The Project on Government Oversight, a Washington-based watchdog group that has been calling for Bloch's removal for three years, released on Wednesday an internal OSC memo showing that Bloch repeatedly ignored the recommendations of a task force he had created to investigate sensitive and high-profile matters, and did not heed the group's warnings that he was demanding probes that were overly broad or outside OSC's jurisdiction.
The document, POGO said, supported its theory that the OSC chief had sought "to create the appearance of a conflict of interest with an ongoing investigation into allegations that Bloch himself had engaged in misconduct."
The FBI on Tuesday executed search warrants on OSC headquarters and the Dallas field office, as well as Bloch's home. The agents collected documents and laptop computers and issued 17 subpoenas in an operation lasting more than seven hours. Debra Katz, who is representing OSC employees who have filed complaints against Bloch alleging whistleblower retaliation, said five or six current employees and numerous former employees were issued subpoenas to appear before a grand jury next week.
"OSC employees were told before the search warrants were executed yesterday that the special counsel was the target of the probe, not the people in the office," Katz said.
The investigation into Bloch appears to be focused not only on potential obstruction of justice charges against him, but also on the possibility he lied to Congress last year and manipulated OSC investigations, according to sources.
Prosecutors are investigating whether Bloch in late 2006 used agency funds to pay a private computer company to erase files from his office computer, a charge Bloch denies. But investigators have sought a range of other material, including files from OSC's high-profile investigation of General Services Administration chief Lurita A. Doan, who was forced to resign last week by the White House. Previously, OSC found that Doan had violated the Hatch Act, which bars federal employees from using government resources for partisan politics.
Bloch drew fire over the Doan probe from House Republicans who accused him of approving the leak of a preliminary report on Doan to The Washington Post. In several letters to the White House urging Bloch's firing, Katz charged that he approved the leak to maximize publicity because other news outlets already were reporting OSC's conclusions on Doan. Because the Post published a draft version of the report different from one shared with Doan, the disclosure appeared to come from OSC. At a July 12, 2007, House Oversight and Government Reform Federal Workforce Subcommittee hearing on OSC's reauthorization, Oversight and Government Reform ranking member Tom Davis, R-Va., in a sharp attack, asked if Bloch authorized the leak. Bloch said he did not. He asserted he did not know how the Post obtained the document.
People involved in the case said the possibility of perjury was most likely the reason prosecutors sought material related to the Doan investigation. Katz, in an April 29 letter, accused Bloch of lying about the transfer of agency employees in a Senate Homeland Security and Governmental Affairs Management Subcommittee hearing on May 24, 2005.
Sources said investigators have demanded material related to all congressional testimony Bloch has delivered as special counsel as well as documents related to OSC's investigation into allegations that Secretary of State Condoleezza Rice used federal resources to travel to campaign appearances supporting President Bush's reelection bid in 2004. Bloch's office closed the case, saying it found no violation by Rice.
The request for Rice documents is likely aimed at evaluating whistleblower charges that Bloch improperly bypassed career investigators during the probe, people familiar with the case said. Bloch's lawyer, Roscoe Howard of Troutman Sanders LLP, did not return calls for comment.
The head of OSC is appointed by the president and confirmed by the Senate to serve five-year terms. Bloch's term is up in January 2009, but Katz and others say Bloch's actions warrant firing for cause.
Davis on Wednesday called on Bloch to resign.
"The White House asked Lurita Doan to step down as head of the General Services Administration because, they said, she had become a distraction," he said. "In light of the various investigations into Mr. Bloch's conduct, including the FBI probe revealed [Tuesday], it's hard to believe he can continue to operate effectively. It's time the OSC put this turbulent period behind it and return to the important work of protecting federal whistleblowers."
Katz said the White House has no obligation to wait for the FBI investigation to run its course to dismiss Bloch.
"Certainly any time you have the head of an office whose employees have been summoned to the grand jury whose work in the office has been interrupted by search warrants in connection with possible illegal activity, he should be removed from office," Katz said. "He and his legal situation are clearly interfering with the proper functioning of the office and have for years."
Neither the White House nor OSC returned calls for comment on Thursday. OSC spokesman Jim Mitchell said on Wednesday that the office was cooperating with the FBI, despite the fact that the raid was "really a surprise" and it was unclear exactly what the agents were looking for.