An attorney for Liza Strong, the bureau's head of employee relations, on Tuesday demanded that lawmakers strike or bar the opening statement of CFPB employee Ali Naraghi, who is slated to testify Wednesday about alleged discrimination at the agency.
"I can't recall this kind of maneuvering to limit testimony," said Scott Amey of the nonpartisan watchdog group Project on Government Oversight, a group that has tracked and probed the claims of whistleblowers throughout the federal government. “Congress has the right to hear from any credible witness, and whistleblowers have the right to be heard."
Slated to join Naraghi on Wednesday is Kevin Williams, a former CFPB employee. Both men have been subpoenaed as part of the subcommittee’s continuing investigation into accounts of widespread discrimination by CFPB management against employees.
Strong is in the center of a growing storm about widespread employee discrimination throughout the bureau and her office's refusal to investigate employee grievances.
In his testimony, a copy of which was obtained by the Washington Examiner, Naraghi claims a CFPB manager used disparaging language about Naraghi's nationality. The CFPB manager allegedly called Naraghi, an examiner and former Federal Reserve employee who is of Persian descent, an “f'ing foreigner.” Another manager told him he was "untrainable."
Naraghi says the bureau's Labor Relations Office, a part of the Office of Human Capital where Strong is the lead employee representative, “is broken and is more harmful than helpful to employees who suffer discrimination or retaliation.”
He charges, “Ms. Strong is failing to adequately protect Bureau employees and, in fact, causes us further harm by holding herself out as the point of contact for us to address our concerns when actually she is just another arm of management.”
Jeff Emerson, a spokesman for the House subcommittee, said it will accept Naraghi’s opening testimony.
“Republicans and Democrats on the subcommittee agreed to subpoena Mr. Naraghi and Mr. Williams,” he said in a statement to the Examiner. “The hearing and the subcommittee’s investigation is going forward with testimony from both of these whistleblowers.”
The attempt to silence Naraghi, said his lawyer Jason Zuckerman, "will likely chill other Bureau employees from disclosing waste, fraud and abuse or other wrongdoing at the bureau." Zuckerman called it "a disturbing attempt to intimidate Mr. Naraghi, and (it) appears to be an improper attempt to interfere with critical congressional oversight of the Bureau."
Federal law prohibits federal agencies or employees from directly or indirectly hiring people or agencies — such as lawyers — that attempt to prevent federal communications to Congress.
The statute says no money may “be used directly or indirectly to pay for any personal service, advertisement, telegram, telephone, letter, printed or written matter, or other device, intended or designed to influence in any manner a Member of Congress.”
The law also says “this shall not prevent officers or employees of the United States or of its departments or agencies from communicating to any such Member or official, at his request, or to Congress.”
The statute may not apply to CFPB, however. The statute covers only agencies funded through Congressional appropriations. CFPB receives no congressionally authorized funding. Its budget comes from an allocation through the Federal Reserve.
John M. Dowd, Strong's attorney, is a high-profile D.C. criminal defense lawyer with the law firm of Akin Gump. One of his most recent well-known clients was Raj Rajaratnam, the Wall Street billionaire hedge fund manager who was convicted of conspiracy and securities fraud three years ago. Rajaratnam is now serving 11 years and has been fined more than $150 million.
It was unclear Tuesday whether CFPB is reimbursing Strong for Dowd's services. Most CFPB senior management officials have indemnification clauses in their contracts that cover their attorney fees. A CFPB spokesman did not reply to a Washington Examiner query on the issue.
Naraghi is a naturalized citizen who worked for 14 years as a bank analyst at the Federal Reserve's Board of Governors. He has two bachelor's degrees and a master's in business administration. He is a graduate of the ABA Stonier Graduate School of Banking, which partners with the Wharton School of Business and the American Banking Association.
But Naraghi would not be the first CFPB employee to criticize Strong. Angela Martin, another CFPB whistleblower who settled her gender discrimination case with the bureau on Monday, has harshly criticized her Strong as well.
Misty Raucci, an independent investigator hired by CFPB to investigate Martin's allegations, also criticized Strong in her April testimony before the subcommittee. She said Strong and other CFPB officials contributed to the "toxic workplace" there. Ben Konop, an executive vice president of the National Treasury Employees Union and a working attorney at CFPB, has also criticized Strong in testimony before the subcommittee.
In a strongly worded letter, Dowd claims Naraghi’s testimony, which he obtained from a Politico reporter, constitute “personal, baseless attacks against Ms. Strong.”
However, Strong is only one of a number of CFPB managers Naraghi criticizes in his opening statement. He claims the bureau suffers from a “culture of intimidation and retaliation," and says it is riddled with gross mismanagement and favoritism in hiring.
He also outlines practices he says are wasteful and a mentality by CFPB officials to pre-judge financial institutions as guilty of violations even before the bureau has conducted an examination.
Before approaching Congress, Naraghi says he brought his accusations to the Federal Reserve's inspector general. There is no word of the IG's actions, if any, on his allegations.