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NewsChannel 5 Investigates: Friends in High Places

More Questions About Insider Contract

(Story created: 9/25/02)

For Tennessee taxpayers, the bills from Workforce Strategists have added up.

In 1999, the Chattanooga company landed an exclusive state contract to provide counseling, as well as job coaching, to help the unemployed get back to work. That contract would eventually be worth almost $2 million.

"It just seemed like a scam to me," says Chattanooga resident Bill Watkins.

Two years ago, Watkins worked just around the corner from Workforce Strategists, inside one of Tennessee's Career Centers -- it's what used to be called the unemployment office.

That's where he became suspicious.

"One of the counselors dropped a client off to me one day to assist in finding a job for him," Watkins recalls. "I thought that's what they were supposed to do."

That contract is currently the subject of an investigation by the Federal Bureau of Investigation and the Tennessee Bureau of Investigation, as well as a review by the state comptroller's office.

As NewsChannel 5 first reported, the company was owned by Monteagle insurance agent John Stamps, a longtime friend of Gov. Don Sundquist.

At the time, the Sundquist administration justified the exclusive contract, saying Workforce Strategists was "the only company in Tennessee" with experience for the job.

That claim came just 6 days after Workforce Strategists was incorporated.

"This, to me, smelled all like a patronage job from the governor's office," Watkins adds.

Workforce Strategists claims it earns its money not only assisting with the job search, but also by providing intensive counseling to its clients.

It collects:

  • $2,970 a person just for enrolling them in the program -- it can only charge for enrolling up to 50 participants;
  • $990 a month per participant for the intensive counseling;
  • $1,000 per participant for getting the client back to work for six months.

But when we asked Workforce Strategist client Marlene Tollett about all the intensive counseling she was receiving, she insisted that's not part of her program.

"My personal problems I don't feel like is anybody's business but mine, and I've got a husband that helps me with that," Tollett says.

"So no real counseling sessions, per se?" asks NewsChannel 5 investigative reporter Phil Williams.

"Other than the first one-on-one with redoing my resume, no, not since then."

Still, Sundquist administration officials convinced the state's workforce development board two years ago to endorse the use of federal money to continue the contract.

To do that, they presented a study from Workforce Strategists, claiming that in its first year the company had 76 participants -- and had placed all 76 in jobs.

A perfect record, or so they claimed.

But invoices submitted to the state Department of Labor indicate that Workforce Strategists billed taxpayers for 87 participants in that first year -- 23 of whom were eventually terminated for lack of participation in the program.

A note suggests one client was dropped from the counseling program for being "paranoid."

The final set of invoices for the first year of the contract indicates that some of the clients had been placed in temporary jobs.

"I e-mailed the governor's office -- never got a response," Watkins says.

Not only did Watkins' complaints fall on deaf ears, but now the Sundquist administration says it's preparing to give the company another $744,000 contract.

Administration officials say other companies were invited to bid for the new contract -- and no one else responded. They add that Workforce Strategists has a proven record of getting its clients back to work.

When asked for a detailed explanation of the billings, Labor Department spokesperson Milissa Reierson said the department would "defer further comments on the contract performance" until the review by the comptroller's office is complete.

Still she added, "The Tennessee Department of Labor & Workforce Development stands behind the Workforce Strategists contract and does not see any improprieties in the billing process. All contracts, including this one, are reviewed by the comptroller's office and the Department of Finance and Administration. None of the audits by these departments during the 3 year period of the Workforce Strategists contract revealed any improprieties or brought into question the reliability of their reporting data or performance."

But, based on his experience, Watkins questions whether the company deserves all the credit for helping its clients to find jobs.

"If you went to three or four agencies applying for a job, and they found out you got a job, they'll probably claim you and put you down as a job placement."

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