Vermont State Auditor: Jonathan Gruber Response to Contract Investigation ‘Unsatisfactory’

The odds that Obamacare architect Jonathan Gruber may face charges for padding invoices are going up.

Vermont State Auditor Douglas Hoffer’s methodical investigation of Gruber’s undocumented billing practices shifted to a higher gear on Friday, when Hoffer called Gruber’s response to his inquiries to date “unsatisfactory.”

That could spell legal trouble for the controversial MIT economics professor.

“At present, there is a sufficient factual and legal predicate to start an investigation,” Brady Toensing, a partner with diGenova & Toensing, a law firm specializing in white collar criminal defense told Breitbart News on Friday.

“If that investigation uncovers sufficient evidence that Gruber padded his bills, he could be charged by the state with contract fraud or by the feds with mail or wire fraud,” Toensing noted.

Gruber has been paid $160,000 by the state of Vermont, $80,000 of which is for 800 hours of work he claimed in invoices was performed by unnamed research assistants, billed out at $100 per hour. But more than 6 weeks after Hoffer first asked Gruber to provide evidence that these research assistants actually exist and did in fact perform work under the contract, Gruber has refused to provide Hoffer with the basic information he requested on the names, contact information, and employment status of this purported research assistants.

“I asked the administration [of Vermont Governor Peter Shumlin] to request information from Mr. Gruber. His response was forwarded to me and it did not contain the documentation I wanted. I will now communicate directly with Mr. Gruber and be more specific about what I need,” Hoffer told Breitbart News in an exclusive email on Friday.

Gruber has also ignored requests from Breitbart News to provide copies of the cancelled checks of the payments he is supposed to have made to his purported research assistants.

Gruber had a July 2014 contract with the state to provide “economic modeling” to support the Governor’s analysis of a now-shelved (for this year, anyway) single-payer health care plan. Under the terms of that contract, Gruber was to be paid $500 per hour for work he performed, and $100 per hour for work performed by research assistants under his direction.

All checks under this contract with the state of Vermont have been paid to Gruber as an individual. No checks were issued directly to the research assistants. Thus Gruber has been paid $160,000 against $200,000 in invoices he submitted to the state for 1,000 hours of work (billed at $100 per hour) he claimed research assistants performed under his direction as part of that contract and 200 hours of work (billed at $500 per hour) for work he claimed he performed.

Under the terms of the contract, the state has retained 20% of the amount billed by Gruber ($40,000 of the $200,000 billed) until the contract is deemed fully completed. To date, that full acceptance of Gruber’s work has not been authorized.

The trouble with Gruber’s billing practices is that, though he was personally paid the $80,000 for work allegedly performed by research assistants, the MIT professor has refused to provide any documentation to the state of Vermont that research assistants actually performed the 1,000 hours of work identified in his invoices as performed by them. Gruber’s invoice merely asserted 1,000 hours were worked by unnamed research assistants, nothing more.

In November, after Gruber’s controversial comments about the “stupidity” of the American voters was made public, the state of Vermont and Gruber agreed to change the amount paid under the original contract.

Gruber was originally to receive compensation totaling $450,000, but he agreed to accept a revised compensation totaling $280,000.

The state of Vermont agreed to pay Gruber the $40,000 retained against the $200,000 he had already billed, and an additional $80,000 for 800 hours of work to be performed by his research assistants between November and January 2015.

With the release of Governor Shumlin’s final report on the shelved single-payer program in late December, Gruber’s contract has presumably been completed.

It is unclear if Gruber has been paid the additional $120,000 specified in the revised November contract, which would bring the total amount the state of Vermont has paid him to $280,000.

Gruber’s Nixonian stonewalling—his refusal to provide what every accounting expert would call standard operating procedure billing documentation–is yet another indication that Gruber is hiding behind the prestige of MIT and his association with the Obama administration.

“The Gruber contract has been a travesty from start to finish,” a senior contracts manager at the state of Vermont told Breitbart News on Friday, adding:

The contract was a bare-bones contract that omitted some of the most important provisions in the state’s contract regulations. It was vaguely worded. There were no performance penalties because there were no specific performance measurements that were to be met as the project progressed. The only “performance” required of Gruber was to be on the phone with Robin Lunge [the director of health reform for the state of Vermont] every day.

For her part, Lunge says: “I feel confident that we’ve gotten our money’s worth in terms of both the amount of work as well as the quality of the work that we received,” she told Vermont Public Radio on Thursday. “I think as is illustrated by the thousands of documents and emails we released between Dr. Gruber and the staff, including myself, I feel confident that we’ve gotten our money’s worth in terms of both the amount of work as well as the quality of the work that we received.”

But that explanation doesn’t hold water with the senior contracts manager Breitbart News spoke with on Friday.

“Gruber’s two line bills reflect the fact that the state was not rigorous enough in its contract language to require detailed billings, and the fact that once they received the first bill, they let it go,” the state contracts manager told Breitbart News. “Robin Lunge asking, ‘Gee do you think this is detailed enough’ one time, and then settling for the status quo is also a dereliction of duty because she’s a lawyer and should know better.”

In the end, the contracts manager said, “the administration blew it.”

“The only question is, did they do so intentionally so that not very much of the work could be tracked?,” the contracts manager asked.

That may be a question on the radar of Vermont State Auditor Hoffer.

“Contracts are a serious business. And if you agree to the terms of a contract then you have an obligation to meet those requirements, and he [Jonathan Gruber] has not met those requirements,” Hoffer told Vermont Public Radio on Thursday.

“The contract called for a description of the work performed. He simply says we worked these many hours. On the face of it, it does not appear to meet the terms of the contract,” Hoffer added.

Hoffer is losing patience with Gruber’s lack of responsiveness. He told Vermont Public Radio on Thursday, he’s “asked Gruber for more detailed documentation of his work. . . Gruber’s responses to those inquiries have been ‘unsatisfactory.’ ”

As a constitutional officer elected statewide, Hoffer has a broad authority–including subpoena power–to compel subjects of investigations to comply with his information requests.

Hoffer appears increasingly inclined to use this subpoena power to compel Gruber to respond to his information requests in the near future. But Hoffer’s subpoena power is not enforceable outside the state of Vermont without the assistance of law enforcement authorities in the state in which the subpoenaed subject lives.

As a resident of Massachusetts, Gruber may try to continue his stonewalling ways and force Hoffer to request the assistance of that state’s Attorney General to obtain the basic accounting documentation he seeks from Gruber.

Attorney Toensing, who resides in Vermont, is unimpressed with Hoffer’s investigative efforts to date.

“Hoffer recognizes red flags with Gruber’s invoices and the need for an investigation. But he then purports to launch an investigation by making ‘requests’ through an administration apparatchik with a vested interest in protecting Gruber and Governor Shumlin,” Toensing told Breitbart News on Friday. “If Hoffer was serious about conducting a real investigation, he would hit Gruber with a subpoena and demand a response forthwith.”

“This contract involves a lot of federal money and well-publicized, highly-questionable billing practices, so I would have expected Vermont’s United States Attorney’s office to have launched an investigation,” Toensing noted.

Toensing concluded by offering a comment that potential white collar crime defendants around the country dread hearing.

“If they get into this, which they should, they won’t make pleading requests through a conflicted, political operative. They will serve Gruber with a federal grand jury subpoena,” Toensing stated.


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