Project JOVE Blames State for Forcing Chapter 11 Bankruptcy

Project JOVE officials said Wednesday that they have filed for bankruptcy because of a state decision to stop funding several of their programs. Thomas Wornham, the agency’s executive director, said the decision by the state Employment Training Panel “has made it impossible for Project JOVE to perform on its contracts.”

“Therefore, we must organize our credit, debt, facilities and staff to be able to continue performance on our other contracts with other funding sources,” he said. “The Chapter 11 filing will provide us an opportunity to do this.”

Chapter 11 of the federal bankruptcy code allows a company to continue doing business, protected from creditors, under control of the bankruptcy court.

Project JOVE programs funded by San Diego County include Releasee Aid and Mainline, designed for ex-offenders, and job assistance for those on probation. A youth employment program is funded jointly by the San Diego Private Industry Council and the Regional Training Employment Consortium, and a weatherization and energy assistance program for low income families is funded jointly by San Diego Gas & Electric, the federal Department of Energy and the state Organization of Economic Opportunity.

The state Employment Training Panel will take over Project JOVE programs it had funded, including recreational vehicle repair training in San Francisco, Sacramento, Los Angeles County and Orange County. The state also will make arrangements for those enrolled in the microprocessor training program in Kearny Mesa to be transferred to a program operated by Control Data Corp.

Wornham said the 14-year-old social service organization’s problems were caused by two employees in Los Angeles who falsified records, which led to an investigation by the state attorney general’s office and the state Employment and Development Department. The investigation, which began in March, has not been completed.

The employees, George Thoroman and Jose Ramerez, apparently have left the country and are thought to be in Spain.

The funding problem caused $70,000 worth of payroll checks given to 160 Project JOVE employees in programs from San Diego to Sacramento to bounce in April.

Steve Duscha, executive director of the state Employment Training Panel, said the organization now owes the state $264,820 on two contracts in the Los Angeles area. One was a $1.25-million contract to retrain unemployed workers to repair recreational vehicles in Baldwin Park, and the other was an $896,000 contract to train workers in the use of liquid propane gas in Pico Rivera.

The irregularities being investigated involved the number of people who were actually trained and received jobs with recreational vehicle dealers and service centers. Project JOVE was to receive $4,995 per trainee if the trainees were placed in jobs that paid at least $7.50 per hour, and if they remained employed there for at least 90 days.

A routine comparison in February of statements filed by Project JOVE and records of businesses said to have hired trainees showed that many trainees were either not working at all or were making less than $7.50 per hour. The two JOVE employees blamed for the financial irregularities did not not remove any funds, Wornham said.

Wornham and Alex Landon, chairman of Project JOVE’s board of directors, worked unsuccessfully with the Employment Training Panel last week in an effort to restore state funding. Wornham said Project JOVE officials and the panel have different views on contract requirements and the timeliness of action.

For example, Project JOVE employees allegedly inflated figures on numbers of people finishing the recreational vehicles training program. Wornham said that, had funding remained available, those actually in the program could have been placed by mid-June as stipulated by the state contract.

“By their not being willing to discuss it with us,” Wornham said, “the option for solution was taken away.” Filing for bankruptcy will provide a forum for the conditions of the contracts to be discussed, he said.

Duscha said, however, that the issue is fraud. Project “JOVE has not performed, and JOVE admits that it has committed fraud with public funds,” he said. “There is no way that we could pay Project JOVE at this point.”

Landon said that “the problem we have at this point is that the same dedication and allegiance we gave to (the Employment Training Panel) has not been shown to Project JOVE. Had we been given the opportunity to continue with these contracts, we could have taken steps to place those people who had not been placed in the context of the contract.”

Landon said that Project JOVE officials are upset because their current problems were caused by people they trusted and that “JOVE will obviously be a bit more cautious in its own self-management.” He added that “JOVE has been responsible in solving its problems in the past,” and that this case will be no exception.

“Project JOVE serves a real need in the community,” he said. “I think we meet this one and continue to have JOVE as a viable, functioning organization.”