CareerSource Pinellas owes Feds $1.9 million: Who pays the bill?

In  letter dated March 11, the U.S. Department of Labor demanded that embattled public employment agency CareerSource Pinellas repay $1.9 million in misspent funding within the next 30 days – and it remains unclear if taxpayer money would settle the debt.

While CareerSource is publicly funded, County Administrator Barry Burton made it clear that the organization is a completely separate entity from the county. However, he said Pinellas “could have been on the hook” if CareerSource did not have the money for repayment. He explained the organization uses federal funding, which requires working through a chief elected official. In this case, Pinellas County Government.

Burton noted the county also appoints a couple of officials to serve on the CareerSource board – which features 25 members, according to its website. Despite the connections, he said the organization does not fall under the county’s purview or funding.

“If they had not had the funds, well, then, the Feds could have sought those funds from us,” he added. “But in this case, they do have the funds, so they’ll handle it independently.”

The federal demand stems from money misspent during the tenure of former CEO Edward Peachey, who led both CareerSource Pinellas and CareerSource Tampa Bay. The two agencies once operated under the same umbrella, but split ties following Peachey’s termination.

The Labor Department began its review following a 2018 Tampa Bay Times expose that uncovered millions of dollars of fraud under Peachey’s watch – including exorbitant salaries and bonuses, and falsifying job placement statistics. Federal officials confirmed that both organizations committed fraudulent acts that resulted in a loss of $4.3 million worth of federal tax money.

Now the Feds want their money back. Steve Meir, the interim CEO for CareerSource Pinellas, told the Catalyst that his organization expected the demand since the compliance review began in 2018.

“The initial report had questioned costs in total of $17 million split between Hillsborough and Pinellas,” he said. “We knew it was not going to be that amount.

“We knew it was going to be between zero and $17 (million), but we did not know how much.”

In the March 11 letter to Dane Eagle, executive director of the Florida Department of Economic Opportunity, the Department of Labor (DOL) outlined a long list of intentional “improper governance.” The DOL offered to waive interest if CareerSource repays the debt within 30 days, but the job training agency cannot use federal funds that comprise most of its budget.

For CareerSource Pinellas, the money could come from the sale of the Science Center of Pinellas County.

Established in 1959, the Science Center was once a popular destination for area schoolchildren. After the facility closed in 2014, Peachey pushed for CareerSource Pinellas to acquire the 27,400-square-foot building and nearly seven acres of land. In 2019, the City of St. Petersburg agreed to buy the science center from CareerSource Pinellas for $3.15 million, just before a half-million-dollar mortgage payment was due.

Following the sale, and with federal trouble lurking on the horizon, Meir said the organization’s board thought it was prudent to set the money aside.

“In a board meeting back in November 2019 … the board at that time wanted us to hold the proceeds separate in an interest-earning account pending the final resolution of the DOL compliance review,” he said.

Meir declined further public comment on potential repayment sources. He also thought it was improper to answer if the government should hold Peachey responsible for the debt. An FBI investigation into the former CEO’s actions is ongoing.

“My understanding is, they owned it (the Science Center) – they purchased it somehow – and they sold it,” said Burton. “So, in turn, they’re using those funds for the repayment.”

Following Peachey’s ouster, CareerSource Pinellas appointed Jennifer Brackney to serve as CEO in November 2018 to guide the organization through troubled times. In February, the organization’s board formally accepted her resignation after a series of whistleblower complaints.

Meir said he was hired as the chief financial officer for CareerSource Pinellas in October 2018 “to help clean up things.” The board of directors approved Meir to succeed Brackney as interim CEO immediately after accepting her resignation.