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Watchdog: Follow the Money

Reckless spending goes straight to the top at FMCS

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Part two 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.

Top officials of the Federal Mediation and Conciliation Service lavished taxpayer funds on themselves, made the phantom company of a recently retired employee one of their largest vendors and spent tens of thousands of dollars on storage spaces near their homes, where they kept old beds and toys.

George H. Cohen, the agency’s top official, used a “recreation and reception fund” freely, ordering a $1,277 "navy blue leather chair," $208 wooden coasters for his office, and bottles of Champagne, according to disbursement records reviewed by the Washington Examiner.

Cohen, who was appointed by President Obama in October 2009, also used the fund to purchase artwork by his wife, whose paintings are sold through the Torpedo Factory Art Center in Virginia, said a former employee, Berkina Porter, and a current employee with knowledge of the buy.

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: FMCS heads forced whistleblower to retract fraud complaint
Friday: Federal officials cede authority to outsiders who write 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.

The 233-person federal agency with a budget of $50 million, whose mission is to be a voluntary, non-binding mediator between government unions and managers, paid some $37,000 over 10 years for a storage facility near the house of Charles Burton, a top official, in Ashburn, Va., with no justification.

When Burton retired in late 2007 or early 2008, a friend at the agency began using his purchase card to pay the bill, and no one at the agency had a key.

When officials finally gained access to the facility, they found that it was filled with his fiance’s organ, a lawnmower, children’s toys, and a photo album of his dog titled “Buster 2004.”

In February 2008, Burton filed paperwork in Pennsylvania incorporating a new company called The Paper's Edge, and FMCS paid it $85,000 over a two-year period.

That amount was more than the agency paid all but three other companies, according to purchase card records reviewed by the Examiner.

The payments came from the purchase card of a still-current employee.

They are listed as being for an “I.T. Call Center Service.” The technology call service has neither a website nor a phone that is answered during business hours.

Federal contracting records show that FMCS never requested bids from other companies for such a service or had an official contract in place. FMCS spokesperson John Arnold refused to say what services The Paper’s Edge performed.

Burton’s former supervisor while at FMCS, Dan W. Funkhouser, was also renting a storage area near his home in Warrenton, Va., with FMCS paying the bill but appearing nowhere on the rental paperwork.

After Funkhouser, in turn, retired in December 2009, the agency continued paying for it, even though no official could access it.

Other potential wrongdoing may have gone undetected, a purchase card audit said, because Funkhouser "destroyed all purchase card records upon leaving the agency. No backup documentation/approval found."

What records do show is that in 2009, he spent $18,000 apparently on picture frames at a store in his neighborhood two hours from Washington that sells frames, as well as “a glittery, eye-popping collection of exquisite handcrafted jewelry, shimmering beaded shawls and evening bags,” according to its website. (His then-fiance also worked at the agency.)

No one answered calls from the Examiner to the store.

Expenditures were overseen by longtime chief financial officer Frances L. Leonard, who continues in her role.

Cohen, Leonard and two current deputies each have full private bathrooms in their offices, where one would smoke cigarettes and another would often be “in the shower” when employees sought to discuss business, Porter, who succeeded Funkhouser after he retired, said.

When President Obama issued an executive order to consolidate office space that coincided with the end of FMCS’s lease in space in an expensive area of Washington, General Services Administration officials, the federal government’s landlord, visited to say that FMCS could be a prime candidate to find more efficient office space, Porter said.

The FMCS occupies a nine-story building for only 60 staffers, with multiple floors completely empty.

But the directors with spacious suites quashed any such talk, pulling Porter, the agency’s point person for landlord issues, off the project, emails show.

"I called [a GSA official] a few moments ago to reassure him that the FMCS's overiding interest is to remain in this building, that a five-year lease was perfectly acceptable and that the agency was prepared to assume whatever costs would be entailed.... I believe it makes good sense that you refrain from any further communications with GSA," Cohen wrote her.

Thursday: Top FMCS officials forced whistleblower to retract complaint on purchase card fraud

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Author:

Luke Rosiak

Senior Watchdog Reporter/Data Editor
The Washington Examiner