A community college dean and a furniture company’s bookkeeper have been arrested for defrauding the state to access job training funds, according to the latest report from State Auditor Shad White.
The arrests are part of broader alleged misuse of $2.3 million in job training money over five years at Itawamba Community College. The case is the latest example of the state’s history of inadequate oversight over several millions of dollars in taxpayer funded workforce development programs.
“Now is the time for policymakers to acknowledge there are not enough fraud-prevention safeguards in place in our workforce training program,” White said in a statement. “Hundreds of millions of dollars are being spent on this every year. We need to be sure the money is being used appropriately.”
White’s audit of the job training money spent through Itawamba Community College uncovered three unrelated misuses of funds that resulted in the arrests, as well as demands the college itself return about $1.4 million it should have never received.
Joe Lowder, Itawamba college’s former dean of economic and community services, was arrested on charges of fraud. He is accused of falsifying documents to hide double billing private companies and the Community College Board for the same expenses related to job training.
The result was roughly $10,000 in revenue to his department. He now has been instructed to pay back that amount with interest.
In an unrelated scheme, Eureda “Edie” Washington is accused of using her experience in applying for job training money to create and submit fake documents to Itawamba Community College to collect $680,000 for a Mississippi furniture company, Chapter 3, Inc. She is also facing fraud charges.
Itawamba Community College has a furniture academy that regularly partners with private companies to train workers in manufacturing.
Chapter 3, Inc., owned by Jennifer and David Schock, no longer appears to be active. The Schocks have not been charged with a crime but are named in a demand letter alongside Washington to repay the state about $867,000, which includes interest.
Washington’s contract with Chapter 3 specified she’d be paid a percentage of the job training money she was able to get for the furniture company. The paperwork she submitted to get reimbursement money showed discrepancies such as a student being listed in one class at the same time they were named an instructor in another.
“I’m thankful for investigators’ work which put a stop to this improper workforce training spending,” White said.
The fraud cases come as the state works to overhaul its workforce development spending and the launch of a new workforce development office, Accelerate Mississippi.
The money White’s office says was misused comes from a large pot collected through an unemployment insurance tax on businesses. Accelerate Mississippi is now tasked with overseeing that roughly $25 million pot, which includes the state’s Workforce Enhancement Training money – commonly called “WET” funds.
Prior to the creation of the new office, the Community College Board oversaw WET fund spending alone. All the money that White’s office says was misused was while it was still under the college board’s oversight alone.
“We are aware of this matter and hope for prompt resolution regarding concerns about the use of WET Funds,” Kell Smith, the interim director of Community College Board, said in a statement. “Both the Mississippi Community College Board and Itawamba Community College have assisted in providing information as part of this investigation. It is not appropriate to provide additional information at this time.”
Among White’s findings are that the community college should have never approved various reimbursements, like to a sofa manufacturer for nearly $1 million over five years. The office said the spending didn’t meet the law’s requirements of WET fund spending.
Accelerate Mississippi director Ryan Miller, who now has oversight of workforce spending, said his office has hired an accounting firm to improve oversight in spending. The lack of oversight, in part, is why his new office was created, Miller said. Miller says spending needs to focus on training that results in skills that increase Mississippians’ wages.
“Accelerate wants to make sure in our new responsibility we are doing this according to the law,” Miller said. “We are committed to ensuring we spend those dollars we have been entrusted with on valuable programming.”
Miller has already set up a new grant system that requires the state’s 12 community colleges to put in formal proposals to access additional workforce development funds.