Thursday, October 5, 2017

Former instructor charged with embezzling $21K from MSU

A former instructor has been charged with embezzling more than $21,000 from Montana State University’s Western Transportation Institute.

On Tuesday, the Gallatin County Attorney’s Office charged Steven Jenkins with felony theft by embezzlement. An initial appearance has not been scheduled.

According to charging documents:

In May of 2016, an employee with WTI contacted the MSU Police Department about possible theft involving Jenkins.

The employee monitored enrollment and revenue for WTI, which is a department in the MSU College of Engineering that teaches classes on transportation.

The employee said she noticed that, dating back to July of 2014, WTI’s revenue was not as high as it should have been.

Jenkins had been instructing 17 or 18 private flagger training courses for WTI, which included more than 400 students, while working on MSU hours, using MSU vehicles for transportation and MSU funds for hotels, and printed kits for students using MSU printers and paper.

While his classes were registered into the WTI database, the school hadn’t received any payments or revenue through those classes and was not reimbursed for any of the other associated costs.

When the employee confronted Jenkins, she said he told her that he had made some errors with his bookkeeping and retroactively applied some of his vacation time to the time he had used to teach private classes. However, records showed that Jenkins had not applied any vacation time to the classes.

Jenkins was ultimately fired from the school.

Records showed that Jenkins teaching his private flagging courses with MSU resources while working on MSU time, all of which he did not reimburse the school for, resulted in $16,695 worth of losses for MSU.

Jenkins also improperly used grant money to purchase items, and MSU was required to pay back that grant money. He also didn’t return a number of items he was asked to after he was fired. Those losses to MSU totaled about $3,189.

And Jenkins spent $1,664 to make class materials for his students.

The total loss to MSU, police said, was $21,548.

During the investigation, Jenkins’ attorney told a detective that he would not speak with investigators. Jenkins later contacted the detective and said he was confused over how he could embezzle money when he didn’t directly handle money for MSU.

Former Harrison Central High bookkeeper embezzled thousands of dollars, officials say

A former bookkeeper at Harrison Central High School is accused of embezzling $5,890. It will cost her $14,687.36, according to a demand letter from the State Auditor’s Office.

The demand letter was hand-delivered to the home of 41-year-old Sherry Lynn Brewer home in Gulfport after a Harrison County grand jury indicted her on charges of embezzlement and alteration of records, documents show.

The amount of money she’s expected to pay includes interest and costs of the investigation, State Auditor Stacey Pickering said in a news release Wednesday.

She is accused of keeping money turned in by students and teachers and altering receipts and records to cover her tracks.

Brewer has not worked at the school since December 2012, said Trang Pham-Bui, public relations specialist for the Harrison County School District.

Brewer embezzled $5,890 between January 2010 and December 2012, according to the indictment.

During that same period, she allegedly made false entries and changed bookkeeping records at the high school to conceal discrepancies.

Brewer was booked at the Harrison County jail Friday and released on a $15,000 bond that covers both counts in the indictment.

Her charges carry maximum penalties of 30 years in prison.

Brewer is at least the second person on the Mississippi Coast arrested on charges from the State Auditor’s Office in two months.

Former Hancock County Justice Court Deputy Clerk Dana Sue Beaman was arrested July 28, accused of embezzling more than $110,000. Pickering’s office has issued a demand requiring Beaman pay $197,408.94, which Pickering said includes $110,827.50 in embezzled money plus nearly $87,000 in interest and recovery costs.

Beaman worked for the court from January 2008 until June 2011. She is free on an $80,000 bond pending court action on four counts of embezzlement.

Tuesday, October 3, 2017

Former Lincoln-Way D-210 superintendent pleads not guilty to federal fraud charges

A former Lincoln-Way District 210 superintendent pleaded not guilty to federal charges of fraud and embezzlement.

Lawrence Wyllie, 79, of Naperville, appeared in person with his attorneys at his arraignment Wednesday before U.S. District Judge Gary Feinerman in Chicago.

Wyllie largely was silent throughout the almost 10-minute arraignment. Afterward, he didn’t acknowledge questions from the media about the charges against him or the fallout of the school district he led for about 24 years before retiring in 2013.

While walking away from the courtroom, Wyllie’s attorney, Dan K. Webb of Winston & Strawn law firm, spoke on his behalf and said he and the rest of Wyllie’s defense team plan to go to trial over the charges.

In an email, Webb said they are convinced Wyllie is not guilty of the charges in the indictment.

“As a result, we will be going to trial and we expect that a jury will find Mr. Wyllie not guilty of these charges. We will not be making any further statements until the case goes to trial,” Webb said.

The next court date for Wyllie’s case is at 9:45 a.m. on Dec. 11.

When Wyllie appeared in court, he sat with his attorneys with his back to an audience of about 10 residents of the New Lenox-based district who came to watch his arraignment.

Marisa Barnas, one of the residents who attended, said that there needs to be more oversight of school boards. She said that parents need to be vigilant with school districts, and she hopes state lawmakers take note of what happened with District 210.

“The community will have its day in court. The community is being heard,” Barnas said.

Wyllie was superintendent of District 210 from 1989 to 2013. He led the district through immense growth as it grew to four high schools.

However, the district was put on the state’s financial watch list in 2015, and the board voted the same year to close one of its newest schools, Lincoln-Way North High School, to cut costs.

The decision stirred community outrage and led to an unsuccessful lawsuit by citizens group Lincoln-Way Area Taxpayers Unite Inc. to block North’s closing. Wyllie has not spoken publicly on the district’s fallout.

Wyllie has been highly respected in the community, and was once called an “absolute genius in school financing” by former Board President Ron Kokal.

However, federal prosecutors allege Wyllie caused the district to assume
$7 million in additional debt and misused at least $80,000 in district funds for his own personal benefit.

Wyllie misappropriated bond proceeds from a $225 million referendum that were used to construct North and West high schools in the late 2000s, as well as renovate Central and East schools, prosecutors alleged.

He also allegedly reclassified millions of dollars in district general operating expenses as purported bond expenses in the district’s general ledger and transferred millions of dollars from a U.S. Bank account to an Old Second Bank account the district used to pay general operating expenses.

“In this manner, [Wyllie] concealed the scheme and the true financial health of Lincoln-Way from the school board and the public by fraudulently appearing to lower the district’s net operating expenditures in its audited financial statements and its reported cost-per-pupil calculation,” prosecutors allege in the indictment.

Wyllie also allegedly used $50,000 in district funds, including bond funds, to build and operate Superdog – a dog obedience school at North high school – allegedly misappropriated $16,500 of district funds as a retirement stipend and allegedly misappropriated $14,000 of funds for unused vacation days.

He faces five counts of wire fraud and one count of embezzlement. Each count of wire fraud is punishable by up to 20 years in prison if he is convicted, while embezzlement carries a maximum sentence of 10 years if he is convicted.

Wyllie has a government pension of more than $321,000 a year. Dave Urbanek, spokesman for the Teachers’ Retirement System of the State of Illinois, has said that based on what TRS understands from the indictment, Wyllie could lose the pension if convicted, according to state law.

Northern Michigan high school coach accused of embezzlement

 A northern Michigan teacher and coach is under investigation after being accused of embezzling money.
Jason Leonard, who works at Kingsley High School is now on paid leave.
Kingsley Area Schools Superintendent Keith Smith wrote a letter to Leonard that states:

" are hereby placed on paid, non-disciplinary administrative leave pending an investigation into allegations you embezzled money from a youth sports organization."
Smith weighed in on this decision on Wednesday.
"Obviously its a serious situation or we wouldn't have placed the employee on leave," said Smith.
The letter also states:
" are not to enter school grounds or attend school events."
"Certainly he's innocent until proven guilty," said Smith. "He has the opportunity to participate in the investigation, but it's just a proven course of action that we have placed him on leave at this time."
Leonard teaches physical education and is the head coach of the high school football team.
Smith said he heard about the accusations a few days ago, but waited to confirm there was actually an investigation.
"The biggest thing for the community and for parents is to understand is that nothing occurred at Kingsley Area Schools and it does not involve the safety or welfare of any person or involve any finances that Kingsley Area Schools is responsible for," said Smith.
Leonard said he cant make any comments on the investigation, but he did emphasize they are "allegations."
"Just reserve judgment," said Smith "There is a process and the police are doing their investigation and hopefully it will come to a good resolution."
Smith said Michigan State Police are conducting the investigation.
Though the allegations are from a youth sports organization that is not associated with the school, Smith said its policy to place him on leave until its resolved.
This Friday the football team will be lead by a temporary head coach.

Previous audits of La Promesa questioned

For six years, La Promesa Early Learning Center’s former assistant business manager allegedly diverted nearly half a million dollars from the school into her personal bank account and deposited about $177,000 worth of questionable checks.

Like all state charter schools, La Promesa was audited annually by an independent firm – a process organized by the New Mexico Public Education Department.

But the alleged fraud and embezzlement were not detected until a vendor called the Office of the State Auditor’s confidential hotline in April to report a suspicious tax form.

So how did years of alleged financial misconduct get past the audits?

State Auditor Tim Keller told the Journal that the problems at La Promesa are part of a larger pattern.

“This isn’t just about one instance, the state needs to do a whole lot more supporting and overseeing of our education dollars to protect them from fraud, waste and abuse,” Keller said in an emailed statement.

“Over the last several years, we’ve urged the Public Education Department to step up oversight and provide the training and support our schools need to succeed. Unfortunately, by the time the Department stepped in at La Promesa, nearly $700,000 was already gone.”

PED spokeswoman Lida Alikhani countered that PED prioritizes “quality financial management within all New Mexico public schools.”

“That’s why we conduct annual audits and rely on independent external auditors – that are approved by Tim Keller’s office – to take the lead in these audits and provide us with the correct information to ensure proper financial management,” she said in a statement.

“During this administration the Public Education Department has worked diligently to improve financial performance within schools across New Mexico by stepping up oversight and providing better training and support.”

Keller said the annual audits are not as exhaustive as forensic audits, which are used to uncover fraud and require special expertise.

PED’s independent auditors look at a random sampling of a school’s financial documents – to find fraud, they would have to “get lucky” and review documents that reveal the misconduct, Keller said. For instance, if the auditors pulled out a document that looked suspicious, they could flag possible fraud.

Keller noted that annual audits have uncovered fraud in other districts.

Another potential obstacle: School staff could falsify documents to throw the auditors off track.

“(School) management is responsible for providing information to the auditors,” Keller said. “If management literally fakes information like false invoices, things of this nature, you would never know that unless you subpoenaed bank accounts and things like that. That’s what a forensic audit does.”

Keller said New Mexico has many high-performing, fiscally responsible charter schools, but PED needs to exercise more oversight throughout the year because annual audits can’t catch every problem.

“I think the best thing that would be helpful is if we had confidence in the accountability and transparency that PED was providing for our charter schools,” Keller said.

On Thursday, the U.S. Department of Education announced that PED will receive a $22 million federal grant for its charter school system.

Part of the funding will support efforts to improve the fiscal and organizational performance of the charter school sector, according to grant documents. For example:

• PED will use a portion of the grant funds to partner with national authorizing experts and state authorizers to strengthen the quality of charter authorizing practices, particularly financial oversight. The group will develop a set of charter authorizing standards by the end of 2018.

• The grant proposal includes funding to provide technical assistance and share best practices for financial and organizational management.

PED also has taken steps to boost oversight independent from the grant:

• PED has posted a job opening for a charter school data and financial analyst, a new position to enhance oversight.

• PED also increased school board training requirements this year. Specifically, new board members must now get two hours of training on financial oversight, within seven hours of total training, from PED before they can cast votes. Additionally, all board members must annually get three hours of financial training from a qualified provider approved by PED.

Under state law, about 2 percent of a school’s costs can be withheld to help cover the cost of oversight and other administrative support to the school.

That money, roughly $18.5 million over a recent five-year period, should be used effectively to oversee charter schools, Keller said. In August, Keller released a report calling for New Mexico do a better job of tracking these funds.

Alikhani described Keller as “a politician looking for cheap headlines.”

“One of our top priorities will always be to ensure that classroom spending is used properly and well-accounted for,” she said in a statement. “That’s why we provide regular training to districts and charters in developing their budgets – including in an annual training session each year as districts and charters prepare for the upcoming school year. And when districts and charters need help or guidance in managing their budgets effectively, we are always happy to assist in any way we can.”

Longtime disagreement

Keller and PED have sparred over charter school oversight for some time.

In March 2016, Keller sent then-Education Secretary Hanna Skandera a letter warning that “millions of dollars of funds are potentially at risk” and “schools are susceptible to fraud, waste and abuse.”

He noted that fiscal year 2015 audits uncovered 195 findings at the roughly 60 state charter schools, including “procurement violations, overspending, lack of sound accounting practices and payroll deficiencies.”

“Many of these findings were repeated from previous fiscal years and have continued to go unaddressed,” he said.

When the fiscal year 2016 PED audit was released, Keller wrote another letter to Skandera, stating that he remained concerned “regarding the adequacy of the Department’s support and oversight of charter schools.”

Keller noted that the overall number of audit findings had decreased to 178 in fiscal year 2016 and recognized that PED was addressing problems at a number of schools, but he said PED should do more to prevent issues.

Paul Aguilar, PED deputy secretary for finance and operations, told the Journal in a February 2017 interview that charter school management had improved during Skandera’s tenure.

“We are confident next year we will have fewer findings and still fewer the next year,” he said.

The revelations about La Promesa Early Learning Center have put charter school management back in the spotlight.

Earlier this month, Keller issued a report outlining extensive fiscal mismanagement at the K-8 state charter school on Albuquerque’s West Side.

According to Keller’s investigation, Julieanne Maestas, La Promesa’s former assistant business manager, diverted more than $475,000 from La Promesa into her personal bank account from June 2010 to July 2016. In addition, she deposited about $177,000 worth of checks that were payable to the former executive director – her mother, Albuquerque Public Schools board member Analee Maestas – as well as to her boyfriend, who was a school maintenance vendor.

The Office of the State Auditor discovered the nearly $700,000 in questionable transactions after a La Promesa vendor called the office’s confidential hotline saying a 1099 tax form he received from the school showed $7,128 in checks having been written to him and “endorsed by persons other than myself.”

The vendor said he’d never received the money and the work he supposedly did had never been performed.

Issues with La Promesa’s finances first arose in February 2016 after the school submitted a suspicious receipt to the New Mexico Public Education Department for reimbursement. Analee Maestas claimed the $342.40 invoice was for carpet cleaning at the school, but it appeared to have been written over, and the cleaning company reported that it actually worked on ducts at her home. She has denied any wrongdoing.

She has also said she did not know about the alleged $700,000 embezzlement and blamed her daughter’s substance abuse problems.

Analee and Julieanne Maestas left their positions at La Promesa in September 2016.

Last week, Attorney General Hector Balderas called for Analee Maestas to resign from the APS board.

Her attorney said she is innocent and has no plans to step down.

Sunday, October 1, 2017

Audit raps Ridgefield School District on cash receipts

The Ridgefield School District was dinged by the Washington State Auditor’s Office for not having adequate cash receipting controls, according to a report from the office released Thursday.
The auditor’s office reviewed controls over cash handling and receipting at three schools in the district, as each building collects money for school lunches, field trips, class fees and after school activities.
The audit looked at the district from Sept. 1, 2013, through Aug. 31, 2016, and showed that a lack of internal controls and monitoring over transactions increased the risk that misappropriation or misuse of district resources could occur without being promptly detected, if detected at all. The district began strengthening controls during the 2015-2016 school year, and Superintendent Nathan McCann said it was an internal review from the district’s business services team that originally found some of the issues.
The district notified the auditor’s office on Jan. 4 about a potential loss of public funds, as required by state law. The auditor’s office conducted a test to determine whether a loss relating to fee revenues occurred at one of the district’s buildings, and found that a lack of supporting documentation for participation in fee-related activities and other inadequate controls complicated the testing.
According to the report, the auditor’s office developed an expectation of the maximum possible participation in fee-related activities at the school to come up with an estimate of expected revenue, and compared that to the actual amounts collected during the school years of 2015-2016, 2014-2015 and 2013-2014. The report identified variances where expected revenues exceeded collections by $1,731, $2,685 and $6,681, respectively.
The variances could be due to three possible reasons, according to the auditor’s office: misappropriation of collections, not billing students for fees or not collecting owed fees from students. The office was not able to determine the actual cause for the variances.
The report found that deposits were not made within limitations of the district’s daily deposit waiver and policy, and funds were held for up to five days past the limits of the waiver and policy at Union Ridge Elementary School and Ridgefield High School. At View Ridge Middle School, funds were not receipted in the system immediately upon collection, and it appeared the school collected funds and held them for up to a week before receipting them.
McCann said the district already started implementing some new policies to clean things up. When a district employee has to handle money, whether coming in to pay for things like a field trip or lunch, and then pass it off to another employee, both have to sign an agreement on how much is there. Money is also being locked up and deposited in a bank quicker.
“It’s not that it was some nefarious action,” McCann said. “Sometimes when collecting money, it would sit in the school if the person collecting knew more money was going to come in.”
The district now provides annual training to secretaries and those responsible for cash receipting to make sure they know about the district’s new requirements.
“It’s job one that we are transparent and 100 percent responsible and accurate with handling of all public monies,” McCann said. “We left the audit better positioned, which is what you always hope for.”
In a 2015 state auditor’s report, officials found the district didn’t have proper protocols in its financial statement preparation and its verification and reporting for a federal nutrition grant during the 2013-2014 school year.

In response, the district said additional monitoring, hiring and training had occurred and the problem was addressed.

Retired priest gets prison time, must repay church in embezzlement case

A retired priest was sentenced to at least five years in prison and must pay $127,000 in restitution after admitting to embezzling tens of thousands of dollars from an Owosso church.
The Rev. David Ernest Fisher was sentenced on Friday, Sept. 22, to five to 15-years in prison, must pay $127,000 in restitution and another $992 in fines and court costs, according to the Shiawassee County Clerk's Office.
Fisher, 70, previously pleaded guilty in July to a single charge of embezzlement before Shiawassee Circuit Court Judge Matthew Stewart.
Initially, Fisher was charged with seven counts of embezzlement, but prosecutors dropped six of charges when Fisher pleaded to a count of embezzling between $50,000 and $100,000, court records said.
Stewart previously revoked the pastor's $10,000 bond and remanded him to the Shiawassee County Jail, according to court records.

The audit revealed at least $450,000 was missing, Diocese officials previously said.
Fisher was arrested in Grand Forks, North Dakota, on suspicion of seven counts of embezzlement.
Initially, Fisher was fighting extradition from North Dakota, but later decided to waive the hearing, Michigan State Police Sgt. Mark Pendergraff said.
Church secretary Nancy DeFrenn also was arrested, police previously said. She is charged with a single count of embezzlement from a charitable organization of more than $1,000 but less than $20,000.
She pleaded guilty and is facing a delayed sentence.