Judge halts demotion of embattled St. Paul Veterans Affairs official

WASHINGTON – A judge this week overturned the decision to demote top St. Paul Veterans Affairs executive Kim Graves.

An inspector general report last year found that Graves abused her position of power by orchestrating a move from the East Coast to Minnesota and wrongly racked up $130,000 in taxpayer-paid moving expenses.

The VA attempted in November to discipline Graves by cutting her pay and demoting her to an Arizona veterans' facility.

Graves appealed the decision with the U.S. Merit Systems Protection Board, a panel that protects federal merit systems and employees against abuses by agency management.

This week, a judge found in a 41-page decision that the VA was inconsistent in doling out discipline to Graves and reversed her demotion. Graves will be reinstated to the same level she served as chief of the St. Paul Regional Benefit Office. Though the judge did not make it explicit on Friday, officials on Capitol Hill expected her to stay in her Minnesota post.

"It's ridiculous," Minnesota Democratic U.S. Rep. Tim Walz, a member of the House Committee on Veterans' Affairs, said Friday. "We cannot let up in pushing for fundamental change that puts service to veterans above all else."

Graves had been in the St. Paul job since 2014. She transferred herself to the post from the East Coast, where she previously was the Veterans Benefits Administration's director of a 14-state North Atlantic District. Even though she had much fewer job responsibilities in Minnesota, she retained her $173,000 annual salary. She and another VA executive under investigation also obtained more than $400,000 combined in questionable moving expenses under a VA relocation program that has since been suspended.

It is not expected that Graves will reimburse the federal government for those expenses.

The incident involving Graves, the second executive and others has embroiled the entire bureaucracy since last fall, when a VA inspector general outlined the allegations and recommended the cases involving Graves, and the others, be reviewed for criminal prosecution. The report sparked the resignation of Allison Hickey, a former head of the Veterans Benefits Administration.

This week's decision by the Merit Systems Protection Board means the saga may be over. Federal prosecutors in December said they were not planning to file criminal charges against Graves.

"Knowledge … of Ms. Graves' reassignment to St. Paul by Ms. Graves' chain of command are readily apparent, and if no one in her chain said, 'Wait, this will not look right' when they approved her reassignment, how can a penalty be imposed against Ms. Graves for not saying that," said Michele Szary Schroeder, a chief administrative judge for the board. "I conclude Ms. Graves put forward sufficient evidence to prove the penalty of transferring her … was unreasonable."

Graves' attorney Julia Perkins told Government Executive, a government news website, that her client is "happy the action was reversed." "She looks forward to continuing her life's work serving veterans," Perkins said.

Rep. Jeff Miller, R-Fla., chairman of the House Veterans' Affairs Committee, called the judge's ruling "a twist of tragic comedy."

"VA's attempt to discipline Kimberly Graves was undone by its refusal to discipline other employees involved in this scandal," he said. "By now there should be no doubt whatsoever that our federal civil service system is in need of drastic reform."

Allison Sherry • 202-383-6120