Ex-Bradley Aide Target of Fraud Probe : City Hall: Investigators say they have found ‘major problems’ in a now-defunct job training program. A former mayoral appointee headed the program.

Los Angeles city officials are investigating allegations of fraud in a poverty program headed by a former Bradley Administration appointee and housed in a building that was renovated with city funds while secretly owned by Bishop H. H. Brookins, The Times has learned.

The inquiry focuses on Bi-Plex Corp., a now-defunct firm that received millions of dollars in city and county job training grants. Bi-Plex paid $10,000 a month for space in Brookins’ office complex in Southwest Los Angeles after it was refurbished with $336,000 in city-approved loans.

The investigation of Bi-Plex is the third current government inquiry into Brookins’ office complex and tax-funded programs operated there. City and federal officials are also investigating the construction loans and a separate poverty program once headed by the bishop.

In its probe of Bi-Plex, the city’s Community Development Department has uncovered numerous irregularities. Investigative records show that a substantial number of students in the training program never received jobs, contrary to Bi-Plex reports to the city.

“There were major problems . . . due to lack of performance and possible fraud,” Steve Porter, CDD’s assistant general manager, said in an interview. He noted that the program’s funds were cut off in 1987 because of the problems.

George Hughley, head of CDD’s Special Investigations Unit, said the current probe involves possible fraudulent reporting and could lead to criminal charges. City auditors have not yet determined how much money Bi-Plex may owe the city, Hughley said.

However, Los Angeles County officials are demanding the return of nearly $100,000 because Bi-Plex allegedly falsified job placement documents under its job training program, according to public records and interviews.

“It looked to me like the county got ripped off,” said J. Tyler McCauley, the head of the county’s auditing division.

Bi-Plex’s former president, Arthur R. Dansby, said, “No fraud occurred at Bi-Plex at all to my knowledge.”

He acknowledged that there were problems with the job placements. “I do not deny that is why we lost our contract,” he said, “and that is why Bi-Plex went out of business.”

Dansby said Bi-Plex received about $5 million in city and county grants between 1979 and 1987, before it was forced to shut down.

Between 1979 and 1982, Dansby said, he was one of Mayor Tom Bradley’s appointees to the city’s Private Industry Council, which distributes job training grants. Dansby acknowledged that he participated in council decisions involving Bi-Plex’s job training contracts until the city attorney’s office identified what Dansby called “the conflict-of-interest situation.” He said he stopped voting on his own contracts after his first year on the council.

A spokesman for Bradley, Bill Chandler, said Thursday, “The mayor’s understanding has always been that (Private Industry Council) members have been prohibited by state and federal law from voting on matters which affect their own and their organizations’ financial interest.”

Dansby continues to lease the majority of Brookins’ complex, where Dansby now operates two private trade schools.

The Community Development Department on Monday announced that it is conducting a full review of the renovation of Brookins’ complex on Crenshaw Boulevard. The Times reported last week that Brookins obtained the $336,000 city renovation loan through a church corporation that did not exist. The loan was intended to provide better quarters for an anti-poverty program funded by local, state and federal agencies.

However, ownership of the office complex was transferred to Brookins and the renovated quarters were leased out to Bi-Plex. The struggling anti-poverty program was shifted to Brookins’ run-down offices next door, where it is now housed.

City administrators said they would not have financed the renovation had they known Brookins owned the building. Brookins’ complex is now worth about $1 million, according to loan records.

The district attorney’s office investigated the loan but dropped the case last year because the statute of limitations for fraud and embezzlement had expired, prosecutors said.

City officials said they are still trying to determine whether Brookins returned about $30,000 of the renovation funds that district attorney investigators said he used for “personal obligations.”

In addition to questions about the construction loan, city officials this week cut off funds to an education program at the complex formerly headed by Brookins. CDD has started investigating alleged conflicts of interest in Brookins’ dual role as an officer of the city-funded program and its landlord. Tens of thousands of dollars in rent payments may have gone to Brookins in violation of city contracts, said Susan Cleere Flores, who oversees the city program.

Brookins has denied any wrongdoing and said he will return any funds owed to the city.

Among the Bi-Plex problems identified by city and county officials were:

* Keeping inadequate attendance records for job training classes. Student time cards were not properly filled out and records did not show if students achieved required skills, county auditors found.

A former Bi-Plex instructor, John Fortier, told The Times that attendance records were sometimes falsified. “I know students were supposed to be dropped after a certain period (of absence) and they weren’t,” he said. “They would keep them on the roll sheet.” Dansby said Fortier was only briefly involved with the city and county programs and was “the worst of all the instructors in submitting attendance records.”

* Training ineligible students. A city review of Bi-Plex found that 32 of 44 people placed in the firm’s job training program in 1986 did not qualify under government guidelines. The review also found that a majority of the students at Bi-Plex were not told that they were participating in a city-funded program. Instead, they were required to apply for state education grants available to pay for tuition, books and other expenses.

* Failing to place students in jobs. City monitors found “a significant number of participants were never employed . . . as reported by Bi-Plex,” records show. City auditors could verify that only one of 41 trainees in the Bi-Plex class had actually been placed in a job. Fifty-nine percent of the job placements claimed under the county’s 1986-87 Bi-Plex contract “either did not actually occur and/or were not allowable,” auditors found.

Dansby said some trainees were placed in jobs but for various reasons “denied it” to city and county auditors.

But he also said it was “possible there were some that were not employed.”

While acknowledging that the Bi-Plex program had struggled, Dansby said that he remains “fully committed” to offering job training and educational opportunities to needy residents.