Regulators blew chances to bring labor scofflaws in line

http://www.mcclatchydc.com/static/features/Contract-to-cheat/Regulators-blew-chance-to-bring-labor-scofflaws-in-line.html?brand=tnt



Earl Devaney served as the Obama administration's top official for preventing fraud and misuse of federal stimulus funds. Around the nation - in plain sight of regulators - thousands of companies avoided state and federal taxes, cheated vulnerable workers and undercut law-abiding competitors by calling workers "independent contractors."

Regulators blew chances to bring labor scofflaws in line
By Franco Ordoñez and Mandy Locke
McClatchy Washington Bureau
September 4, 2014

WASHINGTON — Earl Devaney carries himself with the force of an oncoming bus, intimidating without uttering a word. A onetime college linebacker and Secret Service agent, he exposed the underbelly of money and politics in Washington.

As an inspector general, Devaney helped take down Jack Abramoff and had a reputation in Washington for carrying a big stick. So it made sense that President Barack Obama put him in charge of hunting those who might make off with tax dollars from the $840 billion stimulus bill in 2009.

When he took charge, Devaney wasted no time going after phony contractors. In less than two years, his investigators opened more than 1,400 cases of abuse, fraud and waste.

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Cheaters across the United States used a scheme that was staggering in its simplicity: wrongly treating employees as independent contractors to avoid paying taxes. Five years later, Devaney acknowledges that his group, working at the top levels of the Obama administration, wasn’t paying attention to misclassification .