OFFICE OF SPECIAL COUNSEL. 1730 M Street, NW October 25, 2016 Mr. Timothy Lee clo Mr. Richard Condit, Esq Government Accountability Project 1612 K Street, NW, Suite 1100 Washington, DC 20006 Dear Mr. Lee: This letter is in response to the complaint you filed with the U.S. Office of Special Counsel (OSC) against the Federal Housing Finance Ageney (FHFA), Office of Inspector General (OIG). Before working as a Senior Policy Advisor for the OIG, you worked for the Special Inspector General for the Troubled Asset Relief Program and you spent more than a decade as a finance executive on Wall Street. You allege that the OIG committed several prohibited personnel practices in violation of 5 U.S.C. § 2302(b)(8), (b)(9), (b)(12), and (b)(13). Based on our evaluation of the facts and law, we have made a preliminary determination to close our file in this matter. You allege that in 2012, you disclosed to the OIG that Government Sponsored Enterprises (GSEs)—Fannie Mae and Freddie Mac—sustained major financial losses due to manipulation of the London Interbank Offered Rate (LIBOR) by financial institutions. You also allege that you circulated a report in October 2012, which you drafted with two work colleagues, providing a preliminary estimate of $3 billion in GSE losses. Your report recommended that the FHFA require the GSEs to conduct detailed analyses of their financial losses and that the FHFA should consider options for appropriate legal action. On November 2, 2012, then-FHFA Inspector General Steve Linick forwarded your report to the FHFA and requested that the FHFA respond with written comments. That same month, the FHFA responded to the OIG and provided information in that the FHFA conferred with the GSEs and the U.S. Department of Justice. The FHFA also stated that it sent letters to the GSEs requesting that they determine the extent of their losses from the LIBOR manipulation and consider legal action. In turn, the GSEs advised the FHFA that they initiated the recommended assessment with the help of experts and counsel and would consider options for legal action as appropriate.' Additionally, in December 2012, the OIG asked you to prepare a draft memorandum that the OIG would submit to U.S. Senators Charles Grassley and Mark ' The GSEs subsequently filed lawsuits against large Financial institutions to recoup losses from the LIBOR ‘manipulation,U.S. Office of Special Counsel Page 2 Kirk concerning the LIBOR manipulation issue.” You allege that the OIG asked you to exclude your preliminary estimate of $3 billion in GSE losses when discussing the work the OIG had done in the memorandum for the senators. You concluded that this instruction was “a serious dumbing down of the complete findings” and indicated that the OIG intended to conceal the extent of the losses. You believed the O1G’s actions constituted an abuse of authority, gross mismanagement, gross waste, and “illegality” under the Inspector General Act. Wanting your findings on the losses to be heard, you provided the non-public report with the preliminary estimate of losses that you and your colleagues drafted to a Wall Street Journal (ISJ) reporter. After the IVSJ published an article that attached the non-public memorandum and the FHFA’s response to the OIG, you allege that the OIG initiated an administrative investigation, detained and interrogated you, and coerced you to resign. You claim that the OIG’s investigation and your subsequent resignation violate section 2302(b)(8) and (6)(9). You also contend that the OIG restricted your ability to communicate with Congress and violated other constitutional rights, in violation of section 2302(b)(12). Finally, you assert that the settlement agreement you signed, when you resigned from employment, violated section 2302(b)(13). We address your allegations in turn below. 5 § 2302(b)(8) and (b)(9) lish a violation of section 2302(b)(8), OSC must show that (1) a protected formation was made; (2) a personnel action was taken or threatened; (3) the officials responsible for the personnel action had knowledge of the protected isclosure; and (4) the protected disclosure was a contributing factor in the personnel action at issue. The elements of proof necessary to establish a violation of section 2302(b)(9)(A)(i), (B), (C), (D) are similar to the elements of proof for a section 2302(b)(8) claim. The Merit Systems Protection Board (MSPB), however, will not order corrective action if the agency demonstrates by clear and convincing evidence that it would have taken the same personnel action in the absence of any protected disclosure or activity. Itis unclear whether you made a protected disclosure and/or engaged in protected activity when you released the non-public report with the $3 billion preliminary estimate of GSE losses. The MSPB may view your dispute with the OIG about the preliminary estimate of losses as a mere policy disagreement. Nonetheless, because you resigned from employment, we focus our analysis on whether your resignation is a constructive personnel action. Generally, an employee-initiated action, such as a resignation, is presumed to be voluntary unless the employee establishes that the action was obtained through duress or coercion, or shows that a reasonable person would have been misled by the ageney. See 2 You do not know ifthe memorandum for Senators Grassley and Kirk was in response toa specific requestU.S. Office of Special Counsel Page 3 Staats v. U.S. Postal Serv., 99 F.3d 1120, 1123-24 (Fed. Cir. 1996). The employee may rebut the presumption of voluntariness by providing sufficient evidence to show that the agency’s actions rendered the employee’s action involuntary and that a reasonable person in the employee’s position had no meaningful choice but to resign. A choice between two undesirable options is still a choice and does not constitute coercion Here, the information we reviewed shows that from approximately late December 2012 to early January 2013, the OIG launched an administrative investigation after becoming aware that one of its non-public reports was released to the IVSJ. As part of the investigation, the OIG interviewed you and other employees and gathered evidence. You allege that on January 4, 2013, the OIG told you that you were the subject of the investigation, You also claim that the investigation was retaliatory in nature, For example, you assert that the OIG interrogated you for six to six-and-a-half hours; escorted you to and from the restroom; served you with the “administrative equivalent of a Subpoena Duces Tecum” for your personal emails, which you believed was an intimidation tactie; dissuaded you from seeking counsel; and asked you about “irrelevant and benign topics,” which led you to provide your “personal opinion that was critical of OIG auditors and senior management.” Additionally, you state that during your interview, one of the agent’s gun and handcutfs were visible, and that because of the conditions, you did not feel as if you were free to leave. Thereafter, “{plerceiving no other choice and fearing further interrogation and unlawful prying into [your] private emails and files,” you “ended the ordeal” by signing a settlement agreement in which you agreed to resign from employment, ‘The OIG disagrees with your characterization of the circumstances, For example, it contends that the investigation was not retaliatory and was commenced following the publication of non-public information; that your interview lasted significantly less than you have alleged; that it provided you with multiple bathroom breaks;' that you were never told that you could not leave the interview; that you never asked to leave the interview; and that it served you with the administrative subpoena as part of the standard investigative process. Notably, the OIG also indicates that you willingly signed the settlement agreement, which provided for, among other things, the following: (1) that you would receive paid administrative leave for approximately 30 days; (2) that you ‘would receive a neutral employment reference; (3) that the agreement did not constitute an admission that you had engaged in misconduct; (4) that your resignation was “freely and voluntarily” made “without coercion, duress, or undue influence”; and (5) that you represent that the settlement agreement was “a voluntary decision . . . and [you] had sufficient time to consider [your] options” in order to alleviate any concerns that the OIG’s actions may be construed as a “constructive adverse action or an improper personnel action.” The information we gathered also indicates that the OIG discussed the terms of the settlement agreement with you, you reviewed the agreement, approved a “You were chaperoned during bathroom breaks per the OIG's standard practice once an interview has. started,