Labor Dept. Says Agency Misspent Funds

The U.S. Labor Department has found that a local job training agency improperly spent at least $500,000 during the 1980s, when a former director received salaries from two federally funded agencies simultaneously and awarded his own private company a government contract.

Labor officials, in a preliminary report on the Job Training Policy Council of Ventura County, have demanded that the jobs council or its state overseer repay the half-million dollars in federal grants or show that the money was properly spent.

“The allegations are of misappropriation of funds and fraud,” Labor Department spokesman Joe Kirkbride said.

Details of the department’s preliminary report to the state Employment Development Department are confidential until state and local appeals of the findings are resolved, which may not happen for months or years, he said.

However, according to local and federal officials, the Labor Department findings represent the latest round of accusations against the job council’s former executive director, John Chase, 49.

Chase ran the agency from its creation in 1984 until he was fired in 1990 amid allegations that he worked full time for two job training agencies at the same time, awarded federal contracts from one of the agencies to the other and improperly awarded at least $10,000 to his own consulting firm.

Local job training officials said the Labor Department findings are surprising, since state auditors questioned many of the same expenditures and concluded this year that only $4,300 had to be repaid by the local council.

A criminal inquiry into Chase’s conduct also ended without charges in 1992, when a county grand jury found insufficient evidence to charge Chase with fraud.

“Frankly, I’m very frustrated,” said Jacqueline Richardson, chairwoman of the 19-member job training council. “I don’t know John Chase from a hot rock, and we’re dealing with this problem six or eight years after the fact.

“I just want this to be resolved so we can get on with the business of training people for employment,” she said. “It’s cast a shadow on the Job Training Policy Council. . . . (But) I would say there is no possibility that this could happen in 1993.”

Since the Chase situation became public in 1990, the jobs council has implemented strict internal policies prohibiting business relationships that pose conflicts of interest or which carry the appearance of a conflict, Richardson said.

“There appeared to be unethical and amoral conduct,” Richardson said. “ But maybe there was an excellent lesson learned by what happened in the past.”

The job training council, whose 19 board members are from public agencies and private companies, distributes about $7 million in federal grants annually to companies that train poor people and help them find jobs.

Yet, Richardson questioned the tenaciousness with which federal investigator Richard Burriel has pursued his three-year inquiry of the jobs council. Despite the state and grand jury findings, which were based in large part on Burriel’s probe, the investigator was still conducting interviews about the case last month, Richardson said.

“I’m saying that he is like a pit bull,” she said. “Frankly, you begin to wonder if there’s some personal issues going on here. I find it interesting that people outside the JTPC seem to have more information than people who actually work there about this investigation.”

Burriel could not be reached for comment this week.

The new federal findings are the result of a Department of Labor inquiry that Burriel began in February, 1990, when a fired jobs council auditor revealed Chase’s dual employment and other alleged conflicts of interest. The council fired Chase five months later.

Then in late 1990, federal investigators turned their case over to the county grand jury and to auditors in the Employment Development Department, which oversees federal job training grants distributed to about 50 local job councils throughout California.

State auditors tentatively found that $77,500 had been improperly spent by the Chase-run agency over five years ending in 1990. They declared another $279,000 questionable. This March, however, after 19 months of review, the state concluded that only $4,300 had been misspent.

The Department of Labor is now challenging those findings, Kirkbride said. In response, the state has submitted volumes of documentation to support its conclusion that the federal grants were spent properly, he said.

“When monies are found to be misspent in these programs, the state is responsible,” Kirkbride said. “And the state will try to squeeze it out of the local contractor.”

In fact, the state notified the Ventura County jobs council two weeks ago that a new allegation involving misuse of $101,920 had been leveled by federal investigators. The state has tentatively agreed with the finding, but invited local officials to justify the costs.

Kirkbride said he thought the $101,920 is included in the $500,000 in costs the Labor Department has challenged.

The new challenge revolves around a 1987 contract between the local jobs council and the Business Labor Council, which Chase helped found in the early 1980s and for which he went to work in 1988, officials said.

“My gut feeling is that there will be some kind of compromise,” Richardson said. Either way, “this is a problem of the past,” she said.