Gambling on Truth

Joan Bowden told her bosses about waste, fraud, and abuse in a "model" CETA program. Regulations to protect whistle-blowers didn't help her at all.


Joan Bowden was 38 years old and recently divorced when she took a job last December 1 as a field monitor for a federally funded, county-run program. She is a petite, vibrant, charming woman, self-described as a "disenfranchised housewife," with a degree in psychology and training as a paralegal. She was hired, despite being overqualified and inexperienced, to monitor seven government programs. She approached the job with a characteristic idealism and enthusiasm that apparently marked her early on, in the minds of her superiors, as dangerously naive and a threat. In three months and a day, Joan Bowden was fired from the job—for insubordination, according to her bosses; for uncovering fraud and waste, according to Bowden.

It was in 1973 that, with the best of intentions, another new federal bureaucracy was created to give hope to the poor. Congress anointed it the Employment and Training Administration, tucked it into the Department of Labor, and vested in it powers and funding to spread a system of employment programs so pervasive and accessible that it was thought that finally those feeble in mind, body, or spirit might be lifted from the nagging sludge of poverty and despair.

This was CETA—the Comprehensive Employment and Training Act program. Like all such welfare programs, this one grew in cost, starting out with $2.3 billion in its first year and more than tripling by 1981. And like other welfare programs, it was plagued by charges of abuse and ineffectiveness.

So it was not surprising that in the fiscal 1982 budget, President Reagan, with Congress's blessing, sheared from CETA its Public Service Employment program, which in 1981 is doling out a third of CETA's nearly $7.7-billion budget to keep a couple hundred thousand people employed. These make-work jobs range from street sweeping and sloshing along streams looking for pollutant discharges, to performing as clowns and jugglers in a San Francisco circus and, for the wife of former Nixon aide John Ehrlichman, working for the Seattle Symphony for $10,000 a year. Although this part of CETA has been chopped out by the budget cutters, the other part of its program—job training—survives, with a $3.5-billion budget for fiscal '82.

It is a county-run CETA job-training project that Joan Bowden charges is not giving taxpayers their money's worth. The place is Atlantic County, New Jersey, encompassing Atlantic City; recently commended by the Department of Labor for running one of 22 model CETA programs in the nation. What Joan Bowden found wrong with Atlantic County's CETA an inquisitive reporter can find, too.


When gambling was legalized by New Jersey and casinos opened in Atlantic City three years ago, residents were at first swept up in the gold rush of opportunity. Tourism had long been the economic mainstay in the area but for 50 years had been a declining industry. People were no longer drawn the world over to Atlantic City's beaches, restaurants, and live entertainment, and by 1978 unemployment had mounted to 17.5 percent. Gambling, it was hoped, would spark a revitalization of the East Coast's once-famous vacation and convention center, providing reward and prosperity for the rich and the disadvantaged alike.

So with hope and the wheels of fortune spinning in their eyes, people were lured in ever greater numbers to learn the art of dealing craps, blackjack, and roulette; repairing slot machines; and cashiering. Atlantic County CETA, too, decided to gamble on the area's economic fortunes.

Soon hundreds of job trainees were enrolled in casino-related classes. In the first half of 1981 alone, CETA had 942 people—60 percent of its trainees during that time—in such classes. Each of them is paid $3.35 an hour for attending the classes. As much as $1,000 per class goes to the private schools that train them. And CETA picks up the tab for the $125 license fee the state gaming commission requires of casino workers. And what do CETA, the job trainees, and the taxpayers have to show for this assembly-line approach to the job market?

As of March 31, according to a report issued by the New Jersey Casino Control Commission, Atlantic City's gaming schools had graduated 9,645 students—4,200 more than the number of job openings. The report faulted the gaming schools, and by direct implication CETA, for "turning out too many students without sensitivity to actual market trends."

Ed Zabielski, a tall, quiet, dark-haired man in his early 30s, enrolled in one of CETA's casino cashiering courses after having been through two previous CETA training programs. He says that he and the other students had been led to believe by CETA "manpower specialists" that they at least had the prospect of employment after graduation. But the first day in class his instructor, an unemployed school teacher who worked a casino graveyard shift, announced that "maybe one person out of 12, if you're lucky, will get a job in this business." Zabielski felt cheated and deceived, and as each week in the eight-week, 160-hour course passed, there were other things to fuel his resentment.

"What really hurt me is that I was conscientious and attended class regularly. We got paid for 160 hours even if we never showed up. When the course ended, everybody in class got a certificate even if they never passed the test. I got an A, and everyone who got a D got the same certificate. We were told that even if we didn't want a casino job we had to apply for a license. CETA paid the $150 filing fee [it's actually $125] for each of us. They begged people to apply. I don't know anybody who ever got a job through CETA. It just puts you back on the unemployment line. I'm worse off now than when I started."


Fifty-five-year-old Mary McPeak told me that she was referred to CETA by administrators of a home for battered wives, where she had taken refuge from her increasingly brutal, alcoholic husband. She enrolled in a class called Life Skills, designed to prepare CETA participants for seeking and holding employment. She had never been exposed to a government job-training program before, and what she saw saddened and disillusioned her.

"I was the only one of 12 in my class that hadn't been in the program before. Even our instructor told us, 'Oh, you aren't going to get a job through this course.' She told us, 'If you all solved your problems and got jobs, where would we [instructors] be?'

"I could have been anybody and gotten into CETA. They don't ask if you own property. You could be a millionaire and get a CETA job. I didn't know that people were out to rip off the government like this. You get paid for having kids. I got food stamps for being in CETA. When Reagan announced the budget cuts, they doubled my food stamp payments to $120 a month. Now I know where the taxes go. I know how to play the system now."

"Playing the system" is a phrase often used by CETA participants. For many of them, it describes their entire outlook on life. Many take a job just long enough to qualify for unemployment. Then when unemployment benefits run out, they enter a CETA training program, where they are paid to sit in a classroom, often times even if they don't show up, to learn a skill that few of them will ever utilize.

Although CETA regulations state that job trainees cannot earn more than $30 a week in outside income nor be enrolled in any CETA program for more than two and a half years in a five-year period, many of the Atlantic County trainees I talked to or heard about could not meet these standards. Even fewer instances could be cited when CETA administrators rigidly enforced their own rules. These are some recent Atlantic County CETA participants: one woman is a professional dog groomer; another graduated from Penn State and works as a school teacher; three or four work as cab drivers and waitresses; one woman is a night guard at a reform school. There is one 24-year-old fellow who wears designer suits to class and has been in at least six CETA courses; he is a self-ordained minister—the source of his obvious outside income?

Sherry Oakley is a pseudonym for a welfare mother of two who entered her first government job-training program 12 years ago, when she was 19. She has developed over the years some acute observations about the job-training system and what it does to the lives of its participants.

"CETA needs people, so they break the rules. It's the same with welfare. They didn't want me to get off. I know a person who went to CETA to be a bartender. He was 35 and had been a failure all his life. He got his bartendering certificate. Now he drives a truck. They didn't prepare him to be anything other than a failure.

"I'm a positive person. I knew why I was there. The reason I went to CETA was to learn what I could be. All I learned is that I could be a CETA student.

"They're training us to be nothing. We get meaningless certificates that aren't recognized by anyone other than the school we got them from. Half the people are from out of state who landed here to go on CETA and welfare. I never realized there were so many people broken by the government. They encourage you to be nothing. They don't motivate people, they cripple them."

Andrew Thompson is a pseudonym for a CETA instructor who has been training people for hotel management positions for nearly 30 years. During the few years he has worked with the Atlantic County CETA program, he has watched in amazement and with disgust as CETA has put students into his hotel management classes to fill quotas.

"I thought CETA was for unemployables and the poor. But when I talk to these people I find most don't have the want or need. Some are working. Some have no interest in being in my class. I had one man who had two jobs. Why the hell did he get in the program? I've got a guy who's a fashion designer. None of them wanted to be in the hotel business. CETA misled them during interviewing. None of them have the right attitude. Their backgrounds aren't being checked. If I can salvage one out of 15, I've done well. For 95 percent it's an easy way out of the job market.

"One woman I asked, 'How come you're in CETA?' And she said she was along for the ride. She had a job already and CETA was just a part-time job. Then aren't enough jobs in Atlantic City anyway for the people I'm putting out. CETA is simply filling quotas. It gets me hot under the collar to see them in the class wasting tax money. I don't think the program is policed properly. The people now in the CETA program should all be dismissed immediately."


When another employee of Atlantic County CETA voiced views similar to "Thompson"'s—but attached her birthgiven name to the criticism—reaction came swiftly and predictably in the form of reprimand and then dismissal. Joan Bowden didn't go into CETA to be a whistle-blower. But what she saw, once there, tripped her conscience, and the CETA bureaucracy could not tolerate her honesty.

When Bowden came on board with Atlantic County CETA in December 1980, she was told that she could expect a week of orientation. The only orienting she got was on how to operate a photocopier and where to fill her coffee cup. For the first few days she did nothing but stand around and ask what she could be doing. No one seemed to know or care. When finally she was given a list of seven training courses to monitor, she discovered that the other three field monitors—each paid $9,200 a year—apparently were not accustomed to working with someone both diligent and dedicated.

"Everyone told me to slow down, don't work so hard. I thought I was doing a good job, but they were saying my reports were too long, please don't put this in your report. I was really dumb. I thought they didn't know how to do it and I was embarrassing them.

"Each field monitor had five or more courses to monitor. Some monitors just called in to get attendance. They never worked. I don't know where they were all day long. Some of the schools told me they never saw the other monitors. When someone was dropped or terminated, they would white-out the name on the original list. I never knew why they didn't want me to keep my attendance sheets. I was told that I was too honest. I was told that fraud goes on all the time."

But Bowden didn't believe it had to be that way. On February 17, 1981, she wrote a two-page memo to Atlantic County's affirmative action officer outlining several recommendations for improving the CETA program, including more clearly explaining courses to trainees so that those with little or no interest or aptitude would not end up wasting tax money on something that would do them no good. Six days later, county CETA administrators suspended Bowden for three days without pay.

It was not for incompetence—or insubordination, chronic absenteeism, neglect of duty, intoxication, willful violation of civil service statutes or rules, or any of the other possible causes of action listed on Atlantic County's "Employee Warning Notice"—that Joan Bowden was reprimanded. Instead, under "Other," one of her bosses specified "failure to follow procedures." That is, as an accompanying explanation stated, she had gone outside the normal chain of command with her suggestions for improvements. She had gone, explains Bowden in her defense, to the person who was regarded as the ombudsman for the Department of Manpower in which she worked—a person who had earlier befriended her, assuring her that any problems with this, her first-ever paid employment in her 39 years, could be brought to him.


The three-day suspension made Bowden even more determined to see that her views were heard. She composed a seven-page memo going into greater detail about how and why CETA operations should be reformed. She pointed out that the other field monitors were absent much of the time and suggested that the importance of this job be acknowledged by the CETA bureaucracy. She also recommended that trainees "who blatantly verbalize that they have no intention of using the skills or training taught in these programs, be terminated immediately." She added emphatically, "That, to me, is fraud."

This time she gave the memo to her immediate superior. On March 2, 1981, her first day back at work after her suspension, Atlantic County CETA fired Joan Bowden. On June 3, her dismissal was upheld by the Atlantic County personnel officer on grounds that she had, as charged, shown "a consistent pattern of insubordination."

Dismayed and incensed, Bowden located a phone number for Secretary of Labor Raymond Donovan and called him at home one evening. Donovan, she reports, seemed sympathetic and promised action on her behalf. She was contacted by an assistant in the Labor Department's Office of Civil Rights, who listened to her story. Since she had not been discriminated against as a woman or for being of a minority group, she was informed, there was nothing that office could do.

The Department of Labor's inspector general dispatched two regional investigators who interviewed Bowden and wrote a report. While they would not talk to me about the response they received from the Employment Training Administration, they are known to have expressed the opinion privately that ETA is ignoring their findings.

On July 8, Bowden wrote to the Department of Labor requesting that her case be transferred to the US Attorney's Office. She also wrote to the FBI asking for that agency's intervention. Her patience, as well as her finances, had been exhausted.

Under CETA rules and regulations published in the Federal Register (section 676.82, Protection of Informants), any employee of the agency who furnishes information relating to fraud or abuses in the CETA program is classified as an informant, automatically protected against discharge or retaliation. Clearly this rule should have been applied to Joan Bowden. I queried Phil Mason, spokesman for ETA in Washington, about Bowden's termination. He was not even aware that protection of informants had been mandated for his agency.

There are other discrepancies between CETA practices and the agency's stated administrative policy. For example, Mason says CETA doesn't direct its trainees to food stamps and other benefits or in any way encourage the trainees to apply. "We don't say anything about that," insisted Mason. But Bowden has photocopies of form letters that Atlantic County CETA distributes to trainees enabling them to obtain food stamps.

"Virtually nobody understands the regulations, and no one can explain them," says James Lewis, former acting director of Harris County CETA in Houston. "A field monitor was periodically sent to Houston from the regional office in Dallas to offer advice on how to interpret regulations. But he would simply say, 'We really don't know what the regulation means.'"


Joan Bowden may be the unusual CETA employee, but Atlantic County's CETA turns out not to be so unusual. A pattern of mismanagement, political manipulation, fraud, and failure can be found in CETA training programs nationwide. Just in 1980, this sampling of abuses came to light:

Pittsburgh, reported in the Los Angeles Times, February 14, 1980—an artist's guild received $23,000 in CETA money to train six elderly Pittsburgh residents as weavers. The two women instructors—paid another $16,000 by CETA to teach—went door-to-door in several neighborhoods looking for prospective applicants. They found only five who met the age and poverty qualifications. Three dropped out before the program was completed. CETA calls this project a success because the two elderly women who graduated learned "a skill they otherwise would not have."

Washington, D.C., reported in the Washington Post, August 2, 1980—A General Accounting Office report revealed that the District of Columbia wrongfully paid more than $425,000 in CETA training funds to 39 Lorton Prison inmates. Many of these prisoners were not eligible for release until the early 1990s. One had been sentenced to serve until the year 2003.

Virginia, reported in the Washington Post, December 13, 1980—Allen and Dorothy Blitz of Martinsville, a small town in southern Virginia, are both communists who publicly advocate the violent overthrow of the US government. Soon after being indicted on felony riot charges stemming from a shootout with the Ku Klux Klan that left five dead in Greensboro, North Carolina, the couple were enrolled in a CETA program at $3.10 an hour to learn masonry and carpentry.

Arkansas, reported in the Detroit News, May 9, 1980—A state program to train the unemployed to cut firewood consumed $69,000 in CETA funds but resulted in only 12 cords of wood being cut. That works out to $5,750 per cord, or about $5,730 above the market price.

Houston, reported in the Houston Post, April 1, 1980—Regional Labor Department administrator Ricardo Flores all but conceded that CETA has been a disaster. In an interview, he admitted that less than 45 percent of CETA trainees in the southwest region, including Houston, had ever found gainful employment.

Chicago, reported in the Chicago Tribune, September 11, 1980—Five employees of the Illinois Bureau of Employment Security were indicted for taking bribes from persons wanting placement in CETA training programs.

San Francisco, reported in the San Francisco Chronicle, March 22, 1980—Eleven Santa Clara County job-training centers were placed under FBI investigation for theft and embezzlement of CETA funds that, according to an FBI spokesman, "could involve millions of dollars."

Los Angeles, reported in the Los Angeles Times, March 5 and April 1, 1980—The Center for New Corporate Priorities was suspended from the CETA program after a Department of Labor probe into charges that dozens of ineligible persons had participated in its CETA training program and that many had been used in political activities such as campaigning in Santa Monica for rent control. Most of these CETA participants apparently had college degrees and a history of successful employment. A few weeks later it was revealed that the DOL was investigating the East Los Angeles Community Union for having allegedly used some of its 150 CETA trainees in the reelection campaigns of President Carter and Mayor Bradley and for work involving property owned by ELACU administrators.


At least 10 probes have been conducted by the General Accounting Office, the congressional watchdog agency, into various aspects of the CETA program since 1973. Two of these reports in particular have relevance to the abuses turned up in interviews with Atlantic County participants.

On July 7, 1978, the GAO released its findings from an investigation of 12 training programs in six states. The picture that was painted is a devastating indictment. According to the GAO:

• Trainees were "enrolled in training for which they were neither academically nor physically prepared."

• Trainees were often placed in courses simply to fill quotas, even when some of these courses cost $15,100 and more per student.

• The courses received "limited and superficial monitoring" from CETA.

• About 49 percent of 2,000 trainees sampled were alleged to have later found jobs, but "many obtained jobs not related to the training received," and numerous local CETAs made a practice of inflating their job placement figures. Furthermore, the "participants' wages after training increased only slightly over pretraining wages," most by as little as 4 percent.

• Many of the training courses "were not justified by available labor market surveys." Few sponsors even conducted surveys before churning out trainees in a particular field. Even after a CETA course in welding in Lowell, Massachusetts, was found to have a job placement rate of only 14 percent, the course was continued for another fiscal year. Half of that 14 percent were trainees placed in jobs unrelated to their welding course, most as taxi drivers and housekeepers.

• Of the programs GAO reviewed, fully 31 percent of training graduates went on unemployment after the courses ended.

On March 27, 1981, the GAO released another report whose findings are summarized in its title: "Weak Internal Controls Make the Department of Labor and Selected CETA Grantees Vulnerable to Fraud, Waste and Abuse." GAO investigators visited the Employment Training Administration headquarters in Washington, D.C., and selected at random 29 items of office equipment for review—8 were missing, including a photocopy machine, typewriters, and calculators. At CETA's local level of operation, such theft was found to be commonplace, but minor compared to other types of abuses.

Investigators found that one city-run CETA, unidentified in the report, has used CETA training funds to finance its entire city payroll of $329,000 for a week. Another unidentified CETA sponsor exceeded its CETA grant by $577,498 because it had never bothered to establish a budget. A second city-run CETA diverted $25,561 in training funds to purchase 1,024 water meters for installation in private homes.

The report revealed that erroneous and excessive wage payments to CETA trainees were allowed, if not encouraged, by each of the local bureaucracies examined. One trainee was found to have been paid $5,800 for a period of eight months after his termination from the CETA program.


If these incidents are typical, and if Atlantic County CETA truly does represent one of 22 "model" programs in the nation, we must seriously doubt whether the poor are benefiting from CETA and whether taxpayer interests are being well served. CETA estimates its per pupil cost at $7,000. The evidence is accumulating that many of the trainees are repeaters, professional job-training students playing the system, using the program as a source of additional income rather than for entrance into the job market. The various CETA bureaucracies appear to be filling quotas by recycling people through its programs to keep funding levels high.

Tuition for the Atlantic County CETA travel-tourism course runs in excess of $3,000 per pupil. The hourly trainee stipend brings the total closer to $6,000. "Sherry Oakley" remembers her instructor telling the class not to expect any jobs from the training: "She said that travel-tourism should be a hobby—that we should marry a doctor." Was CETA set up to teach hobbies to the poor and to those who masquerade as poor?

Far too many CETA graduates, the serious ones in search of advancement, end up as maids, taxi drivers, and manual laborers. Is that what taxpayers spend an average of $7,000 per pupil for, to raise and then shatter the job expectations of the poor, training them for jobs that either don't exist or were never meant to exist for them at all? "It's better not to give us a dream if it's going to be taken away in nine months when we leave CETA," says trainee "Sherry Oakley."

For every CETA success story, for every training-program graduate who has used CETA as a slingshot to making a success of his life, there are far too many failures. Most of the well-meaning people are hurt or crippled by the CETA system, while the others approach this jobs program, as they have every other government cup of altruism, with the worst of parasitical intentions.

Joan Bowden has as much cause for bitterness as any of the disadvantaged persons she worked with in CETA. She is jobless, trying desperately to clear her name. She has spent $600 in legal fees, another several hundred dollars in phone calls, attempting to prove that she was fired for telling the truth, for revealing fraud, waste, and mismanagement. Her predicament illustrates why so few government employees can muster the courage to become whistle-blowers.

Meanwhile, CETA lives on, reduced but not smitten by the Reagan search for wasteful elements in the federal budget. After each media revelation, after each GAO report, the politicians vow to reform CETA. But the same bureaucrats who failed to see—or condoned or even perpetrated—the abuses retain their jobs, even as budgets are squeezed.

"You're not going to clean them up," Bowden says of the CETA bureaucrats. "You have to cut them out. They are corrupt, and the parasites dominate. They look upon the CETA trainees as bodies, nothing more—x amount of bodies means x money. CETA doesn't care if they learn anything. They are just victimizing the poor and the handicapped to perpetuate themselves and the agency. "

Randy Fitzgerald is a free-lance writer. This article is a project of the Reason Foundation Investigative Journalism Fund.