An audit found that Jim Baker, former coordinator of the AFL-CIO’s Project Challenge: Work Again office in Cut Bank, enrolled his stepdaughter, Karol Zubach in the program in 2002. He approved spending $35,111 in job training money over four years to send her to college. Baker later admitted not informing program supervisors that Zubach was his stepdaughter.
The Labor Department turned the matter over to the state Justice Department for a criminal investigation, state Labor Commissioner Keith Kelly said Monday. The Justice Department’s Division of Criminal Investigation assisted in an investigation, spokeswoman Lynn Solomon said, and it will be prosecuted by a U.S. attorney. Montana’s U.S. attorney, Bill Mercer, would neither confirm nor deny the existence of an investigation.
The Labor Department audit found that Zubach collected an average of $8,778 yearly over the four years, while other recipients of job retraining money from the Cut Bank Project Challenge office averaged only $628 apiece annually.
“That really was a blinking light for us,” Kelly said. “It sticks out like a sore thumb.”
It marks the second time in less than two years that the Labor Department has ordered the AFL-CIO to pay back federal job training money that auditors deemed misspent. In April 2006, the Labor Department ordered the federation to pay back $47,515, and the AFL-CIO paid off the balance earlier this year.
In a statement in August 2006, Baker said he chose to enroll his 37-year-old stepdaughter in the program “and kept the knowledge of her relationship with me within the Cut Bank PCWA (Project Challenge: Work Again) office.”
Baker said Zubach had been laid off from a job with the Browning school district and was eligible for the job retraining program. He said he should have referred her to another program coordinator.
“At no time did I receive any program funds from this client in return for enrollment and eventual graduation.” Baker said.
Baker landed in trouble before over allegations of misspending federal job training money. A federal judge in September 1983 put Baker, director of the Blackfeet Manpower Program, on five years’ probation and ordered him to repay $12,296 in restitution, the Great Falls Tribune reported.
In response to the Labor Department letter demanding repayment, Jim McGarvey, executive secretary of the Montana AFL-CIO since July 2005, said “This happened before my watch.”
“Obviously, he shouldn’t have been serving his daughter,” McGarvey said.“The day I found out Zubach was his stepdaughter, I asked for his resignation.”
Baker submitted a one-sentence resignation letter to McGarvey Aug. 8, 2006.
McGarvey said he will present several repayment options to the AFL-CIO executive board in January. The AFL-CIO board can vote to repay the money or, he said, it sue to recoup it from Baker, Sue Mohr, who formerly ran the now-nonexistent state Job Training Partnership Inc. that monitored grants or Jerry Driscoll, who headed the AFL-CIO for four years before McGarvey.
“I was told by the people that worked for me that they followed the instructions prescribed by Jerry Driscoll and Sue Mohr,” McGarvey said. “I personally thought these were atrocious, and I changed them before the state even talked to me.”
McGarvey added, “All of these people put a black eye on the union, and I’m tired of it.”
In response, Driscoll said, “I don’t remember nothing about it. If they want to sue me, let ’em sue.”
Said Mohr: “I have no idea what they’re talking about.”
McGarvey said he took steps two years ago to tighten financial controls over the Project Challenge program to prevent these problems from recurring.
He defended the Project Challenge program, which last year received about $1.2 million in federal job training money.
“It’s a good program that helped a lot of people and still is,” McGarvey said. “It’s a shame that this one abuse occurred.”
Labor Commissioner Kelly said the state investigation showed that “no one did any administration, supervision and administrative oversight” over Project Challenge. As a result, Kelly said, the Labor Department has taken control of handling the money for Project Challenge and hired seven field representatives for the program.
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