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$750,000 STATE GRANT YIELDED FEW JOBS -- AND NO REFUND

In 2000, Telespectrum Worldwide received a $750,000 grant for creating 400 jobs at its North Buffalo call center.

When it closed the call center three years later, it owed New York a partial refund for the "Jobs Now" grant -- and state representatives vowed to collect.

Now, however, the Empire State Development Corp. says that a plan to preserve the job creation requirement of the grant has fallen through.

Although Telespectrum agreed to transfer a portion of the grant -- and the job obligation -- to a new company that moved into its call center off Delaware Avenue, the transfer wasn't approved, an agency spokesman said.

The unfilled promise of jobs is part of a pattern of lax oversight by the agency, a legislative critic said.

"We have become increasingly concerned about the failures of ESDC to protect taxpayers," said Assemblyman Richard L. Brodsky, a Westchester Democrat whose committee oversees Empire State Development Corp. Supposedly job-linked grant programs have turned into cash handouts for businesses, he said.

With a contract for jobs backing it up, how did the state miss out on job creation with Telespectrum?

Empire State Development's explanation of how the grant failed is disputed by others involved in the deal, raising questions about the management of the publicly funded benefit.

Other than the transfer plan, no effort was made to recover the grant, according to agency spokesman Chapin Fay.

"Telespectrum's gone," he said.

But Telespectrum remains in business, headquartered in King of Prussia, Pa. And it disputes the contention that it left Buffalo without paying up.

Spokeswoman Paulette Thompson said the company was released from its employment obligation when it transferred equipment and other benefits to the new occupant of its call center, a company called Account Management Services of New York LLC.

Records obtained under state Freedom of Information Law back her up.

A release dated in February 2003 clears Telespectrum's obligation to create the 400 jobs. The company was released in exchange for giving Account Management Services $200,000 worth of equipment and paying $150,000 for its rent and security deposits at the call center.

The $350,000 transfer represents a discount on the $450,000 that the state could have demanded, under the terms of the "Jobs Now" grant.

In return for the benefits from Telespectrum, Account Management was supposed to create 400 jobs, ESDC documents state. The company was to file employment reports documenting its job total starting last January, the agreement states.

But according to Fay, Account Management has no employment obligation to the state, and no employment report on file.

What do agency officials say?

Telespectrum's release was signed by Terry Trifari, Empire State Development's former senior vice president of loans and grants. Trifari has since retired from the agency and couldn't be reached for comment.

A letter to Empire State Development chairman Charles Gargano seeking clarification got no response, and phone calls to the agency project manager in Buffalo weren't returned.

Account Management Services President Mark F. Bohn said in a court document in July that his company has 140 jobs, a fraction of the 400 called for under papers signed by an Empire State Development official. According to the agreement, Account Management Services is liable to repay the grant entirely if employment wasn't at least 85 percent of the 400-job target, or 340 jobs.

Bohn said the state is working with his company to enable it to meet the terms of the grant transfer, contradicting the agency spokesman's statements. Bohn said the agency is counting workers of sub-tenants in the call center building toward his company's job target.

Account Management buys unpaid debts and hires lawyers to collect from the debtors, Bohn said. One of the sub-tenants in the building on Great Arrow Drive is a collection company called Lenahan Law Offices that performs collection work for Account Management.

Bohn said his company and Lenahan are separate entities, but that jobs of sub-tenants in the building count toward his company's total for purposes of meeting the grant obligation.

Brodsky, chair of the Assembly Committee on Corporations, Authorities and Commissions, has focused criticism on the state's Empire Zone program, which has allowed companies to claim job creation benefits simply by reincorporating. But other programs, including the "Jobs Now" grant that Telespectrum received, have also left job promises unfilled, he said.

"There is growing evidence they're failing to recapture (grants)," when recipients don't hold up their end of the bargain, he said.

e-mail: fwilliams@buffnews.com

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