City Employees Nailed For a Phony Jobs Scheme

Following an investigation, three top officials at city job placement centers have been fired for manipulating the numbers of job seekers that their centers placed in jobs, apparently in an effort to meet high placement goals.

Stephen Spezzaferro and Iris Wise were the director and the deputy director of the East End Job Placement Center in East Harlem. Adrian Williams was the director of the Rider center in the South Bronx. Each of them had been working for the city’ for more than 25 years.

But no more. Following the recommendation of Judge John Spooner of the city’s Office of Administrative Trials and Hearings, the Human Resources Administration, which operates the centers, terminated employment for all three, effective January 24.

Spooner, an administrative judge, found that the three had collaborated with other agency employees to claim job placements that had actually secured by other Human Resources Administration centers. By transferring case records, he determined, they inflated statistics the agency uses to track their job-centers’ performance. The scheme is alleged to have involved hundreds of cases, and taken place in 2011 and 2012.

No criminal charges have been filed.

Judge Spooner wrote in his report on the case that the HRA employees “undermined the entire purpose of the job placement reporting, which was to generate accurate data.” He continued: “Their participation in the scheme was an egregious violation of the trust placed in them as managers, as well as their fundamental responsibility as civil servants.”

Spezzaferro, Wise and Williams did not respond to requests for comment.

Testimony in the proceedings suggested that there was heavy pressure within the Human Resources Administration for center directors to reach performance goals. Wise, for one, described being “hammered” by higher-ups at meetings for her center’s failure to meet placement goals. She indicated in her testimony that job placements were reflected in directors’ evaluations.

Wise said that she had told Spezzaferro, her supervisor, “numerous times” that she did not want to be involved, but did so anyway because she felt obliged to follow directives from a boss.  All three denied receiving any benefit from the transfers.

Robert J. Croghan, vice-chairperson of the Organization of Staff Analysts union, which represents HRA employees, said he was not too surprised by the judge’s finding.  “In my 40 years of experience, I’ve seen it happen before,” he said. Croghan recalled an incident under the administration of Mayor Rudolph Giuliani, in which, he said, three of his workers employed by HRA were threatened with dismissal for failing to reach job placement goals.

The Giuliani’s administration created the job-placement tracking system in 1998 as part of its aggressive efforts to move welfare recipients into paid work, dubbing it “JobStat” in a nod to the Compstat crime tracking system employed by the NYPD. JobStat continues in use today.

Since then, says David Jason Fischer, a senior fellow in workforce development at the think tank Center for Urban Future, the job-tracking system has been vulnerable to manipulation. “When you have a system that requires reporting large numbers to get reimbursement, the incentive to stretch the numbers is there,” said Fischer.

Williams told investigators she believed her job was in jeopardy when she received a phone call from a regional manager, explaining how she could inflate the Rider center’s success statistics. Spezzaferro, Wise and Williams have since then submitted written statements admitting to processing the case transfers.

According to Judge Spooner’s report, a regional manager—who resigned from city employment in late 2012—allegedly alerted Williams and Spezzaferro about cases that were about to close at other HRA centers because clients had found employment, and emailed them the case numbers.

Williams testified that she asked two of her subordinates to process case numbers she started receiving by email from the regional manager. She says she was worried about making the agency’s yearly placement goals. Following the manager’s directives, Williams testified, they created new paperwork, entered the data into an HRA computer system, and shredded the documents. This enabled them to reassign other centers’ cases as their own.

A spokesperson from the Human Resources Administration told The New York World (NY CITY Lens’s publishing partner on government stories) that the agency is reviewing all of its procedures regarding job placements, “to make sure that they are appropriate and that New Yorkers who seek our assistance get the help they need.”

Steve Banks, former attorney in chief of the Legal Aid Society, was appointed as the new HRA commissioner on Feb. 28.

Croghan, the union representative, says he looks forward to improved conditions under the new commissioner. “Banks is working for [Mayor Bill] de Blasio, so I am hopeful it will be a joint affair in making things right,” said Croghan. The mayor’s office did not respond to a request for comment.

The internal HRA scheme echoes a scandal that tarnished a similar program at the city Department of Small Business Services two years ago, when the nonprofit organization Seedco, a city contractor, acknowledged it had falsely claimed to have placed hundreds of clients in jobs. It now appears that similar shenanigans took place within HRA just as the city Department of Investigation was closing in on the Seedco case.

“The Seedco scandal was taken very seriously by the administration at the time, and regulations and safeguards were put in place,” said Fischer. “But HRA is a different agency, and the lessons learned at SBS were not necessarily transferred.”

According to a report from the Department of Investigation, Seedco took “full responsibility” after the case emerged, removing participants involved, changing supervisory personnel, hiring an experienced compliance officer and establishing an ethics hotline.

At hearings in the current termination case, one agency official, Gregory Gomez, testified that the East End staff processed up to 1,300 improper placement transfers, and estimated that another 800 went to the Rider Center during 2011 and early 2012.

The centers saw a simultaneous spike in their overall job-placement numbers: from 2,068 placements in 2010 to 3,183 in 2011 at East End, and from 3,845 in 2010 to 6,535 in 2011 at the Rider Center. In 2011, the East End center ranked first in the City for job placement.

While no client filed complaints, Judge Spooner determined as a result of the case transfers some clients had to travel to different boroughs to obtain food stamps and other services from HRA.

In his testimony, Spezzaferro recalled Wise telling him that they ought to stop the reassignment of cases to their job center because “it isn’t right.” He said he didn’t know how to stop because “this thing had gotten so out of hand that the numbers we were pulling in was more than half our placements.”

Meanwhile, the agency’s placement goals kept increasing. In 2013, annual job placement goals for welfare clients in New York City reached 88,000, up from 85,000 in 2012, according to a data analyst at HRA.

“I’ve seen it happen before,” said Croghan. “Quotas are developed and sometimes they are unreasonable.”

The case first came to light in August 2011 when a HRA employee received internal complaints about cases being processed in one center and closing in another center. The issue came under further scrutiny in May 2012, when another job center director complained that some of the cases she should have been given credit for were “disappearing.”

Gomez examined the data and observed a high number of case transfers going into the East End and Rider Centers, just as clients’ new employment was about to be recognized by the database.

During the hearings, the three employees charged with the scheme, admitted they knew false data would improperly credit their centers with job placements. As a result of this, Judge Spooner wrote they were depriving existing clients of extra resources, since higher-ranking centers receive fewer resources.

Spezzaferro testified that he realized the transfers were “a stupid thing to do.” He said he knew that what he had done was “wrong” and said he regrets it: “every day of my life and I wish I never did it.”

He believed his actions destroyed his life and said he “asks God for forgiveness each day.”