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Golden Hammer: Job Corps used debit cards for clothes, phones, not travel

- The Washington Times - Thursday, May 1, 2014

Since 1964, the Job Corps has spent millions of dollars providing education and vocational training to the nation's youth.

And since 2011, federal employees and the students they're training have been using that money to pay for cellphone bills, trips to the hairdressers, clothing, electronics and other personal expenses.

It's all thanks to prepaid debit cards the government provides to students to help them pay for tickets and baggage fees while traveling to official Job Corps events. But the cards are being abused for personal gain, according to a report released Tuesday by the Labor Department's inspector general.

"Debit card abuse is unfortunately not an unusual event in the federal government," said Tom Schatz, president of watchdog group Citizens Against Government Waste. "The problem is always caused by the same lack of internal controls."

That lack of oversight, according to the IG's report, included the fact that no one was checking the card receipts to make sure purchases were allowable.

"Hundreds of thousands of dollars in government funds were misused or wasted because Job Corps lacked basic internal controls," the report said. "Job Corps did not require its staff to regularly review or monitor its centers' government purchase card expenses."

For using taxpayer money to buy a personal payday, the Labor Department's Job Corps wins this week's Golden Hammer, a distinction from The Washington Times given to mark examples of fiscal waste, fraud, theft and abuse of government cash.

So far, the IG auditors have identified just $250,000 in improper purchases using the cash cards, but are worried there's potentially a lot more cash on the line, given the poor level of oversight.

"In total, we believe improved internal controls could result in better use of an estimated $5.1 million in Job Corps funds," the IG said, noting there were at least $4 million in "questioned purchase card transactions."

And the fraud has been widespread too. Out of 125 Job Corps centers nationwide, investigators found abuse of the debit cards at 98 of them.

In fact, the private company that supplies the cards to the government, Transcor, was the one that tipped off federal investigators over concerns about the abuse. The Labor Department's Employment and Training Administration (ETA) that oversees the Job Corps then asked the inspector general to investigate.

"We recognize that Job Corps' student transportation represents a significant investment of public funds and must be managed efficiently and effectively," said Eric Seleznow, the acting assistant secretary for the ETA.

The Labor Department will work to make sure "students are provided with transportation that supports the program's mission and is safe, economical and accountable," he said.

Calls to the Job Corps itself went unanswered.

Although the cards are supposed to be only used to pay for students' transportation fees as part of the program, investigators found that about 35 percent of all cards issued had been misused.

In Miami, the cards were used for almost $100,000 on trips to hair salons and clothing stores and paying Sprint phone bills. And in Greenville, Ky., people bought $16,000 in clothes from Kohl's and JC Penney.

The IG said they "could not always determine whether these improper purchases were made by students, center staff, or both, because the centers did not consistently track card distribution to students."

A handful of people at Job Corps centers across the nation have been fired over the incident, but Mr. Schatz said that it's uncommon for federal workers to be punished when misspending like this comes to light.

"There aren't a lot of consequences for stealing the taxpayer's money or wasting the taxpayer's money," he said. "It does have a relatively simple solution and that's to put in these internal accounting controls."

The Job Corps isn't alone. Investigators at the Veterans Affairs Department announced this week they discovered that engineering services employees at the Ralph H. Johnson Medical Center in Charleston, S.C., used prepaid cards to make nearly $650,000 in purchases that were either unauthorized or lacked sufficient documentation. The employees often split purchases among several cards to avoid the $3,000 maximum each card had.

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