As feds probe workforce program, for alleged fraud by vendors, Mayor Reed reappoints majority of its board

By David Pendered

Federal authorities are conducting a criminal investigation into Atlanta’s workforce training program, city records show.

U.S. Labor Secretary Thomas Perez' department is investigating Atlanta's workforce training program.

U.S. Labor Secretary Thomas Perez’ department is investigating Atlanta’s workforce training program.

The U.S. Department of Labor is investigating allegations of fraud, by at least 57 vendors, which were unearthed in an audit released in February 2013 by Atlanta City Auditor Leslie Ward, records show.

Although an outside consultant hired by Invest Atlanta recommended July 31 that Atlanta reorganize the board that oversees the training program, Mayor Kasim Reed has recommended that 12 of 21 board members be reappointed.

The mayor appointed four new members. The status of five other members is unclear.

Reed notified the Atlanta City Council of his intent to reappoint the members in a series of recent letters to council President Ceasar Mitchell. The full council is to be notified at its Tuesday meeting.

The council is not required to act because it has no authority over the mayor’s appointments to the board that oversees the Atlanta Workforce Development Agency.

However, the council did vote in July 2012 to instruct Ward to conduct an audit of AWDA. Ward delivered the audit in October 2012 and Reed’s office did not respond until February 2013, following Ward’s notification that she intended to deliver the audit to the city council with or without comment from the mayor’s office. The workforce training program is administratively attached to the mayor’s office.

News of the federal investigation into AWDA has not been widely disseminated at Atlanta City Hall.

The investigation was detailed in minutes of the AWDA’s board meeting Feb. 19.

This is the only meeting this year for which minutes are posted on the agency’s website. Other meetings were scheduled for May 21 and Aug. 20, but no online record is available.

Mayor Kasim Reed has nominated Michael Sterling to direct the city's workforce training program.

Mayor Kasim Reed has nominated Michael Sterling to direct the city’s workforce training program.

Reed appointed an interim director on May 7 and said in August that he will ask the city council to confirm Michael Sterling as the permanent director of the workforce agency. Sterling has served as one of Reed’s principal advisors since Sterling left the U.S. attorney’s office in 2011.

Here are some highlights of the federal probe, which the minutes attribute to Jeffrey Norman, the city’s compliance officer who works in the city’s law department:

  • “Jeffrey Norman from the City of Atlanta Law Department informed the board that AWDA has been served with a subpoena by the U.S. Department of Labor, Office of the Inspector General, relative to information concerning the AWDA On-the-Job Training Program. The time period currently under review is from January 2009 to present….
  • “Norman explained that with this litigation in progress, we are basically looking to preserve all documentation from 2009. In addition, he explained the genesis of the subpoena served.
  • “Approximately a year ago, city internal auditors conducted an internal audit concerning this agency. As a part that audit, it was indicated that there was possible indication of fraud relative to vendors associated with the On-the-Job Training Program. The information was provided to the U.S. Department of Labor and they are now investigating. It is considered to be a criminal investigation at this point.
  • “Norman stated that he had a discussion with the U.S. Attorney’s Office, which is heading the investigation and currently no specific allegations have been made; they are in the information gathering status at this point.”

The audit prepared by Ward does not specify the indications of fraud that were uncovered. The audit stated that this specific information was withheld so as to not interfere with any potential investigation.

The audit did reveal that AWDA paid a total of $1.6 million in fiscal years 2011-12 to pay for training for 341 individuals. Of these trainees, 74 were hired for fulltime jobs. The vendors were paid an average of $4,692 for each trainee.

On Aug. 22, Reed attended an event with U.S. Labor Secretary Thomas Perez and, at the event, announced that Atlanta was restructuring its workforce training program as suggested by an outside consultant hired by  Invest Atlanta. The mayor chairs the board that oversees Invest Atlanta, the city’s development arm.

The analysis, delivered to the city on July 31, recommended just two organizational changes:

  • “Adopt a formal vision and strategic plan to drive implementation of the recommendations;
  • “Reorganize the Atlanta Workforce Investment Board and AWDA,” including suggestions that the mayor appoint a business leader to chair the board, and to secure training for existing board members.

David Pendered, Managing Editor, is an Atlanta journalist with more than 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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