D.C. officials probing alleged payroll embezzlement at Dept. of Employment Services

By Nikita Stewart Washington Post Staff Writer
Saturday, October 23, 2010; 3:03 AM

City officials are investigating allegations that the Department of Employment Services's payroll system was hacked and that payments made out to the stolen identities of a half-dozen people in the jobs programs were sent to a bank account in North Carolina.

The Washington Post obtained records from a source close to DOES that show at least $50,770 was paid to five people since June. Payroll records for a sixth person were not provided. But $22,513 of the total was paid to a former employee or participant who has not been a part of a jobs program since March, according to the source, who spoke on condition of anonymity because the records are confidential.

As of Friday, no one had been terminated, but District officials said they think that the alleged scam might be limited to an employee in DOES. The records obtained by The Post show that department payments scheduled for Friday were stopped.

"The DC Department of Employment Services is aware of the payroll allegations and is working closely with the Office of the Attorney General and the Office of the Inspector General, which is currently conducting an investigation," DOES spokeswoman Dy Brown said in an e-mailed statement Friday. "The Agency is unable to comment further pending the outcome of the investigation."

The Office of the Chief Financial Officer has also begun an investigation, said spokesman David Umansky.

WUSA (Channel 9) first reported the story Thursday night, saying "tens of thousands of dollars" might have been embezzled in the alleged scam but did not specify how many people were involved. The station also said the alleged scheme involves the Summer Youth Employment Program, long criticized for mismanagement and one of the first major stumbles for Mayor Adrian M. Fenty (D) when it went over budget by more than $30 million in 2008.

That summer, several youths and vendors contracted by the city to provide jobs were paid, although the participants did not work. Checks were sent to former participants, according to audits.

According to city officials and the source, the allegations involved participants in other jobs programs within DOES. Council member Michael A. Brown (I-At Large), chairman of the committee that oversees DOES, has asked D.C. Auditor Deborah K. Nichols to investigate.

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