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Part Three: FMCS executives forced whistleblower to retract fraud complaint

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Part three of a five-part Washington Examiner series, "Just Sign Here: Federal Workers Max Out at Taxpayer Expense." See the entire series -- and FMCS workers' salaries -- at this link.

Federal Mediation and Conciliation Service employees' use of purchase cards amounted to rampant violation of federal procurement law, specialists say, and when an employee wrote to the General Services Administration to ask for a compliance review, the agency director and another top official forced her to send a “retraction,” according to documents reviewed by the Washington Examiner.

The FMCS is a small agency whose sole purpose is to mediate labor-management conflicts.

When accountant Carol Booth became concerned about luxury goods being delivered to employees' homes, spending on unnecessary services and indifference to federal regulations, she sought help from the GSA, which oversees federal purchase cards, writing that “it has come to my attention that we, the FMCS, have violated several rules, regulations and/or laws concerning the government-issued purchase card program.”

Just Sign Here

Federal Workers Max Out at Taxpayer Expense

A five-part series by the Washington Examiner watchdog team
Tuesday: Bureaucrats at tiny agency buy legions of luxuries with purchase cards
Wednesday: Reckless FMCS spending goes straight to the top
Thursday: Implicated top officials forced whistleblower to retract complaint on purchase card fraud
Friday: At federal agency, officials cede authority to outsiders who write their own contracts
Monday: FMCS fired wounded warrior whistleblower after ICU stay
Data: FMCS salaries and bonuses
View the whole series

Got tips?

Do you know more about what's going on at the FMCS -- or any other federal agency? Contact Luke Rosiak at lrosiak@washingtonexaminer.com.

That infuriated FMCS director George H. Cohen and chief financial officer Frances L. Leonard, who together sought to evade outside scrutiny by helping compose a retraction to which Booth would sign her name.

Booth pleaded that she was “still somewhat confused to what’s right, wrong and/or appropriate, but, again as directed by Mr. Cohen, the director and Fran Leonard,” submitted this “draft” to them:

“I am retracting the email below. It has come to my attention the attached audit was incomplete and inappropriately sent to GSA therefore invalid.”

Cohen conferred with the CFO: “Fran, I want to have added after ‘incomplete’ the phrase ‘contains numerous errors and,’” emails show. The CFO then directed that Booth send the retraction under her own name.

Days later, security staffer Mike Colandria wrote to the GSA that, because several colleagues raised issues to that agency, they have "been under constant harassment by the Senior Executive Staff (Directors Office) and ... had disciplinary action taken against several.”

Booth's supervisor, Berkina Porter, who supported her, was escorted out of the building by armed guards.

Typical day-to-day use of purchase cards included:

— Samuel Baumgardner bought a $1,500 bookshelf for his office, and the agency spent $1,000 on a big-screen television for its in-house gym.

— John Buettner bought himself a $352 Bose stereo, then had the government pay $800 to send him to a conference called "Blacks in Government."

— James C. Donnen ordered tens of thousands of dollars worth of high-end electronics and had it shipped to his West Virginia home.

The abuse is ongoing, a current employee said this month. “Why would top people be going to Costco every week when they've got a supply management person” who is ordering a full contingent of supplies through proper channels?, the employee asked.

Items as mundane as light bulbs and computers were purchased from retail stores instead of through government-wide contracts that provide deep bulk discounts, according to bank records and receipts that provided an unusually detailed view into federal spending.

Government procurement experts said that based on the activities documented by the Examiner, FMCS staffers violated a multitude of regulations on a daily basis.

“They have to follow the [Federal Acquisition Regulations]. That's a violation” to buy goods or services for anything more than small amounts using purchase cards instead of contracts, said an auditor working for an inspector general who asked not to be named.

“By not doing that, you’re not sure if you’re getting the best cost, because GSA has negotiated the prices with suppliers based on bulk,” the auditor said.

Doing business with a company started by a just-retired official, as the FMCS did, also amounts to a prohibited conflict of interest, she said.

“There’d have to be a full investigation to determine the intent to defraud, and then there could be a referral for prosecution,” according to the auditor.

John Arnold, FMCS’ media relations director, declined to speak with a reporter, presumably one of only a few to call the tiny agency each year.

Instead, he sent a written statement saying the agency has taken “steps to ensure that the agency's internal processes meet federal regulations. Additionally, we obtained a review by an outside, independent authority regarding FMCS procurements made over a period of years. We conducted a prompt and thorough investigation and a review of our own internal processes.”

That's a reference to a referral of complaints by Porter to the National Labor Relations Board's inspector general, who substantiated the allegations but did not recommend disciplinary action.

Multiple top FCMS executives received hefty bonuses in 2012, records show, and Porter’s lawyer said no disciplinary action appears to have been taken against anyone.

The steps to ensure compliance, records indicate, consisted of Porter herself revising written procedures — revisions which emails show was met with derision — with the agency’s lawyer scorning that they were now “nearly an inch thick.”

There was also this, according to a current employee:

“They sent us to classes” about purchase card rules, which were supposed to have been taken before the cards were issued, “but then they want us to forget about what we learned.”

Friday: Federal officials cede authority to outsiders who write their own contracts

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