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FBI Probes Use of Funds by Ex-FEC Aide

The FBI is investigating allegations that a former top official at the Federal Election Commission tried to settle a sexual harassment complaint from a female staffer by attempting to misappropriate $100,000 in taxpayer funds last fall.

The investigation has embroiled at least a handful of FEC employees, each of whom has been put on administrative leave or no longer works for the agency, leaving vacancies in critical posts heading into the campaign season.

In addition, according to an internal management plan privately unveiled two weeks ago, the FEC is facing a $2.6 million shortfall — out of an original $54 million 2006 budget — that was caused in large part because of an overstaffing problem and has prompted the interim FEC staff director to recommend a hiring freeze. More than 20 percent of that shortfall was caused because of “settlement and legal services” costs associated with the employment discrimination case and the ensuing FBI investigation, according to the internal FEC memo.

FEC Chairman Michael Toner was not available for comment, but the agency’s spokesman said that once notified of the allegations, the six appointed commissioners conducted an internal review of the matter.

“We took immediate action. An investigation was initiated,” said Bob Biersack, FEC spokesman, adding that no financial harm was done to taxpayers. “We found no improper or illegal expenditures were made from agency funds.”

Biersack would not discuss the detailed allegations involving the agency’s former top staff director, James Pehrkon, John O’Brien, who was ousted as budget officer, and Lola Hatcher-Capers, the ex-director of the agency’s Equal Employment Opportunity division. A handful of other top aides have recently left the agency or are expected to depart later this spring — some in moves unrelated to the investigation — but Biersack said that the turmoil would not disrupt the commission’s efforts in overseeing the 2006 election season.

Officials with the FBI’s Fraud and Public Corruption unit and the U.S. Attorney’s Office for the District of Columbia declined to comment on the case because it is ongoing.

According to recently unsealed affidavits, at least six FBI special agents executed a search warrant in late 2005 on the FEC’s headquarters at 999 E St. NW, seeking any files and e-mail correspondence related to the discrimination case. The search warrant specifically cited the computers and office space of Pehrkon, O’Brien and Hatcher-Capers.

According to the court documents, Pehrkon was accused of “employment discrimination” in June 2005 by a female subordinate, who reported the accusation to Hatcher-Capers at the EEO office. The initial affidavit for the search warrant did not name the female employee, but the follow-up inventory of items seized during the search named her as Cheryl Kelley, who until last month worked as the director of budget, planning and management for the FEC.

Initially, Hatcher-Capers told Kelley her claim “would be kept confidential” except for a notification to the commissioners, court filings said.

Later, Hatcher-Capers told Kelley she decided against forwarding the complaint to Toner or the other five commissioners.

“It’s unclear at this time what further action, if any, Hatcher-Capers took in response to [Kelley’s] complaint and whether Pehrkon, to whom Hatcher-Capers reports, unduly influenced her not to notify the commission,” FBI Special Agent Frank D’Amico wrote to the U.S. District Court on Nov. 28 requesting the search warrant.

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