MEMORANDUM

TO: FROM: DATE: RE: MEMBERS OF THE PUBLIC COA LEGAL STAFF SEPTEMBER 14, 2012 HATCH ACT VIOLATIONS BY HHS SEC. KATHLEEN SEBELIUS

This memorandum summarizes Cause of Actions review of legal and investigative matters concerning actions by the federal government regarding Kathleen Sebeliuss February 25, 2012 statements. On September 12, 2012, the Office of Special Counsel (OSC) informed President Obama of its determination that U.S. Department of Health and Human Services (HHS) Secretary Kathleen Sebelius violated the Hatch Act. Secretary Sebelius committed two distinct Hatch Act violations for her political activity on February 25, 2012: (1) Supporting the election of Barack Obama as President and (2) Supporting the election of Walter Dalton as North Carolina governor. Non-Compliance with President Obamas Ethics Pledge President Obamas first act in office was Executive Order 13490, which required his political appointees to sign an ethics pledge concerning lobbying activities while also seeking consensus from his political appointees that they understood the federal ethics rules. Secretary Kathleen Sebelius signed this pledge. Secretary Sebelius did not receive a waiver from the restrictions agreed to by signing the pledge. And yet on February 25, Secretary Sebelius, using her official position, engaged in direct lobbying when she supported the defeat of North Carolinas Amendment One. While this statement does not violate the Hatch Act, it would appear to be inconsistent with Secretary Sebeliuss ethical promise to the President. When Martha Johnson, as GSA Administrator, condoned wasteful spending at the GSA, she acted against the spirit of the Presidents ethics pledge as well as in violation of Executive Order 13589, which required the promotion of efficient spending. Martha Johnson resigned from office. Potential Election Crime Violation The Democratic National Committee (DNC) (partially) reimbursed HHS for travel and other related costs due to Secretary Sebeliuss political activity. That payment may be interpreted to constitute a loan from the federal government. As such, Sebelius, who is in an administrative position of the United States, and in connection with activity financed in whole or in part by loans or grants made by the United States, or any department or agency thereof, used her official

authority for the purpose of affecting the election of a candidate for President, may be subject to liability under 18 U.S.C. 595, a prosecutable offense. Cause of Action continues to investigate: (1) Whether the FEC properly disclosed this disbursement to Secretary Sebelius, (2) Whether any committee other than the DNC reimbursed any funds to HHS, and (3) Whether any lobbying activities were properly disclosed. President Obamas Failure to Act 5 U.S.C. 7326 was passed by Congress and states An employee or individual who violates section 7323 or 7324 of this title shall be removed from his position, and funds appropriated for the position from which removed thereafter may not be used to pay the employee or individual. However, if the Merit System Protection Board finds by unanimous vote that the violation does not warrant removal, a penalty of not less than 30 days suspension without pay shall be imposed by direction of the Board. The OSC clearly found that Sebelius violated 7324(a) because Sebelius engaged in political activity in her official capacity. Under 5 U.S.C. 1215(b), In the case of an employee in a confidential, policy-making, policy-determining, or policy-advocating position appointed by the President, by and with the advice and consent of the Senate (other than an individual in the Foreign Service of the United States), the complaint and statement referred to in subsection (a)(1), together with any response of the employee, shall be presented to the President for appropriate action in lieu of being presented under subsection (a). Because Sebelius is not subject to the Merit Systems Protection Board (MSPB) for review, only the President can determine her punishment. In an unprecedented situation like the present one, the President takes appropriate action by substituting himself into the role of the MSPB in other words appropriate action means that the president must suspend Secretary Sebelius for at least 30 days or remove her from office. By taking neither option, the President has, in effect, sent a message to the public that his Cabinet is superior to the law and that either his ethics pledge was a farce or that Sebelius is exempt from complying with the Executive Order. Moreover, Secretary Sebelius, in her letter to the OSC, disagreed with the conclusion that she committed a Hatch Act violation. It would appear that Secretary Sebelius is openly opposed to following the high standards of ethics she took an oath to the President to follow. Alternatively, the President has sanctioned her activity. Congressional Oversight If Congress determines: (1) The President failed to take appropriate action to punish Secretary Sebelius and (2) Secretary Sebelius fails to acknowledge that she violated the law, then Congress would have the ability to impeach Secretary Sebelius.