Feds receive evidence of possible fraud in Atlanta’s jobs program; spending nears $10 million a year

By David Pendered

Indications of fraud and/or abuse in Atlanta’s federally funded workforce training program, revealed by a city audit made public Monday, have been turned over to the federal Department of Labor.

The city auditor found that indications of fraud and/or abuse in the city's workforce training program and forwarded them to the federal Department of Labor.

The city auditor found that indications of fraud and/or abuse in the city’s workforce training program and forwarded them to the federal Department of Labor.

In addition, the audit recommends that Atlanta’s mayor and city council consider discontinuing the program because of performance and compliance risks. The agency’s budget approaches $10 million a year.

Atlanta Chief Operating Office Duriya Farooqui received the audit in October 2012 and issued her response Monday. Farooqui wrote that the audit is not what she expected, and she refuted some of its findings.

City Auditor Leslie Ward indicated in her transmittal letter that she will respond to Farooqui’s comments before a council committee considers the audit. The Community Development Committee could take it up Feb. 19.

The Atlanta Workforce Development Agency is housed in a bureau in the executive office of the mayor. The agency functions largely out of public awareness, but it plays a significant and possibly increasing role in placing workers in private sector jobs.

The program had a budget of almost $9.6 million in fiscal year 2012, with about 80 percent coming from the federal government, according to the audit. The budget was set at almost $8 million in the current fiscal year, according to the mayor’s budget proposal.

The audit does not specify what indications of fraud were uncovered. The audit states:

  • “We omitted specific information from this report related to indications of potential fraud and/or abuse so as not to interfere with potential investigation. We referred this information to an external investigative agency and notified the audit committee, the city’s chief operating officer and compliance officer of the referral, in accordance with audit standards.”

One finding involves the expenditure of a total of $1.6 million in fiscal years 2011-2012:

  • The city subsidized 42 companies a total of $1.6 million to subsidize training for 341 workers. State records indicate that 74 of the 341 workers who participated were hired for full-time jobs.

Another finding questions the companies that were paid portions of the $1.6 million to train workers:

  • One company, Cronus Development LLC, was paid $385,370 to train 50 workers. For this subsidy, an average of $7,707 a worker, Cronus was paid 24.3 percent of the total sum allotted for this project. The only name associated with Cronus on papers filed in the corporations division of Georgia’s Secretary of State corporations division is Laquarmie J. Carter, as agent.
  • Cronus is listed as an active company, but as non-compliant for failing to file its annual registration in a timely manner.
  • Carter also is listed as agent for a liquor license that was sought from Atlanta’s License Review Board in June 2011. The Indigo Bar and Lounge intended to offer live entertainment at 619 Edgewood Ave. and wanted to pour liquor, beer and wine.

Other concerns raised in the audit state:

  • 57 percent of the program’s participants reside outside Atlanta, where they could be served by workforce development agencies operated by DeKalb or Fulton counties;
  • If the program continues, the city’s COO should exercise greater control over the agency;
  • If the program continues, the city’s IT officer should make sure to protect personal  information retained in the AWDA system.

The audit of the Atlanta Workforce Development Agency sets up a discussion between Mayor Kasim Reed’s office and the council. The council voted June 20, 2012 to request an audit of the program.

The AWDA historically has not received a great deal of public attention, partly because it is managed out of the mayor’s office and paid for with federal funds.

Atlanta has put some muscle behind its workforce training authority. For example, the city required that some of the sought-after jobs at the airport’s restaurants and shops had to be filled by individuals who had been processed through the workforce agency.

There’s been talk of implementing similar requirements for companies that are helped by Invest Atlanta, the city’s development authority.

 

About David Pendered

David Pendered, Managing Editor, is an Atlanta journalist with nearly 30 years experience reporting on the region’s urban affairs, from Atlanta City Hall to the state Capitol. Since 2008, he has written for print and digital publications, and advised on media and governmental affairs. Previously, he spent more than 26 years with The Atlanta Journal-Constitution and won awards for his coverage of schools and urban development. David graduated from North Carolina State University and was a Western Knight Center Fellow. David was born in Pennsylvania, grew up in North Carolina and is married to a fifth-generation Atlantan.
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