 2003. On that date, without citing any justification, McGhie informed the OIG that BOEE would not provide the OIG any documentation relating to ongoing audits conducted by the Supervisory Auditor. McGhie further asserted the attorney-client privilege for documents relating to the OCF Audit Division's referrals to agency counsel.20 BOEE/OCF has not provided the OIG any authority to support its position that the privilege is applicable in this case.
For numerous reasons, the OIG does not agree that the attorney-client privilege may be used by agency executives to prevent agency employees from reporting alleged government waste, fraud, and abuse to the Inspector General. First, the OIG's statutory authority to access District government records is broad in scope:
The Inspector General shall have access to the books, accounts, records, reports, findings, and all other papers, items, or property belonging to or in use by all departments, agencies, instrumentalities, and employees of the District government, including agencies which are subordinate to the Mayor, independent agencies, boards, and commissions, but excluding the Council of the District of Columbia, and the District of Columbia Courts, necessary to facilitate an audit, inspection or investigation.
D.C. Code § 2-302.08(c)(1) (2001) (emphasis supplied). The OIG's authority to access government information specifically includes reports, findings, and all other papers "in use by" District government employees and agencies. To accomplish the OIG's mission to detect corruption, mismanagement, and fraud in District government programs and operations, the OIG must be able to review all records compiled by District government agencies. Unlike cases where private entities in litigation with the District government seek access to privileged government information, the assertion of privilege is wholly inappropriate where one District agency - pursuant to its statutory authority and mission - seeks official information from another.
Second, assertion of the privilege in this context is contrary to public policy: Indeed, if the privilege were applicable, the conduct of government attorneys would be immune from OIG scrutiny, and all other government officials and employees could escape OIG review simply by processing official documents through the agency's general counsel office: Williams cannot counsel or assist her "client" in fraudulent conduct. See D.C. BAR RULES of PROF'L CONDUCT R. 1.6 car. 14 and R. 1.2(e). In the same vein, during an OIG investigation BOEE cannot shield information relating to her questionable activity of suppressing and deleting findings in government documents by simply stating that she was acting as a government attorney at the time.
Third, the Supervisory Auditor has an affirmative duty to report information regarding corrupt government activity (here, allegations of selective enforcement of the law) to the OIG under Section 1803.8 of the DPM and could face disciplinary action for failure to cooperate with the OIG in the subsequent investigation:
Failure on the part of any District government employee or contractor to cooperate with the Inspector General by not providing requested documents or testimony needed for the performance of his or her duties in conducting an audit, inspection or investigation shall be cause for the Inspector General to recommend appropriate administrative actions to the personnel . . . authority, and shall be grounds for adverse actions . . . including the loss of employment . . . .
D.C. Code § 2-302.08(f-3) (2001). In addition, as a government auditor, the Supervisory Auditor follows the General Accounting Office's Government Auditing Standards, which require auditors to report irregularities and illegal acts to specified external parties. See id. Paragraphs 5.18 - 5.25.
Finally, assuming arguendo the applicability of the privilege, not every communication with an attorney is protected by the privilege. "The communication must be made in confidence for the express purpose of securing legal advice." Wessel v. City of Albuquerque, No 00-00532, 2000 U.S. Dist. LEXIS 17494, at *7, (D.D.C. Nov. 30, 2000) (emphasis in original) (citation omitted). Furthermore, the privilege protects communications between clients and their attorneys, and not the facts underlying the communications. See Upjohn v. U.S., et al., No 79886, 1981 U.S. LEXIS 56, at *396-397 (1981).
In the instant case, OCF's supervisory auditor prepared two draft reports and submitted these documents to OCF's general counsel pursuant to agency policy. Williams, who was Acting Director of OCF at the time, then called a meeting with the Supervisory Auditor, OCF's Chief of Staff, and another OCF auditor, to go over the reports' findings. At that meeting, Williams instructed the Supervisory Auditor to delete findings and change others. Soon after the meeting, Williams shared Collier-Montgomery's instructions to delete and change the reports' findings. Therefore, the draft reports do not represent attorney-client communications, but the auditor's factual compilations and conclusions based upon his review of the candidate committee reports. The communications between the Supervisory Auditor and Williams were not for the purpose of obtaining legal guidance, but merely to report the auditor's findings after conducting the respective audits.21 Similarly, Williams' instructions to the Supervisory Auditor to change the report did not constitute legal advice; rather, her instructions reflected management decisions, made by her on behalf of the agency. See Evans v. Atwood, et al., No. 96-2746, 1999 U.S. Dist. LEXIS 17545, at 15, n. 6 (D.D.C. Sept. 29, 1999).
Attempt to ratify the illegal pay raises. Following the initiation of the Inspector General's investigation in April 2002, several attempts were made by BOEE/OCF to retroactively ratify the pay raises and back pay that had been given to the Directors of OCF and BOEE. These actions appear to have been a deliberate attempt to influence the investigation by demonstrating that the raises would have been approved regardless of the deception that was used in the scheme to obtain the pay raises in August of 2001.
On May 29, 2002, the General Counsel, BOEE, asked the General Counsel of the D.C. Council for an advisory opinion on his interpretation that the D.C. Code established a floor, and not a ceiling, when it set the compensation of the Director, OCF, at the maximum rate for Grade 16. The General Counsel for the D.C. Council obligingly opined, by letter dated May 31, 2002, that one could reasonably conclude that the language of the D.C. Code established a floor and not a ceiling.
Soon thereafter, on June 21, 2002, Councilmember Orange introduced Bill 14-735 entitled "Director of Campaign Finance Compensation Amendment Act of 2002." The Bill proposed to amend the D.C. Code to allow the Board of Elections and Ethics to fix the compensation of the Director of Campaign Finance and remove the provision set forth in existing law, which fixed the compensation of the Director at the maximum rate for Grade 16. On November 18, 2002, at the time the Bill was under consideration, the Inspector General wrote to the Mayor and to the Chairman of the City Council, to remind the Council of the existence of the OIG investigation on the very issue addressed by the proposed legislation. The attempt to ratify the pay raises through legislation was unsuccessful, and the Bill never became law.
As a result of our investigation we make the following recommendations to the Chairman of the Board of Elections and Ethics. The Chairman should take appropriate action to ensure that the recommendations are implemented at the District of Columbia Board of Elections and Ethics (BOEE) and the Office of Campaign Finance (OCF).
5. EXHIBITS [not available online]
1. At the time, this provision was codified at D.C. Code § 1-1431(a).
2. During the execution of the search warrants, the OIG seized a floppy computer disk from Miller's office desk drawer, which contained both documents. The United States Secret Service conducted a subsequent forensic computer analysis of the disk, which confirmed that each document was created by Miller on her government computer.
3. This provision was previously codified at D.C. Code § 1-1306(e)(1).
4. This date is significant because it preceded Wilson's memorandum of August 28, 2001, which requested and approved the salary increases.
5. Even though no statute provides a limit on Miller's salary, the parties obtained her pay raise through the fraudulent means described above.
6. The record reveals that, aside from the August 2000 and May 2002 draft bills, McGhie also included the proposed legislation in an unsigned letter, dated March 26, 2001, to Councilmember Orange, who had succeeded Councilmember Patterson as Chair of the Government Operations Committee.
7. BOEE claimed attorney-client privilege for these draft reports by the OCF Supervisory Auditor. However, these documents had been disclosed to the OIG long before any claim of privilege by BOEE and had formed the basis of MAR-2 to Chairman Wilson. The OIG disputes the claim of privilege as to these documents because they were not prepared by an attorney or by someone acting for an attorney. Nor are they client documents provided to an attorney for the purpose of seeking legal advice or for assistance in some legal proceeding. Instead, the documents reflect the work of a District government employee performing the functions assigned to his agency by law. In addition, the information in the documents was the type of information the employee was required to turn over to the OIG. See DPM § 1803.8. As such, the documents are of the type that the Inspector General has the legal obligation and authority to review.
8. The Position Description of the Supervisory Auditor who reported the violations require him to execute his responsibilities independently within established guidelines and operating procedures, including inter alia the Government Auditing Standards as established by the General Accounting Office. The Policy and Procedures Manual adopted by the OCF Reports Analysis and Audit Division also require adherence to auditing standards, including the GAO Government Auditing Standards.
9. D.C. Code § 1-1131.01(a)(3) (2001) provides that no person can make a contribution in support of a candidate for a Council At Large Seat in excess of $1,000. D.C. Code § 1-1131.02 (2001) provides that, in the R&E, all contributions made by partnerships must be attributed to each partner in direct proportion to the partner's share of partnership profits or by the agreement of the partners. 3 DCMR § 3011.13 provides that "[a] corporation, its subsidiaries, and all political committees established, financed, maintained or controlled by the corporation and its subsidiaries share a single contribution limitation."
10. The Hatch Act governs the political activities for both federal and District government employees. See 5 USC §§ 7321-7326.
11. While the OSC has recently determined that legislative branch employees are subject to the Hatch Act, during 2000 the OSC opined that the Act should apply only to executive branch employees. Notwithstanding any confusion created by the earlier opinion, all potential Hatch Act violations must be reported to the OSC.
12. At the time, the General Counsel was serving as Acting Director of OCF because Collier-Montgomery was on extended leave.
13. Ralls subsequently resigned from his official position with the Council on September 1, 2000, and was re-hired by the Council on October 1, 2000.
14. A review of the Evans Committee's R&E report disclosed that the contributions were reported as being received on October 29, 1999.
15. The D.C. Code includes loans (not "made in the regular course of business by a business engaged in the business of making loans" ) within the definition of the term "contribution." D.C. Code § 1-1101.01(6)(A)(i) (2001).
16. See 27 DCMR §§ 1010.5 and 1701.3(b).
17. Williams has claimed that her notes were somehow taken from her locked office without authorization. However, the OIG obtained a copy of her notes from an OCF employee who told OIG investigators that he/she found the notes on a copy machine in OCF. The employee said he/she recognized that the notes disclosed potential wrongdoing. Therefore, the employee copied the notes, leaving the originals on the copy machine, and gave a copy to the OIG.
18. At the time the notes were prepared, the OCF General Counsel was serving as the Acting OCF Director.
19. On March 28, 2003, the Supervisory Auditor appeared at the OIG and was ready and willing to both testify and turn over the requested documents. However, McGhie telephoned the OIG that morning and objected that: a) the subpoena was too broad; b) he needed to review all the information prior to the Supervisory Auditor's compliance; and c) the OCF Audit Division's referrals to OCF agency counsel were protected by the attorney-client privilege. In addition, a BOEE staff attorney appeared at the OIG on March 28th to speak with the Supervisory Auditor during his interview. Although the OIG did not object to allowing the staff attorney the opportunity to speak with the Supervisory Auditor, the staff attorney voluntarily left the OIG without doing so. In response, the OIG and McGhie agreed that the Supervisory Auditor would testify concerning all matters except those relating to the audit referrals, and that the OIG would narrow the scope of the subpoena and provide a revised time-frame for production of the requested documents. At no time did the OIG acquiesce to McGhie's privilege claims, but did agree not to delve into the referral matters with the Supervisory Auditor during his interview. However, when the OIG informed the Supervisory Auditor of the restrictions upon his testimony and that a staff attorney had appeared to speak with him, the Supervisory Auditor indicated that he was uncomfortable providing testimony or documents to the OIG at that time. Therefore, the OIG did not interview or receive any documents from the Supervisory Auditor in response to the subpoena on March 28th or at any time thereafter.
20. The referrals and draft audit report referenced herein were provided to the OIG by BOEE/OCF personnel prior to McGhie's claim of privilege on March 28, 2003.
21. Cf. Diversified Industries, Inc. v. Meredith, No. 77-1043, 1978 U.S. App. LEXIS 12617, at 12-13 (8th Cir. Feb. 15, 1978) ("Under this test, the mere receipt of routine reports by the corporation's counsel will not make the communication privileged, either because the communication will have been made available to those who do not need to know or because the communication was not made for the purpose of securing legal advice.").
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