State questions $550,000 of St. Louis County nonprofit costs. Executives say there was no fraud.

The Missouri Department of Higher Education and Workforce Development, which conducted a review of records from about 170 job training program participants from July 2021 through March of this year, flagged $552,736 in costs submitted by Family and Workforce Centers of America, according to documents released recently through an open records request.

From August through February, state inspectors remotely monitored activity on the county case management system used by FWCA, according to Jason Strickland, spokesman for the state workforce development department. The state decided to do an in-person inspection following the remote review, he said. St. Louis County had done its own audit of FWCA last fall, and in January asked for the state’s help investigating a whistleblower complaint alleging fraud.

Inspectors visited the county’s job center at 715 Northwest Plaza Drive in St. Ann, one of the five locations where FWCA provided services, and spent about two and a half weeks in February reviewing records there. On March 24, the inspectors sent a letter to County Executive Sam Page and Jason Archer, an executive with the county’s economic development arm, notifying them of its findings.

Nearly all of the costs questioned by the state — about $519,000, or 94%, of the total — occurred in a program that pays youths ages 14 to 24 to get training on the job, such as in an office or apprenticeship. The federal money is aimed at helping some of the most underprivileged kids in St. Louis who face challenges entering the job market or pursuing higher education.

FWCA CEO Carolyn Seward in an interview Tuesday conceded her nonprofit’s record-keeping was faulty but insisted there was no fraud.

Since the state’s review, the organization has supplied the county with missing records, she said; the county is expected to share an updated response with the state by the end of June.

Multiple issues

FWCA’s role was to figure out what participants were interested in and connect them with jobs that would provide relevant work experience. Using federal funds funneled through the county, the nonprofit would then pay the participants instead of employers, incentivizing workforce development at little or no cost to the private sector.

In its review, the state found a stack of problems with the nonprofit’s work experience program:

• Almost all of the participants were assigned to work at FWCA, though the nonprofit’s agreement with the county says placements are supposed to be diverse and in the St. Louis region’s core industries.

• Multiple participants were attending out-of-state colleges while being paid by FWCA. One of the participants had obtained a bachelor’s degree.

• Required documents such as agreements with employers were missing.

• Participant case notes lacked information about their start dates, wages and goals.

• Twenty participants ages 14 or 15 lacked documentation required by the Missouri Child Labor Law, and they worked over eight hours per day and past 7 p.m. during the school year.

• None of the participants followed guidelines for duration of a work experience. The maximum time allowed for job training is 400 hours, but a “significant number” of participants went over that amount. Others had multiple jobs going on at once.

The rest of the questioned costs — totaling $33,341 — were documented in the part of the program that helps support participants with direct payments. Each participant can receive up to $1,000 for eligible costs such as books, child care or housing, as long as their needs are documented in detail. Some participants received payments for ineligible costs such as “legal services,” and at least one participant received more than $1,000. Invoices were missing from some case files, and other files lacked proof that participants received the support FWCA said they did.

Blaming the county

Seward told the Post-Dispatch that understaffing during the COVID-19 pandemic made it difficult for FWCA to keep up, and the nonprofit’s executives were getting mixed signals from the county workforce development division, she said. But all of the participants who have interacted with FWCA are real, and received real services, she said.

Seward said she expects questions about the invoices to be resolved after the state receives the county’s updated response.

Meanwhile, as FWCA waits for the state to decide whether its costs were valid, the nonprofit has spent hundreds of thousands of dollars of its own money, said Jermal Seward II, the nonprofit’s general counsel and chief administrative officer. The county paused payments to FWCA, so about $300,000 of the questioned costs are those that have mounted up since the state started its review, he said.

“We acknowledge the administrative side of it, but the participants that got programs, they met with the employers, they received the supportive services. All the documentation shows the funds that were expended went to helping youth,” Jermal Seward said. “As the state’s report shows, there are no findings of fraud. There was no fraud.”

The FWCA executives, while acknowledging the organization’s staff made mistakes, blamed some of the nonprofit’s problems on the county.

In 2021, FWCA started complaining about a lack of policy and clear workflow, Jermal Seward said. In response, the county slowed down enrollments and payments, making it difficult for the nonprofit to function, he said. In 2022, the county started monitoring FWCA more closely.

Carolyn Seward said it was backlash.

“Any time you delay the enrollment process it backs up everything else. It stops everything else,” she said. “We were navigating all of that.”

The county’s lack of organization reflected poorly on FWCA, she said.

In fact, the state in its review found deficiencies in the county’s monitoring, calling it “insufficient, abbreviated, and limited in scope.”

FWCA, which provided job training programs under contract for St. Louis County until late February, previously was accused by the county of fraudulently altering federal grant records. The Post-Dispatch reported in late April that the county paid FWCA for invalid costs totaling $5,800 from April through September 2022.

Editor's note: This story was updated Wednesday afternoon with information about St. Louis County's audit of FWCA.