Consumer Financial Protection Bureau officials appear to be taking the unusual step of seeking to negate a critical employment report issued last spring and counter it with a new investigation.
The earlier review by an independent investigator hired by CFPB found bureau managers had created a “toxic workplace” environment for its employees.
However, CFPB officials have decided to re-examine the earlier probe by hiring Hollowell, Foster and Herring, an Atlanta law firm with longstanding Democratic ties.
The new law firm specializes in defending government agencies faced with whistleblower or employee complaints, and last year it was retained by the troubled Department of Veterans Affairs.
The overriding fear among Washington employment attorneys is that the new investigation is being used to exonerate CFPB managers.
“Is it unusual? I think it’s unusual,” says employment attorney Cathy Harris, who specializes in employment discrimination.
“It certainly raises to me the question they are trying to retroactively clean up what became a mess for them and whitewash it,” she said in an interview.
Harris is with the law firm of Kator, Parks, Weiser and Harris, and is the co-chair of the Merit Systems Protection Board Committee for the Federal Circuit Bar Association.
CFPB senior counsel Margaret H. Plank, who is leading the new probe, previously served as opposing counsel in the high profile whistleblower case involving bureau attorney Angela Martin.
CFPB has since settled with Martin. Harris said she was surprised Plank’s firm would be involved with the new investigation.
“I’m surprised that a lawyer for the agency would even be involved in any investigation whatsoever,” notes Harris. “It’s usually a different branch of the agency that would be handling that.”
Rep. Patrick McHenry, R-N.C., chairman of the House Financial Services subcommittee on oversight and investigations, said he was troubled by Plank's role in the new investigation.
"The bureau's choice of investigator raises serious questions about whether the CFPB actually seeks to end discriminatory treatment of employees or rather manufacture a report that masks the depth of employee mistreatment and failure of agency leaders to end it," he said.
There also is a growing fear that the new probe could send a new, chilling warning to CFPB employees who are critical of the bureau's current leadership.
“This sort of thing, of using investigations, is definitely a tool used against complainants, potential complainants, people who’ve given unfavorable testimony against the agency,” said Robert Seldon, a civil rights lawyer and a former assistant U.S. attorney.
The atmosphere at the CFPB’s Consumer Response unit, derisively nicknamed “The Plantation” by its African-American workers, already has been highly charged.
A transcript of a March 31 “all hands” meeting, obtained by the Washington Examiner, shows CFPB Consumer Response manager Scott Pluta criticizing employees for giving anonymous testimony to congressional investigators.
In 2013, CFPB employees filed 115 official grievances through its union, the National Treasury Employees Union, according to an NTEU local chapter executive vice president. NTEU officials have said the number is high for an agency with only 1,300 employees.
CFPB officials have ordered the new law firm to “focus on the actions of management officials and the environment within the Office of Consumer Response,” according to a July 9 letter from the law firm to Plank obtained by the Examiner.
Misty Raucci was the original independent investigator who was hired by the bureau to probe Martin’s claims of discrimination and retaliation in the Consumer Response unit.
Bureau managers were embarrassed when Raucci, the director of the Defense Investigators Group, testified before Congress that Martin's claims were verified and that there were a widespread set of employment problems plaguing the unit.
“I found that the general environment in Consumer Response is one of exclusion, retaliation, discrimination, nepotism, demoralization, devaluation, and other offensive working conditions which constitute a toxic workplace for many of its employees,” she told members of the House Financial Services subcommittee on oversight and investigations last April.
The Hollowell firm was founded by the legendary late civil rights lawyer Donald Lee Hollowell, who secured the release of the Rev. Martin Luther King from Georgia State Prison in 1960.
In 1966, President Johnson appointed Hollowell as the first African-American regional director of the Equal Employment Opportunity Commission.
Hollowell died in 2004 and was succeeded by Stanley Foster, who now oversees the tiny, minority-owned firm.
The mission of Foster's law firm is to defend federal agencies faced with employee complaints, according to its website.
The company says its goal is “reducing your agency’s exposure to liability” to employee complaints.
Under the Obama administration, Foster’s law firm has blossomed, receiving $1.1 million in contracts, including $62,564 from CFPB. The bureau paid Raucci $3,000 for her investigation, according to congressional sources.
The firm had no federal contracts prior to 2010, according to the contracting database USAspending.gov.
One of Foster’s largest contracts is with the troubled Department of Veteran Affairs. The VA awarded the firm $445,000 in a September 2013 contract through its human resources department, according to USAspending.gov.
The Office of Special Counsel, which represents whistleblowers, sent a letter to Congress and to President Obama last month concluding that the VA has a “troubling record” of downplaying or ignoring whistleblowers.
The letter from OSC Special Counsel Carolyn Lerner stated, “too frequently, the VA has failed to use information from whistleblowers to identify and address systemic concerns that impact patient care.”
Foster’s campaign contributions have gone mainly to Democrats. He has contributed $5,500 to Democratic candidates running for office in Georgia and one $500 donation to an independent judicial candidate.
The issue of intimidation within CFPB has been a problem for some time.
Pluta, the assistant director of the Consumer Response Unit, has been cited as an intimidating CFPB manager who did not tolerate dissent. He was accused of retaliating against Martin when she complained about discriminatory treatment, a conclusion upheld by Raucci.
Pluta, a former Obama campaign worker, has been unapologetic about his actions as manager of Consumer Response. At the “all hands” meeting, the manager repeatedly dismissed the upcoming bipartisan congressional probe on employment discrimination at the bureau, calling it “political theatre.” The hearing was scheduled to occur in two days' time.
Pluta denigrated CFPB employees who gave anonymous testimony to congressional investigators at the meeting.
Pluta asked the assembled group, “Do you say there are anonymous people on our team, in this room, who fear reprisal and have these issues and did not feel confident enough in the process that they could come forward and be heard?”
He added, "In the report, there are four anonymous folks that gave testimony or gave a summary, and there is a laundry list of issues. It upsets me that people felt that they couldn’t put their name on the record. That they couldn’t stand up and say, 'My name is Scott Pluta, and I have a problem because I think this is going on.' "
“I think the outcome of the new report is pretty clear,” said Jason Zuckerman, Martin’s attorney, who successfully represented Martin. “They are trying to exonerate themselves.”
“The only way this could be a legitimate investigation is if it was not influenced by people who have a stake in the outcome. I can’t see any legitimate purpose in this,” Zuckerman said in an interview.
McHenry said he thought when the Martin complaint had been settled, the case was as well.
"The CFPB's decision to reinvestigate Angela Martin's EEO claims appears both unnecessary, considering all of her claims against the Bureau have been resolved, and also unfair, since a second investigation could force her to personally rehire counsel," he told the Examiner.
The Examiner contacted Rep. Maxine Waters, D-Calif., the ranking Democrat on the subcommittee. She declined to comment.
A CFPB spokesman had no comment except to say the law firm "was retained by the CFPB after making the lowest bid on a competitive contract. The firm is a minority-owned small business and a GSA schedule contractor."