Senator Charges Justice with Cover-Up on Labor Nominee

Sen. Charles Grassley, R-Iowa, accused the Justice Department of delays in releasing documents concerning Perez’s 2011 intervention in a Minnesota discrimination case. Sen. Charles Grassley, R-Iowa, accused the Justice Department of delays in releasing documents concerning Perez’s 2011 intervention in a Minnesota discrimination case. Cliff Owen/AP

In an unusual use of bicameral tag-team tactics, Republicans from both chambers of Congress used a Tuesday House hearing to challenge the integrity of Thomas Perez, President Obama’s nominee to be Labor secretary. At a contentious panel showcasing testimony by a whistleblower in a St. Paul, Minn., housing dispute, Sen. Charles Grassley, R-Iowa, accused the Justice Department of delays in releasing documents concerning Perez’s 2011 intervention in the Minnesota discrimination case.

On the eve of a key Wednesday Senate hearing on the Perez nomination, Grassley—who has complained for months about the earlier intervention in the whistleblower case by Perez in his role as assistant attorney general for Civil Rights—blasted Justice for delivering “only last night” a 35-page document shedding light on Perez’s role in overrulling career attorneys and settling with the St. Paul housing authorities on a legal question of “disparate impact.”

“Justice failed to provide this early, and we only learned about it from the Housing and Urban Development Department, so it could be construed as a cover-up,” Grassley said. “Keep an eye on this case or it will effectively end whistleblowing in the federal government.”

Republicans invited self-described whistleblower Frederick Newell, a small-business owner and pastor from St. Paul, to a joint hearing of subcommittees of the House Judiciary Committee and the Oversight and Government Reform Committee.

For more than a year, many GOP lawmakers have viewed Newell as a hero deserving of monetary reward under the False Claim Act, or qui tam law, for exposing noncompliance with regulatory reporting requirements by the City of St. Paul under HUD’s Section 3 housing and local development program. They believe Perez orchestrated a deal with the city that prevented the Justice Department from recovering hundreds of millions of dollars.

Perez previously served as Maryland’s Labor secretary and in 2002 became the first Latino elected to the Montgomery County Council. He served in the Health and Human Services Department’s civil rights office under President Clinton and was a staffer for the late Sen. Edward Kennedy, D-Mass.

At the Tuesday hearing, however, Newell, accompanied by his attorney, steered clear of direct comments on the case (citing ongoing litigation) and stuck mostly to his background and commitment to safe low-income housing. What unfolded was a series of partisan exchanges and rules challenges in what some saw as an attempt to influence the Senate confirmation process.

“Whistleblowers’ contribution to good government and to the nation was $3.2 billion in awards last year under the False Claims Act,” said subcommittee chair Jim Jordan, R-Ohio. The Justice Department “lost a chance to recover $200 million and a whistleblower was thrown under the bus for political purposes,” he said. “It sets a precedent for future whistleblowers in exposing waste, fraud and abuse.”

Rep. Trent Franks, R-Ariz., said, “Perez may have violated the rule of law by making a secret deal based on just a legal theory, with lasting consequences for taxpayer and country.

But ranking subcommittee member Matt Cartwright, D-Pa., decried “the majority’s misunderstanding of nature of qui tam laws” and accused them of “staging a hearing to discredit the Perez nomination.” He argued that Newell was determined not to be a qualified whistleblower because he lacked direct insider knowledge of the wrongdoing, that Justice intervenes in 25 percent of such cases to implement a legal strategy for prioritizing promising cases, and that Newell is free to pursue his case without Justice Department support.

Rep. Jerrold Nadler, D-N.Y., said the hearing was “not about Newell but Perez, and its purpose is to stack the deck against Perez, a fine public servant. He said the Justice Department settled with St. Paul because the relevant case was “an extremely poor factual case to bring to the Supreme Court” and that the decision was made by the department’s Civil Division. “This is at best a policy disagreement and at worse, partisan politics,” he said. “It is long past time to end this smear campaign.”

Nadler clashed with Rep. Darrell Issa, R-Calif., chairman of the Oversight panel, and both at different times demanded that the words alluding to Perez spoken by lawmakers of the opposing party be “taken down” for violating House rules on comity. Issa stressed—and placed letters in the record as evidence—that House Republican interest in the St. Paul case goes back more than a year before the Perez nomination. He is demanding full access to 1,200 emails sent by Perez, only a few of which have been made available to Congress, and promised to continue investigating the case. The department said it sent Issa a letter on May 3 explaining it had already provided the committee with the relevant emails.

Following disagreements over the rules for grouping witnesses for testimony according to two separate committee traditions, the Democrats’ witness was permitted to speak at the end, with fewer lawmakers in attendance. Shelley Slade, an attorney and qui tam specialist, at the Washington law firm of Vogel, Slade & Goldstein, said, “the broader programmatic concerns of HUD and the Civil Rights Division, the Department of Justice’s ultimate decision was fully consistent with its usual policies and practices. Moreover, it bears emphasizing that in the Newell case, the department did not do anything to limit the rights of the qui tam relator to go forward with the case.”

Perez, meanwhile, in preparation for a Wednesday hearing at the Senate Health, Education, Labor and Pensions Committee, submitted detailed answers to a questionnaire on how he would operate as Labor secretary. Asked about the Newell case and whether whistleblower cases should be decided “on the merits,” Perez wrote, “Yes,” adding, “I will ensure that the department’s decisions are based on the evidence and comply with the requirements of the appropriate law.” He also said he would “ensure that all whistleblowers are treated with respect, their claims are seriously investigated, and any decisions on the merits of the claim are based on evidence.”

This story has been updated.

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