It took Patrick Sullivan, assistant inspector general for investigations at the E.P.A., just one week to uncover a million dollar fraud overlooked by the government agency for over a decade. John Beale, at one point the E.P.A's highest paid employee, convinced the E.P.A he was working overseas as an agent for the CIA when he was actually "riding his bicycle, reading books and working around his house" in Virginia.
The EPA’s highest-paid employee and a leading expert on climate change deserves to go to prison for at least 30 months for lying to his bosses and saying he was a CIA spy working in Pakistan so he could avoid doing his real job, say federal prosecutors.
John C. Beale, who pled guilty in September to bilking the government out of nearly $1 million in salary and other benefits over a decade, will be sentenced in a Washington, D.C., federal court on Wednesday. In a newly filed sentencing memo, prosecutors said that his lies were a "crime of massive proportion" and “offensive” to those who actually do dangerous work for the CIA.
Beale’s lawyer, while acknowledging his guilt, has asked for leniency and offered a psychological explanation for the climate expert’s bizarre tales.
“With the help of his therapist,” wrote attorney John Kern, “Mr. Beale has come to recognize that, beyond the motive of greed, his theft and deception were animated by a highly self-destructive and dysfunctional need to engage in excessively reckless, risky behavior.” Kern also said Beale was driven “to manipulate those around him through the fabrication of grandiose narratives … that are fueled by his insecurities.”
The two sentencing memos, along with documents obtained by NBC News, offer new details about what some officials describe as one of the most audacious, and creative, federal frauds they have ever encountered.
When he first began looking into Beale’s deceptions last February, “I thought, ‘Oh my God, How could this possibly have happened in this agency?” said EPA Assistant Inspector General Patrick Sullivan, who spearheaded the Beale probe, in an interview with NBC News. “I’ve worked for the government for 35 years. I’ve never seen a situation like this.”
Beyond Beale’s individual fate, his case raises larger questions about how he was able to get away with his admitted fraud for so long, according to federal and congressional investigators. Two new reports by the EPA inspector general’s office conclude that top officials at the agency “enabled” Beale by failing to verify any of his phony cover stories about CIA work, and failing to check on hundreds of thousands of dollars paid him in undeserved bonuses and travel expenses -- including first-class trips to London where he stayed at five-star hotels and racked up thousands in bills for limos and taxis.
Until he retired in April after learning he was under federal investigation, Beale, an NYU grad with a masters from Princeton, was earning a salary and bonuses of $206,000 a year, making him the highest paid official at the EPA. He earned more money than Gina McCarthy, the agency’s administrator and, for years, his immediate boss, according to agency documents.
In September, Beale, who served as a “senior policy adviser” in the agency’s Office of Air and Radiation, pled guilty to defrauding the U.S. government out of nearly $900,000 since 2000. Beale perpetrated his fraud largely by failing to show up at the EPA for months at a time, including one 18-month stretch starting in June 2011 when he did “absolutely no work,” as Kern, Beale’s lawyer, acknowledged in his court filing.
To explain his long absences, Beale told agency officials -- including McCarthy -- that he was engaged in intelligence work for the CIA, either at agency headquarters or in Pakistan. At one point he claimed to be urgently needed in Pakistan because the Taliban was torturing his CIA replacement, according to Sullivan.
“Due to recent events that you have probably read about, I am in Pakistan,” he wrote McCarthy in a Dec. 18, 2010 email. “Got the call Thurs and left Fri. Hope to be back for Christmas ….Ho, ho, ho.”
In fact, Beale had no relationship with the CIA at all. Sullivan, the EPA investigator, said he confirmed Beale didn’t even have a security clearance. He spent much of the time he was purportedly working for the CIA at his Northern Virginia home riding bikes, doing housework and reading books, or at a vacation house on Cape Cod.
“He’s never been to Langley (the CIA’s Virginia headquarters),” said Sullivan. “The CIA has no record of him ever walking through the door.”
Nor was that Beale’s only deception, according to court documents. In 2008, Beale didn’t show up at the EPA for six months, telling his boss that he was part of a special multi-agency election-year project relating to “candidate security.” He billed the government $57,000 for five trips to California that were made purely “for personal reasons,” his lawyer acknowledged. (His parents lived there.) He also claimed to be suffering from malaria that he got while serving in Vietnam. According to his lawyer’s filing, he didn’t have malaria and never served in Vietnam. He told the story to EPA officials so he could get special handicap parking at a garage near EPA headquarters.
When first questioned by EPA officials early this year about his alleged CIA undercover work, Beale brushed them aside by saying he couldn’t discuss it, according to Sullivan. Weeks later, after being confronted again by investigators, Beale acknowledging the truth but “didn’t show much remorse,” Sullivan said. The explanation he offered for his false CIA story? “He wanted to puff up his own image,” said Sullivan.
Even at that point, prosecutors say, Beale sought to “cover his tracks.’” He told a few close colleagues at EPA that he would plead guilty “to take one for the team,” suggesting that he was willing to go to jail to protect people at the CIA. This has led some EPA officials to continue to believe that Beale actually does have a connection to the CIA, Sullivan said.
Kern, Beale’s lawyer, declined to comment to NBC News. But in his court filing, he asks Judge Ellen Huvelle, who is due to sentence Beale Wednesday, to balance Beale’s misdeeds against years of admirable work for the government. These include helping to rewrite the Clean Air Act in 1990, heading up EPA delegations to United Nations conferences on climate change in 2000 and 2001, and helping to negotiate agreements to reduce carbon emissions with China, India and other nations.
Two congressional committees are now pressing the EPA, including administrator McCarthy, for answers on the handling of Beale’s case. The new inspector general’s reports fault the agency for a lack of internal controls and policies that allegedly facilitated Beale’s deceptions.
For example, one of the reports states, Beale took 33 airplane trips between 2003 and 2011, costing the government $266,190. On 70 percent of those, he travelled first class and stayed at high end hotels, charging more than twice the government’s allowed per diem limit. But his expense vouchers were routinely approved by another EPA official, a colleague of Beale’s, whose conduct is now being reviewed by the inspector general, according to congressional investigators briefed on the report.
Beale was caught when he “retired” very publicly but kept drawing his large salary for another year and a half. Top EPA officials, including McCarthy, attended a September 2011 retirement party for Beale and two colleagues aboard a Potomac yacht. Six months later, McCarthy learned he was still on the payroll
In a March 29, 2012 email, she wrote, “I thought he had already retired. She then initiated a review that was forwarded to the EPA general counsel’s office. But the inspector general’s office was not alerted until February 2013 and he didn't actually retire until April.
Sullivan said he doubted Beale’s fraud could occur at any federal agency other than the EPA. “There’s a certain culture here at the EPA where the mission is the most important thing,” he said. “They don’t think like criminal investigators. They tend to be very trusting and accepting.”
In a statement to NBC News, Alisha Johnson, McCarthy’s press secretary, said that Beale’s fraud was "uncovered" by McCarthy while she was head of the Office of Air and Radiation. “[Beale] is a convicted felon who went to great lengths to deceive and defraud the U.S. government over the span of more than a decade,” said Johnson. “EPA has worked in coordination with its inspector general and the U.S. Attorney's office. The Agency has [put] in place additional safeguards to help protect against fraud and abuse related to employee time and attendance, including strengthening supervisory controls of time and attendance, improved review of employee travel and a tightened retention incentive processes.”
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