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CIETC: ANOTHER SHOE TO DROP?

January 17, 2007

With four sets of federal indictments and one plea deal, the CIETC scandal exploded back into the news yesterday.

The Central Iowa Employment and Training Consortium was a multi-county "jobs training" agency that, if the indictment is to be believed, really was a publicly-funded pinata for its top executives. The indictment charges former executive director Ramona Cunningham with taking exorbitant salaries and bonuses (up to $360,000 in a year) while CIETC employees did landscaping at her house, accompanied her on gambling junkets on company time. She also is charged with running thousands of dollars in personal expenses on a CIETC card in the name of (unindicted) city council member Tom Vlassis, who said he functioned as a "rubber stamp" in his role on the CIETC board.

As a tax nerd, I can't help notice that there are no tax charges in the indictment. It seems unlikely that Ms. Cunningham, if she did do the things charged in the indictment, reported the value of her CIETC-funded landscaping and gambling sprees on her tax returns. Maybe those will come later.

While nominally about an obscure agency that few Iowans had ever heard of, this scandal could have profound implications for central Iowa politics and government. Some possible implications:

WHAT ABOUT "PROJECT DESTINY?" The proposal to boost the local sales tax rate from 6% to 7% was deferred when the CIETC scandal first hit the news. Boosters thought it was unlikely that voters would want to send more money to local government when Ms. Cunningham's $360,000 compensation was still fresh. Now the trial and the stories of taxpayer-financed gambling junkets will be in the news on a regular basis. Continuing coverage of county and city fiscal incontinence isn't likely to get voters excited about sending more money to Mr. Vlassis and his associates.

ARE THERE MORE CIETCS? CIETC was a "28E" organization. Last month the Des Moines Register reported:

Although 28-E organizations are publicly funded, they receive very little public scrutiny. State officials are not even sure how many there are in Iowa. By some estimates, there are more than 1,000, and at least 100 of those have annual budgets of more than $100,000.

Obscurity enabled shenanigans at CIETC to continue for two decades, according to the charges. How much tax money is going down other ratholes?

WHY IS A FORMER CIETC DIRECTOR WHO TOOK THE 5TH STILL ON THE PRAIRIE MEADOWS BOARD? I'm all for the exercise of constitutional rights, but if you can't talk about your work on one agency board because of self-incrimination problems, it doesn't seem you should be on another board that handles billions of dollars of cash annually.

WHERE IS THE MONEY? The CIETC board held its meetings at the Prairie Meadows casino. The indictment says the executive director liked gambling junkets. Perhaps that gives the forensic accountants a place to look.

Links:

The indictment
David Yepsen's comments
State 29
Ted Sporer
Political Forecast

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