Inside The Now-Shuttered Federal Agency Where Employees Lived ‘Like Reigning Kings’
DailyWire.com
Luke Rosiak
March 19, 2025
Employees of DOGE’s latest target spent taxpayer money on exotic vacations, portraits, and more.
One of the seven small federal agencies that President Donald Trump ordered downsized or eliminated on Friday was rife with corruption, with its employees hiring friends and relatives, commissioning paintings of themselves, and using government credit cards to indulge in constant luxuries.
The Federal Mediation and Conciliation Service (FMCS) occupied a nine-story office tower on D.C.’s K Street for only 60 employees, many of whom actually worked from home, prior to the pandemic. Its managers had luxury suites with full bathrooms; one manager would often be “in the shower” when she was needed, while another used her bathroom as a cigarette lounge. FMCS recorded its director as being on a years-long business trip to D.C. so he could have all of his meals and living expenses covered by taxpayers, simply for showing up to the office.
FMCS is a 230-employee agency that exists to serve as a voluntary mediator between unions and businesses. As an “independent agency,” its director nominally reports to the president, but the agency is so small that in effect, there is no oversight at all — and it showed, becoming a real-life caricature of all the excesses that the Department of Government Efficiency has alleged take place in government.
This reporter spent a year investigating the agency a decade ago, and I found egregious and self-serving violations of hiring, pay, contracting, and purchase card rules. One thing I could not discover is why the agency actually existed, other than to provide luxurious lifestyles for its employees. Endless junkets to resort destinations, which employees openly used to facilitate personal vacations, were justified as building awareness of the agency in the hopes that someone would actually want to use its voluntary services.
FMCS seemed, quite clearly, to exist for the benefit of those on its payroll, and not much else. One employee told me: “Let me give you the honest truth: A lot of FMCS employees don’t do a hell of a lot, including myself. Personally, the reason that I’ve stayed is that I just don’t feel like working that hard, plus the location on K Street is great, plus we all have these oversized offices with windows, plus management doesn’t seem to care if we stay out at lunch a long time. Can you blame me?”
“Recreation and reception fund.”
Top FMCS official George Cohen used a “recreation and reception fund” to order champagne and $200 coasters for his office, and to purchase artwork painted by his wife. The tiny agency commissioned paintings of its top employees — as one employee told me, “like they were reigning kings or something…I’ve never seen anything like it before.” It spent $2,402 retouching the portrait of someone who briefly held the top job in an acting capacity.
FMCS employees “unblocked” their government credit cards to turn off typical abuse protections, then used them to apparently fund personal expenses and simply bill anything they’d like to the government. One employee leased a BMW; another (IT director James Donnen) billed the government for his wife’s cell phone, cable TV at both his home and his vacation home, and even his subscription to USA Today.
Employee Dan W. Funkhouser used his FMCS card to rent a storage unit near his home in rural Virginia, two hours from the office he supposedly worked at, which was used to store personal possessions such as a photo album of his dog, Buster. Funkhouser also spent $18,000 at a jewelry store near his house, and “destroyed all purchase card records upon leaving the agency,” an audit said.
When Charles Burton retired from FMCS, he incorporated an LLC to which another FMCS employee paid $85,000 using his purchase card, listing it as a “Call Center Service,” even though the company had neither a website nor a working phone.
When an accountant, Carol Booth, blew the whistle on financial abuses to the General Services Administration, which manages purchase cards and contracting, Cohen forced her to send an email (which he wrote under her name) rescinding her statement.
Like something out of “The Office,” the employees spent an inordinate amount of time and money congratulating one another for being employed there and engaging in “work” that really amounted to pampering themselves.
One purchase was for $30,000 on trinkets marking employees’ anniversaries. The agency’s office was absurdly oversized, but it refused to move. It hired a consultant for a “Hallway Improvement Project” to decorate. It had an in-house gym for employees, and purchased a $1,000 TV for the gym, a $3,867 ice-maker, and a $560 stereo.
The expenses that were actually business-related were hardly better. It paid, for example, $895 “for Suzanne Nichter’s enrollment in the English Essentials: A Grammar Refresher course” and $735 “for Lakisha Steward to attend Listening and Memory Skills Development Course.”
All expenses paid lifestyle
FMCS used federal jobs as a spigot of cash for friends and relatives. Allison Beck, a former union lawyer who became a top FMCS official, employed her sister-in-law as a “special assistant,” and an inspector general found evidence that she tried to create a high-level job for a friend.
FMCS employees allegedly steered contracts to friends, allowing them to write the “statement of work” that would be used to choose the contract winner — resulting in, of course, their own selection. Such “trainers” were paid $1,500 per day per person to train FMCS’s staff, plus $163 an hour for travel. When a low-level employee eventually said the extra travel pay ran afoul of federal rules, a contractor made clear he viewed it as an entitlement, huffing: “Work we have successfully performed for the agency for more than a decade — at great personal sacrifice, I should add — will be taken away unless we comply in an unquestioning manner with your edict.”
Scot Beckenbaugh, a top agency official, was paid $174,000 a year, but that wasn’t enough: He had his “duty station” listed as Iowa so that he could have all of his living expenses and food paid for in D.C., where he lived and worked, as if he was on a six-year-long business trip. When an employee raised the issue to an agency lawyer, the lawyer told him he “should not raise these issues … it would open a can of worms.”
FMCS hired a former mail carrier who lived in Pennsylvania, Lu-Ann Glaser, for a high-level, D.C.-based job, and agreed to pay for her to stay in a hotel for half of every month — even though it would have been easy to find someone better qualified who didn’t need to be put up in a hotel to simply do her job.
Paul Voight, a human resources official, was listed as living in D.C. even though he actually lived in Wisconsin, in order to fraudulently obtain higher cost-of-living pay. Voight’s boss was Artur Pearlstein, who left the agency to become a law professor, and was then re-hired after his academic career imploded in a plagiarism scandal. His first move in his new job was terminating an independent investigation into FMCS staff abusing taxpayer funds for personal gain.
Cohen, for his part, steered work to his previous employer, despite signing ethics forms saying he would not.
Constant junkets
Many of the agency’s top employees lived outside of the typical Washington, D.C., commuting area, and only stopped in the area occasionally, in an era before telework was routine. Its CFO, Fran Leonard, would come to the office twice a week but leave by 2:00 p.m.
The agency had, inexplicably, an office in Honolulu.
It funded constant travel of its employees to exotic locales, on the pretext that it was drumming up business for the federal agency — an admission that there was little demand for the agency’s existence.
In one month, Beck traveled to Italy and Switzerland, where she conducted a business meeting — over video chat. Then she went to Tunisia and an island off the coast of Georgia. She flew first class and forced the agency to reimburse her for mileage when she drove to her vacation home in Maine.
The agency had three full-time media relations staffers, none of whom would speak to me, almost certainly one of the only reporters to ever call.
Cash grants for insiders
The agency’s existence is predicated on the idea that it is an impartial mediator, biased neither towards labor nor management. But its staff largely comes from a union background, and it gave out grants to promote union membership. But it was too incompetent to do much ideological damage; its employees’ comfort always came before helping unions.
Anyone could request cash grants from the agency, with the only requirement that they mention some nexus with unions, however tortured. It doled out a seemingly random assortment of giveaways to private businesses, perhaps because they were the only ones who knew the grants existed.
It gave $63,000 to a hospital that went bankrupt; $51,000 to a childcare company to help it pay government licensing fees; and $57,000 to a company to “strengthen of culture of continuous improvement to drive us to world class excellence!”
What surprised me most about my FMCS investigation was what happened afterward: nothing. An inspector general made a referral to the FBI, but there were no prosecutions. Instead, President Barack Obama nominated a chief subject of the investigation to the top job.
A decade later, Trump has done what even the agency’s own employees said should happen: shut it down.
FMCS – 1947
The Federal Mediation and Conciliation Service (FMCS) was created by the National Labor Relations Act of 1947 (better known as the Taft-Hartley Act) as an independent agency to preserve labor-management peace.
The Federal Mediation and Conciliation Service (FMCS) is, at first glance, an unassuming bureaucracy. Established in 1947 under the Labor-Management Relations Act, its ostensible purpose was to provide voluntary mediation between unions and employers to avert labor disputes. Yet, as is often the case with government agencies founded under noble pretenses, it did not take long for FMCS to become a study in the dangers of unchecked bureaucracy, financial mismanagement, and unaccountability. With its dissolution under the Department of Government Efficiency’s (DOGE) mandate, we have an opportunity to reflect on what its closure reveals about the broader state of the administrative state.
A common argument in defense of FMCS was that it played a vital role in resolving labor disputes and preventing economically disruptive strikes. But was this actually true? Even a cursory review of its effectiveness suggests otherwise. The agency did not hold any binding authority over labor negotiations, nor was it an indispensable player in the mediation process. Private-sector mediators, arbitration firms, and direct negotiation strategies routinely fulfilled the same function without burdening taxpayers with an unnecessary bureaucracy. In practice, FMCS existed more as a vestigial organ of a bygone labor-management era than as an essential mechanism for modern labor relations.
But the real scandal of FMCS was not just its redundancy—it was the egregious waste of taxpayer money. The agency operated out of an expansive, nine-story building in Washington, D.C., despite employing a mere 60 people at its headquarters. This physical presence alone was a grotesque misuse of resources, with office space far exceeding actual staffing needs. Worse still, lavish accommodations such as private gyms, executive lounges, and absurdly expensive artwork (including commissioned portraits of its own bureaucrats) dotted the premises, all paid for with taxpayer dollars. At a time when ordinary Americans were forced to tighten their belts, FMCS operated with the unchecked indulgence of a medieval court.
The financial improprieties extended far beyond real estate excesses. Employees routinely abused government-issued purchase cards, circumventing fraud-prevention restrictions to charge personal expenses to the agency’s accounts. Among the more flagrant examples: one official used government funds to pay for his wife’s cell phone bill; another leased a luxury BMW under the pretext of ‘business necessity.’ Such behavior was not the result of a few bad actors but a systemic culture of entitlement and graft, shielded by the bureaucratic opacity that defines so many independent agencies.
It is worth asking how FMCS was able to persist in such blatant inefficiency and self-dealing for so long. The answer lies in its status as an independent agency—nominally accountable to the executive branch but, in practice, answerable to no one. Unlike cabinet-level departments subject to frequent political oversight, FMCS operated in the shadows, its budget rubber-stamped by congressional inertia. When internal auditors and whistleblowers attempted to expose its abuses, they were met not with reform but with retaliation. This is the predictable outcome of bureaucratic isolation: an agency more concerned with its own survival than with serving the public interest.
The predictable outcry against FMCS’s dissolution from entrenched interests underscores just how little the agency was about mediation and how much it was about maintaining a cushy sinecure for its employees. Critics argued that its closure represented an attack on labor rights, a claim that wilfully ignored the fact that private mediation services exist in abundance, often with greater efficiency and flexibility than their public counterparts. In reality, the opposition stemmed from a far more mundane source: those who had grown comfortable in their government sinecures were loath to see the gravy train come to an end.
The FMCS case study is not an isolated incident but a microcosm of the fundamental problem with the modern administrative state. Agencies like FMCS continue to exist not because they serve an indispensable function but because they benefit from bureaucratic inertia. Once created, federal entities become self-perpetuating, with every incentive to expand their budgets, justify their own necessity, and resist any attempts at reform. The question, then, is not just why FMCS was shut down but why so many similar agencies remain untouched.
The dissolution of FMCS under President Trump’s Department of Government Efficiency was a rare moment of rational governance—a recognition that the mere existence of an agency does not justify its continued operation. The standard for any government function should not be whether it has a noble-sounding mission statement but whether it provides a tangible, irreplaceable benefit to the American people. By that measure, FMCS failed spectacularly. It was not merely redundant but actively harmful to the principles of good governance and responsible stewardship of public funds.
If the elimination of FMCS is to serve as more than a symbolic gesture, it must be a precedent rather than an exception. The administrative state is rife with similar agencies—obscure, unaccountable, and operating under the radar of public scrutiny. The FMCS model of bureaucratic excess is hardly unique; it is simply one of the more egregious examples to come to light. If we are serious about limiting government to its proper functions, then FMCS should be the first of many agencies to be sent to the dustbin of history.
The lesson of FMCS is clear: government, left unchecked, will expand endlessly, accruing waste, inefficiency, and corruption along the way. It is the duty of an engaged citizenry and a principled executive to ensure that public institutions serve the public—not themselves. In shutting down FMCS, the Department of Government Efficiency has taken a step toward fulfilling that duty. The only question that remains is whether we have the will to continue the work.
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