A lawyer administering the 9/11 victims fund directed $3.6 million worth of government contracts to her private law firms over a five-year period, a government watchdog reported Thursday.
That conflict of interest was just one of several problems identified by the Justice Department's inspector general that arose from having private attorneys oversee the $7.375 billion Victims Compensation Fund.
According to the audit, one of those lawyers, then-deputy special master Deborah Greenspan, was able to negotiate 18 different non-competitive government contracts with her own law firms between 2011 and 2016. The audit said officials couldn't find documents establishing "the justification and rationale" for the deals, which benefited her firm.
"We further identified a potential conflict of interest involving these non-competitive contracts due to the fact that Deputy Special Master Greenspan dictated the contract requirements, including developing the Statements of Work and identifying the contract period of performance; and signed the contracts on behalf of her law firm," the inspector general's report said.
The investigators concluded that Greenspan, who left the VCF in November of 2016, "should have pro-actively excluded herself from these negotiations" with her private firm. And they cast a skeptical eye on Greenspan's claim "that her firms did not make a profit" on the deals.
"We believe that it is indisputable that the $3.6 million in revenue that the contracts generated for the law firms and its partners was not insubstantial," the inspector general said. "Nevertheless, because we were unable to obtain sufficient information to determine the profitability of these contracts for the law firms, we could not ascertain whether Greenspan received any financial compensation as a result of the contracts."
Greenspan was brought onto the team by Special Master Sheila Birnbaum, a New York-based lawyer whom Attorney General Eric Holder appointed to run the Victims Compensation Fund in 2011. Birnbaum worked on a part-time basis, like Greenspan, and the leadership team reviewed requests for the 9/11 money slowly. Victims of the 2001 terrorist attack who applied for help had to wait an average of 465 days to receive the funding.
And the real wait time may have been longer. "We excluded the time; (1) a claim spent between stages and (2) a claim decision was under appeal or amendment when computing day-count averages," the report said.
Greenspan had final responsibility for "all eligibility and compensation decisions," a huge task given that she was only working part-time on the project. "According to multiple VCF officials, the decision to route all decisions through a single official – the deputy special master – led to significant bottlenecks and delays in the claims process," the report said.
The team struggled to make timely payouts even to the most impoverished victims.
"Throughout our audit, VCF leadership emphasized to us that it evaluates each claim individually; however, we identified systemic weaknesses affecting this process in making expedited awards to deceased victim claims whose representatives reported extreme financial hardships," the audit found.
The VCF's new leadership said they've made significant changes to speed up payouts to deserving claimants.
"The VCF today is reauthorized and reinvigorated in its efforts to serve the 9/11 community, and has taken substantial steps to realign the program to promptly, accurately, consistently, and fairly decide the claims already pending and the claims still anticipated to be filed," VCF Special Master Rupa Bhattacharyya, a full-time Justice Department employee who has been detailed to lead the effort, said Thursday. "The VCF is grateful for OIG's collaborative approach to the audit, and for the time and effort that OIG expended in reviewing the Fund's operations through February of 2016, when it completed its substantive review."
The inspector general was complimentary of the reforms. "While the VCF implemented these and other changes too recently for the OIG to fully analyze their impact as part of this audit, based on our review of the claims data (which showed an increase in the amount of decisions made and payments issued), along with the significant changes and efforts the VCF has implemented since 2015, we believe that the actions taken should help address the delays in claims processing and award determination," the report said.