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Feds demand new payment records from Tampa Bay CareerSource job centers

A federal criminal investigation of both job centers is ongoing. Federal regulators want to verify payments for job training and gas and debit cards.

Two years after turmoil erupted at public job centers in Pinellas and Hillsborough counties, federal regulators ordered both agencies on Tuesday to turn over records tied to more than $3.6 million in spending in 2016 and 2017.

The U.S. Department of Labor ordered the Florida Department of Economic Opportunity to determine how CareerSource Pinellas and CareerSource Tampa Bay spent more than $1.3 million on gas and debit cards and another $2.3 million for on-the-job training between July 2016 and June 2017. The Department of Economic Opportunity oversees the state’s 24 public job centers.

The request for more records comes two years after a series of Tampa Bay Times investigations found widespread abuses in which employees were encouraged to create fake Social Security numbers, falsify paperwork and report sham job placements for people they never helped. The efforts were all in a quest to drive up numbers that made it look like the agencies were exceeding expectations. The sham placements also triggered higher salaries for some top employees.

Both agencies were led by former president and CEO Edward Peachey. Any percentage of misspending found in that period will apply to a total of five years. Taxpayers in both counties could be responsible for any disallowed spending. A federal criminal investigation of the then sister agencies is ongoing, officials said.

“This is the next step in the process to resolve the situation,” CareerSource Pinellas CEO Jennifer Brackney said Wednesday.

John Flanagan, CEO at CareerSource Tampa Bay, agreed, saying: “We’re going to follow instructions to a tee. We’re going to be very cooperative.”

Related: CareerSource: Read the entire investigation

On Wednesday, Stephanie Marchman, an attorney for CareerSource Pinellas, told board members that the U.S. Attorney’s Office recently asked her to provide more information for their ongoing investigation. She later told the Times that prosecutors requested current lists of board members and staffers.

Last week, a federal labor administrator sent a letter summarizing his request to Ken Lawson, the executive director of the Florida Department of Economic Opportunity. Lawson sent the requirements to local leaders on Tuesday, records show.

The letter explained that a review of every transaction for the two programs over five years would take “tremendous time and additional resources." The Labor Department preferred to focus on one year and apply the findings to the five years.

Edward Peachey, the former president and CEO of CareerSource Tampa Bay and CareerSource Pinellas, left, talks with his attorney, Marion Hale, right, while listening to board members discuss terminating him in March 2018.    [DOUGLAS CLIFFORD   |   Times]
Edward Peachey, the former president and CEO of CareerSource Tampa Bay and CareerSource Pinellas, left, talks with his attorney, Marion Hale, right, while listening to board members discuss terminating him in March 2018. [DOUGLAS CLIFFORD | Times]

After a series of newspaper articles in 2018, the FBI and Labor Department announced they were conducting criminal and administrative investigations into the two job centers. In May 2019, the Labor Department released a scathing 50-page report that followed a year-long review.

Peachey did not answer his door Thursday when a Times reporter visited his home, seeking comment.

Specifically, federal regulators want to verify that 6,375 transactions worth $3.6 million were proper payouts.

Of those, 5,073 involved the sister agencies trading 19,330 gas and debit cards for information from job seekers. Many individuals received the cards if they found jobs on their own. The agencies then collected the information and reported to the state that the agencies had made the placements. The cards were supposed to help job seekers buy gas, tools, work clothes and other items needed for jobs.

In Pinellas, federal regulators will examine gas and debit card payouts worth $407,990. Hillsborough is under the microscope for $894,490, records show. Both centers gave out far more cards than any other job center in the state. Tax dollars paid for the cards.

Related: Tampa Bay job centers gave away millions in gift cards and boosted hiring totals

Additionally, federal regulators want verification on how the agencies made 1,302 payments worth $2.3 million for on-the-job training without documenting that the new workers were eligible or even needed the training.

In Hillsborough, the job center made 811 payments to employers, totaling nearly $1,385,000. Pinellas is responsible for 491 payments, totaling $919,555, records show.

The agencies used this program to pad job referrals and leaned on a database of employers’ signatures to file contracts in bulk — meaning they did not always consult with the employers on each new record. This practice was connected to Pinellas County Sheriff Bob Gualtieri, eventually questioning whether a CareerSource Pinellas staffer had forged his signature.

The Times reported the above findings a year before federal regulators listed them in its report.

Related: Amid CareerSource controversy, allegations of a love affair, big raises and family favoritism at the top

CareerSource Pinellas and CareerSource Tampa Bay separated in 2018, reversing the merger of services adopted under Peachey. Each office selected new leaders and new policies, and officials say they are working to rebuild trust. But the scandal continues to resurface — and now it carries the potential for even more costs.

“We still don’t know how much we’re going to have to pay yet,” Pinellas County Commission Chair Pat Gerard said.