One of the seven small federal agencies that President Donald Trump ordered downsized or eliminated on Friday was rife with corruption, with its employees hiring friends and relatives, commissioning paintings of themselves, and using government credit cards to indulge in constant luxuries.
The Federal Mediation and Conciliation Service (FMCS) occupied a nine-story office tower on D.C.’s K Street for only 60 employees, many of whom actually worked from home, prior to the pandemic. Its managers had luxury suites with full bathrooms; one manager would often be “in the shower” when she was needed, while another used her bathroom as a cigarette lounge. FMCS recorded its director as being on a years-long business trip to D.C. so he could have all of his meals and living expenses covered by taxpayers, simply for showing up to the office.
FMCS is a 230-employee agency that exists to serve as a voluntary mediator between unions and businesses. As an “independent agency,” its director nominally reports to the president, but the agency is so small that in effect, there is no oversight at all — and it showed, becoming a real-life caricature of all the excesses that the Department of Government Efficiency has alleged take place in government.
This reporter spent a year investigating the agency a decade ago, and I found egregious and self-serving violations of hiring, pay, contracting, and purchase card rules. One thing I could not discover is why the agency actually existed, other than to provide luxurious lifestyles for its employees. Endless junkets to resort destinations, which employees openly used to facilitate personal vacations, were justified as building awareness of the agency in the hopes that someone would actually want to use its voluntary services.
FMCS seemed, quite clearly, to exist for the benefit of those on its payroll, and not much else. One employee told me: “Let me give you the honest truth: A lot of FMCS employees don’t do a hell of a lot, including myself. Personally, the reason that I’ve stayed is that I just don’t feel like working that hard, plus the location on K Street is great, plus we all have these oversized offices with windows, plus management doesn’t seem to care if we stay out at lunch a long time. Can you blame me?”
“Recreation and reception fund.”
Top FMCS official George Cohen used a “recreation and reception fund” to order champagne and $200 coasters for his office, and to purchase artwork painted by his wife. The tiny agency commissioned paintings of its top employees — as one employee told me, “like they were reigning kings or something…I’ve never seen anything like it before.” It spent $2,402 retouching the portrait of someone who briefly held the top job in an acting capacity.
FMCS employees “unblocked” their government credit cards to turn off typical abuse protections, then used them to apparently fund personal expenses and simply bill anything they’d like to the government. One employee leased a BMW; another (IT director James Donnen) billed the government for his wife’s cell phone, cable TV at both his home and his vacation home, and even his subscription to USA Today.
Employee Dan W. Funkhouser used his FMCS card to rent a storage unit near his home in rural Virginia, two hours from the office he supposedly worked at, which was used to store personal possessions such as a photo album of his dog, Buster. Funkhouser also spent $18,000 at a jewelry store near his house, and “destroyed all purchase card records upon leaving the agency,” an audit said.
When Charles Burton retired from FMCS, he incorporated an LLC to which another FMCS employee paid $85,000 using his purchase card, listing it as a “Call Center Service,” even though the company had neither a website nor a working phone.
When an accountant, Carol Booth, blew the whistle on financial abuses to the General Services Administration, which manages purchase cards and contracting, Cohen forced her to send an email (which he wrote under her name) rescinding her statement.
Like something out of “The Office,” the employees spent an inordinate amount of time and money congratulating one another for being employed there and engaging in “work” that really amounted to pampering themselves.
One purchase was for $30,000 on trinkets making employees’ anniversaries. The agency’s office was absurdly oversized, but it refused to move. It hired a consultant for a “Hallway Improvement Project” to decorate. It had an in-house gym for employees, and purchased a $1,000 TV for the gym, a $3,867 ice-maker, and a $560 stereo.
The expenses that were actually business-related were hardly better. It paid, for example, $895 “for Suzanne Nichter’s enrollment in the English Essentials: A Grammar Refresher course” and $735 “for Lakisha Steward to attend Listening and Memory Skills Development Course.”
All expenses paid lifestyle
FMCS used federal jobs as a spigot of cash for friends and relatives. Allison Beck, a former union lawyer who became a top FMCS official, employed her sister-in-law as a “special assistant,” and an inspector general found evidence that she tried to create a high-level job for a friend.
FMCS employees allegedly steered contracts to friends, allowing them to write the “statement of work” that would be used to choose the contract winner — resulting in, of course, their own selection. Such “trainers” were paid $1,500 per day per person to train FMCS’s staff, plus $163 an hour for travel. When a low-level employee eventually said the extra travel pay ran afoul of federal rules, a contractor made clear he viewed it as an entitlement, huffing: “Work we have successfully performed for the agency for more than a decade — at great personal sacrifice, I should add — will be taken away unless we comply in an unquestioning manner with your edict.”
Scot Beckenbaugh, a top agency official, was paid $174,000 a year, but that wasn’t enough: He had his “duty station” listed as Iowa so that he could have all of his living expenses and food paid for in D.C., where he lived and worked, as if he was on a six-year-long business trip. When an employee raised the issue to an agency lawyer, the lawyer told him he “should not raise these issues … it would open a can of worms.”
FMCS hired a former mail carrier who lived in Pennsylvania, Lu-Ann Glaser, for a high-level, D.C.-based job, and agreed to pay for her to stay in a hotel for half of every month — even though it would have been easy to find someone better qualified who didn’t need to be put up in a hotel to simply do her job.
Paul Voight, a human resources official, was listed as living in D.C. even though he actually lived in Wisconsin, in order to fraudulently obtain higher cost-of-living pay. Voight’s boss was Artur Pearlstein, who left the agency to become a law professor, and was then re-hired after his academic career imploded in a plagiarism scandal. His first move in his new job was terminating an independent investigation into FMCS staff abusing taxpayer funds for personal gain.
Cohen, for his part, steered work to his previous employer, despite signing ethics forms saying he would not.
Constant junkets
Many of the agency’s top employees lived outside of the typical Washington, D.C., commuting area, and only stopped in the area occasionally, in an era before telework was routine. Its CFO, Fran Leonard, would come to the office twice a week but leave by 2:00 p.m.
The agency had, inexplicably, an office in Honolulu.
It funded constant travel of its employees to exotic locales, on the pretext that it was drumming up business for the federal agency — an admission that there was little demand for the agency’s existence.
In one month, Beck traveled to Italy and Switzerland, where she conducted a business meeting — over video chat. Then she went to Tunisia and an island off the coast of Georgia. She flew first class and forced the agency to reimburse her for mileage when she drove to her vacation home in Maine.
The agency had three full-time media relations staffers, none of whom would speak to me, almost certainly one of the only reporters to ever call.
Cash grants for insiders
The agency’s existence is predicated on the idea that it is an impartial mediator, biased neither towards labor nor management. But its staff largely comes from a union background, and it gave out grants to promote union membership. But it was too incompetent to do much ideological damage; its employees’ comfort always came before helping unions.
Anyone could request cash grants from the agency, with the only requirement that they mention some nexus with unions, however tortured. It doled out a seemingly random assortment of giveaways to private businesses, perhaps because they were the only ones who knew the grants existed.
It gave $63,000 to a hospital that went bankrupt; $51,000 to a childcare company to help it pay government licensing fees; and $57,000 to a company to “strengthen of culture of continuous improvement to drive us to world class excellence!”
What surprised me most about my FMCS investigation was what happened afterward: nothing. An inspector general made a referral to the FBI, but there were no prosecutions. Instead, President Barack Obama nominated a chief subject of the investigation to the top job.
A decade later, Trump has done what even the agency’s own employees said should happen: shut it down.
