A former Atlanta contractor faces possible prison time and the city must pay $1.86 million for a jobs program that an Atlanta Journal-Constitution investigation found gave grants to businesses that hired phantom workers and conducted token or non-existent training.
The city admits no liability as part of the settlement reached with the U.S. Departments of Justice and Labor over federal subsidies to employers that provided on-the-job training after the Great Recession. A May 2014 AJC investigation revealed that the Atlanta Workforce Development Agency recklessly awarded the grant money to city insiders for so-called participants — many who did not know they were part of a program at all.
Entrepreneur Kevin Edwards, who was investigated by the AJC, is set for a plea hearing Dec. 13 in U.S. District Court in Atlanta on a felony charge of stealing grant funds and knowingly converting them to his own use. Edwards was once touted by the workforce agency as the program’s model employer, the AJC found.
Edward’s attorney, Janice Singer-Capek, said that while workers he hired with federal dollars did benefit, the city program was poorly run and her client failed to follow Labor Department rules.
“I would find it very difficult to believe he was only person taking advantage of the system. It was rife with problems and many other people utilized it,” Singer-Capek said. “It’s his intention to admit fully that he took advantage of the system, and that he regrets it.”
The Justice Department’s False Claims Act investigation found that the city workforce agency knowingly paid out job training funds while failing to provide required services. Investigators think it subsidized employees who were ineligible, did not receive training, or received inadequate training, the settlement agreement states. It also did not assess clients to determine what help they needed.
City officials agreed to the settlement to avoid additional legal expenses and potential liability, and provide the agency with a fresh start.
“AWDA has turned the corner and we are proud of the investments we’re making to engage and train Atlanta’s dislocated workers, low-income adults and youth, both in-school and out-of-school, so that they can obtain meaningful employment and participate in the economic growth of the region,” the agency’s Interim Director Melissa Mullinax said in a statement.
A city spokeswoman released the Oct. 20 settlement agreement to the AJC on Wednesday after repeated requests.
Federal officials stated as part of the agreement that it did not intend to launch civil investigations into 58 current workforce development agency employees.
But the settlement does not release the city from administrative sanctions or free individuals from criminal prosecution. The city also agreed to fully cooperate with federal investigator.
The workforce agency will not fund on-the-job training until a corrective action plan is approved by the Labor Department.
Problems with the on-the-job training program took place under longtime Executive Director Deborah Lum, who retired after the AJC published its investigation. The city paid Edwards, who then owned nightclubs and restaurants, to train construction workers at a long-shuttered home building business, as well as teachers at a daycare center that inspectors said repeatedly violated state safety rules. The daycare’s director was listed to be trained as her own assistant director, the AJC found.
Non-existent or token job training also took place at Atlanta Human Performance Center, a physical therapy and fitness center that briefly employed Police Chief George Turner’s son, and where Lum exercised; Summerset Assisted Living, a home for the elderly owned by a Metro Atlanta Chamber Business Person of the year; and health care and medical education company Bennett Group Management, according to the AJC investigation. None were mentioned in the settlement agreement.
The person AWDA made responsible for signing most of the contracts with these businesses was a convicted murderer with no real work experience.
Mayor Kasim Reed vowed to fix the workforce agency, and participants in new job training programs have since said that the services it provides are effective.