Cabinet confirmations on hold as VA House reviews ‘alarming’ federal investigation into McAuliffe appointee

By Kathryn Watson | Watchdog.org, Virginia Bureau

WASHINGTON, D.C. — Confirmation of Gov. Terry McAuliffe’s cabinet is on hold while Virginia officials study a report that the governor’s choice for Commerce and Trade secretary violated anti-lobbying policies while working as an Obama appointee.

Matthew Moran, communications director for Speaker of the House Bill Howell, said Virginia delegates are taking their time to review an investigative report and testimony from the inspector general of the U.S. Department of Housing and Urban Development that raise concerns about the conduct of Maurice Jones, former HUD deputy secretary.

“We are aware of the reports and they certainly gave us pause,” Moran said in an email. “…We want to carefully review the inspector general’s report and the committee hearing before making any decisions. We spoke with the (McAuliffe) administration and they’re aware of our decision.”

The House of Delegates on Tuesday was scheduled to confirm Jones — who as secretary would oversee Virginia’s economic interests and 13 state agencies — along with the rest of McAuliffe’s appointees. But confirmation for Jones and the entire cabinet was put on hold indefinitely when word broke of the OIG investigation and a Wednesday hearing before congressional members of the House Financial Services’ Subcommittee on Oversight and Investigations.

Virginia lawmakers may not be very vocal about the investigation and its findings yet, but members of Congress are.

“If even half of the conduct in the preliminary report is substantiated in the final report, I find it all very alarming, as you can imagine,” U.S. Rep. Joyce Beatty, D-Ohio, said during Wednesday’s hearing. “Certainly any allegations of clear and direct violation of long-established anti-lobbying and appropriation laws, as well as attempts to circumvent specific internal HUD policies alone would warrant cause for concern. But if you add to that any of the findings of obstruction … witness coaching, evidence of tampering, it would make a very disturbing report.”

On July 31, 2013, Jones directed and authorized an email to “friends and colleagues,” urging them to contact specific U.S. senators to advance a bill appropriating money for Transportation, Housing and Urban Development and Related Agencies, according to the yet-to-be-finalized OIG report.

“We determined this email was a grassroots lobbying campaign on a matter that was pending before Congress,” HUD Inspector General David Montoya testified Wednesday.

In the email, which was sent to approximately 1,000 people, Jones asked his circle to push for the Senate, rather than the House, version of an appropriations bill he believed would better benefit his agency.

“I am humbly asking you to let your senators, especially the ones listed below, know how important it is that the cloture motion passes so that the Senate THUD bill MOVES FORWARD to a vote and TO VOTE for the Senate THUD bill,” the email read, according to the 72-page OIG report.

That email was a “continuation of a series of ‘stakeholder calls’ that Deputy Secretary Jones’ office had been conducting,” according to the OIG report, which also focuses heavily on actions by other HUD officials.

The report faults Elliot Minceberg, HUD’s general deputy assistance secretary for congressional and intergovernmental relations, who also was involved in the email and was aiming for HUD to be “more aggressive” in lobbying, according to the inspector general report. The report also faults Peter Constantine, HUD’s chief ethics attorney, for not being more involved in the situation.

When U.S. Rep. Patrick McHenry, R-N.C., who chairs the Financial Services’ Subcommittee on Oversight and Investigations, caught word of the email, he requested HUD’s inspector general investigate.

The situation intensified when Minceberg attempted to interfere with the investigation and threaten investigators, according to the report.

The investigation revealed that Jones didn’t quite violate the Anti-Lobbying Act, which prohibits federal agencies from lobbying members of Congress, simply because the cost of generating and sending the email didn’t reach a $50,000 threshold.

Still, Jones did violate an internal HUD policy prohibiting agency officials from lobbying members of Congress — a policy Jones told investigators he wasn’t aware of at the time. HUD removed that policy from its internal web page in September 2013, according to the OIG report.

Plus, by directing and authorizing an email to 46 HUD employees, Jones likely violated personnel practices that prohibit an official from coercing any person’s political activities, the OIG report says.

U.S. Rep. Sean Duffy, R-Wis., a member of the subcommittee, said he is more outraged by the response over the investigation than by Jones’ initial email.

“There is not a great deal of outrage here about Mr. Jones,” Duffy said. “… What angers me is … the kind of pushback.”

What remains to be answered is whether the McAuliffe administration had any knowledge of the investigation before this week, but particularly before the announcement of Jones’ appointment in early January.

McAuliffe’s office didn’t respond to Watchdog.org’s request for comment, and Jones’ office hasn’t responded to Watchdog.org since Tuesday.

Ian O’Connor, spokesman with HUD’s office of inspector general, said the office has “ no comment” as to whether McAuliffe’s administration — as prospective employers — could have known about the investigation prior to the announcement of Jones’ appointment.

The U.S. Government Accountability Office will decide whether Jones’ email violated federal appropriations laws. The U.S. Office of Special Counsel will take responsibility for reviewing Jones’ possible coercion of personal political activity.

The U.S. Department of Justice has declined to pursue any criminal charges.

To the general dismay of members of Congress on Wednesday, HUD has yet to discipline any of the individuals involved.

Read the full inspector general report here.

Read the full testimony of Montoya here.

— Kathryn Watson is an investigative reporter for Watchdog.org, and can be reached at kwatson@watchdog.org, or followed on Twitter @kathrynw5.

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