A judge on Wednesday reversed the demotion of a top Veterans Affairs (VA) official who allegedly manipulated a program to pocket thousands in taxpayer dollars.

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The Merit Systems Protection Board (MSPB) in Chicago ruled in favor of Kimberly Graves, a former St. Paul, Minn., regional director, who had appealed her demotion in the wake of the scandal.

The ruling will likely reinstate Graves’s senior executive service status and boost her salary, which was cut by $50,000 in the demotion.

Graves was reassigned to an assistant director position on Jan. 6, after an Inspector General (OIG) report found she had created a vacancy in the St. Paul office – which she subsequently filled – in order to take advantage of a lucrative relocation stipend.

She was reimbursed nearly $130,000 in the move, the OIG report said.

“Ms. Graves is happy the action was reversed, and she looks forward to continuing her life’s work serving veterans,” Graves’s attorney, Julia Perkins, told Government Executive.

The board did not make public its reasons for reversing the decision. The VA has declined to comment on the matter.

Rep. Jeff Miller (R-Fla.), chairman of the House Committee on Veterans' Affairs, called the decision a "slap in the face to many dedicated VA employees who do the right thing on a daily basis."

"By now there should be no doubt whatsoever that our federal civil service system is in need of drastic reform," Miller said in a statement to The Hill.

Concerned Veterans for America (CVA), a group advocating comprehensive VA reform, said the reversal demonstrates what is wrong with the embattled agency.

“The reversed demotion of senior VA executive Kimberly Graves clearly demonstrates that the VA lacks not only the will to hold its employees accountable, but it also lacks the ability,” CVA press secretary John Cooper said in a statement to The Hill.

“The toxic culture at the VA, which has resulted in wait list scandals, retaliation against whistleblowers and now the defrauding of taxpayers, can only be fixed when government bureaucrats know they will be held accountable for their actions,” he added.

Another VA official caught up in the scandal, Diana Rubens, former regional director in the VA’s Philadelphia office, is still awaiting her decision from the MSPB. It will be announced by Feb. 1.

Rubens allegedly received more than $274,000 in moving expenses to fill a vacancy in the agency’s Philadelphia office, which she allegedly orchestrated.