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Two arrested on work force grant fraud charges

NEW PORT RICHEY — Under indictment on charges of scheming to defraud a taxpayer-funded work force training program, two people turned themselves in to the Pasco County Sheriff's Office on Thursday.

Marian Elizabeth Callaghan, 47, and James Egan, 60, both of Hudson, worked for Optima HVAC and Axon Technologies, companies that applied for training grants from the Pasco Hernando work force board.

The two companies were approved for $123,000 in in-house training costs — a rate that came out to $3,844 an hour, which was "extraordinarily high and deviated from established practice," according to a report by the state Office of Inspector General.

Callaghan handled the applications, the report said. Egan was listed as the trainer.

The payments were never actually made to Egan, a man one staffer described as Optima's sometimes president, the report said.

The arrests are fallout from the scandal that erupted last summer, when the inspector general released a 48-page report outlining allegations of financial mismanagement at the Pasco Hernando Jobs and Education Partnership. The investigation was sparked by a whistle-blower's complaint.

The chief allegations centered around a work force board program, paid for with federal money, that allows businesses to split the cost of employee training with the government.

The report found that Lee Ellzey, then-president of the work force board, approved the training grants for Optima HVAC and Axon Technologies even after lower-level staff denied the application.

Both New Port Richey companies are owned by Steve Jensen. At the time, Jensen also served as chairman of the work force board — which made him Ellzey's boss.

After the report became public, Ellzey was fired and Jensen resigned.

The report noted other irregularities in the grant requests: The application listed Egan as an outside consultant, which would have allowed him to be paid at a higher rate. In fact, Egan worked for the company where he was providing training, so the grant should only covered only half of his hourly pay.

A review of his invoice listed James Egan Consulting Services. However, that entity was not listed with the Florida Division of Corporations.

The address was the same as Optima Technologies. A listed phone number belonged to the company Superior Solid Surfaces, which specializes in countertops, the report said. The owner said he did not know a James or Jim Egan.

A separate grant application for training listed the trainer as Ralph Newman of Orlando, but the provided address belonged to another Optima office in Orlando. Jensen told investigators that Newman was the company's groundskeeper.

Investigators who questioned Jensen about the program said he didn't know how much money was being paid to Egan. Jensen said Callaghan, one of his employees, handled the applications.

She "pretty much is on auto-pilot with that," Jensen told investigators, according to the report.

The Florida Department of Law Enforcement obtained warrants Tuesday to arrest Callaghan and Egan on charges of scheming to defraud. They turned themselves in Thursday.

Callaghan and Egan were booked at the Land O'Lakes jail, then released on $5,000 bail.

Jerome Salatino, who replaced Ellzey as president of the work force board, said the announcement of the arrests give the agency a sense of closure. "We're trying to move forward," he said.

Board chairman Ed Blommel said he was glad to see the matter resolved. "It seemed to distract us," Blommel said.

Two arrested on work force grant fraud charges 03/18/10 [Last modified: Thursday, March 18, 2010 8:35pm]
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