Investigation finds CareerSource was vulnerable to fraud, abuse

Image 1 of 3

A blistering report from the U.S. Department of Labor accuses the state's CareerSource offices in Hillsborough and Pinellas Counties of "fostering and environment vulnerable to mismanagement, waste, fraud, and abuse."

CareerSource Tampa Bay and CareerSource Pinellas have been under federal investigation since last year when reports surfaced alleging the job placement agencies were falsifying numbers and records to make it seem like they were exceeding expectations.

The report confirmed much of what has previously been reported and placed the blame on Ed Peachey, who was the CEO of both offices.

"Very frustrating because clearly this CEO, Ed Peachey, clearly misled and misrepresented what he was doing to the board, do the department of economic opportunity, DEO, to the county," said Hillsborough County Commissioner Sandy Murman, who is also on the CareerSource Board of Directors. "Clearly it's fraudulent what he did. He misrepresented and misled us all the way through."

According to the report, at Peachey's direction, employees took credit for finding jobs for workers who had never even used CareerSource.

This resulted in more than $17 million in questionable costs that are "subject to disallowance." Those expenditures included bumps in salary for Peachey, who ended up making more than $200,000.

Murman stopped short of saying whether she believes Peachey will be charged, but said there were "very strong statements in [the report] that made me believe that they were probably going to be looking at filing from charges."

Peachey's attorney has not responded to a request for comment.

During the last year, CareerSource's leadership has been overhauled. The Tampa Bay and Pinellas branches now have different CEO's.

John Flanagan took over the Tampa office and said he's been working to correct errors and safeguard against this happening again.

"First and foremost, re-establishing our community trust and getting the community to understand that we are going to take every measure possible to be accountable and transparent to the taxpayer in regards to how we manage our way through this," Flanagan said.

As for the questionable costs, Flanagan added, "we have the opportunity to prove that these costs were allowable and we will do that with what we can, with what we can't we will have to deal with those ramifications."

Should CareerSource have to pay back any of the funds, public money might have to be used. It's unclear if the agencies would try to recoup any money from Peachey.