Manhattan U.S. Attorney Sues SEEDCO And Seven Former Managers For Falsely Reporting Job Placements in A Federally-Funded Program
Preet Bharara, the United States Attorney for the Southern District of New York announced today that the United States has filed a civil fraud lawsuit against structured employment economic development corporation, or SEEDCO, a national not-for-profit corporation that operated two New York City Workforce1 Career Centers, and ALEX SAAVEDRA, SHOMARI GREENE, ALAN KATZ, TAGEWATEE CHANDARPAUL, SHANDELL SANTIAGO-VELEZ, MITCHELL McCLINTON, and MONIQUE TARRY, former managerial employees of the company (collectively, the “Individual Defendants”), for fraud in connection with a federally-funded program to provide job placement assistance to unemployed and underemployed New York City residents. Workforce1 is a service provided through New York City’s Department of Small Business Services, (“SBS”) that prepares and connects job candidates to job opportunities. According to the Complaint, SEEDCO fraudulently collected millions of dollars in federal funds for job placement services that it did not provide, as well as obtained contracts based on falsified performance reports. The lawsuit seeks treble damages and civil penalties under the False Claims Act for the fraudulent claims and false statements submitted by SEEDCO.
Manhattan U.S. Attorney Preet Bharara said: “SEEDCO was supposed to provide valuable job placement assistance that was underwritten by the federal government to New Yorkers in need. Instead, as alleged, the defendants went to great lengths to manufacture non-existent job-placements to protect their federal contracts and inflate their compensation. When the alleged fraud was reported to SEEDCO by a whistleblower, rather than taking steps to deter or prevent it, they allegedly engaged in a cover-up. As today’s suit demonstrates, this type of fraud will not be tolerated.”
As alleged in the Complaint filed today in Manhattan Federal Court:
SEEDCO receives funding from government as well as private sources to promote community economic development, through the provision of, among other things, employment training and placement assistance, community lending, and small business services. Beginning in 2004, SEEDCO contracted with SBS to operate a federally funded Workforce1 Career Center in Upper Manhattan. In January 2011, SEEDCO began providing unemployed and underemployed New York City residents with job placement assistance, among other employment-related services, at another center in the Bronx. SEEDCO operated both centers until at least April 2012.
In order to receive federal funding for operation of the Workforce1 Career Centers, SEEDCO was required to report on its job placement performance through a governmental reporting database maintained by SBS, called WorkSource1. The information was relied on by the United States in determining grant recipients and terms, including grant amounts, as well as performance incentives or, when appropriate, sanctions. It was also reported to the United States Congress.
Many of SEEDCO’s Directors, Deputy Directors, and Managers – the employees who oversaw the day-to-day operations of its New York City Workforce1 centers – routinely falsified, and directed others to falsify, entries into the WorkSource1 reporting database to make it appear that numerous job candidates had been placed in jobs by or with the involvement of SEEDCO. SAAVEDRA, GREENE, KATZ, CHANDARPAUL, SANTIAGO-VELEZ, McCLINTON, and TARRY instructed clerical staff members to falsify information to report placements in the WorkSource1 database. Also, certain SEEDCO managers threatened Workforce1 clerical employees with the loss of employment if job placement goals were not achieved.
SEEDCO’s reports regarding its job placement performance are replete with falsifications, including:
Dates of employment provided by job candidates on their initial enrollment form were falsified when entered into the WorkSource1 database to enable SEEDCO to take credit for a job candidate’s prior or current employment, including on many occasions stating that a job candidate acquired a position after coming to the Workforce1 center when, in fact, the job candidate remained unemployed and the reported job was actually a past position that the individual no longer held.
SEEDCO also used its other departments not involved with the job placement programs – including two programs that, respectively, provided services to small businesses and helped individuals apply for public benefits – to gather information about people using those services to falsely report their past or current employment as job placements.
SEEDCO managers directed employees to use their relationships with businesses to generate false placements. The employees would visit the businesses and gather information from the businesses’ current employees. SEEDCO then used that information to falsely report that employment as a job placement obtained for the candidate by SEEDCO, although the individuals had no prior relationship with SEEDCO Workforce1 and had not been recruited into the job by SEEDCO.
SEEDCO managers instructed clerical employees to pull resumes from job search websites, such as Monster.com and Careerbuilder.com, and report the employment of individuals sourced from those downloaded resumes as job placements by SEEDCO.
SEEDCO managers asked staff members to have family and friends fill out intake forms, so that the employment of those individuals could be reported falsely as a SEEDCO job placement.
SEEDCO and the Individual Defendants engaged in this fraudulent scheme to maintain SEEDCO’s contract in connection with its Upper Manhattan Workforce1 Career Center, and to acquire its contract to operate a WorkForce1 Career Center in the Bronx, as well as to increase its compensation in connection with both centers. SEEDCO caused false and inflated placement figures to be reported through New York City and New York State to the United States Department of Labor to receive federal subsidies for its job program. Moreover, through their participation in the fraud, the Individual Defendants maintained or acquired managerial positions. Each of the Individual Defendants who did not already hold the position of Center Director at the beginning of their work with SEEDCO achieved a promotion during the period in which he or she participated in the fraud.
The Complaint further alleges that SEEDCO management engaged in a cover-up of the fraud after it was reported by a whistleblower, a high-level Workforce1 center employee, in early 2011. Instead of stopping the fraud, SEEDCO and several of the Individual Defendants responded by undertaking an internal audit that operated only to conceal the fraudulent conduct. As a result, the fraud in SEEDCO’s job placement centers continued.
* * *
By filing its Complaint, the Government joined a private whistleblower lawsuit that had been filed against SEEDCO on September 14, 2011, under the False Claims Act.
Mr. Bharara thanked the United States Department of Labor, Office of Labor Racketeering and Fraud Investigations for its assistance in this case. He also thanked the United States Department of Labor Employment and Training Administration.
The case is being handled by the Office’s Civil Frauds Unit. Assistant United States Attorney Sarah J. North is in charge of the case.
Manhattan U.S. Attorney Preet Bharara said: “SEEDCO was supposed to provide valuable job placement assistance that was underwritten by the federal government to New Yorkers in need. Instead, as alleged, the defendants went to great lengths to manufacture non-existent job-placements to protect their federal contracts and inflate their compensation. When the alleged fraud was reported to SEEDCO by a whistleblower, rather than taking steps to deter or prevent it, they allegedly engaged in a cover-up. As today’s suit demonstrates, this type of fraud will not be tolerated.”
As alleged in the Complaint filed today in Manhattan Federal Court:
SEEDCO receives funding from government as well as private sources to promote community economic development, through the provision of, among other things, employment training and placement assistance, community lending, and small business services. Beginning in 2004, SEEDCO contracted with SBS to operate a federally funded Workforce1 Career Center in Upper Manhattan. In January 2011, SEEDCO began providing unemployed and underemployed New York City residents with job placement assistance, among other employment-related services, at another center in the Bronx. SEEDCO operated both centers until at least April 2012.
In order to receive federal funding for operation of the Workforce1 Career Centers, SEEDCO was required to report on its job placement performance through a governmental reporting database maintained by SBS, called WorkSource1. The information was relied on by the United States in determining grant recipients and terms, including grant amounts, as well as performance incentives or, when appropriate, sanctions. It was also reported to the United States Congress.
Many of SEEDCO’s Directors, Deputy Directors, and Managers – the employees who oversaw the day-to-day operations of its New York City Workforce1 centers – routinely falsified, and directed others to falsify, entries into the WorkSource1 reporting database to make it appear that numerous job candidates had been placed in jobs by or with the involvement of SEEDCO. SAAVEDRA, GREENE, KATZ, CHANDARPAUL, SANTIAGO-VELEZ, McCLINTON, and TARRY instructed clerical staff members to falsify information to report placements in the WorkSource1 database. Also, certain SEEDCO managers threatened Workforce1 clerical employees with the loss of employment if job placement goals were not achieved.
SEEDCO’s reports regarding its job placement performance are replete with falsifications, including:
Dates of employment provided by job candidates on their initial enrollment form were falsified when entered into the WorkSource1 database to enable SEEDCO to take credit for a job candidate’s prior or current employment, including on many occasions stating that a job candidate acquired a position after coming to the Workforce1 center when, in fact, the job candidate remained unemployed and the reported job was actually a past position that the individual no longer held.
SEEDCO also used its other departments not involved with the job placement programs – including two programs that, respectively, provided services to small businesses and helped individuals apply for public benefits – to gather information about people using those services to falsely report their past or current employment as job placements.
SEEDCO managers directed employees to use their relationships with businesses to generate false placements. The employees would visit the businesses and gather information from the businesses’ current employees. SEEDCO then used that information to falsely report that employment as a job placement obtained for the candidate by SEEDCO, although the individuals had no prior relationship with SEEDCO Workforce1 and had not been recruited into the job by SEEDCO.
SEEDCO managers instructed clerical employees to pull resumes from job search websites, such as Monster.com and Careerbuilder.com, and report the employment of individuals sourced from those downloaded resumes as job placements by SEEDCO.
SEEDCO managers asked staff members to have family and friends fill out intake forms, so that the employment of those individuals could be reported falsely as a SEEDCO job placement.
SEEDCO and the Individual Defendants engaged in this fraudulent scheme to maintain SEEDCO’s contract in connection with its Upper Manhattan Workforce1 Career Center, and to acquire its contract to operate a WorkForce1 Career Center in the Bronx, as well as to increase its compensation in connection with both centers. SEEDCO caused false and inflated placement figures to be reported through New York City and New York State to the United States Department of Labor to receive federal subsidies for its job program. Moreover, through their participation in the fraud, the Individual Defendants maintained or acquired managerial positions. Each of the Individual Defendants who did not already hold the position of Center Director at the beginning of their work with SEEDCO achieved a promotion during the period in which he or she participated in the fraud.
The Complaint further alleges that SEEDCO management engaged in a cover-up of the fraud after it was reported by a whistleblower, a high-level Workforce1 center employee, in early 2011. Instead of stopping the fraud, SEEDCO and several of the Individual Defendants responded by undertaking an internal audit that operated only to conceal the fraudulent conduct. As a result, the fraud in SEEDCO’s job placement centers continued.
* * *
By filing its Complaint, the Government joined a private whistleblower lawsuit that had been filed against SEEDCO on September 14, 2011, under the False Claims Act.
Mr. Bharara thanked the United States Department of Labor, Office of Labor Racketeering and Fraud Investigations for its assistance in this case. He also thanked the United States Department of Labor Employment and Training Administration.
The case is being handled by the Office’s Civil Frauds Unit. Assistant United States Attorney Sarah J. North is in charge of the case.
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