“Two strong women mud wrestling.” That’s how one Capitol Hill Democratic staffer describes the match of wills between Emily Stover DeRocco, assistant secretary of labor for the Employment and Training Administration (ETA), and LaVera Leonard, president of the National Job Corps Association.
At stake in the struggle is so little, yet so much. So little is the substantive issue of whether the 41-year-old Job Corps should be administered by DeRocco, a Bush appointee who has won the enmity of most of the nation’s employment and training professionals, or, as Leonard wants, by the office of the assistant labor secretary for administration and management.
Last December, using the fiscal 2006 appropriations bill, Leonard – purporting to represent all Job Corps stakeholders – inexplicably convinced Congress to move the program out of the ETA. The move to Secretary of Labor Elaine Chao’s office offered only one discernible benefit: getting Job Corps out from under the wrecking hand of DeRocco and her even more intensely despised deputy, Mason Bishop.
Just who is Leonard, and how did she persuade Congress to make such a needless administrative change?
Here in Paper City, where the color of choice is green, even as azaleas bloom, ever-imaginative lobbyists/entrepreneurs are adept at presenting a powerful-appearing façade, behind which looms little of benefit for the commonweal.
One successful practitioner of this Potemkin Village approach to lobbying for profit is the Leonard Resource Group (LRG), run by Leonard, and its captive “nonprofit,” the National Job Corps Association (NJCA). NJCA holds itself out as the duly constituted, membership-driven, public policy mouthpiece for the nation’s 122 Job Corps centers. Those centers’ operators, and various satellite contractors, thrive on the Job Corps’ $1.6 billion in annual spending.
With Congress and the Bush administration in a spending frenzy not seen since Pearl Harbor, small for-profit boutique businesses (like LRG) that contract with the federal government have become the darlings of investors. In recent months Aspen Systems, contractor for the federal Juvenile Justice Clearinghouse, has been sold to Lockheed-Martin for an undisclosed sum. Founded in 1958, the firm employs 1,700 people. Its new owner, Lockheed-Martin, employs 135,000 and had $37.2 billion in sales last year.
Another business striving to catch that rising tide is LRG, founded in November 1996 and owned by Leonard. She has long laid claim to all things Job Corps-related as her exclusive political domain, and has the well-exercised sharp elbows needed to repel interlopers. Her business acumen has her well on the way to building a business that could sell for more than $10 million in the current market.
So you want to be a millionaire too? Join the National Job Corps Association and become president. But to do that, you’ll have to dethrone the formidable Leonard, the apparent NJCA president-for-life.
The Alexandria, Va.-based group loudly proclaims itself as representing the interests of all Job Corps stakeholders. That assertion is hotly disputed by others, including the Building Trades Council of the AFL-CIO and its members. They have provided on-site job training to many of Job Corps’ 16- to 24-year-olds since Job Corps began in 1965. One labor union official who has worked at a local Job Corps says of the NJCA, “I don’t understand the point of the organization except to keep the [LRG] coffers full.”
In Youth Today’s December/January 2006 issue, Nose Knows reported on LRG/NJCA shafting one of its longtime dues-paying members – Joint Action in Community Service (JACS), led by Harvey Wise – resulting in the virtual demise of JACS. Leonard and NJCA board Chairman Richard Schubert declined to be interviewed for that article. With gleeful help from Leonard’s many covert detractors, the unflattering column, “JACS Tossed by Job Corps,” circulated briskly via e-mail to Leonard’s friends and foes alike.
Most trade association leaders are understandably quick to defend themselves and their professional reputations. Not so Leonard, who leaves NJCA’s Schubert – a former president of the American Red Cross and former deputy secretary of labor – to counterattack. In February, on NJCA’s “members only” website, Schubert, “speaking for board and staff,” denounced Nose Knows’ reporting as “unscrupulous.”
Nose had accurately reported about IRS tax records that show that virtually all of NJCA’s dues ($564,167 in 2004) “end up in LRG’s bank account.” Schubert wrote on the website, “The suggestion” is “false and borders on libel.” NJCA, says Schubert, “has, to the best of my knowledge, abided by the strictest ethical standards” and the Youth Today report is “mud raking” [sic].
Well, someone’s got to level the mud in the wrestling ring between rounds.
Prior to setting up LRG/NJCA, Leonard had worked on Job Corps matters at the Home Builders Institute, the nonprofit arm of the trade association for the nation’s housing industry.
At its birth in January 1997 (two months after the creation of LRG), NJCA was already a family affair. Incorporating the 501(c)(6) group were Leonard’s mother and father, both then residents of a Lancaster, Pa. nursing home, and her then-husband Dean Griffin.
For all practical purposes, the NJCA exists only on paper – and there’s not much of that that’s reliable when it comes to its business affairs.
More “Mud” Raking
An examination of LRG, the NJCA and another LRG-controlled nonprofit, the NJCA Foundation for Youth Opportunities, invites invidious conclusions about this opaque trio of organizations, all located at the same Alexandria, Va. address.
Over the past few months, LRG and NJCA have rebuffed repeated attempts to learn just how “the Job Corps community,” as LRG is fond of calling it, takes public policy positions that are then advocated on and off Capitol Hill. One dues-paying member in the Rockies says of policymaking, “I don’t know about that. They do it back there.”
In a brief, begrudging interview, Schubert, “talking for the association,” declared that LRG/NJCA had “nothing to hide,” and proceeded to label his “good friend” – Nose Knows – as “nefarious” and on “a fishing expedition.”
Not surprisingly, with all that mud in the water, the fishing was lousy. Requests submitted in writing in early March for NJCA audits (if they exist), minutes of board of directors’ meetings (if they exist), documents reconciling differences in filings with the IRS and the U.S. Senate, as well as the total compensation paid by NJCA to Leonard, were all rebuffed. In a March 9 letter, nothing-to-hide Schubert wrote, “It is our understanding that the [above-referenced] information … is not subject to disclosure requirements.”
Requests to Leonard, LRG and the NJCA yielded little more than the already publicly available IRS tax returns for the NJCA. On March 13, a Youth Today reporter was turned away at the door from the LRG National Job Corps Association Policy Forum, whose apt theme, chosen by Leonard, was “Seizing Opportunities.”
On April 14, Schubert wrote to offer “final clarifying details.” Dues are pro rata for NJCA’s top tier of 29 “Alpha” members. That list includes all of Job Corps’ large contractors, including Management and Training Corp. The YWCA of Los Angeles operates one center, and, says CEO Faye Washington, pays $1,500 in dues. JACS, before it was knifed by Leonard, paid $1,000.
Prior to Nose Knows’ December column, NJCA’s website listed 76 members, a sort of coalition of the willing and unwilling, it turns out. Pressure from the unwilling for an accurate membership list produced a plunge to 36 members by March. NJCA now claims 41 paid members, one of which is LRG.
Available documents offer scant insight into the murky, un-fished waters of LRG/NJCA business dealings. According to IRS records, the NJCA has seen its gross receipts grow to $1,155,354. Almost all of that revenue promptly disappears behind the LRG corporate veil.
For example, in 2002 NJCA revenue was $719,924, and its expenses totaled $709,264, while LRG was paid $709,264 under the undisclosed terms of its management agreement with NJCA. In 2003 and 2004 as well, every cent spent by the NJCA was paid to LRG.
Two months after Leonard started LRG, the NJCA filed for its nonprofit tax exemption. The IRS Form 1024 asked if “the applicant organization is now, or plans to be, connected in any way with any other organization … and [to] explain the relationship (e.g. financial support on a continuing basis, shared facilities, same officers, directors, trustees).”
The official document, signed by attorney Steven Zimmerman, says “N/A,” as in “not applicable,” at least as it applies to LRG’s Leonard. The bylaws of NJCA follow IRS requirements and read, “no part of the income of the corporation shall be distributed to its Members, Directors or Officers.” President Leonard is also a member of NJCA’s board of directors.
According to Schubert’s rebuttal of the December Nose Knows column, “NJCA has, to the best of my knowledge, abided by the strictest ethical standards.” Given today’s “culture of corruption” on and off Capitol Hill, that’s setting a low standard.
The NJCA will next gather on July 26 for its annual Alpha Awards suck-up dinner to Congress and congressional staff, The plaque-giving event isn’t cheap. In 2004, according to NJCA’s IRS tax returns, the orgy of adulation cost $197,226. At the annual event, the charitable impulses of LRG/NJCA are on full display.
Consider that in 2002 the LRG/NJCA-controlled NJCA Foundation for Youth Opportunities had income of $281,302 and listed $279,594 in expenses, all paid to LRG – including $146,872 in “compensation” to Leonard. That year 10, Job Corps students each got $5,000 scholarships, which are funded by the foundation and announced at the awards dinner.
In 2003, when the foundation’s income was $339,609, the scholarships were cut back to $3,000 each. In 2004, with income of $464,476, the foundation could only scrape together six scholarships of $2,500 each, while Leonard’s compensation rose to $209,197. Her reported NJCA compensation for 2004 was not listed on the NJCA’s IRS forms – an egregious violation of nonprofit tax law.
That same year, NJCA reported Leonard’s direct pay – as president, working “5 hours per month” – at $160,412, while in 2002 she directly received $146,872 for working “5 hours per week.” The 2003 tax returns of NJCA and the NJCA Foundation for Youth Opportunity are the last to provide total direct income for Leonard. They total $320,824.
In 2004, however, the NJCA Foundation for Youth Opportunities listed $209,197 in direct compensation for Leonard. If the 2003 tax returns are a guide to the 2004 returns, then the two groups paid Leonard a total of $418,294. Presumably the bulk of Leonard’s current additional income comes from LRG profits.
Government contractors win a typical fee (that is, off-the-top profit) of 7 percent. LRG’s revenue, according to an article Leonard wrote five years ago, had already passed the $3 million mark. Seven percent of that is $210,000. So, her personal income from all sources this year could break the million-dollar barrier.
A WICS and a Nod
No one other than Leonard knows the extent of her business dealings with Job Corps contractors. One small example is Women in Community Service (WICS), also based in Alexandria, Va.
The nonprofit, headed by Jacquelyn Lendsey, has its roots in its work aiding young women who are graduating from Job Corps. The ill-fated JACS, done in last August by LRG, originally worked with young men.
WICS is a member of the NJCA (as well as the National Collaboration for Youth). With 85 staff members and revenue of about $5.5 million, WICS, like JACS before it, is dependent on Job Corps contracts. More than 60 percent of WICS’ revenue comes from Job Corps. Lendsey, an NJCA board member, declined to be interviewed for this and previous articles.
As part of its affirmative action and small business set-aside, the Department of Labor (DOL) requires that 25 percent of the work be subcontracted to qualified groups. LRG is, of course, “woman-owned,” so when WICS bid successfully for its contract renewal, LRG received $50,000 for its “technical expertise to research a model for a national mentoring program for Job Corps,” says WICS. What’s $50,000 in protection money for an annual contract of $3.7 million? Now-retired JACS executive director Wise muses, “I wish I’d thought of that.”
Chao to LeVera: Ciao
But Leonard isn’t the only one in Washington adept at mud wrestling. Two weeks after NJCA’s confab, Chao, DeRocco, et al, had big news, as President Bush’s fiscal 2007 budget proposal was released. Under the budget plan, as Chao had told a House oversight subcommittee in back February, “DOL proposes to transfer the [Job Corps] back to ETA.”
But if you insist, Ms. Leonard, on keeping Job Corps in the office of the assistant labor secretary for administration and management, how do you like this?
The transfer of Job Corps from ETA, said Congress in Public Law 109-149, must happen within 90 days of the law’s enactment, which was last Dec. 30. The law allows Secretary Chao to make changes “as necessary,” a gaffe in legislative language that even the greenest of lobbyists knows is a hole big enough for an executive agency to drive a Stryker armed vehicle through.
So, DOL simply disassembled Job Corps support functions, much as the Justice Department did with the Office of Juvenile Justice and Delinquency Prevention. Dispersed throughout DOL are Job Corps’ budgeting, financial management and accounting, approval of Job Corps initiatives, data, reports and media affairs – a function Nose Knows didn’t even know existed at DOL.
But all of that is so much mud in the eye. Leonard wrote to congressional staff three days after the DOL announcement, saying the new setup “disbands Job Corps’ time-tested procurement systems by separating it from the Office of Job Corps.” Nothing makes a wrestling match more vicious than breaking up the familiarity and cronyism that has grown up over what NJCA called, in testimony before Congress on March 29, a “40-year history of unprecedented success.” Understandably alarmed contractors – we’re talking $5 million to $25 million per year for up to five years here – must be wondering how they got snookered into Leonard’s bureaucratic transfers maneuver. Groups pay a half million a year in dues for what?
Chao, DeRocco, et al, are moving muy rapido. First, they canned the national director of Job Corps, Grace Kilbane. In a death by kindness compliment letter to Congress, NJCA called her “a respected Job Corps professional.” Put in the job is Esther Johnson, who has spent her career dealing with unemployment insurance. One colleague describes her as “a pleasant woman with no idea how to run Job Corps” – hardly a disqualification so far as DeRocco is concerned.
The sly DeRocco can now brag that Johnson is the first African-American woman to run Job Corps. National contracting will be out of Job Corps’ hands by May 20, and regional contracting by Sept. 30, the DOL says.
Leonard, having entered the ring with DeRocco, is fighting back. The Senate Appropriations Committee has added language to a pending spending bill for the Iraq war that “directs DOL to immediately transfer the Office of Job Corps intact, retaining all its staff functions [i.e., contracting] and authorities.” Unfortunately for Leonard, the larger bill has become controversial and is loaded up with so much pork that the president has threatened to veto it. Now delay is DOL’s ally.
No one knows how this slapdown will end. One Job Corps civil servant says, “I’m packing boxes with my current address and my future address on the same box.” It is hoped that all will be settled before the $200,000-plus Alpha Awards dinner in July. Few will place a bet on DeRocco getting an award. And few will place a bet that her nemesis, Leonard, will ever again be perceived as speaking for all Job Corps stakeholders.
One union official writes in an e-mail that Leonard “may have once represented or been the symbol for Job Corps as a whole, but that day is over.” Maybe organized labor will give DeRocco an Alpha Award.
Contact: Employment and Training Administration (202) 693-2700, www.doleta.gov; Leonard Resource Group (703) 548-8535, www.lrginc.org; National Job Corps Association (703) 519-6430, www.njcaweb.org.