By Sheena Dooley | Iowa Watchdog
Iowa Workforce Development officials failed to comply with Iowa law when they blocked state auditors from investigating a case in which an employee with a criminal background embezzled more than $43,500, according to a newly released report from the Iowa State Auditor.
The agency contacted the state auditor’s office nearly eight months after starting its own investigation into fraudulent unemployment claims that were traced to back to Linda Pippen, a workforce adviser in Cedar Rapids. Its workers refused to cooperate with officials from the auditor’s office, saying they first wanted to complete their own internal investigation, the report said.
Iowa law requires state agencies to immediately contact the state auditor when they become aware of potential cases of fraud. Despite that, Iowa Workforce Development officials didn’t face any punishment.
“If there is fraud or suspicions of fraud you don’t wait,” Tami Kusian, deputy state auditor, told Iowa Watchdog.
Kerry Koonce, spokeswoman for Iowa Workforce Development, said the agency worked initially with the Division of Criminal Investigation, as well as the U.S. Inspector General because it involved federal unemployment funds.
Workforce Development officials have since taken steps to ensure all of the appropriate officials are notified in the future, officials said in the auditor’s report.
“She was charged federally because there were federal funds involved and when you have money deposited on debit cards it becomes an issue of interstate commerce,” Koonce said.
Pippen, who had access to unemployment accounts, pleaded guilty just more than a year ago to one count of embezzling federal funds and one count of aggravated identity theft. She was sentenced to four years in prison and will have to pay back the $43,500 she stole.
Pippen embezzled the money from 2008 to 2009 by changing computerized accounts of individuals, including her husband, who previously received unemployment benefits. Once they stopped collecting the benefits, Pippen altered bank account and routing numbers, so they flowed into her checking and savings accounts. She also received preloaded debit cards.
The 43-year-old was hired by Iowa Workforce Development in 1998. Several years later she was found guilty of third degree theft, embezzlement and identity theft, all of which were not related to the case involving Iowa Workforce Development.
Pippen did not disclose her criminal history and the agency couldn’t take action against her because she had not lied on her application when answering if she had a criminal record, Koonce said.
“Are there better processes to check that? Yes,” Koonce told Iowa Watchdog. “At the time we didn’t have the authority to fire her because she hadn’t done anything at that point in time.”
Prior to officials uncovering the embezzlement, Pippen was the lead plaintiff in a class action against the state that involved as many as 6,000 black people who were turned down for jobs or promotions. Pippen alleged she was unfairly passed over for a promotion, a job that was given to a less qualified white woman, according to the lawsuit, which gained national attention.
Her name was dropped from the lawsuit after she pleaded guilty to embezzlement.
Officials at Iowa Workforce Development have consolidated their operations into the Des Moines office, limiting access to individual claim information. Anytime a change is made to an individual’s file, a notice is automatically sent to the individual to ensure they requested the changes. Also, officials have increased internal audits, Koonce said.
“This happened under a different administration,” Koonce said. “The Branstad administration has taken a lot of steps to deal with these issues.”
Contact Sheena Dooley at email@example.com. Follow Iowa Watchdog’s handle @IAWatchdog on Twitter.