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Eye on the EPA: Gina McCarthy’s Role in John Beale Saga
February 4, 2014

John Beale, a long-time member of the Environmental Protection Agency's (EPA) senior staff, perpetrated fraud against the Agency and against American taxpayers from at least 2000 through his voluntary retirement in 2013, masquerading as a CIA agent in order to take advantage of the Agency's lax internal controls. As the EPA Office of Inspector General (OIG) noted in its Early Warning Report, issued pursuant to U.S. Senate Environment and Public Works Committee Ranking Member David Vitter's (R-La.) request, EPA management did not take timely effective action to address Beale's erroneous retention bonuses and pay in excess of statutory limits.[1]  However, "lack of timely effective action" is a generalized statement that fails to adequately reflect actual events surrounding those responsible for managing Beale.  In an effort to further inform the public on how Beale got away with his fraud for so long, EPW Republicans have conducted an exhaustive review of materials obtained through its own investigatory efforts to untangle the web of unaccountability that permeated the Agency.  This focuses on Beale's most recent manager, Gina McCarthy, to articulate what she knew, when she knew it, and what she did with the information when it became available to her.

Managing John Beale

McCarthy's contact with John Beale began when she assumed management of the Office of Air and Radiation (OAR) in June 2009. Shortly after her confirmation as the Assistant Administrator for OAR, she met Beale for a lunch to discuss his work at the Agency, at which point he represented that he also worked for the CIA.[2]  During her recent interview with the OIG, McCarthy represented that she had concerns about Beale since the moment he was hired; however, it is not clear from the available facts that she ever acted on her initial concerns.

Despite her stated "concerns," documents and correspondence show that McCarthy took his word at face value and worked closely with Beale, letting him into her inner circle and consulting frequently with him.  In the beginning of her term, McCarthy had three Deputy Assistant Administrators, including Beale, and roughly thirty staff in her immediate office.  According to calendar appointments, between June 2009 and June 2010, McCarthy and Beale had periodic one-on-one meetings.[3]  In December 2010, McCarthy sent a note to OAR staff announcing that Beale would be resuming his role as the immediate office's lead for all of OAR's international work, and added that she was "very excited to finally get the opportunity to work closely with him."[4]

Beale continued to take days off for CIA work during this period of time,[5] during which McCarthy received emails from Beale, like the following in May 2010, "Contrary to what I believed when we spoke last Thursday, I do have to travel out of the country next week.  Events last week have made this trip necessary."[6]  In December 2010, Beale sent an email referring to events in Pakistan keeping him away from his responsibilities at EPA.[7]  Throughout this time, evidence suggests that McCarthy did not take any steps to confirm whether Beale was indeed an undercover spy working at the EPA.

Failing to Take Action

EPA staff, including those in OAR as well as the Office of Administration and Resource Management (OARM), began to uncover problems related to Beale's pay in mid-2010.[8]  In an interview with the OIG, McCarthy represented that she was not aware of recommendations made by OAR and OARM staff on how to resolve the retention bonus and statutory pay issues concerning Beale. However, there is a significant body of evidence that suggests she was aware, or had been informed by her staff, but that she declined to take action.

For example, by December 15, 2010, an OAR official was already discussing ways to terminate Beale's bonus:

"I'm writing to ask not about the corrections but about 2011. Specifically, I would like to intervene with the AA now to prevent the bonus from taking effect in 2011. I do not expect the AA to support continuation and in any event the employee has not produced any bona fide offer that I'm aware of."[9]

Later that month, the OAR official issued a memo, which instructed that unless Beale met criteria for a retention bonus, it should be stopped for 2011.[10]  On January 12, 2011, the official sent McCarthy a memo informing her that Beale's salary exceeds the statutory threshold and that he and the Office of General Counsel recommended she cancel Beale's bonus.[11] Documents obtained by EPW Republicans show that at that time, the OAR official also prepared a draft letter under McCarthy's name requesting information to stop the bonuses. Despite these recommendations, McCarthy did not follow through with any actions to stop the bonus payments for 2011. In fact, EPW Republicans learned that McCarthy was "reluctant to finalize [cancelation of Beale's bonuses] unless OARM [Assistant Administrator] Craig [Hooks] gives her the okay that the White House is aware and there will not be any political fallout."[12]  Moreover, it remains unclear whether McCarthy or someone else at EPA took an affirmative action to reauthorize the bonus for 2011, as Agency protocols normally require certification that the circumstances necessitating the bonus still existed.

According to the OIG, McCarthy deferred to OARM on how to handle the situation, but according to McCarthy she "was advised to stand down on the matter since it was a criminal matter and that [OARM] would refer it to the IG."  Documents and correspondence show that EPA staff viewed the Beale pay situation as a human resources matter and never as a criminal matter, and Hooks has denied ever characterizing the matter as a criminal one. These conflicting statements do not explain why McCarthy would have made such a representation to the OIG that is inconsistent with what was perceived by her coworkers at the time.  This hands-off attitude is also reflected in her response to an OAR official asking, "Has Craig [Hooks at OARM] gotten back to you about the pay issue yet? I'm eager to move ahead with canceling the bonus."  McCarthy replied, "No he hasn't.  It's now in his hands as far as I am concerned."[13]

In addition to the questions regarding Beale's pay, it appears that at the same time McCarthy put Beale in charge of OAR's international portfolio, she was also on notice that Beale's claim to be a CIA operative was highly questionable. According to an OIG interview with Deputy Administrator Bob Perciasepe, McCarthy and Hooks approached him in early 2011 and asked whether Beale worked for the CIA.  Documents obtained by EPW Republicans show that Perciasepe informed them at that time that EPA had no CIA employees - almost two years before anyone at EPA took steps to verify his claim. 

Beale's Lingering Retirement

On May 4, 2011, McCarthy approved a draft email to be sent to all OAR staff announcing Beale's imminent retirement from the Agency:

I'd like to express my appreciation to JB for managing OAR's international efforts these past months while we worked through an important period of leadership transition.... John will now turn his attention to a few projects where his expertise and experience can continue to add significant value. As you know - John has been a vital part of EPA and the OAR leadership for more years than he cares to remember.  He is beginning to look forward to his retirement in the near future - but thankfully has agreed to work on some key efforts in the near term.[14]

This arrangement, with an indefinite termination date, allowed Beale enough ambiguity to continue his fraud.  According to Beale's sentencing memorandum, beginning in June 2011, and for the next 18 months, "the scale of his fraud and deception became even more egregious."[15] On September 22, 2011, McCarthy and others attended his retirement party.  However, he never officially retired and instead continued to report his time to his assistant, was paid his salary plus bonus, and continued to use his EPA blackberry.

On March 29, 2012, an OAR official raised concerns about Beale's expanded fraud when he asked McCarthy about the status of Beale's retirement. McCarthy responded that she "thought he had retired,"[16]  then turned to OARM to take action.[17]  Despite being aware of the fact in March 2012 that one of her employees was collecting his paycheck without providing any work product, this arrangement continued for seven more months before McCarthy contacted Beale in November 2012.

Around this same time frame, according to documents obtained by EPW Republicans, officials at EPA began to investigate whether Beale was actually an undercover CIA agent.  On December 12, 2012, McCarthy was informed by staff at EPA's Office of Homeland Security that it was highly unlikely that Beale was a CIA agent, even though Perciasepe had already told her the same thing.  With the knowledge that Beale is likely not CIA and had been collecting a paycheck for over a year while performing no EPA-related work, McCarthy met with Beale, over a year after attending his retirement party, who informed her that because the real estate market tanked, he was no longer planning on retiring.[18] Two more months passed before McCarthy on February 5, 2013, informed Beale that she will be cancelling his retention bonus as she had "found no documentation from you or elsewhere that would support reauthorization" - information she had been aware of for nearly two years.  Even after this series of events, the OIG did not receive notice of concerns with Beale until February 11, 2013.[19]  On April 30, 2013, McCarthy allowed Beale to voluntarily retire with full benefits.

Troubling Inconsistencies

When asked, "In your opinion, is it possible that this fraud could have gone undiscovered if it were not for Administrator McCarthy's actions?"  Patrick Sullivan with the OIG testified that, "I think it's highly likely that had not been Ms. McCarthy raising the alarm, this never would have been discovered."[20]

Sullivan's statement ignores the work performed by OARM and OAR officials who spent months pressing McCarthy to take action on Beale's undeserved bonus income.  Moreover, the OIG glosses over the fact that Beale did not show up for work at the EPA for six months, while continuing to receive full pay and benefits, before OAR officials alerted McCarthy to the fact. It took another eight months before EPA began to inquire the veracity of Beale's status as a CIA operative.

The testimony of Perciasepe has also misled the characterization of McCarthy's role.  When asked to explain the delay for reporting Beale to the OIG, Perciasepe responded:

"When the- when Assistant Administrator McCarthy who I want to point out once again, no one ever questioned this for over a decade.  This question is, the first thing she wanted to do and the first thing she wanted to see was whether or not this person had any of these relationships that-that are being discussed or she asked in the General Counsel and the Office of Resource Management where our personnel-our folks are, they asked the Office of Homeland Security who has relationships with the intelligence community. And when nothing could be found there, I think it was quickly-and confirmed then quickly as Mr. Sullivan just mentioned, it was quickly referred to the Inspector General."[21]

Much of the confusion stems from the EPA OIG's focus on Beale's status as a CIA agent and when officials were first suspicious of his cover story, which allowed him to perpetrate his massive fraud.  But the fact remains, Beale was tried and convicted for stealing time and money from the Agency, not for impersonating an undercover CIA operative.[22]  His actions were fraudulent, regardless of the circumstances surrounding his CIA status.  These actions were known within EPA as early as 2010, but senior officials, including McCarthy, did not take action until the problem grew so large it could no longer be ignored.

 

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[1] EPA Inspector General  Early Warning Report at  14

 

[2] Beale Dep. 18:15-18:12 Dec. 19, 2013.

 

3 E-mail meeting request from Teri Porterfield,Envtl. Prot. Agency, to John Beale, Senior Policy Advisor, Envtl. Prot. Agency; e-mail meeting reschedule notification from Shela Poke-Williams, Envtl. Prot. Agency, to John Beale, Senior Policy Advisor, Envtl. Prot. Agency; e-mail Meeting Notification from Cindy Huang, Envtl. Prot. Agency, to John Beale, Senior Policy Advisor, Envtl. Prot. Agency; e-mail meeting reschedule notification from Teri Porterfield, Envtl. Prot. Agency, to John Beale, Senior Policy Advisor, Envtl. Prot. Agency; e-mail meeting request from Teri Porterfield, Envtl. Prot. Agency to John Beale, Senior Policy Advisor, Envtl. Prot. Agency.

E-mail from Gina McCarthy, Adm'r, Office of Air and Radiation, Envtl. Prot. Agency, to Office of Air and Radiation, Envtl. Prot. Agency (Dec. 3, 2010 07:44 AM EST).

 

4 E-mail from Gina McCarthy, Adm'r, Office of Air and Radiation, Envtl. Prot. Agency, to Office of Air and Radiation, Envtl. Prot. Agency (Dec. 3, 2010 07:44 AM EST).

 

5 Beale's electronic calendar entries reflect a total 9 days off for "D.O. Oversight" from Jan. 2009 to May 2011.

 

6 E-mail from John Beale, Senior Policy Advisor, Office of Air and Radiation, Envtl. Prot. Agency, to Gina McCarthy, Assit. Adm'r, Office of Air and Radiation, Envtl. Prot. Agency (May 8, 2010 07:19 AM EST).

 

7 E-mail from John Beale, Senior Policy Advisor, Office of Air and Radiation, Envtl. Prot. Agency, to Gina McCarthy, Assist. Adm'r, Office of Air and Radiation, Envtl. Prot. Agency (Dec. 18, 2010, 02:26 PM EST).

 

[8] Office of Inspector Gen., Envtl. Prot. Agency, Report No. 14-P-0036, Early Warning Report: Internal Controls and Management Actions Concerning John C. Beale Pay Issues, 19 (Dec. 11, 2013).

 

[9] Email from Scott Monroe, Dir. Of Human Res., Office of Air and Radiation, Envtl. Prot. Agency, to Susan Smith, Office of Admin. and Res. Mgmt, Envtl. Prot. Agency (Dec. 15, 2010, 11:58 AM EST).

 

[10] Memorandum from Scott Monroe, Office of Human Res., Office of Air and Radiation, Envtl. Prot. Agency (Dec. 20, 2010).

 

[11] Memorandum from Scott Monroe, Office of Human Res., Envtl. Prot. Agency, to Gina McCarthy, Assistant Adm'r, Office of Air and Radiation, Envtl. Prot. Agency (Jan. 12, 2011).

 

[12] E-mail from Susan Smith, Envtl. Prot. Agency, to Karen Higginbotham, Envtl. Prot. Agency (Feb. 1, 2013 01:09 PM).

 

[13] E-mail from Gina McCarthy, Adm'r, Office of Air and Radiation, Envtl. Prot. Agency, to Scott Monroe, Dir. of Human Res., Office of Air and Radiation, Envtl. Prot. Agency (Jan. 27, 2011 08:24PM EST).

 

[14] E-mail from Gina McCarthy, Assistant Adm'r, Office of Air and Radiation, Envtl. Prot. Agency, to John Beale, Deputy Assist. Adm'r, Office of Air and Radiation, Envtl. Prot. Agency (May 04, 2011 12:00 EST).

 

[15] Sentencing Memorandum of John C. Beale, United States v. John C. Beale, Cr. No. 13-247 ESH (D. D.C.Filed Dec. 9. 2013).

 

[16] E-mail from Scott Monroe, Envtl. Prot. Agency to Gina McCarthy, Assist. Adm'r, Office of Air and Radiation, Envtl. Prot. Agency, (Mar. 29, 2012 09:59 AM EST); E-mail from Gina McCarthy, Assist. Adm'r, Office of Air and Radiation, Envtl. Prot. Agency, to Scott Monroe, Envtl. Prot. Agency (Mar. 29, 2012 05:48 PM EST).

 

[17] E-mail from Gina McCarthy, Assist. Adm'r Office of Air and Radiation, Envtl. Prot. Agency to Craig Hooks, (Apr. 02, 2012 10:53 AM EST).

 

[18] Early Warning Report, supra, note 1.

 

[19] Elkins testimony before OGR, p. 5. Secret Agent Man? Oversight of EPA's IG Investigation of John Beale Before the H. Comm. on Oversight and Government Reform, 113th Cong. (2013) (Testimony of Arthur A. Elkins Jr. , Inspector General, Envtl. Prot. Agency).

 

[20] Secret Agent Man? Oversight of EPA's IG Investigation of John Beale Before the H. Comm. on Oversight and Government Reform, 113th Cong. (2013) (Testimony of Patrick Sullivan, Assist. Inspector General for Investigations, Envtl. Prot. Agency).

 

[21] Secret Agent Man? Oversight of EPA's IG Investigation of John Beale Before the H. Comm. on Oversight and Government Reform, 113th Cong. (2013) (Testimony of Hon. Bob Perciasepe, Deputy Adm'r, Envtl. Prot. Agency).

 

[22] Statement of the Offense, United States v. John C. Beale, Cr. No. 13-247 ESH (D. D.C. Signed Sept. 27 2013).

 

 





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