Watchdog: Follow the Money

Feds used donations intended for poor for massages, luxuries for themselves

By |
Watchdog,OPM,Waste and Fraud,Luke Rosiak,Follow the Money,Minusextra,Combined Federal Campaign

Federal employees and a contractor diverted more than $1 million of charitable contributions to spending on themselves for in-office massages, meals at every meeting and other luxuries and unnecessary expenses, a government audit found.

They called themselves "volunteers" and said they needed "motivation" to help the less fortunate, even though some 41 federal workers were being paid full-time salaries to administer just one local chapter of the government's annual workplace charity drive, the Combined Federal Campaign.

They arrived a day early and stayed a day late for annual training conferences in New Orleans and Las Vegas, and paid for room service and pay-per-view movies with donated funds. Then, they adamantly defended their right to do so when questioned by auditors.

Charity Without Sacrifice

A three-part series by the Washington Examiner.

Today: Nonprofits, feds used money intended for poor to live all-expenses-paid

Part Two: Feds' version of 'workplace giving' means getting paid for charity --- and often barely breaking even

Part Three: Charity drive employees, contractors fight reforms meant to reduce waste

Click here to see a summary of the series and find more resources.

They claimed that restrictions on spending for things like first-class flights didn't apply to donated funds because taxpayer money was not involved.

The whole time they were working on the CFC full-time, these "loaned executives" received full government salaries, and were able to ignore the work they were originally hired by agencies to do.

The CFC is overseen by the Office of Personnel Management through regional committees made up of government employees.

Each of the committees contract with an outside nonprofit group to do most of the work, paying expenses out of the donations.

Federal agencies detail hundreds of employees from their regular duties to work at CFC contractor offices, all at taxpayer expense.

The largest regional chapter is the CFC for the National Capital Area, which contracted with Alexandria, Va.-based nonprofit Global Impact.

Global Impact occupies custom-built office space with wall-to-wall views of the Potomac River. On those walls are pictures of starving children in Africa juxtaposed against elaborate conference rooms and amenities like a gourmet kitchen. Global Impact has assets of more than $20 million, according to its latest tax return.

The same nonprofit also has the contract for another large CFC campaign, which covers members of the U.S. military on overseas deployments.

In 2012, the year a scathing audit by OPM's inspector general of Global Impact's work on the D.C.-area contract was published, the nonprofit paid its then-top executive, Renee Acosta, nearly a half-million dollars.

According to the audit, 132 staffers ran that charity drive, including 41 "loaned executives" who collected federal salaries but worked out of the nonprofit's offices.

The audit "identified $764,069 in expenses that could have been put to better use for the campaigns," including a private box at the stadium where the Washington Nationals play, "jazz band costs at a leadership conference," a Mardi Gras tour, and a "Washington by Night Tour for the Loaned Executives."

The audit also reported that Global Impact "was reimbursed for unreasonable, unallowable, or unsupported expenses" totaling nearly $300,000.

Those consisted of a torrent of petty offenses, including expensing personal dry cleaning bills, gift shop purchases, travel to an awards banquet unrelated to the CFC, and an $80 flower gift to an employee.

Global Impact held two-week training conferences at hotels in the tony Georgetown section of D.C., and flew its workers to conferences as well as in other cities known for being popular entertainment venues such as New Orleans, Orlando and Las Vegas.

Staff arrived "one day early and stay[ed] one day after the conferences" because they "were involved in planning" or "to ensure ... timely presence at the start of the conference," Global Impact claimed, according to the audit.

The auditors weren't impressed, pointing out that the conference started in the afternoon and, as “for days following the conferences, we do not understand the justification that would warrant this."

Global Impact reimbursed one staffer $1,000 for driving from D.C. to an Orlando conference, which would have allowed his family to come along, even though round-trip flights run as low as $230.

The nonprofit justified in-office "neck massages for Loaned Executives" by saying they were "to alleviate stress."

When auditors flagged expenses like room service and movie rentals incurred before the conference started, Global Impact frustrated them by insisting that the expenses must be allowed, even taking the unusual step of hiring a law firm to push back against the inspector general in an effort to avoid having to pay for them themselves.

“Loaned Executives are not campaign ‘volunteers,’” auditors repeatedly reminded Global Impact in a lengthy back-and-forth.

“They are federal employees who are temporarily assigned, on a full time basis, to the CFCNCA and continue to receive their regular salary and benefits from their employing federal agencies during this time. Work related to the CFCNCA is simply part of their official duties,” the audit said.

“Consequently, the argument that these federal employees need ‘morale boosters’ because they serve without compensation is without merit,” the audit concluded.

The employees who were being paid to do charity work frequently spent money thanking and rewarding each other, such as a $51-per-person “appreciation luncheon” that was “both unreasonable and excessive, in addition to being redundant since the campaign also held a finale event, where campaign workers were again recognized and rewarded,” according to the audit.

There were also multiple problems with the Local Federal Coordinating Committee, the board of federal employees who were supposed to oversee Global Impact's work.

“Expenses revealed a culture within the LFCC and [Global Impact] where the charging of meals as part of the normal course of business was considered to be an acceptable expense to the campaign,” the audit said.

Every dollar spent on a bureaucrat's dinner was one that didn’t go to the charity for which it was intended, the audit said.

“It has taken the position that any event where campaign business is conducted or where campaign staff is involved constitutes a ‘campaign event,’ the expenses of which are chargeable to the campaign. The OIG finds this approach to the administration of a campaign extremely disturbing and suspects that most donors would as well.”

“This is an example of [Global Impact's] disturbing tendency to interpret the OPM CFC regulations in a manner that minimizes accountability" on the contractor, the audit said.

In 2010, according to a separate report of a criminal investigation obtained by the Washington Examiner, the Secret Service determined that a Global Impact employee was using donors' checks to sell their personal financial information to a Detroit-based violent crime ring that would steal their identities.

The ring's hackers would drain the donors' bank accounts and wire the Global Impact employee a cut of the stolen money.

The Secret Service report also indicated the Global Impact employee faced no criminal consequences and told investigators she needed the money "to help support her child."

Acosta, Global Impact’s then-chief executive, is no longer at the helm after 20 years, but received a $150,000 bonus well after auditors highlighted the multiple problems, tax disclosures show.

During an Examiner visit to Global Impact's office, legions of empty desks were visible, but few "loaned executives" were seen.

An assistant said Acosta's successor, Scott Jackson, was in New York City for the week and was unavailable to comment.

As a result of the IG audit, then-OPM Director John Berry wrote a letter banning CFCs from using donations to expense meals, but in the process, mistakenly referred to the paid staffers as “volunteers.”

The "loaned executive" system lends some insight into why the contractor might have felt that it was necessary to bestow "motivation" on the federal employees.

They are detailed to a contractor for at least six months, far from their boss's eyes, to someone who has little ability to discipline or fire them.

It is a situation in which any employee — unless self-driven by a desire to help the needy — might find themselves slacking off for lack of accountability. The perks were intended to keep them working.

"The campaign depends heavily on enthusiastic Loaned Executive participation in the CFC. LEs are the primary contact between federal agencies and the CFC. The... manager of the campaign must find appropriate ways to thank and motivate federal worker participants," Global Impact told the inspector general.

Despite the devastating findings of the audit, Global Impact continues raking in money though the CFC, even being featured as a presenter at the Atlanta CFC conference in February of this year.

In a written response, Global Impact said it believes its spending was proper and that the board of federal employees overseeing it, the LFCC, was always informed of how it was spending the money and never raised any objections. It even received additional work for the National Capital Area after the audit came out.

"The LFCC renewed the Memorandum of Understanding for Global Impact to administer the Combined Federal Campaign of the National Capital Area and the Combined Federal Campaign-Overseas for the fall 2012 campaign with full confidence," Vice President of Marketing and Campaign Engagement Joseph Mettimano wrote.

Global Impact and the LFCC had seen the audit findings by June 2011 and the final audit was published March 2012. The LFCC didn't provide its own response to the IG, even though spending on board members was called out, and was absent at meetings the auditors held to discuss the findings with the subjects of the audit.

"Global Impact continues to serve as PCFO of the CFC-Overseas with the full confidence of OPM," Mettimano added.

He even said that "on August 14, 2012, Global Impact was informed by Office of Personnel Management Director John Berry that he conceded a significant portion of the flagged expenses involved in the audit and authorized reimbursement to Global Impact."

OPM did not return a request for comment by deadline on why OPM was still doing business with the contractor after its auditors' meticulously-documented findings. The reimbursements appeared to relate to a small portion of money for which Global Impact could not explain to auditors what it was spent on, but months later produced documentation to OPM.

In 2013, the organization, on behalf of its various clients, raised $106 million and gave $86 million to charity, according to an annual report it publishes.

Global Impact also manages government workplace charity efforts for numerous state and local governments.

A separate audit of the overseas drive said Global Impact was essentially taking money that soldiers intended to donate to others and spending it on first-class flights and alcohol.

The contractor also bought copies of overpriced software that it created itself, which the inspector general called a “conflict of interest,” also noting that the software was essentially free for them to deploy and they were only allowed to charge “actual” costs.

Global Impact “did not adhere to its responsibility to conduct a campaign aimed at maximizing the charitable contributions donated by civil servants and employees and members of the U.S. Military serving overseas,” the audit said.

View article comments Leave a comment

More from washingtonexaminer.com