$1.17M whistleblower settlement raises new questions for embattled DHS inspector general

A $1.17 million settlement with a former Department of Homeland Security’s Office of Inspector General employee who flagged issues with embattled Inspector General Joseph Cuffari is raising a fresh set of questions from Congress.

The settlement, signed earlier this month but revealed by the Project on Government Oversight (POGO) on Thursday, admits no wrongdoing by Cuffari’s office but makes a substantial whistleblower reprisal payment to Jennifer Costello, the employee.

The Merit Systems Protection Board (MSPB) investigation into the matter surfaces a number of bizarre clashes between the two employees, including a beef over Costello’s refusal to print thousands of pages of documents she asserted Cuffari could read online to his initial plan to try and assign her to a division of the Department of Homeland Security (DHS) dealing with countering weapons of mass destruction.

But lawmakers are also raising questions over whether Cuffari misled Congress about the need for a $1.4 million contract to investigate Costello and others.

The settlement received by Costello is the largest known settlement for an employee of an inspector general office and among the largest ever given to a federal employee.

A joint letter from top Democrats on the House Homeland Security Committee and House Oversight and Accountability Committee obtained by The Hill indicates lawmakers plan to probe the deal, as well as why Cuffari’s deputy was able to sign off on the agreement without alerting other officials.

A deposition in front of the board “raises serious concerns about your possibly retaliatory actions and lack of candor, improper use of taxpayer dollars, and lack of truthfulness in your communications with Congress,” Reps. Bennie Thompson (D-Miss.) and Jamie Raskin (D-Md.) write in the letter to Cuffari.

Costello in 2019 made disclosures about Cuffari to both Congress and the Council of the Inspectors General on Integrity and Efficiency (CIGIE), which is now investigating Cuffari. He likewise complained to the organization about her.

Costello’s complaints included that Cuffari delayed a report on DHS’s struggle to track children and parents separated at the border under a Trump administration policy, according to records Costello supplied to the POGO.

Costello was dismissed in June 2020, but Cuffari told the MSPB his plan to assign her to the Office for Countering Weapons of Mass Destruction — despite her lack of relevant experience — was made before an investigation into her conduct.

“Your testimony appears to show that at least one of the allegations brought against Ms. Costello as a basis for her proposed removal was frivolous,” the lawmakers wrote.

“Specifically, the deposition transcript reveals that after you requested that Ms. Costello print thousands of pages of DHS OIG policies, she expressed concern to you that it was not a ‘valuable use of the staff resources or appropriated funds.’ You then decided that this suggestion was grounds for removal because she ‘was making a determination on whether or not [the printing] was appropriate.’”

The POGO report indicates Cuffari made other inaccurate claims to justify his firing of Costello, including that she ordered a criminal review of his travel shortly after taking the job — a review that was initiated by another employee.

Cuffari spent $1.4 million on a contract with law firm WilmerHale to investigate Costello and others, one that lawmakers contend “did not substantiate any illegal conduct.”

They say Cuffari also failed to disclose to Congress that other inspectors general he asked to probe the conduct of Costello declined to do so. 

“Your omission of this important information raises questions about your intentions when you informed Congress that you conferred with other Inspectors General and whether or not you accurately reflected the events preceding your decision to hire WilmerHale,” they wrote.

The settlement with Costello was signed by his chief of staff, Kristen Fredricks, something Thompson and Raskin say should have prompted an alert to ethics officials, as federal regulations require that they be consulted when the conduct at issue involves the head of the agency.

“It is unclear whether you raised concerns regarding your subordinate’s approval of the $1.17 million settlement to resolve allegations pertaining to your misconduct. It is also unclear whether or not you sought an opinion from a DHS ethics officer,” they wrote.

“However, it is deeply troubling that the individual who approved the settlement is someone whom you directly oversee and promoted to the position of Chief of Staff. This decision raises a potentially serious and flagrant abuse of your position.”

Cuffari’s office did not respond to request for comment over the POGO report or the letter from Democrats.

An attorney for Costello said she was pleased with the result of the years-long battle.

“My client stood for what she believed was right.  Time has revealed that she was indeed right. And now she has a balm for the sacrifice she made to preserve the integrity of the work of the faithful civil servants of DHS OIG,” Costello attorney Eden Brown Gaines said in a statement. 

The matter adds to the growing complaints about Cuffari, who has earned the ire of lawmakers after failing to notify them that Secret Service text messages from Jan. 6 were lost in software migration. 

He most recently came under fire for saying that he routinely deletes text messages from his own government phone — an action that appears to violate record retention laws.

Lawmakers are also reviewing reports he censored findings of domestic abuse and sexual harassment by DHS employees.