VA Officials in Hot Water Over Psychic Party and Tax Evasion

This story has been updated.

The takeaway from the latest lapse in judgment involving senior leaders at the Veterans Affairs Department is this: Think twice before you throw a party with psychics, and pay your taxes.  

The VA’s watchdog concluded that Lucy Filipov, assistant director of the department’s Philadelphia regional office, misused her position when she held a June 2014 party for subordinates at her home and encouraged them to pay another employee’s wife $35 each to summon the dead. At the time, Filipov was acting director of the Philadelphia regional office.

Soliciting money from subordinates is a no-no in the federal government. Ethics standards for executive branch employees also state that individuals shall not use their public office for private gain, the gain of friends and relatives, or to promote a product or service. Federal employees must act impartially and not give preferential treatment to anyone, or create the appearance of violating the law or ethics standards.

House Veterans Affairs Committee Chairman Jeff Miller, R-Fla., grilled Filipov about the party at a tense hearing in April related to data manipulation, mail mismanagement and egregious processing delays of veterans’ claims at VA facilities in Philadelphia and Oakland, Calif. At that time, Filipov said she was told by an employee of the inspector general’s office that she could not discuss the matter because it is “part of an ongoing investigation.”

Miller issued a statement on Thursday responding to the IG report, calling it "another example of Philadelphia VA regional office officials exhibiting horrible judgment." The lawmaker said the department continues to be "unwilling" to seriously punish "wrongdoers," leaving the impression it is "more interested in defending the dysfunctional civil-service status quo than actually reforming itself."  

According to the IG report, Filipov organized the supernatural soiree, using her official VA email to plan it and to recruit guests, some of whom were her subordinates. The medium is the wife of Gary Hodge, head of the department’s Philadelphia Pension Management Center. Filipov and Hodge are both GS-15s; those who attended the party ranged from GS-9 to GS-14.

“Just checking in for Friday night kiddies!” wrote Filipov in a June 3, 2014, email to a few invited subordinates about the party. “I’ll have munchies, wine/beer/vodka. If you would like something else to drink, let me know. [The spouse] will be doing private readings, they are $35. We had to guaranty [sic] a minimum of six, but I think we have those numbers. If you would like to bring someone with you please feel free. They don’t have to have a reading but could hang out and enjoy happy hour.”

The IG said the employees “told us of their reticence with their paid psychic participation and said that they generally wanted to participate, but exhibited some reservation.” The individual readings involved a crystal and some prayers. Employees told the IG they were “generally not enamored of the psychic experience.”

Filipov told the IG she gave the money to Hodge’s wife at the end of the event. She took issue with the watchdog characterizing her VA guests as “subordinates,” and repeatedly referred to them as her “friends.” That’s a problem, the watchdog concluded, saying that as a senior leader Filipov is held to higher standard and should set a more appropriate tone in the office—namely one that doesn’t give the appearance of favoritism. “Ms. Filipov’s less-than-arm’s-length relationship with this group of employees, who she described not as subordinates within her chain of authority, but as friends, may create an appearance of preferential treatment of those employees selected to spend personal time with her,” the report concluded.

In the same report, the watchdog also found that Hodge had failed to report his wife’s income as a medium on his government ethics forms. The couple also didn’t report her earnings for 2012 and 2013 to the Internal Revenue Service. Hodge’s wife, who is self-employed, earned $13,955 in 2014, $12,850 in 2013, and $6,960 in 2012. A website the IG found stated that Hodge’s wife has worked as a medium since 2006. Her business also was not registered with the city of Philadelphia.

“Although Mr. Hodge initially told us that he did not know how much his spouse earned and failed to report and pay taxes on this income, he was later able to tell us how much his wife earned for those tax years,” the report said. “And although he said that he did not get involved in his spouse’s business, he admitted that they had a joint bank account where she deposited her earnings, and they used those funds to pay for a recent family vacation. It was not until we questioned Mr. Hodge about his spouse’s self-employment and income earnings that he reported it on his Confidential Financial Disclosure Report for 2015 and told us that he intended to claim her income on their 2014 income tax return.”

The IG referred Hodge’s tax issue to the IRS and the Pennsylvania Department of Revenue, as well as a criminal referral to the Justice Department for making false statements on his financial disclosure forms. Justice declined to pursue it in favor of any administrative action. The watchdog also recommended refresher ethics training for both Hodge and Filipov, as well as appropriate administrative action.

Willie Clark, Eastern Area director of the Veterans Benefits Administration, told the IG that after conferring with the Office of General Counsel and human resources, he will “take the appropriate administrative and/or disciplinary action, if any, against one or both individuals.” Clark said Filipov and Hodge will receive additional ethics training and Hodge will correct his financial disclosure reports. “Lastly, I also told both individuals this type activity will not be condoned or tolerated in this agency,” Clark said.

(Image via Cora Reed/Shutterstock.com)