A jury convicted three people of taking federal money earmarked for job training and instead using the money to pay for personal expenses, including vacations, investments, real estate purchases and salaries for people who did not work at the company, said U.S. Attorney Justin E. Herdman and IRS Special Agent in Charge Ryan Korner.
James D. Moody, 57, of Toledo, Victoria Hawkins, 30, of Grand Rapids, Michigan, and Angela Bowser, 46, of Toledo, were convicted on all counts for their activities related to Toledo-based Business Rehabilitation Informed Decisions Guiding Employment Strategies, Inc. d/b/a B.R.I.D.G.E.S., Inc..
They are scheduled to be sentenced April 10, 2018.
Company founder and general manager Daniel E. Morris, 68, of Maumee, pleaded guilty last month to his crimes and is scheduled to be sentenced February 22, 2018.
“These defendants stole millions of dollars targeted to help the least among us learn job skills, and instead used the money to fund lavish lifestyles and pay for no-show jobs,” Herdman said. “They ripped off taxpayers and betrayed the trust placed in them.”
“This was a transparent scheme to defraud the taxpayers of Northwest Ohio,” Korner said. “Today’s guilty verdicts brings justice to thieves who enriched themselves on the backs of those struggling to survive.”
According to court documents and trial testimony:
BRIDGES operated at 242 Reynolds Road and 310 Reynolds Road. The company was in the business of providing work placement and work training services to public assistance recipients, and nearly all of its revenue came from public funds.
Morris was the co-founder and general manager of BRIDGES. Moody was co-founder and sole-shareholder. Hawkins was an employee from 2008 through 2012, while Bowser was an employee from 2008 through 2014.
BRIDGES was funded through the Temporary Assistance for Needy Families (TANF) program. TANF was a welfare program that provided cash assistance to qualifying households with minor children or pregnant women. TANF provided federal block grants to states each year to cover benefits, administrative expenses and services targeted to needy families.
One of TANF’s goals was reducing the dependency of needy parents by promoting job preparation, work and marriage. TANF recipients must work as soon as they are job ready and no later than two years after commencing assistance. BRIDGES placed public assistance recipients at “job sites,” where the recipients would work for free to obtain job training and as a condition of receiving public assistance benefits like cash assistance or SNAP benefits (formerly food stamps).
BRIDGES received more than $15.7 million in funding from several entities between 2004 and 2015, including the Ohio Department of Job and Family Services, the Lucas County Department of Job and Family Services, Ohio Works First and others. This funding was based in part on BRIDGES’ grant proposals. The majority of BRIDGES’ stated administrative costs were payroll and transportation.
BRIDGES provided job training and work placement services but at substantially lower costs than those stated in its budgets and invoices. The defendants fraudulently inflated BRIDGES payroll costs, transportation and mileage.
Morris, BRIDGES and others maintained false personnel files, timesheets, mileage records and reimbursement forms for nonexistent employees. They included fake, former or nonexistent employees on the payroll. For example, BRIDGES paid Moody a salary even though he did not work there, and later continued to pay him by issuing payroll checks to Moody’s wife.
During trial, Moody testified that he placed the salary in his wife’s name in order to distance himself from BRIDGES while running for mayor in 2009 and so that she could receive Social Security benefits despite not otherwise being eligible. Moody also received non-payroll checks, which he used to purchase and rehabilitate an investment property in Toledo, purchase an interest in his real estate company, Flex Realty, and pay for legal fees.
BRIDGES, Morris, Moody, Hawkins and Bowser used TANF funds to pay for personal living expenses including groceries, dental care, medical care, resort vacations, pharmaceuticals, clothing, toys, designer bags, furniture, video streaming services, credit card bills, legal fees unrelated to BRIDGES’ business, tattoos, cosmetic surgery, real estate, vehicles, investments and jewelry, according to court documents and trial testimony.
For example, between February 2013 and October 2014, Hawkins accessed a BRIDGES business account to make approximately $18,200 in cash withdrawals. Hawkins also had access to a debit card through which she accessed and spent approximately $750,000 in a two-year timeframe. Hawkins and co-defendant Morris also purchased two houses, including a $400,000 house in the Point Place neighborhood of Toledo.
Bowser, a program manager at BRIDGES, received numerous non-payroll checks from the company, some of which were used to purchase a house in Toledo. Bowser continued to receive bi-weekly payments from the company after she stopped working there in 2014.
Each defendant was convicted of conspiracy to commit federal program theft, conspiracy to commit money laundering offenses, substantive federal program theft counts, and substantive money laundering counts.
Morris pleaded guilty to conspiracy to commit federal program theft and mail fraud, aggravated identity theft, conspiracy to commit money laundering, and willful failure to pay over withheld payroll tax.
The case is being prosecuted by Assistant U.S. Attorneys Noah P. Hood and Gene Crawford following an investigation by the Internal Revenue Service-Criminal Investigations with the assistance of the Ohio Auditor of State’s Office, Public Integrity Assurance Team.