Orlando Sentinel (Florida) - by Jim Stratton

Workforce Central Florida says it followed state law and took the most inexpensive option when it used federal job-training money to pay a $739,000 settlement with SunTrust bank two years ago.

In a 23-page filing, the regional workforce board is challenging state and federal labor officials who contend it improperly used that money to settle a lawsuit brought by the bank.

Workforce Board Chairman Larry Haber said the agency relied on the opinions of outside experts and what it viewed as tacit approval from state officials who, he said, were aware of the strategy.

"Everything we had at the time said we could do this," Haber said Wednesday. "Nobody had a problem with it at the time."

The case involved a broken lease at a Lake Mary office building bought and renovated in 2003 by a private foundation associated with the regional workforce board. Federal officials sued over the financing of the $6 million project, and the Workforce Foundation settled the case for $3.4 million in 2006.

It borrowed money from SunTrust to cover that settlement and promised to repay the bank with rent from the building's tenant — Workforce Central Florida.

But the agency broke its lease before the loan was repaid, leaving its foundation with virtually no income — and no way to pay the bank. SunTrust sued, and in November 2009, Workforce Central Florida and the foundation settled the case for $627,000. With legal fees included, the total cost reached more than $739,000.

To pay that, Workforce used federal grant money typically used for job training for the unemployed. State and federal officials say that was prohibited and have ordered the agency to pay the money back by mid-September.

But Haber said the agency had no choice. It broke the lease, he said, because its federal funding declined dramatically, forcing the agency to downsize. It was prohibited by law from paying for space it no longer needed, so it could not stay in the foundation-owned building.

When SunTrust sued, the agency concluded a settlement was the cheapest alternative. Haber said it consulted with attorneys and other experts who said the federal grant money could be use to end the lawsuit. "This was the best option we had," he said.

State officials would not comment on the agency's legal challenge.

The appeal comes as Workforce mounts an offensive to shore up its image.

This week, it sent community leaders a letter describing the work it does and assuring officials that the agency takes its financial responsibilities "very seriously." The letter cited a "perfect storm" of bad publicity and claimed the agency has been "unable to get an accurate reporting from the media."

"You may have seen stories about red capes, automobile purchases, doing business with board members, and possible litigation with State and/or Federal agencies," the letter says. "You may have also read about the Office of the Inspector General investigating some of our decisions and actions. In all of these areas, WCF has followed State and Federal laws as well (as) appropriate regulations. But the negative publicity has continued."

The agency has reached out to Orange County Mayor Teresa Jacobs — the most high-profile local official in the region — and may be trying to clean up its image on Wikipedia.

Editing tracks on the free online encyclopedia indicate that, in June, a "wjmoyer" removed a reference to the agency's now-infamous "Cape-A-Bility" Challenge — a $73,000 marketing campaign that proposed giving the unemployed shiny, red capes. "

One of the agency's public-relations staffers is Wendy Jo Moyer.

Agency spokeswoman Kim Sullivan did not return an email asking if "wjmoyer" is the same person.

Haber said he is convinced some of the controversy swirling around his agency comes from the organization being too innovative and entrepreneurial.

"I think they're coming after us because they don't understand what we've done," he said of state and federal regulators. "And when the media portrays it negatively, they have a right to be concerned."