VA Executive's Demotion Fails for Second Time with Judge's Ruling

A judge in Chicago has overturned the demotion and reassignment of a Veterans Affairs Department director who was disciplined for abusing her position by taking a job she forced another official to vacate.

Michele Szary Schroeder, a chief administrative judge with the Merit System Protection Board in Chicago, this week decided in favor of Kimberly Graves, a regional VA director in St. Paul, Minnesota, according to a 41-page ruling released Friday by the board.

Schroeder said the disciplinary action was wrong because the VA failed to punish another senior executive service member for the same conduct in the same controversy

"If Ms. Graves is going to be disciplined for failure to exercise sound judgement by creating the appearance of impropriety, then it would only be reasonable if any other [SES] members … involved in the same situation were disciplined as well," she wrote in her ruling, which was posted to the board's website.

Graves had her senior executive service status dropped to general service and was reassigned to another region as an assistant director by VA Deputy Secretary Sloan Gibson after an investigation into the matter by the VA inspector general.

Gibson also demoted and reassigned Diana Rubens who the IG said had maneuvered herself into the regional directorship of the Philadelphia office after forcing out its previous director.

Both moved into jobs with less responsibility but retained their Senior Executive Service-level salaries. In addition, the VA paid out a total of about $400,000 in relocation costs.

Following the inspector general investigation, the women were demoted from directors to assistant directors, reassigned and reduced from SES employees to general employees -- a move that cost them each about $50,000 in annual salary.

The VA tried to demote the women in October, but the case was dismissed in December on account of a technicality after the department didn't provide them with all the supporting evidence in the allotted period. The VA earlier this month again tried to discipline the women. And again, they appealed the move to the board.

Rubens made her case to an MSPB judge in Philadelphia on Thursday. A decision could come as early as today but no later than Monday.

The VA's decision to demote the women rather than fire them infuriated some members of Congress, including House Veterans Affairs Committee Chairman Rep. Jeff Miller, a Republican from Florida, who wanted to see them prosecuted, as well.

Miller's office didn't immediately respond to Military.com's request for comment.

Sen. Johnny Isakson, a Republican from Georgia and chairman of the Senate Veterans Affairs Committee, is waiting for official notification from the board of both cases before commenting, his office said.

The VA inspector general handed over its report on Graves and Rubens to the U.S. Attorney's office for possible criminal charges, but the office declined to press charges and returned the case to VA for potential disciplinary action.

VA Secretary Bob McDonald has said he understands the decision to demote rather than fire was not popular with lawmakers, but that he stands by Gibson's call.

"When he tells me he's gone through the evidence and the evidence does not support firing but supports demotion, I believe him," McDonald told Military.com in an interview earlier this month.

Even so, the secretary acknowledged the board would have the final say on the demotions.

"We'll see," he said. "Both ladies have appealed and we'll see if our calibration of punishment sticks."

In her ruling, Schroeder pointed out that Graves broke no laws by retaining her SES salary when moving into the St. Paul job or by receiving the relocation benefits.

The judge also found it relevant that everyone in Graves' chain of command "completely knew" she was vying for the job as director of the St. Paul regional office and never voiced a concern with it. They also knew she was involved in the process of reassigning her predecessor, Antoine Waller, to the Baltimore office.

"It was not something Ms. Graves hid from them as far as her involvement with [her predecessor’s] reassignment," she wrote. "They not only endorsed the actions when they happened, but they continue to endorse the actions."

And if no one in the chain of command said, "Wait, this will not look right when they approved her assignment, how can a penalty be imposed against Ms. Graves for not saying that?" she asked.

Schroeder said the VA's reason for disciplining Graves was "failure to exercise sound judgement" in creating an appearance of impropriety by having a role in Waller’s reassignment and then taking Waller's position.

But she noted that Acting VA Under Secretary for Benefits Danny Pummill was heavily involved in the job transfers and was in Graves' direct chain of command.

"There was no evidence whatsoever," she wrote, "that at any point Mr. Pummill said, 'Time out everyone, this doesn't look good.' Or to be more articulate, 'Ms. Graves and/or the Agency are creating the appearance of an impropriety because she was the recommending official as to Mr. Waller's reassignment to Baltimore and she is now taking his prior position.'"

The judge also noted that the VA had set a deadline of Dec. 31, 2015, to consider action against Pummill for his part in the matter but, so far, VA has not issued any disciplinary or adverse action against him.

Knowing this, Schroeder said, the VA still went ahead and demoted and reassigned Graves.

“If Ms. Graves is going to be disciplined for failure to exercise sound judgement by creating the appearance of impropriety, then it would only be reasonable if any other [SES] members … involved in the same situation were disciplined as well.”

Gibson, who demoted Graves and Rubens based on the IG report and its supporting evidence, told Schroeder he believed Pummill’s failure to advise Graves to take herself out of the transfer process involving Waller was different and not a lack of sound judgement.

The judge disagreed. "I do not see it as different," she wrote.

--Bryant Jordan can be reached at bryant.jordan@military.com. Follow him on Twitter at @bryantjordan.