The acting head of the Corporation for National and Community Service (CNCS) has told Congress that the agency's inspector general was excluded from settlement negotiations involving Sacramento Mayor Kevin Johnson's misspending of AmeriCorps grant money because the inspector general had made "questionable comments" to the press about the matter.
Nicole Goren's June 18 letter to Senate Majority Leader Harry Reid provides new insight into the long-term disagreements that the corporation and its board of directors had with Gerald Walpin, who was fired by President Barack Obama on June 11. Goren writes that "Mr. Walpin's own actions called his objectivity into serious question." The White House has also said that Walpin had acted disoriented in a meeting, causing officials to lose faith in him.
Goren's three-page letter, with nearly 60 pages of attachments, represents the corporation's comments on Walpin's special report to Congress about the Johnson matter, which was submitted May 12.
Goren's comments, which by law were to have been included when Walpin's report was transmitted, were filed only after a barrage of congressional inquiries to the corporation and the White House in the wake of Walpin's firing. Previously she had maintained she should not file comments until a complaint against Walpin to the Council of the Inspectors General on Integrity and Efficiency had been resolved. It is still pending.
Walpin's firing has caused a furor among some members of Congress and has turned into a cause célèbre of the political right, which is questioning whether Congress should fund the planned expansion of AmeriCorps to 250,000 members, given what critics say are massive funding irregularities. Much of the public discussion of the matter has centered on whether Johnson was given a sweetheart settlement because he is a political ally of the president.
Sexual Allegations Ignite Probe
Ironically, the investigation of Johnson, St. Hope Academy and its Hood Corps was requested by CNCS after the California commission that recommended St. Hope for funding received reports of irregularities at the program, including allegations of sexual misconduct.
It was disclosed that a female student at St. Hope had told a teacher that Johnson had inappropriately touched her. Rather than school officials reporting the alleged incident directly to police, Johnson's attorney interviewed the girl, who then recanted.
The teacher soon resigned, saying in his resignation letter that "St. Hope sought to intimidate the student through an illegal interrogation and even had the audacity to ask me to change my story."
At about the same time, it was discovered that Johnson had been accused in a similar incident in Arizona in the late 1990s. In that case, Johnson reached a $230,000 settlement.
Local media outlets reported that the investigation included reports that the AmeriCorps members at St. Hope were required to attend church services. Sources said that there were also allegations of physical abuse.
In her letter, Goren complained that Walpin never completed a full audit of St. Hope's grant spending. But in his report to Congress, Walpin set out in detail how his investigators were never able to obtain the main financial records from Johnson or St. Hope, or the timesheets that AmeriCorps members are required to fill out. And he noted that his case was not based merely on financial accounting but on the "ethical misuse of the money for the personal use and benefit of the CEO."
The investigators determined that among other improprieties, Johnson had used AmeriCorps members to perform personal errands for him, to recruit students to the charter school he ran and to participate in activities surrounding a Board of Education election. They found few records to show that the AmeriCorps members had performed the tutoring and other service projects set out in the grant.
Walpin determined that all of the $847,000 paid to St. Hope and AmeriCorps members as education awards had been used improperly. The corporation barred Johnson and St. Hope from receiving federal funds, at least until the matter was resolved. Walpin referred the findings of his office to the U.S. Attorney's Office in Sacramento.
Johnson Seeks Relief
After Johnson was elected mayor in November, the Sacramento city attorney hired a lawyer to determine if Johnson's funding suspension might affect federal funding to the city. The lawyer found that it could.
In his report to Congress, Walpin stated that Johnson could have appealed the suspension or the city could have designated another official recipient of federal funds, bypassing the Johnson suspension. He said that Johnson never appealed.
In an attachment to Goren's statement to Congress, corporation general counsel Frank Trinity said that Johnson's attorneys repeatedly asked for extensions of the time for him to appeal the suspension.
After the passage of the federal Recovery Act this year, Johnson pressed for a quick resolution to the suspension and investigation. On April 9, Johnson, his executive director and St. Hope signed a settlement with the corporation that required the repayment of about half the funds St. Hope had received and the lifting of Johnson's suspension.
Under the agreement, Johnson paid the first payment - with the expectation that St. Hope would repay him when it had the money - and St. Hope agreed to repay $350,000 over 10 years. Walpin maintains that St. Hope is essentially insolvent and would have to use other grant money to repay the government. Goren said the settlement guarantees the government will be paid, even if St. Hope becomes insolvent, apparently through seizure of property.
Walpin said in his report to Congress that "the settlement accepted by the corporation leaves the unmistakable impression that relief from a suspension [from receiving federal funds] can be bought."
He also maintained that the corporation could have obtained a better settlement - the government could have sought at least twice the amount of money used improperly - and that Johnson personally should have been held more accountable.
In a memorandum to Goren, Trinity complained about Walpin posting information about Johnson's suspension under a flashing "News Flash" headline on the OIG website, and about an opinion piece Walpin wrote for the Sacramento Bee, while the U.S. Attorney was considering the case.
Firing Angers Congress
Members of Congress declared immediately that the way Walpin was fired - with a telephone call from the White House informing him he had an hour to resign or be fired - violated the Inspectors General Reform Act of 2008, of which Obama was a sponsor.
A day after the firing, which was announced in a message by Goren to AmeriCorps colleagues, Sen. Charles Grassley (R-Iowa) complained to the White House that Obama had to give a 30-day notice to Congress, stating his reason for the firing, before Walpin could be removed.
The White House sent letters to both the House and Senate saying that the president had lost confidence in Walpin - an explanation that several congressional representatives said was not sufficient.
A later White House letter stated that Walpin was confused and seemed disoriented at a May 20 board meeting, causing the president to lose faith in him.
Now, members of Congress - including Grassley, Sens. Michael Enzi (R-Wyo.), Orrin Hatch (R-Utah), Joe Lieberman (D-Conn.) and Susan Collins (R-Maine), and Rep. Darrell Issa (R-Calif.) - are awaiting answers from the White House and the corporation to inquiries about the reasons for and procedure surrounding Walpin's firing.