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  1. Pinellas

Feds cite 'blatant non-compliance,' fakery and $17 million in questionable spending at embattled Tampa Bay CareerSource offices

Edward Peachey, right, leaves an executive committee meeting of CareerSource Pinellas on Jan. 31, 2018, at the EpiCenter at St. Petersburg College. (SCOTT KEELER | Times)
Published May 21

Federal regulators lambasted two Tampa Bay CareerSource offices once lauded among Florida's best at putting people to work, revealing how they cultivated lies and shady spending of more than $17 million in public money.

According to a report released this week, leaders at CareerSource Pinellas and CareerSource Tampa Bay oversaw a toxic workplace, encouraging staffers to create fake Social Security numbers, falsify paperwork and report sham job placements for people they never helped — all in a quest to drive up numbers that made it look like the agencies were exceeding expectations.

Former CEO Edward Peachey oversaw the operation, according to the 50-page report that followed a yearlong review by the U.S. Department of Labor. The inquiry was triggered by a Tampa Bay Times investigation started by staff writer Mark Puente, who questioned the spending and reporting practices of the two job placement centers.

THE INVESTIGATION: Read the Tampa Bay Times investigation into CareerSource.

THE REPORT: Read the 50-page federal report.

Board members for the agencies placed much of the blame on Peachey, who was ousted on both sides of the bay last year.

"He set this whole thing up so that you wouldn't be able to find out what he was doing. I'd like to see him behind bars," said Pinellas County Commissioner Pat Gerard. "I think we fixed the things that were wrong, but I guess we still have to pay for what happened."

The FBI and Labor Department earlier this year announced they were conducting a criminal investigation into the two job centers. Peachey could not be reached for comment Tuesday.

The county commissions ceded much control to Peachey and the agencies, according to the reviewers, and that helped create "an environment vulnerable to mismanagement, waste, fraud, and (for) abuse to occur undetected."

Among the issues was a hostile work environment in which bosses threatened to demote staffers and directed them to report finding jobs for people whom they never met.

"Management relied heavily on falsified placements to achieve desired performance goals," the report states.

The $17 million in questionable costs includes money that CareerSource Pinellas and CareerSource Tampa Bay paid out for job training, gas and gift cards, incentives to staffers and salary increases to Peachey and other directors, according to the report. That money could be disallowed, it says, meaning the offices could be forced to pay it back to the federal government. The local CareerSource offices rely largely on public money to begin with, and the county governments, which are supposed to oversee and backstop the agencies, could eventually be forced to cover part of the bill.

A federal labor administrator sent a letter summarizing the findings May 15 to Ken Lawson, the executive director of the Florida Department of Economic Opportunity, which oversees 24 CareerSource offices. The report outlines 17 specific problems and chides the Tampa Bay agencies for "blatant non-compliance" with federal workforce program rules.

Gerard says she hopes the counties can work with the Department of Economic Opportunity and reduce the expenses CareerSource Pinellas and CareerSource Tampa Bay may have to pay back. Hillsborough County Commissioner Sandy Murman, a member of the CareerSource Tampa Bay board, echoed blame for Peachey.

"Clearly he did something wrong and it was unlawful, and good hardworking people may have to pay for his wrongdoing," she said. "The message is you have to really look long and hard into somebody's success, and make sure that everything is being done above board."

The Labor Department report did not spare the counties, local boards or Department of Economic Opportunity from criticism. Reviewers said board members were not trained and did not know what they were supposed to do to oversee the agencies, and that the state did not provide adequate guidance or monitoring for the local boards.

The Department of Economic Opportunity must now submit a corrective action plan within 45 days. Lawson, the agency's director, wrote in a letter to the federal administrator: "We expect all workforce development boards to comply with state and federal funding requirements and act in the best interest of the job seekers and businesses they serve. Anyone who is found to not be meeting these high standards will be held accountable as we protect taxpayers' dollars."

For years, the state praised Peachey's CareerSource centers as top performers. He used high job placement figures to justify a salary increase and was named to a list of Tampa Bay's 100 most powerful business figures. His public reputation was sterling, his grip on the agencies ironclad.

The Labor Department review said over the years Peachey began recommending board members, effectively controlling some people who were supposed to be overseeing him. The Times reported that the members often did not attend meetings, and rarely questioned or voted against Peachey's recommendations.

From 2006 to 2017, the reviewers wrote, Peachey increased his salary seven times without evidence of board approval, with costs totaling $408,487. That money is among the questioned spending the government may seek to recoup.

He also implemented the incentive structure, which the review says led to more than $2 million in questionable payouts from 2013-17 to recruiters and placement workers who were pushed to inflate hiring figures. They worked under the business services department, led for some time by Haley Loeun, a top deputy to Peachey who was also fired last year. Staffers alleged she and Peachey were having an affair, but they denied any inappropriate relationship.

Much of the scheme for fake reporting centered on hiring lists, according to the report. The CareerSource offices would obtain records of new employees at businesses around Tampa Bay, and then take credit in official reporting for helping send people to the work. Sometimes, according to instructions attached to the report, this meant CareerSource staffers were directed to create accounts in their computer systems with sham Social Security numbers for people they had never helped.

The two agencies further steered nearly $10 million to area businesses for on-the-job training without documenting that the new workers were eligible or actually needed the training. They used this program to pad job referrals, according to the report, 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 job placement centers handed out more than $5 million in prepaid debit cards and gas cards from 2013 to 2017, too, the reviewers wrote, without determining whether the recipients really needed the help. They mailed out cards "in most cases," and did not verify whether they were received by the right people. The federal government might also ask for that money back.

All of the above findings were first reported in the Times.

CareerSource Pinellas and CareerSource Tampa Bay separated last year, reversing the merger of services adopted under Peachey. Each office has 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.

Jack Geller, chairman of the CareerSource Pinellas board, said Tuesday he had not had time to read the full report since receiving it Monday.

"Until I review the report, I can't give you any reaction to it," he said. "What they're talking about is yesterday and I don't mean that in a dismissive statement, but it is yesterday."

Contact Zachary T. Sampson at zsampson@tampabay.com or (727) 893-8804. Follow @ZackSampson.

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