Labor Dept., Job Training Agency Settle Funds Case : Inquiry: Officials conclude that only about $1,200 in federal money was misspent, not more than $500,000 as originally alleged.

The U.S. Labor Department has settled a 5-year-old case against a local job training agency after concluding that only about $1,200 in federal money was misspent, instead of more than $500,000 as originally alleged.

The settlement between federal officials and the Job Training Policy Council of Ventura County apparently ends a federal inquiry into possible misappropriation of funds and fraud by the jobs agency’s former executive director, John Chase.

Chase was fired by the council in 1990 amid allegations that he illegally collected salaries from two government-funded agencies simultaneously and awarded his own private company a $10,000 government contract.

Federal officials concluded in 1993 that Chase had misspent about $500,000 but reduced that estimate to $250,000. They then resolved the job agency’s appeal last month by agreeing that the agency should repay only $1,168, according to court documents and local officials.

A spokesman for the Labor Department said he could not comment on the case because a formal settlement agreement has not been signed.

However, employees at a federal administrative law court in San Francisco confirmed that both sides have declared settlement and requested cancellation of a trial scheduled for this week. Labor Department and JTPC documents also confirmed the settlement.

“The case is over,” JTPC lawyer William N. Later said. “We were able to demonstrate to the Department of Labor that all the money that they were questioning was spent on allowable grant activities.

“Specifically, a great deal of it had to do with Mr. Chase’s time,” Later said. “And we demonstrated that he did indeed spend that time for the benefit of the program.”

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Chase’s daily calendars showed he worked extraordinary hours, not only directing the JTPC but also a second local job agency, Later said.

A separate state challenge to spending in the Chase era is still pending, the attorney said.

Chase could not be reached for comment.

His former lawyer said it has always been Chase’s position that he earned both salaries and ran the JTPC properly from its founding in 1984 until he was fired six years later.

“This should be viewed as vindication,” attorney George Eskin said. “I’m sure to this day he believes he earned every penny he received. He worked 20 hours a day.”

Eskin said Chase has acknowledged making mistakes, including allowing the jobs council to enter into a contract with Chase’s own consulting firm, Eskin said.

“He realizes now that there was that appearance of conflict of interest,” the attorney said.

The 19-member jobs council spends about $11 million annually to train low-income people throughout the county. At monthly meetings, the council awards federally funded contracts to schools, cities and private agencies that promise to put people to work.

Philip Bohan, assistant executive director of the JTPC, said the settlement should remove a cloud of suspicion that has shadowed his agency for five years.

“I think it was quite a blow in terms of our image,” he said. “We’re all relieved that the situation is now behind us and that we as an agency have been vindicated. We’re looking forward to starting anew in terms of having a new image.”

The settlement comes, however, as the state Employment Development Department is concluding a separate investigation into complaints that the JTPC has favored friends and associates in awarding job contracts.

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That investigation began in August. And according to John Elordy, an EDD investigations supervisor, the findings were forwarded to employment officials last month to decide if the claims were valid and action warranted.

An EDD spokeswoman said she could only say that the inquiry is ongoing.

Jacqueline Richardson, jobs council chairwoman until last month, said the new inquiry was prompted by disgruntled bidders passed over for contracts.

“They interviewed a lot of people including myself and what they talked to me about seemed pretty inconsequential,” Richardson said. “They were issues and grievances that had been investigated and dismissed.”

Ephren Gore, an Oxnard city employee who bids for job council contracts, told The Times in October that he had informed state investigators that the council routinely practices favoritism in assigning grants. He said cronyism permeates agency decisions.

Agency officials dismissed Gore’s complaint, saying he apparently was unhappy with losing out on an agency contract.

Gore could not be reached for comment Wednesday.

Even as state and federal authorities sorted through jobs agency problems, the county Board of Supervisors moved in March to take over administration of all JTPC grants by July 1.

And a year later, the county will begin direct administration of job contracts, said Tom Nikirk, county liaison for the jobs agency.

The county is taking charge of job training functions because of a new law that makes a local elected official partly responsible for repayment of federal grants if misuse is found, Nikirk said.