State Audit Criticizes Spending of Job Council : Inquiry: The report says the agency should repay $357,000. It blames most of the problems on the former director, who was fired 15 months ago.

The former director of a county job-training agency improperly spent $77,500 in federal money and approved another $279,000 in questionable expenditures over five years ending in 1990, state auditors have concluded.

The auditors, in a final report to the Job Training Policy Council of Ventura, said the agency should repay nearly $357,000 unless it can show that the money was spent properly.

Nearly all of the questioned costs result from the actions of the job council’s former executive director, John Chase, who created a conflict of interest by receiving money not only from two government agencies but from companies doing business with them, auditors said.

Auditors found that Chase drew salaries from three employers at the same time, earning $168,597 over 2 1/2 years. He received salaries from the job council and from the Private Industry Council, an agency that the job council was supposed to have replaced but which Chase secretly kept alive, the audit said.

Chase improperly routed more than $73,000 that should have gone to the job council to the Private Industry Council, the audit said. Then, as chief executive of the industry council, he awarded $15,300 to a company that he owned, auditors found.

Chase also allegedly routed $274,000 from a federal jobs contract to another private company, the Business Labor Council, which he helped establish in the early 1980s and for which he went to work in 1988.

Chase, 47, directed the semiautonomous Job Training Policy Council from its inception in 1983 until he was fired 15 months ago amid allegations of misusing government money.

The job council, whose 19 members are from public agencies and private companies, distributes about $6 million in federal grants annually to companies that train poor people and help them find jobs.

In addition to the state audit by the Employment Development Department, a parallel U. S. Department of Labor criminal investigation of Chase has been under way for 18 months.

Deputy Dist. Atty. John L. Geb, whose office will review both the state audit and federal criminal findings, declined to comment until he had a chance to review the audit.

Neither Chase nor his attorney, George C. Eskin, could be reached for comment Wednesday. Previously, Eskin has insisted that Chase was a hard-working government employee whose 80-hour workweeks were known to his bosses and who is now being used as a scapegoat by the job council.

Bill Hewston, the job council’s new chairman, said the audit is most troubling because it shows that previous council members blindly trusted Chase to run the agency.

“I don’t believe it was proper that he was working for three companies at the same time, or even two,” Hewston said. “It was a conflict of interest.”

Hewston said the council will fight the recommended repayment of the $357,000 in questioned expenditures. He said most of the money eventually went to legitimate programs.

Hewston acknowledged, however, that the audit pointed out the need for reform. “This problem was created not only by John Chase but by the lack of oversight by the council itself.”

Since the job council was briefed by state auditors in January, it has drastically changed the way that it does business, he said.

Chase and four others who drew two government salaries have resigned, he said. The council’s conflict-of-interest policy that allowed Chase and other employees to hold two or more jobs has also been revamped, he said.

In addition, he said the council has ordered more frequent audits of its books. Council members already have begun monthly review of agency finances and contracts.

Investigations into Chase’s activities began in January, 1990, in response to charges by the council accountant, Randy Winton, shortly after he was fired by Chase.

Winton alleged that the council was “administratively in shambles.” He contended that he was fired because of questions that he had raised about apparent improprieties.

The audit confirms Winton’s allegations. It found:

* That job training officials spent about $15,000 for travel that apparently was not related to their jobs;

* That Chase and four members of his staff were drawing two government paychecks simultaneously and earned an extra $90,000 without the job council knowing of the income;

* That $177,600 in federal contracts was paid to train workers enrolled with the Private Industry Council, which had ceased to exist as a government-sanctioned agency years earlier;

* That $73,000 in job council funds was improperly funneled into the checking account of the Private Industry Council to be used as Chase wanted.