Home Debt Hillsborough to sue over $2.4 million CareerSource debt

Hillsborough to sue over $2.4 million CareerSource debt

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Hillsborough County is heading to court to try to recoup $2.4 million of taxpayers’ money it fronted a job training agency to cover misspending under its former chief executive officer.

The U.S. Department of Labor demanded repayment of more than $4 million from CareerSource Tampa Bay and CareerSource Pinellas after an audit released in March 2022 found the agencies — which formerly operated as sister entities directed by fired CEO Edward Peachey — falsified records and logged phony hiring reports.

The federal review followed a 2018 Tampa Bay Times investigation that revealed the job placement centers took credit for finding work for people who never sought CareerSource’s help. Staffers earned bonuses for posting high placement numbers. The agencies also handed out millions of dollars in gift cards without following up on how the money was spent, including by people who did not use CareerSource to find jobs.

In June, the Hillsborough County Commission authorized payment of up to $2.48 million and said it would seek reimbursement from CareerSource’s insurance carrier. The county agreed to the payment to avoid accruing interest charges.

The reimbursement effort, however, has been fruitless so far. Both CareerSource Tampa Bay and CareerSource Pinellas plan to sue the carrier, Chubb Insurance, according to a memorandum to commissioners from their own legal staff. On Wednesday, commissioners are scheduled to vote on their legal team’s request for the county to file its own suit.

“I’m very disappointed that after several years the insurance carrier is unwilling to do the right thing,” said Hillsborough Commissioner Chairperson Ken Hagan.

Officials at both CareerSource Tampa Bay and CareerSource Pinellas declined comment because of the pending litigation. Chubb’s regional chief operating officer did not respond immediately to an email request for comment.

The county was warned of the potential risks last year.

“If CareerSource Tampa Bay is not able to secure payment for all or part of identified disallowed cost, Hillsborough Board of County Commissioners, as fiduciary, would then assume responsibility for any cost deemed to be disallowed under audit,” the county’s economic development staff told commissioners last year.

CareerSource Pinellas’ board of directors agreed last year to use its reserves to pay its portion of the debt — about $1.9 million. The agency said it would use reserves from the sale of a science center building, but it, too, filed a claim with Chubb, which underwrote the agency’s director and officer liability policy.

CareerSource centers use federal money to train workers and help them find jobs. The federal audit covered July 1, 2014, to June 30, 2018, and followed the Times investigation of the fictitious job placements.

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