Palmer: Whistleblower’s case is all wet

PALMER — In response to claims it misspent federal grant money when fixing water mains downtown, the city of Palmer has asked a federal judge to throw the suit out entirely.

The lawsuit, initially filed in October 2011, alleges that in 2009 when the city had to replace steel water mains under Alaska Street because one burst, it used federal funds illegally to pay city employees for the work rather than putting the project out to bid. The lawsuit alleges that $1.4 million was misspent and seeks triple that — $4.2 million — from the city. Whistleblowers in these kinds of cases are allowed to keep 10 percent to 30 percent of the money recouped as a reward for bringing the case to light.

But lawyers for the city argue the lawsuit should be tossed out. In short, they argue that the person suing them over the projects, Arlene Cohen, is not entitled to sue, that she read federal rules for the grants incorrectly and that she didn’t point out any specific instances of fraud.

On that first count, whether Cohen was entitled to sue, the city’s attorneys filed a sheaf of printouts from the Frontiersman’s website, as well as a bunch of records and emails the city handed over to Cohen.

“These Frontiersman articles contain all the operative facts on which (Cohen) bases her allegations,” write private attorneys Mary Pinkel and Robert Bundy with the law firm Wolfforth, Brecht, Cartledge and Brooking, regarding some of the claims, later adding of the rest that “all the information supporting the claim was provided to (Cohen in written responses to her public records request).”

So why does that matter? It has to do with what the law refers to as an “original source.”

To be a primary source, the attorneys argue, a person has to have first-hand knowledge of the infractions of the law. That all of the pertinent information was available in newspapers and public records, the attorneys argue, means that the government could have pursued fraud if it had wanted to.

The purpose of that rule, they argue quoting case law, is “to ‘encourage insiders to disclose fraud’ while preventing parasitic actions based on information already available to the government.”

Cohen, in a response to the city’s motion to dismiss, filed an 18-page affidavit detailing the various things she had done to document her claims the city had misspent funds.

She said the records requests “told me nothing I had not already known for sometime” and, though she was aware of the Frontiersman reports, she writes, they “did not play any role in my investigation of Palmer’s misconduct.”

On that second point, that she misread the law, the city points out that the funds for the projects came from the American Recovery and Reinvestment Act, also known as the stimulus act.

The city describes Cohen’s contention as being that the act prohibits using city employees for stimulus projects.

“In fact, the use of stimulus funds to pay existing employees for emergency work in Palmer is consistent with one of the primary purposes of ARRA, which is the ‘preservation and creation of jobs, and the stabilization of state and local government budgets,’” the city’s attorneys write.

At the very least, the city argues, there is some confusion as to whether city employees could be paid from those funds and at what rate. Cohen alleges they should not have been paid so-called Davis Bacon wages.

The city’s attorneys argue, though, that a simple mistake or differing interpretation of the law doesn’t add up to fraud.

In her response, Cohen argues that the money specifically spent on the water main project was not the type stimulus money was intended for.

“The ARRA funds in controversy in this case were clearly intended for the private sector and particularly to create new jobs,” she argues.

She also alleges that what happened in Palmer was more than a simple misapplication of the money. She refers to the payroll for city employees at the time as a “bonanza.”

“I concluded that Palmer was essentially stealing from the local private-sector the recovery funds that were ear-marked to help it,” she writes. “The federal Department of Labor, the voice of authority on this subject, has made clear for more than a generation that city workers are not to be paid enhanced wages on federal grant projects.”

Lastly, the city argues that Cohen’s complaint isn’t specific enough. The law requires someone bringing such a lawsuit to clearly state “what is false or misleading” about particular statements the city made.

Cohen “has failed to identify the ‘who, what, when, where and how’ of the misconduct charged, as well as what is false or misleading about the alleged misconduct and why it is false,” according to the motion.

In response, Cohen points to very specific allegations about things like specifically overpaid city employees and materials she believes the city retained when it shouldn’t have.

Contact reporter Andrew Wellner at andrew.wellner@frontiersman.com or 352-2270.

Editor’s note: This story updates a previous one in which there was some confusion on our end that caused greater confusion in the community. Arlene Cohen is a retired school teacher and never claimed to be a “Realtor.” Our reporter was both confused and laboring under a faulty definition of the word “relator” which, in this case, is the word the courts use to refer to a private party who brings a suit on behalf of the government.