A local Veterans Affairs official is accused of financial misdealings for arranging to have herself transferred from the East Coast to St. Paul, keeping a higher rate of pay for a lower level of responsibility and claiming more than $100,000 in moving expenses.

The VA inspector general's office said it has referred the case of Kimberly Graves and another VA official to the U.S. attorney for possible criminal prosecution. It also recommends that actions be taken to decide whether Graves, who remains head of the VA's St. Paul office of the Veterans Benefits Administration, should return $129,000 in moving expenses.

"We determined Ms. Graves inappropriately used her position of authority for personal and financial benefit when she participated personally and substantially in creating an opportunity for her own transfer to the St. Paul [Veterans Affairs Regional Office]," said the report released Monday.

The case involves high-level officials in the Veterans Benefits Administration, the arm of the VA that handles issues such as disability compensation and other forms of financial assistance to veterans and their dependents. It is different from the Veterans Health Administration, which administers medical care at VA hospitals and clinics, which also has come under fire.

The inspector general found that the Veterans Benefits Administration often used moves of senior executives as a method to justify annual salary increases and used the VA's transfer policies to pay moving expenses for the employees. It recommended that the VA strengthen the approval process and require an independent review to ensure moves and expenses are justified.

"This report is simply the latest in a long line of investigations showing VA officials helping themselves instead of helping America's veterans," Rep. Jeff Miller, R-Florida, chairman of the House Committee on Veterans Affairs, said in a statement.

The allegations are "outrageous," Rep. Tim Walz, D-Minn., a member of the House Committee on Veterans Affairs, said in a statement.

"VA officials manipulating the trust and placing their own personal benefit before the needs of veterans is unacceptable," he said.

Forced transfer comes first

In 2010, Graves became the director of the Veterans Benefits Administration's Eastern Area Office, responsible for 16 regional offices across 14 states.

In 2014, she volunteered to become the director of the St. Paul regional office, a position that involved a significant decrease in job responsibilities. Although she volunteered for a position with reduced responsibilities, she retained her $173,949 annual salary when she transferred. The VA also paid a total of $129,467.56 in relocation expenses.

A former director of the St. Paul office told investigators that Graves first suggested he move to the Philadelphia office, then forced him to accept a transfer to Baltimore. Then Graves, who had family in Minnesota and had worked in St. Paul previously, recommended herself for the now-vacant St. Paul position.

Graves could not be reached for comment.

Another top Veterans Benefits Administration official, Diana Rubens, was accused of using the same tactics to get herself reassigned from a high-level job in Washington to the Philadelphia and Wilmington, Del., regional field office, while retaining her $181,000 salary and racking up almost $275,000 in moving expenses.

In response to the report, the VA released a statement saying it will conduct a 30-day review of all incentive and relocation procedures.

"In addition, VA will consider all the evidence presented by the IG, collect any additional evidence necessary, and take appropriate accountability actions," according to the statement.

Congress demanded probe

The investigation began in March when members of House and Senate committees overseeing the VA received an anonymous complaint about Rubens' relocation expenses; and about her retaining her higher level salary for substantially lower responsibilities.

"I am not surprised that the IG has confirmed our biggest fears about VBA's relocation expenses program," said Rep. Miller in his statement. "The IG's report proves that VA's corrosive culture extends to the highest levels of VBA leadership and must be immediately rooted out once and for all."

Federal regulations say an employee transferring in the interest of the government from one agency or duty station to another that is at least 50 miles from their old duty station is eligible for relocation expense allowances.

Mark Brunswick • 612-673-4434