A consultant who was paid lavishly by the government to identify waste was found to have received contracts improperly, and he is now suing the government for $10 million, saying the negative publicity of that finding made it impossible for him to earn a living, since the government is his only means of making money.
A high-ranking appointee of President Obama was found to have advocated for the steering of contracts to the consultant without competitive bidding, and he agreed to resign.
He, too, has filed a $5 million suit, saying the government didn’t invite him to tell his side of the story at the press conference where it announced the crackdown on contracting abuses, and that he was deprived of his due process rights, despite voluntarily resigning in exchange for severance pay when confronted with evidence.
Consultant Stewart Liff filed suit in July against the government for more than $10 million, revealing that the government paid him $33,000 a month, the Examiner found.
Twelve days later, Raymond Jefferson, the former assistant secretary of labor who resigned in disgrace for his role in steering contracts to Liff, filed his own suit against the feds.
Jefferson was one of the first Obama appointees to resign in scandal after an investigation by the Labor Department’s inspector general.
Both suits say the IG report on how officials used tricks to circumvent competitive bidding tarnished the men’s reputations and also insist that the government pay for a public relations firm to bolster their images.
Liff, who had virtually no prior private sector management experience, was paid more than $230,000 by the government in only seven months for his “leadership” advice, according to his lawsuit.
“In July 2011, when the DOL-OIG report was issued, Liff already had earned approximately $230,500 from government consulting work and was on track to earn more than $300,000 by year end, almost all of which was generated by government contracts,” it said.
He also claimed to have suffered more than $810,000 in “lost consulting opportunities” in the three years between his resignation and the filing of his lawsuit, which demands “not less than $10,000,000.”
As the Examiner reported in June, according to another IG report on contracts to Liff by the Office of Personnel Management, “Liff became acquainted with Mr. Jefferson after the 2008 Presidential election. Mr. Jefferson was on the Veterans Benefits Administration (VBA) Transition Team for the Obama-Biden Administration.”
The OPM report found an email by Liff in which he said he could create the optics of a lower hourly wage by inflating the number of hours reported.
“If we need to make the price more palatable, we could add another say 200 hours or so to the estimate, and then reduce the hourly rate by 10% to get the same final number,” Liff wrote.
Jefferson now lives in Singapore and markets himself as a professional “keynote” speaker, playing off his connection to Obama.
On July 21, 2011, the inspector general’s office presented Seth Harris, then deputy secretary of labor, with its investigation into contracting fraud.
The next day, Harris put Jefferson on administrative leave, writing to him that he had seen evidence that Jefferson was involved in “very serious misconduct … including ethics and procurement violations.”
The next week, he sent a copy of the IG report to Jefferson, and later that week told him “that he had four hours in which to resign or be fired. If he resigned, Harris told Jefferson that his resignation would take effect on September 1, 2011 so that Jefferson would still receive a salary through August,” according to the lawsuit.
“If Jefferson did not resign by close of business July 26, 2011, Harris said that he would fire Jefferson immediately and without any severance pay.”
His lawyer, Peter C. Choharis, told the Examiner: “I can be an at-will employee and fired for no reason whatsoever, but you can’t fire me for a false reason.
“Jefferson committed no violations of law, what he’s accused of isn’t a violation of law, and he never even learned he was accused of wrongdoing until the report came out,” Choharis said, adding that the government routinely dictates to contractors that they must take on hand-selected subcontractors because engaging in competitive bidding for small amounts of work is burdensome.
He said Jefferson — whose salary was $156,000 in 2010 — accepted the resignation deal because he needed the severance money, and that Choharis took on much of the legal work for free.
“I’ve done the vast majority pro bono. It shows that serving in government is perilous, and your reputation can be destroyed.”
The lawsuit says the IG report contains errors and that other people at Labor were engaged in contracting malfeasance and that it wasn’t fair that the IG didn’t focus on them.
It indicates he was made a scapegoat — and indeed, the Examiner’s earlier report found that while the Obama administration got headlines for enforcing accountability after Jefferson’s resignation, others involved with similar practices around Liff’s work at OPM got promotions.
The lawsuit also said Jefferson didn’t have a relationship with Liff that would provide a motive for wrongfully steering contracts to him.
The department couldn’t contract with Liff directly without opening bidding to others, so it instructed an existing contractor to hire him as a subcontractor, even though that contractor had nothing to do with his work.
“Jefferson lost opportunities for lucrative public speaking engagements because of the Report’s allegations of legal and ethical violations. On a personal level, Jefferson has had to bear the humiliation, anger, and depression from having his name and reputation ruined,” the lawsuit says.
The suit singles out the Department of Labor, his former bosses, the inspector general’s office and individual investigators.
Inspector generals’ offices work to identify waste, fraud and abuse at federal agencies.
The suit by Liff, who was paid hundreds of thousands of dollars a year to identify waste in government, says it is an outrage that IGs have wide latitude to conduct investigations, which are fact-finding and don’t bring automatic penalties.
The government’s actions are “emblematic of a larger and increasing problem — the virtually unconstrained power of federal Inspector Generals to decimate livelihoods as they conduct investigations, without any readily available or effective means of oversight or protection for those ensnared — no judge to resolve disputes, no mandatory rules of procedure with sanctions, no feasible means of appeal if an OIG oversteps,” his lawsuit says.
“Liff brings this action because he refuses to be bullied and vilified by the government that he diligently, competently and honorably served first as an SES-level federal employee and most recently as a government contractor/consultant. The government, he believes, has to be held accountable. He has to be, finally, made whole.”
Liff’s lawer, Paul Y. Kiyonaga, declined to comment.
