A Social Security employee fired for his part in an income tax fraud scheme involving several agency employees has won a partial reprieve from the federal appeals court as his case is sent back to the Merit Systems Protection Board for more work. (Williams v. Social Security Administration, C.A.F.C. No. 2009-3020, 11/9/09) The facts are taken straight from the court’s opinion.
Stephen Williams, a mailroom worker in Baltimore, Maryland got caught up in the income tax fraud scheme that apparently was sponsored by a co-worker, Joel Edwards. It started when Williams had Edwards prepare and file his tax return. In that return, Williams improperly claimed children who were not his as dependents on his federal tax returns. Apparently Edwards had the father of these children provide their social security numbers so he could include them on Williams’ return thus giving him several illegal deductions. (Opinion, p. 2)
The Internal Revenue Service and the agency’s Inspector General became aware of the tax fraud scheme and were investigating while Williams was promoted more than once by supervisors who had not been made aware of the scheme. Apparently his new position gave Williams access to a database of social security numbers. (p. 2)
Eventually a criminal case for tax fraud was brought against Edwards. Williams was listed by name in the criminal information, along with several other Social Security employees. Edwards pleaded guilty and the case hit the newspapers. The story indicated that the fraud scheme involved other unnamed Social Security employees. At this point the agency quickly detailed Williams to a position that did not give him access to the database of social security numbers. (pp. 2-3)
Several months later the agency fired Williams for "conduct unbecoming of a federal employee." (p. 3) In the decision letter, the deciding official underscored the connection between Williams’ conduct and the fact that "the problem of identity fraud through the misuse of Social Security Numbers is one of the biggest problems facing the Agency." (pp. 3-4)
The Merit Systems Protection Board affirmed, ruling that there was a nexus between Williams’ offense and the efficiency of the service. The Board further found that removal was reasonable given the agency’s mission and the seriousness of the charge. (p. 4)
Williams took his case to the Federal Circuit Court of Appeals. He tried to argue that the agency failed to show a nexus, but the court simply did not buy this argument: "Williams filed a federal tax return listing the Social Security numbers of two children, not his own, whom he illegally claimed as dependents…Social Security justifiably concluded that an employee who engaged in such misconduct could well again misuse Social Security numbers at some point in the future." (p. 4)
Williams also tried arguing that the agency’s failure to act for some six years after the misconduct showed that he was trustworthy, particularly since the agency had actually promoted him during this time. The MSPB had found this fact "troubling," but concluded that it did not make discipline against Williams inappropriate. (p. 5) Once the immediate supervisor knew about Williams’ involvement in the scheme, he moved out to take action. Moreover, the U.S. Attorney’s office had asked the agency not to take action against any of the participants in the scheme until they could deal with all of them. (p. 5)
Williams hit pay dirt with his final argument. He pointed to his "disparate treatment" when considering how the agency had dealt with Edwards, the scheme’s mastermind. He told the court that the agency had re-employed Edwards yet fired him. This gave the court some pause: "If those are the facts, they would appear to raise a serious question about the reasonableness of Williams’ penalty of removal. Edwards was more culpable than Williams." (p. 6)
Apparently the only reference by the MSPB to the disparate treatment argument is in a footnote to its decision that pointed out that it was not relevant how Edwards was treated since he was not in the same chain of command and "therefore not similarly situated for purposes of a disparate treatment claim." (p. 6) While the different chains of command "may sometimes justify different penalties" the court is clearly troubled by the lack of information and explanation in the Board’s decision on this point. Acknowledging that the agency’s attorney gave an explanation, the court pointed out that it decides "cases on the record before us, not on the basis of facts stated by counsel." (p. 7)
The case has been bounced back to the MSPB for full development of the facts surrounding Edwards’ employment, reach its conclusions, and make a new decision on penalty based on the augmented record. (p. 8)
Susan McGuire Smith spent most of her federal legal career with NASA, serving as Chief Counsel at Marshall Space Flight Center for 14 years. Her expertise is in government contracts, ethics, and personnel law.