Seedco, a national nonprofit that operated two career centers for the Department of Small Business Services, will pay the city $1.725 million in damages to resolve a lawsuit by U.S. Attorney for the Southern District Preet Bharara that charged Seedco with routinely falsifying its entries in the national job-placement database.

Seedco (the Structured Employment Economic Development Corporation) admitted to the false reporting as part of the settlement, which was approved by Federal Judge Alvin K. Hellerstein on Dec. 19.

Specialty Was Manufacturing

The nonprofit, which draws on government and private funding to promote job training, community development and placement assistance, contracted with SBS in 2004 to operate two Workforce 1 Career Centers, Federally-funded offices providing assistance to unemployed New Yorkers.

Seedco was required to report job placement performance to continue receiving Federal funding, and falsified much of the information, often changing dates to make it look like applicants had obtained jobs through the program, when in fact they had worked for the employer before becoming unemployed.

'Exploitative and Insensitive'

It used its relationship with local businesses to gather information on their employees and report them as having been placed by Seedco, even though they had no relationship with the nonprofit.

Seedco also had staff members’ friends and family fill out intake forms to boost job-placement numbers.

“In addition to being illegal, it is insensitive to the people who desperately need employment help to exploit public funding for these programs by falsifying job-placement reports, as Seedco admitted to doing in this case,” Mr. Bharara said in a statement.

“In addition to paying a heavy fine and making admissions, Seedco has agreed to implement a comprehensive compliance program to ensure that this never happens again,” he continued. “At a time of high unemployment and strained Federal budgets, we will not tolerate the abuse of Federally funded programs.”

This compliance plan will be overseen by an independent officer who will work to prevent future fraud. Workers will be encouraged to call an internal fraud hotline if they suspect any foul play.

Mr. Bharara is continuing his civil fraud lawsuit against seven Seedco employees who used to work at the Workforce Centers.


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