State audit uncovers fraud

ATLANTA --- The Georgia Bureau of Investigation is conducting investigations into the state's operation of a job-assistance program run by the Georgia Department of Human Services with federal stimulus money and dozens of the employers who participated, state officials revealed Thursday.

Additional participants are the subject of inquiries by the department, and still others have been referred to the attorney general's office to seek repayment of funds. The department turned three Atlanta area companies over to local prosecutors.

A state audit released Thursday morning described the program as plagued by poor judgment and criminal behavior.

"Apparent fraud, waste and abuse in (the) low-income jobs program likely resulted from mismanagement and weak controls in the central office," wrote investigators at the Georgia Department of Audits & Accounts.

A whistle-blower complaint in January led to the probe of the Adult Subsidized Employment Program. It found that 48 of the contractors in the program were already being investigated by the GBI or Human Services' inspector general at the time they were awarded contracts and that managers simply looked the other way.

Of the 579 contractors, two out of three weren't eligible anyway, and 23 percent of the job seekers in the program might have also been ineligible if auditors could have found sufficient documentation.

According to the auditors' report, $400,000 in computers purchased with the federal funds were still in boxes.

The $23 million program was part of the state's $165 million stimulus grant that was designed to quickly find work for people receiving welfare benefits. Their benefits were supposed to end once they were getting a paycheck, but the auditors think the workers got both because the central office never notified the county welfare offices that workers' incomes had increased.

Employers recruited to the program were to receive a subsidy that paid 80 percent of the wages of the qualified job seekers they hired.

The auditors interviewed Human Services' project manager over the program, Eli Phillips, about his approval of employers who had not met all of the eligibility criteria.

"When questioned about his decision to approve these applications, Mr. Phillips contented that not all of the eligibility criteria had to be met by the prospective employers," the auditors wrote.

His staff disagreed with him.

"Mr. Phillips' explanation did not seem credible to us as there were many prospective employers rejected because not all eligibility criteria had been met," the audit team wrote.

The GBI has investigations into 10 employers in the Albany area, according to GBI spokesman John Bankhead.

Wes Sherrell, the chief investigative auditor for Audits & Accounts, said that there also were numerous irregularities with employers in the Atlanta and Savannah areas and that there could be more.

View the audit report