Skip to Main Content

Senior VA Official Investigated for Possible Conflict with Husband’s Business

By Adam Zagorin

 SEE STORY UPDATE (2/22/2017)

A senior official in charge of a high-profile program at the Department of Veterans Affairs (VA) is the focus of a law enforcement probe into a potential conflict of interest with her husband’s business and possibly other matters, the Project On Government Oversight (POGO) has learned. The investigation has not been previously disclosed.

 A spokesperson for the VA’s Office of Inspector General, which is conducting the probe, told POGO:

 “As a matter of policy, we do not comment on ongoing investigations.”

Rosye Cloud

Rosye Cloud photo via wikimedia.org

Rosye Cloud, 42, who led the Veterans Employment Center (VEC) at the VA, is married to Chad Cloud, president of Washington, DC’s Software Performance Group, Inc. SPG is a privately owned company that has marketed, among other things, computer programs to help veterans get jobs—a mission that overlaps with the VEC, which Ms. Cloud headed until her move to other duties last month.

It’s unclear how, or if, Chad Cloud or his company benefited from his wife’s position, or if she assisted him in any way. A number of people who have met with one or both Clouds say the issue arose in August 2014 at a Virginia Beach meeting organized by a veterans support group, where Ms. Cloud wanted  to  introduce the VEC and other VA economic initiatives to the community. Mr. Cloud and a business partner (who participated by phone) appeared near the end of the meeting,where Ms. Cloud  was a principal speaker. She then left the room. Mr. Cloud’s patent pending veterans employment software was apparently the only product presented. (The arrangements for Mr. Cloud to attend were not made by the VA.)

Some eighteen months later, in February 2016, two agents entered Rosye Cloud’s fifth-floor office at VA headquarters to remove her computer hard drive and her government-issue iPhone and iPad, apparently as evidence, according to a former VA employee.

John Andrews, a retired Navy captain who worked as an advisor on veterans issues to the city of Norfolk, showed POGO a Freedom of Information Act (FOIA) request he had sent to the VA’s Inspector General dated April 19, 2016. In it, Andrews asked for material relating to case number # 2015-01879-TQ—0466, “and any other investigations that determined if Ms. Cloud acted in violation of: federal conflict of interest regulations, federal travel regulations, federal merit system principles and policies.”

 In a reply dated May 12, 2016, the VA OIG denied Andrews’ FOIA query, telling the veteran naval officer that:

“The records you requested are part of an ongoing law enforcement investigation.”

ROSYE CLOUD: A RECUSAL

Earlier, on November 21, 2014, Andrews­ had asked Ms. Cloud in an email whether her husband, Chad, had any involvement in the VEC program.

She replied to Andrews’ boss that:

“I’ve recused myself from contracting activity” connected to the VEC, adding: “I will not participate in any demo or market research related to Chad’s company or his clients because I want to keep more than just arms distance.”

When contacted by POGO,  a spokesman for Mr. Cloud provided two apparently official VA memoranda, one dated April 11, 2014, the other January 15, 2015, each signed by Ms. Cloud and recusing herself from dealings with her husband and his company.

The business day after Andrews queried Ms. Cloud about her husband, he was fired by the city of Norfolk.

“Thanks for letting us know, John. We take these issues very seriously. We will investigate and act upon it. Thanks. Bob.”

Once terminated, Andrews reported his concerns to the VA’s Under Secretary Alison Hickey, then the department’s top official in charge of veterans’ benefits, and to Hickey’s replacement, Danny Pummill, who has resigned. He later contacted VA Secretary Robert McDonald. All three officials who received material from Andrews about Ms. Cloud acknowledged its receipt in writing.

Robert A. McDonald

Secretary of Veterans Affairs Robert A. McDonald official portrait via wikimedia.org.

Secretary McDonald, in his message dated July 1, 2015, replied to Andrews:

“Thanks for letting us know, John. We take these issues very seriously. We will investigate and act upon it. Thanks. Bob.”

The VA did not immediately respond to questions about Ms. Cloud or the VEC; a spokesman for the agency said it was looking for answers.

Neither Ms. Cloud nor her Washington lawyer returned phone calls seeking comment.

In a statement, a spokesman for Mr. Cloud said, “His wife never directly or indirectly used her official position to benefit him or his company. Ms. Cloud has been fully transparent and has adhered to the governing ethics and disclosure requirements.”

The statement added that, “Misinformation and lies continue to be manufactured by entities with financial and political motives to benefit from a scandal.” The statement did not name the entities.

“The VA has in its possession information that would shed further light on the true nature of these attacks by parties who stand to gain from damaging SPG [Mr. Cloud’s company] and Ms. Cloud’s career.” The statement did not specify what that information might be.

 CHAD CLOUD: “THE VEC WILL BE AN ALLY”

In October 2014, Mike Schindler, president of a Washington state company hoping to sell employment software to the VA, was exploring a business deal with Chad Cloud and, according to emails they exchanged, the pair discussed the VEC.

In one October 22, 2014, email, Schindler asked Mr. Cloud: “What role is your software playing in the VEC? Is VEC a threat or an ally?”

Mr. Cloud replied that, “…the VEC will be an ally.”

He also asserted that the VEC was only capable of performing, “…about 20-30% of what we have right now, and of course they can’t violate our patent, so we are exploring how they work together so they don’t have to reinvent the wheel.”

While on its face it appears that Mr. Cloud’s reference to ownership of a patent indicates that he viewed the VEC as a marketing opportunity, a spokesman for him said the businessman’s software also served other groups, with only 20-30% related to veterans employment. A few months earlier, the patent application was filed on Mr. Cloud’s behalf, along with a request that the patent document not be published.

How Mr. Cloud gained knowledge of the VEC’s capabilities is unclear. According to the spokesman, veterans employed in his business with access to the VEC informed him.

No publicly announced disciplinary action appears to have been taken against Ms. Cloud. When suggestions of a conflict of interest were aired publicly before the VA’s official probe began, a senior VA official told Norfolk’s Virginia Pilot newspaper that, “We have no reason to believe these allegations have merit.”

The VEC, announced with fanfare in a White House press release from the Office of First Lady Michelle Obama in April 2014, was intended to create an online, one-stop-shop for veterans, their spouses, and employers, all embedded in a VA website, eBenefits.

Ms. Cloud served as the VA’s Senior Advisor for Veterans Employment and, before that, as Acting Director of the Office of Transition, Employment and Economic Impact. She had previously served at the White House as Policy Director for Veterans, Wounded Warriors, and Military Families.

In May 2016, after an expenditure that apparently ran into the millions, possibly tens of millions, of dollars, the VA announced it was cutting back the VEC  and erasing tens of thousands of veteran profiles. The agency has said it is “disabling” the VEC profiles “based on Veteran feedback, low usage rates and data collected over the past two years.” Also in May, the Department of Labor said it was expanding its own veterans employment website, which performs some of the same functions as the VEC.

FOIA BLACK HOLE

In early 2015, before Andrews’ recent FOIA request produced evidence of an official probe into Rosye Cloud, Andrews says he submitted two other FOIA requests concerning her—to which the agency has not responded except to acknowledge receipt of a single request on April 17, 2015. His requests sought a copy of the recusal Ms. Cloud said she signed, her travel schedule, and other items.

Receiving none of the documents he asked for, Andrews says he contacted the Department of Justice Office of Information Policy on November 4, 2015, to try to learn the status of his FOIA requests at the VA.

In a reply dated November 5, 2015, the head of the Justice Department’s FOIA Compliance Staff asked for authorization to act in the matter, noting that, “Our office would like to look into this matter and we will contact you once we complete our review.”

Andrews says he has heard nothing from Justice since.

In December 2014 and January 2015, Andrews says he made several requests to the White House for emails written by Ms. Cloud. He says he never received a written response, but was told on the phone that the requests had been denied for reasons of Executive Privilege and National Security.

The Virginia Pilot also submitted FOIA requests to the VA about Ms. Cloud in January 2015, and apparently received no documents from the VA in response.

As the investigation of Rosye Cloud continues, Secretary McDonald has become the target of recent criticism after he publicly compared lines for popular rides at Disneyland to wait-times at VA hospitals. The agency’s previous boss, Eric Shinseki, resigned under pressure in May 2014 after he proved unable to reduce wait times for thousands of veterans at VA hospitals.

Update:  IG Investigation Clears VA Official

An 11-page report of investigation dated  December 13, 2016  from the Office of Inspector General at the Department of Veterans’ Affairs has found that Rosye Cloud “did not misuse her VA position to give preference to her husband’s private business.” The probe also found that the private business, a software company belonging to her husband, had not bid on or obtained any VA contracts during his wife’s tenure, a period when she was in charge of the VA’s software initiative to find jobs for veterans. The probe determined as well that Ms. Cloud had repeatedly sought and received advice, in writing, from VA attorneys in order to avoid any possible conflict of interest.

         In a statement to POGO a spokesperson for Rosye Cloud quoted her as commenting, “The OIG report acknowledges that I repeatedly and proactively engaged VA counsel, maintained transparency, and acted in full compliance with governing laws and any allegations of misconduct are simply untrue. I strongly believe that our Veterans deserve an effective and efficient VA.”

          Meanwhile, retired Navy captain John Andrews continues to pursue a civil lawsuit against the City of Norfolk, Va., where many former military personnel live, for firing him in November 2014 from his position as an advisor on veterans affairs to the municipality. According to his lawsuit, city officials ended his employment after he warned them that Rosye Cloud might have a conflict of interest involving her husband at a time when he was marketing a software program designed, among other things, to find jobs for veterans, a mission overlapping with the VA program overseen by his wife.  Andrews alleges the dismissal violated federal and state laws protecting whistleblowers, as well as his First Amendment rights.  No hearing date has been set that in that litigation.

By: Adam Zagorin
Journalist in Residence, POGO

Adam Zagorin, Journalist in Residence Adam Zagorin is a journalist in residence for the Project On Government Oversight. Adam's work dives into many different areas including corruption and the financial arena.

Topics: Government Accountability

Related Content: Veterans Affairs, Conflicts of Interest

Authors: Adam Zagorin

comments powered by Disqus

Related Posts

Browse POGOBlog by Topic

POGO on Facebook