March 9, 2012; Source: New York Times
New York City’s Department of Investigation (DOI) has reported that, of 6,500 job placements claimed by Seedco, 1,400 were fraudulent. That is, those who had purportedly been helped by the nonprofit were either still jobless or they had found jobs on their own without Seedco’s help. The DOI report says that Seedco “developed systematic practices to report false placements.” One of the most remarkable findings is that Seedco got the city’s approval for shredding job placement documents for the period of 2008 to February 2011, so the actual number of fraudulent job placements might be much higher.
If you want to see an example of the courage of a whistleblower, look to Bill Harper, a former deputy director at Seedco. In August of last year, Michael Powell of the New York Times first reported about Harper’s allegations that SEEDCO was falsifying reports of job placements for its performance on city government contracts. At the time, Powell said that Seedco tried to sully Harper’s reputation and claimed to have conducted an audit that found only 60 fraudulent job placements compared to Harper’s count of 400. A month later, Powell was back reporting on new allegations about Seedco’s job placement accomplishments. This time around, both the city oversight agencies and Seedco itself were less defensive and dismissive, and Seedco promised corrective actions such as reviews and retraining of staff.
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Though Seedco’s relatively new senior management is promising to make additional changes, the new charges are obviously not good news for the organization. Powell reports that federal prosecutors are looking at Seedco’s job placement contracts and the city has announced that it will take away Seedco’s $7 million annual contract and give it to a different nonprofit.
Why did a great and respected nonprofit allegedly get involved in this kind of behavior? According to Powell’s article, “The employees at Seedco…described a culture of unrelenting pressure from the Bloomberg administration to produce data showing that the job placement effort was working. Each year, city officials increased the targets for placements, even in the midst of a deep recession. The city required contract agencies to give weekly, monthly and quarterly reports of progress. City officials graded their progress, giving good marks to those with high numbers of placements, and poor grades to those that fell behind.” Staff reported that managers pressured them to fake job placements and learned tricks for fabricating job placement reports.
Under Mayor Mike Bloomberg, the city has emphasized performance-based contracting, making Seedco’s competition for new contracts, such as a contract for a new workforce center in the Bronx that it wanted at the time, dependent on showing the numbers. Faking the reports had reportedly become part of Seedco’s organizational culture of responding to Bloomberg’s city hall pressure.
Read the DOI report for an amazing story of terribly bad nonprofit management. But congratulate Harper. You and we know that he had to have been showered with attacks and insinuations after he went public with what he knew. But that’s the challenge of being a whistleblower. It takes real courage. Thank you, Bill Harper.—Rick Cohen