Blowing the Whistle

Pastor testifies about political machinations of Obama labor nominee

Tom Perez / AP
May 7, 2013

A Minnesota pastor who blew the whistle on a multi-million dollar fraud testified before Congress about the federal authorities who allegedly threw out the case for political purposes.

Fredrick Newell, an affordable housing advocate and construction company owner, exposed St. Paul, Minn., for allegedly fraudulently receiving millions of federal dollars without providing the job training and low income contracting required by federal law.

He brought the case to the Department of Housing and Urban Development (HUD) and the Department of Justice (DOJ), which agreed to take on the case.

Tom Perez, the DOJ’s chief civil rights enforcer, allegedly sabotaged the $200 million fraud case in order to get the city to drop a Supreme Court appeal that threatened disparate impact theory.

Newell told a joint hearing of the House Oversight and Judiciary subcommittees on Tuesday that he paid a great personal price to bring the suit only to see it scrapped.

"Our company suffered and when we brought the HUD complaints we were retaliated against. … There was pushback," Newell testified. "It was a real travesty … being sold [out]."

Newell’s story has become a political football since President Barack Obama tapped Perez to be the next labor secretary. Republicans have called the deal a quid pro quo, while Perez and Democrats dismissed Newell’s case as a "bad case." However, Newell said the whistleblower suit was apolitical.

"My aims were to … make a program work in St. Paul that we found would help people," Newell said, adding that career attorneys "thought it was a good case."

Rep. Jim Jordan (R., Ohio) accused Perez of endangering the prospects of future whistleblowers, who may fear that "they will be thrown under the bus for political purposes."

Rep. Matt Cartwright (D., Pa.) accused the GOP of using the hearing to "disparage" Perez and derail his nomination.

The comment drew the immediate objection of House Oversight Committee Chairman Darrell Issa (R., Calif.), who pointed out that the committee began investigating the case 10 months ago.

"We attempted to right this wrong for many months, long before an obscure member of [the Department of Justice] was considered for a cabinet appointment," Issa said.

Cartwright refused to withdraw his comments and continued to criticize the committee, saying that Newell "was not a real whistleblower." He echoed claims from Perez and other Democrats that Newell’s case was later dismissed because it was "bad law."

Sen. Chuck Grassley (R., Iowa) slammed that assertion, pointing out that the case was dismissed because Newell lacked the standing that the federal government would have brought to the case—not because of the facts.

"Newell’s case was dismissed precisely because the United States was not a part of it," he said.

He also revealed emailed notes from a meeting in which Department of Justice career attorney Michael Hertz said that the administration was "buying off St. Paul. Should be whether there are legit reasons to decline."

Newell is now appealing the case.

Perez’s confirmation troubles extend beyond the alleged quid pro quo.

The Oversight Committee has requested more than 1,200 government emails that Perez sent from a private email account. The Department of Justice told lawmakers on Friday that they had "satisfied" the committee’s request, pointing out that some of the private emails were already archived on Perez’s government account.

Lawmakers accused Perez and the department of intentionally stalling and withholding potential evidence to avoid controversy until his confirmation. Issa appealed to Perez directly in a letter sent Monday night.

"Your continued and blatant disregard for a duly issued congressional subpoena is extremely disconcerting, especially coming from one of the Nation’s highest law enforcement officers," Issa wrote. "You have not produced a single e-mail as required by the plain terms of the subpoena issued to you on April 10, 2013. Until you produce all responsive e-mail communications, including at least the 1,200 e-mails that the department has identified as responsive, you will continue to be noncompliant with the subpoena."

Newell will play a crucial role in Perez’s confirmation battle. Sen. Tom Harkin (D., Iowa), chairman of the Senate Health, Education, Labor, & Pensions (HELP) Committee, canceled an April hearing at which Newell was expected to testify. Senate Republicans forced Harkin to delay an April confirmation vote until Newell had visited Capitol Hill.

The HELP committee is expected to vote on Perez’s nomination Wednesday.