City’s racial equity initiative leader ran Ohio agency that mishandled $3.8B, according to audit

CHARLOTTE, N.C. — There are some who want an investigation to happen after an Ohio state audit found that an organization mishandled billions of dollars.

It’s the same organization that the leader of Charlotte’s new racial equity initiative, Kimberly Henderson, was a part of.

On Wednesday, Henderson was named the executive director of the Employer Office of Inclusion and Advancement and will help support Mayor Vi Lyles’ “Mayor’s Racial Equity Initiative.” It’s a $250-million campaign to help address racial equity in the Queen City.

Claims of fraud at Henderson’s last job totaled $3.8 billion, which has prompted calls for a criminal investigation.

Before moving to North Carolina, Henderson was director of the Ohio Department of Job and Family Services.

The State Auditor’s Office in Ohio said during the time when Henderson worked there, they found more than $475 million had been paid to criminals and more than $3.3 billion in overpayments in the state’s unemployment system during the pandemic.

According to the audit, the main issues that led to the failures were a dated system, failure of early action and prevention, lack of controls and relaxing of verification requirements.

A city council member told Channel 9 reporter DaShawn Brown that he wants to know how no one knew about this when she was hired to work for the Queen City.

“Why are we learning about these things second-hand, after the fact?” questioned Tariq Bokhari, Charlotte city councilman.

Bokhari voiced concerns with transparency throughout the process of starting the new alliance.

“I think it’s a process that has been flawed from the beginning,” Bokhari said. “Although well intended by many of our private sector partners and the mayor’s initiative, or whatever it’s going to be called. It’s really going to need to get a dose of transparency and really open dialogue for people like us, who are funding a lot of this.”

The audit found that 26% of all unemployment payments for the fiscal year that ended in June were potentially paid as overpayments or to fraud accounts. Before 2020, fraud and overpayments were around 3.5% of payouts.

The state also identified over $3.8 billion in fraud and overpayments through the state’s unemployment system, which equals to over $673 for every Ohioan in the labor force.

“It’s appalling that Ohioans in need were victimized not only by a pandemic that ravaged our economy, but by criminals who took advantage of a system that was outdated, overwhelmed and ill-prepared for the onslaught of unemployment claims caused by COVID,” said Ohio Auditor Keith Faber. “The fact that the Department neglected to acknowledge it’s failures until hundreds of millions of dollars in fraud and overpayments had been made, potentially delaying assistance from eligible and deserving Ohioans is more than disappointing. Fortunately, upon his appointment Director Damschroder demanded transparency and efficiency and pursued the necessary assistance to address the weaknesses in the system and pursue the necessary procedures to protect Ohio’s unemployment dollars.”

Response from the Ohio Department of Job and Family Services on the audit:

“I would like to thank State Auditor Keith Faber and his audit team for the thorough work in conducting their audit,” ODJFS Director Matt Damschroder said in October. “The audit confirms the unprecedented surge in claims and accompanying fraud caused by the pandemic, and the recommendations align with the work already underway in addressing the issues we faced.”

“Much work remains, but we are confident in the improvements we have already made and look forward to utilizing the findings in the audit to inform the future work being planned,” Damschroder said. “I’m proud of the hard work, ingenuity, and adaptability of ODJFS employees, contractors, and private-sector partners, who have spent the last 18 months working to meet these unprecedented challenges.”

The Ohio Attorney General has asked the Columbus Police Department to conduct a criminal investigation into whether or not, “any criminal statues were violated, including dereliction of duty, obstruction of official business and/or falsification by the former director and/or any other staff members of the Ohio Department of Job and Family Services.”

Henderson has not been charged with anything.

Channel 9 reached out to the City of Charlotte about the investigation, which said the new position falls under the Charlotte Regional Business Alliance. “Mrs. Henderson is an employee of the Alliance and the City was not involved in the hiring or selection process,” the city said in a statement.

CRBA president and CEO Janet LaBar said she was aware of the audit in Ohio.

“I was aware that the Ohio Department of Job and Family Services, formerly led by Kim Henderson, was the subject of a now-completed audit and request for investigation which dates back to May 2021,” LaBar said in a statement. “I factored this into consideration, as well as her capabilities for the role of executive director of the Employer Office of Inclusion and Advancement, and I made the decision to hire her. The Employer Office of Inclusion and Advancement is one of four priorities comprising the Mayor’s Racial Equity Initiative, the implementation and efficacy of which will be supervised by two oversight boards. There is tremendous work to be done for our community, and we’re ready to get going.”

**Editor’s clarification: A previous version of this story said there was an investigation into the Ohio Department of Job and Family Services. The Ohio Attorney General has requested a criminal investigation after the findings of a state audit.

(WATCH BELOW: More than 25 people report recent unemployment fraud to Action 9)

More than 25 people report recent unemployment fraud to Action 9

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