WASHINGTON — In a blistering report, Republican lawmakers sharply criticized Labor secretary nominee Thomas Perez over what they said was a questionable deal he brokered while serving as head of the Justice Department's Civil Rights Division.
The 63-page report, issued Sunday after months of investigation, is certain to provide fodder for Republicans seeking to challenge Perez at his Senate confirmation hearing Thursday.
The GOP lawmakers accuse Perez of misusing his power last year to persuade the city of St. Paul, Minn., to withdraw a housing discrimination case before it could be heard by the Supreme Court. In exchange, the Justice Department agreed not to intervene in two whistleblower cases against St. Paul that could have won up to $200 million for taxpayers.
Perez has defended his reason for wanting St. Paul to drop its case, telling investigators that he feared an adverse ruling from the Supreme Court would jeopardize the government's use of statistics to win housing discrimination cases. The Justice Department also says Perez got proper clearance and made the deal in the best interests of the nation.
But Republicans say the deal was dubious, that Perez misled senior officials about his intentions, and that he tried to cover up the true reason for his decision not to intervene in the whistleblower cases.
"This offer was inappropriate and potentially violated Perez's duty of loyalty to his client, the United States," said the report from Iowa Sen. Charles Grassley, California Rep. Darrell Issa and Virginia Rep. Bob Goodlatte.
Issa is chairman of the House Oversight Committee, while Goodlatte heads the House Judiciary Committee. Grassley is top Republican on the Senate Judiciary Committee.
Top Democrats on the House Oversight Committee issued their own report on the investigation Sunday, writing that Perez "acted professionally to advance the interests of civil rights and effectively combat the scourge of housing discrimination."
The Justice Department also defended Perez in a statement, saying litigation decisions made by the department "were in the best interests of the United States and were consistent with the department's legal, ethical and professional responsibility obligations."
"In resolving False Claims Act matters, the Department has broad discretion to consider legal, factual and policy factors," the statement said. "The decision to decline to intervene in these cases followed an examination of such factors and permitted the relators to continue to pursue their claims against the city."
The Republican report cites documents that suggest Perez's decision frustrated and confused career attorneys at Justice who initially wanted to join the whistleblower cases against St. Paul. These attorneys described the department's change of heart as "weirdness," ''ridiculous" and a case of "cover your head pingpong."
The report also quotes the handwritten notes from one Justice lawyer who wrote after a January 2012 conference call: "Message from Perez. When you are working on memos make sure you don't talk about Sup. Ct. case."
But Democrats claim Perez was up front about using the strategy and cleared it with ethics and professional responsibility officials before it was finalized. Associate Attorney General Tom Perrelli told investigators it was common Justice Department practice to encourage parties not to pursue Supreme Court cases with poor fact patterns that could lead to adverse national interests.
"Instead of identifying inappropriate conduct by Mr. Perez, it appears that the accusations against him are part of a broader political campaign to undermine the legal safeguards against discrimination that Mr. Perez was protecting," said the staff memo issued Sunday by Rep. Elijah Cummings, top Democrat on the House Oversight Committee, and Rep. John Conyers, top Democrat on the House Judiciary Committee.
Federal law allows whistleblower cases alleging misuse of public funds to be brought by private parties. If they win, they can keep a percentage of the proceeds while the government gets the rest. The Justice Department intervenes in about 22 percent of federal whistleblower lawsuits, a move that can give the case a better chance of winning. The department has recovered more than $13 billion from such cases over the past four years, according to Justice Department statistics.
After the Justice Department declined to join the whistleblower cases against St. Paul, one of them was later dismissed. The second is still being litigated by a private plaintiff.