CLEVELAND, Ohio — A federal audit has been released questioning more than $20 million in costs connected to an Ohio manufacturing program, and the nonprofit affected is firing back.
The audit, conducted by the U.S. Department of Commerce, found that the Ohio Department of Development did not comply with the terms and conditions of its award. Of the $20 million questioned, $4.6 million is attributed to the Manufacturing Advocacy and Growth Network, better known as MAGNET.
Back in December, News 5 reported that nearly $5.9 million in state and federal funding for MAGNET had been frozen following the audit.
Watch previous coverage: MAGNET faces possible layoffs and closures after abrupt federal funding halt
So we sat down with Ethan Karp, MAGNET’s president and CEO who strongly disputes the findings.
“Our first thing is to get the facts out there and set the record straight,” Karp said.
Karp called the audit’s findings largely false and said MAGNET is prepared to prove it.
“Oh, it’s deeply unfair and completely flawed. Ninety-five percent of the claims, and we’ve gone through them one by one, are completely false. There are some administrative things that we own, and all the rest we are going to fight with actual evidence,” Karp said.
Karp says he has the documents and plans to dispute the audit, while also questioning the motivations behind the report.
“We can’t prove motive. We can prove that this was written for salacious headlines, and we have the evidence and we have the receipts to back that up,” Karp said.
Watch previous coverage: Single father among MAGNET employees facing job loss after funding halt
Karp also adds that MAGNET was denied a meaningful opportunity to respond to the audit’s findings before it was published, a process he described as fundamentally flawed.
“They told us that they were going to give us that chance to respond in May of ’25. Then they delayed it to July of ’25. Then September of ’25. Then they suspended us and told us that the suspension would be lifted once we corrected things. After they told us what was going wrong in May of ’26, they then said, actually, we’re not going to let you see it at all,” Karp said.
State Sen. Jerry Cirino, a longtime supporter of Ohio manufacturing, said he wants to see those receipts and ensure taxpayer money is being handled properly.
“We’ll wait and see what the responses are from both the Department of Development and from MAGNET and their counterparts around the state. But again, at face value, these are very serious things,” Cirino said.
Watch previous coverage: Senators demand answers after MAGNET funding halt
U.S. Sen. Jon Husted, who along with other senators previously wrote letters demanding the frozen federal funding be restored, also weighed in. Husted said he does not support fraud, but he also does not believe the program should come to an end.
“Find some people who run it effectively, and that’s what you should do. Manufacturing education partnerships are essential. You get the employer and the educator to work together, developing the skilled workforce that you need, and everybody wins,” Husted said.
Karp said MAGNET plans to formally respond to the audit within approximately 30 days and will continue operating in the meantime at a smaller scale.
“We are open. We are serving students. We are still serving manufacturers. And when that 10-year renewal is awarded to Ohio, we hope to be able to participate again in that as soon as all of these falsities are cleared up,” Karp said.
He added that he believes the real victims are the manufacturers the organization has not been able to fully serve.
“If false allegations can happen to us, if an unfair process like this can happen to MAGNET, this can happen to any nonprofit with federal funds, and I feel like we are carrying the weight of many more by standing up to something this unfair,” Karp said.
The Ohio Department of Development was also contacted for comment and responded with the following statement:
“The Ohio Department of Development takes the findings in the Inspector General’s report seriously and is committed to responsible stewardship of public funds. We have zero tolerance for fraud, waste and abuse, and we expect the programs we administer, and the organizations that receive public funds through those programs, to meet the highest standards of accountability and compliance.
Development cooperated fully with the Inspector General throughout its multi-year audit. After becoming aware of the serious concerns identified in the initial report, and following NIST’s suspension of the federal award in December 2025, Development suspended the MEP Program.
Development will continue to work with NIST to address the report’s recommendations, including reviewing and, where necessary, revising financial reports to ensure they are current, accurate and complete. We will also continue to review and strengthen our oversight of the programs we administer, including our processes for monitoring subrecipients and verifying financial and performance information. Our responsibility is to ensure taxpayer dollars are managed responsibly, protected from fraud, waste, and abuse, and used appropriately and for their intended purposes.”
Nadeen Abusada is a Cuyahoga County and immigration reporter at News 5 Cleveland. Follow her on Instagram NadeenAbusada or email her at Nadeen.Abusada@wews.com.
