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Justice attorneys wary of Perez’s nomination for Labor, cite ‘most devastating indictment’
In a written statement, Mr. Perez said Justice “takes very seriously” any allegations of harassment, mistreatment, unauthorized disclosure of internal information, and other unprofessional conduct. He said “a number of troubling incidents” in the IG’s report “have no place in the department, and we have taken steps to prevent similar incidents from recurring.”
Minnesota case cited
Mr. Grassley also has raised questions about Mr. Perez’s involvement in a “controversial decision to decline intervention by the federal government” in two False Claims Act cases against the city of St. Paul, Minn., in exchange for the city withdrawing its case before the Supreme Court. He said the case, Magner v. Gallagher, likely would have gutted a low-income housing theory favored by Mr. Perez.
“It appears Mr. Perez may be at the heart of a decision by the Justice Department to make a quid pro quo deal with the city of St. Paul, Minn., that ultimately led to the American taxpayer potentially losing hundreds of millions of dollars by declining to intervene in a False Claims Act case that career attorneys had signed off on,” the lawmaker said.
Three House members — Rep. Darrell E. Issa, California Republican and chairman of the House Oversight and Government Reform Committee; Rep. Lamar Smith, Texas Republican and chairman of the House Judiciary Committee; and Rep. Patrick T. McHenry, North Carolina Republican and chairman of the House Oversight financial services subcommittee — said the Justice Department refused to intervene in a case that had the potential to return more than $180 million in damages to the U.S. treasury.
They said they were “shocked to learn” that Mr. Perez — over the objections of career Justice Department attorneys — had enticed the city to drop its lawsuit that he “did not want decided by the Supreme Court.” They said Mr. Perez was concerned that a decision in the city’s favor “would dry up the massive mortgage lending settlements his division was obtaining by suing banks for housing discrimination based on disparate effects rather than any proof of intent to discriminate.”
Documents reviewed by Mr. Issa’s committee show that Mr. Perez obtained St. Paul’s agreement to drop its appeal in exchange for an agreement by Justice not to join a fraud lawsuit against the city.
Career attorneys in the Justice Department’s Civil Fraud Section had recommended the case be pursued, citing the city’s behavior as a “particularly egregious example” of false certifications. On Oct. 7, 2011, the Department of Housing and Urban Development concurred in the recommendation as did the U.S. attorney’s office in Minnesota.
Committee investigators wrote, “As Mr. Perez labored to force a reversal, emails show career department attorneys confused and frustrated. … ‘Weirdness’ they call it.”
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About the Author
Jerry Seper is the investigative editor for The Washington Times.
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