In late March, the Department of Veterans Affairs' Office of Inspector General told Congress it would investigate how the VA managed to spend more than a quarter of a million dollars to help a top official relocate to Philadelphia VA office.
That huge payment was about 20 times the normal relocation subsidy that the VA typically spends, prompting more anger in Congress about what seems to be the latest management failure at the broken VA.
The Department of Veterans Affairs is dodging numerous questions abot the money it's spending to help top officials relocate. The program could also be used across all federal agencies, potentially costing taxpayers millions of dollars each year. Image: AP
In the last week or so, several more questions have been raised about the payment, including whether the VA is secretly inflating the value of the homes of these officials as a farewell present when they move.
But so far, the VA has failed to provide any denials or explanations, regardless of who's asking. House aides said they've had no luck getting straight answers from the VA about how the payment was made, and while the VA has provided some information to TheBlaze, that information has been general in nature and fails to paint a full picture of what happened.
To catch readers up on what is quickly becoming the latest scandal to hit the beleaguered agency, below is a summary of what's known so far, and the several outstanding questions that have yet to be answered.
What We Know
Last year, Diana Rubens relocated from the Washington, D.C., office to Philadelphia, where she is now the VA director. The House Veterans Affairs Committee has argued — and the VA has not denied — that nearly $300,000 was spent in some way to help her move.
It's not clear how much of that amount went directly to Rubens as a relocation subsidy. But as TheBlaze reported last month, the total is about $275,000 more than the average relocation expense paid by the VA in 2011.
When asked how this huge cost could be justified, the VA released a statement saying it's part of a program aimed at making it easier for the VA to retain talented employees. The VA indicated that most of the payment was provided under the VA's Appraised Value Offer program, or AVO, which helps employees quickly sell their homes when they're asked to take on assignments in different parts of the country.
According to a VA spokeswoman, AVO allows a contractor to buy the home of a VA employee who is trying to relocate to another city for a new job. Under the program, the contractor will buy the home "at the appraised value and market the home."
The VA pays the contractor a fee for this service. According to the spokeswoman, "the major portion of the costs associated with Ms. Rubens' relocation is related to AVO program costs." The spokeswoman also said the costs were high in Rubens' case because
Here are our remaining questions.
1) How Does the AVO Program Really Work?
At this point, no one is really sure. But based on the VA's own statements, it seems possible that most of the $288,000 is the "fee" that the VA paid the contractor, which is Brookfield Relocation and its subsidiary, Stone Financial LLC.
The VA says the fee was based on the appraised value of the home. The VA is not saying how big the fee is as a percentage of the value of the home.
Still, if most of the $288,000 was related to AVO program costs, that could mean the VA paid a fee of about $200,000 to ensure the quick sale of Rubens' home, which appraises at about $700,000. Does that mean the VA routinely pays a 30 percent fee to sell the homes of its employees?
Also, what other components are included in the $288,000? How much of that money went directly to Rubens as a relocation bonus?
The House Veterans Affairs Committee says that based on its own information from VA and a whistleblower, the payment could have been made directly to Rubens. But it's completely unclear at this point what happened and where the money went.
As of this week, the VA had not itemized the $288,000 cost to show how it was spent.
2) Why Such a Big Subsidy for Someone Who Is Moving to a Less Costly Real Estate Market?
It would be one thing if a Philadelphia employee had to buy a house in Washington, D.C. That might justify some subsidy given the high cost of homes in the nation's capital.
But Rubens was moving away from a high-cost area to a relatively low-cost area. House Veterans Affairs Committee staff say that based on the information they have, Rubens pocketed about $180,000 by capturing equity in her Alexandria, Virginia, home and buying a less expensive house in Philadelphia.
So, why so much trouble to help a person who didn't seem to need that much help?
3) Why So Much Help for a VA Worker Who May Have Wanted to Move to Philadelphia Anyway?
There is some talk that Rubens was looking to return to Philadelphia anyway, make it seem even more excessive that the VA would spend so much money to facilitate a move the employee wanted to make.
There is also evidence that Rubens brought other VA officials with her to Philadelphia, raising other questions about what sort of relocation costs the VA incurred for those officials, and Rubens' exact relationship to those officials.
4) Is the AVO Program Being Used to Provide a Backdoor Subsidy to Federal Workers?
According to the VA, the AVO program buys homes at their appraised value, then sells them.
But according to property records, Rubens' home was sold for $770,000 in 2014 — at the beginning of that year, it was appraised at just $665,000. Didn't the contractor break the rules by paying $105,000 more for the home than the appraised value?
Seven months later, the contractor sold the house for $667,000, even though the real estate market in the area was relatively stable during that period. Does that mean Rubens was paid $105,000 more for her home — through the VA's contractor — than what her home was really worth? Isn't that a backdoor subsidy for Rubens?
And does that overpayment mean a higher taxpayer-funded "fee" that the VA must pay the contractor?
5) If the Contractor Is Purposefully Paying Too Much for the Home, What Else is Going On?
Does the VA know that Brookfield Relocation is overpaying for these homes? Do employees generally know this? Are there any other personal or financial ties between VA management and Brookfield that need to be explored?
6) Who Are These VA Contractors Anyway, and Why Won't They Pick Up the Phone?
TheBlaze called Brookfield Relocation repeatedly over the last several days, and never got any answers. One woman thought to have some knowledge of the program never answered the phone.
Another employee who was reached offered the company's legal services, but they never replied to any questions either.
On Monday, the House committee asked the VA for reams of information about the VA's relationship to the contractor (see the full letter at the end of this story).
7) What Other Federal Agencies Are Using the AVO Program, and How Much Is That Costing Taxpayers?
The VA told TheBlaze that "federal travel regulations authorize all federal agencies to offer this type of relocation services program."
What other federal agencies are doing this, and how much is that costing every year. Will a committee outside the House Veterans Affairs Committee examine these costs across the federal government?
8) On Top of Everything Else, Why All the Bonuses for More Failed Performance?
According to the Center for Investigative Reporting, Rubens was given a $23,000 bonus award in 2011 when she was a deputy of VA Undersecretary for Benefits Allison Hickey. That was the same year when the backlog of disability claims double.d
So essentially, Rubens was a top official on the issue of veterans benefits, was part of a system that was routinely failing and getting worse at ensuring veterans get benefits, and was handsomely rewarded anyway.
Below is the House Veterans Affairs Committee's letter to the VA asking for more details about the AVO program: