Saturday, October 29, 2016

Hope and its Absence

Hope and its Absence

The time required to resolve whistleblower complaints calls not only for perseverance but for a facility with hope and hopelessness in the situation.  An expectation of success is often an important motivator for the potential whistleblower[1], but success is rarely achieved[2].  As we proceed through our whistleblowing projects, we must anticipate that we will fail to achieve our objectives.

I identified HomeFirst’s violations of “master lease” requirements in three government contracts – two with the U.S. Department of Housing and Urban Development (HUD) and one with Santa Clara County – during my routine compliance reviews in October and November 2013.  In the contracts, HomeFirst provided financial assistance to clients who were leasing apartments.  In 2013, the contracts changed from those in prior years by requiring that the leases be in HomeFirst’s name, not the clients’.  Only these “master leases” would generate eligible leasing expenses that HomeFirst could charge to HUD or the County.  In my review I found that very few of the leases were master leases.  As a consequence, we had violated the contracts by charging HUD and the County for ineligible expenses.

The HomeFirst CEO asked the Program Officer to contact HUD in San Francisco and get a waiver for the violation.  Months passed, and no waiver came; HUD was working on it, the CEO said.  As CFO, I included ineligible expenses in our invoices to HUD and the County while informing them how much we were overbilling them.  Then in June 2014, I was fired.

During my time at HomeFirst, I made no external complaint about the violations because I hoped that management would fix the problem.  I hoped that HUD would agree to waive the violations.

For the first several months after being fired, I worked on my other complaints and with my attorney on a response to my termination.  We had overbilled the County more than $200,000 and HUD by over $100,000, but I did not gather documents to support my complaint before I left.  As a result, I lacked specifics about the violations, such as the names of clients without master leases and the amounts billed to HUD and the County for those clients.

By early 2015, the HUD Office of the Inspector General (OIG) had apparently ignored my three complaints about the $1.2 million that HomeFirst overbilled HUD in 2003-2006, and my two appeals to Senator Feinstein on the matter had come to nothing.  I did not bother with the master lease violations, thinking it unlikely that anything could be done about them.  A year later, the State investigator of my whistleblower complaint showed little interest in the master lease violations because I had no evidence of reporting them to authorities while I worked for HomeFirst. 

In 2016, my requests for public documents from the County, the City of San Jose and HUD about other complaints began to yield information that revealed the slow enforcement process years working after the initial whistleblowing.

In September 2016, I asked the County for HomeFirst’s master lease contract billing information that I thought would reveal the 2014 charges for ineligible expenses.  The 266 pages of County documents included a letter from the HomeFirst CEO which admitted to charging the County $263,162 for ineligible expenses.  The documents also suggested, without proving conclusively, that the County had charged HUD for those same ineligible expenses.  Excited at finding probable evidence, at least in my mind, of the County’s seemingly fraudulent billing of HUD, I registered my complaint on the County’s whistleblower website.  A week later, after receiving no response from the County, I filed a similar complaint with the OIG.

Also in September I made a Freedom of Information Act request to HUD for documents relating to its three contracts with the County and HomeFirst.  HUD agreed to provide the material if I paid them $546 for 10.5 hours of their time spent complying with my request.  The City of San Jose, the County, and HUD itself had not charged me for my earlier FOIA requests.  Since I had received from the County what I needed concerning their contracts, I revised my request asking only about the HomeFirst contracts.  HUD revised its invoice to $126.  [I subsequently asked them to waive the fee in the public interest.]

My reluctance to pay even the lower amount may reflect my lack of commitment to this whistleblowing venture.  Or it may measure my optimism that the blowing a whistle on this would do any good.  HomeFirst has changed its management and probably its procedures in the past three years.  Based on how it handled the $1.2 million overbilling, the OIG will probably refer my complaint to the San Francisco office, and the $300,000 to $400,000 of overbillings on the three contracts may be within the authority of the San Francisco office to forgive.

Even though I do not have all the specifics, I will file my complaint with the OIG on HomeFirst’s violations, as I did my complaint about the County.  I will point out that, combined with the earlier overbilling, HomeFirst-related violations amount to over $1.5 million.  But I don’t expect that anyone will care really.  Hope is not the issue for me.

Nor was hope an important factor for me in most of the whistleblowing I did while still employed at HomeFirst.  By the time of my first external complaint, I was pretty sure that HomeFirst would not correct itself.  I soon decided that the authorities would stand by HomeFirst, not me.  With each complaint I thought there might be a chance that a wrong would be fixed, but mostly I was fed up with the situation and with standing by idly watching it continue.

I am now years removed from my initial whistleblowing, and I was not harmed as much as others whose stories I have read.  I would like to achieve some good with my whistleblowing.  But I have always been more concerned with what will happen to me if I do not act – who I will be if I do not add my small efforts to the fight.







[1] For example, Duska, Ronald, Brenda Shay Duska and Julia Regatz. Accounting Ethics. Malden, Mass.: Wiley-Blackwell. 2011; Moberg, Daniel J. “The Organizational Context of Moral Courage: Creating Environments That Account for Dual-Processing Models of Courageous Behavior.” In Moral Courage in Organizations: Doing the Right Thing at Work. Debra R. Comer and Gina Vega (eds.) Armonk, N.Y.: M.E. Sharpe. 2011. 188-208
[2] For example, Moberly, Richard.  “Unfulfilled Expectations: An Empirical Analysis of Why Sarbanes-Oxley Whistleblowers Rarely Win.” 49 William & Mary law Review (2007): 65-155; Devine, Tom and Tarek F. Maassarani. The Corporate Whistleblower’s Survival Guide. San Francisco: Berrett-Koehler Publishers, Inc. 2011; Modesitt, Nancy M.  “Why Whistleblowers Lose: An Empirical and Qualitative Analysis of State Court Cases.”  62 Kansas Law Review (2013): 165-194

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