Former Pontiac school superintendent reaches settlement in Michigan

A former superintendent of the financially troubled Pontiac School District who alleged he was fired for exposing fraud and misuse of school funds has agreed to a $100,000 settlement to drop his whistle-blower lawsuit.

Jonathan N. Brown, a former Pontiac athletic director and principal, was hired as interim superintendent in July 2011 and soon after launched an investigation into the management of school funds. He found the school district's deficit had doubled to about $25 million and the system was in danger of losing all state funding, according to his lawsuit, filed in Oakland Circuit Court in February 2012.

Brown claims he was fired in November 2011, less than two months after he reported suspected fraud and embezzlement to Michigan Department of Education officials, his attorney Deborah Gordon said Thursday.

"His contract was only for a year, so his actual damages are limited," said Gordon, explaining how she and attorneys for the school district agreed to an evaluation of damages by a three-attorney panel.

"We think this indicates his findings of serious problems in the district were correct."

Gordon said Brown faced retaliation after objecting to improper expenditures that were in violation of the school district's debt elimination plan. Among his concerns were allegations of unauthorized payments to staff; suspected misappropriation and overspending in several grant funding sources; contracts with vendors without proper approval; and misuse of district credit cards.

"His findings are still being investigated by state and federal agencies," said Gordon, who did not elaborate.

Attorneys hired by the school district and its insurance company would not comment Thursday.

A state report sent to district officials May 8 said the Pontiac district has a $37.7 million deficit and was in danger of missing payroll.

Late last week, the state agreed to release school aid funds after the district submitted a revised deficit cutting plan.

Meanwhile, the district's current superintendent, Brian Dougherty, tendered his resignation effective today, saying his job with the district "was not the right fit."

Dougherty is the second superintendent to leave since Brown was fired.

Bureau of Indian Education Employee Sentenced for Stealing Charity Funds Provided for Children Attending the Kaibeto Boarding School

Marcellina Tohonnie, 36, a Bureau of Indian Education employee, was sentenced on April 23, 2013 by U.S. Magistrate Judge Mark Aspey in federal court in Flagstaff, AZ, for stealing charitable donations to children attending the Kaibeto Boarding School.  She received five years of supervised probation and was ordered to repay $23,226 in restitution to Children Incorporated – an international nonprofit organization assisting needy children in the U.S. and abroad.

            The charges stem from a U.S. Department of the Interior, Office of Inspector General investigation of Tohonnie’s embezzlement of Children Incorporated account funds, sponsoring 47 Native American students, grades kindergarten through 8th, at the Kaibeto Boarding School. As the school’s former Children Incorporated program coordinator, Tohonnie was entrusted with accepting and using donations to purchase basic necessities (e.g. clothing, school supplies, etc.) for the children enrolled in the program. Instead, Tohonnie embezzled approximately $25,000 from the Children Incorporated account to pay for personal expenses – including clothing, salon visits, gifts, car repairs, and travel to Las Vegas, Nev.

            “This case is a reflection of the Inspector General’s continued involvement in Indian Country and our dedication to insure the integrity of all U.S. Department of the Interior programs,” said Jack Rohmer, Special Agent-In-Charge.

            Children Incorporated U.S. Program Director Renée Kube said, “Children Incorporated serves over 20,000 children on an annual basis, and has assisted more than 250,000 children since our founding in 1964.  We provide these resources because we believe passionately that children everywhere deserve education, hope and opportunity. We are deeply grateful for the dedication, time and efforts given by the U.S. Attorney’s Office and the Office of the Inspector General.”

            Under a plea agreement with the U.S. Attorney’s Office, Tohonnie pleaded guilty to one count of 18 USC '1163, embezzlement and theft from Indian tribal organizations.

            The investigation in this case was conducted by the U.S. Department of the Interior, Office of Inspector General.  This case was prosecuted by Assistant United States Attorney Adam Zickerman, District of Arizona, Flagstaff.

State audits, system controls help prevent Minnestoa school frauds

Taxpayers entrust their money to the public schools system and school districts take that responsibility very seriously.

But the system isn't perfect. So districts are constantly on alert.

Last week, a former La Crescent school employee was sentenced to a year in jail for embezzling money from the district.

Minnesota school districts have their finances audited each year.

CPA Earl Engelson said it's just a sample of the finances. If something doesn't seem right, accountants investigate further.

"It could have been an employee reimbursement that was paid out and it wasn't really a true reimbursement. But if you don't happen to pull that particular employee invoice or time record, you won't catch it," said Engelson, a CPA for Engelson & Associates, Ltd.

This means not everything is detected.

"You don't have the person who does the reconciling of the banks also in charge of the general ledger and also writing the checks. You're just inviting a fraud," he said. "You need other people involved to oversee."

All Minnesota school districts follow a set of controls outlines by the state. Yearly audits also check that those safeguards are in place.

When a public employee or public officer discovers evidence of theft, embezzlement, unlawful use of public funds or property, they have to immediately report to law enforcement and write to the state auditor, according to the Minnesota Office of the State Auditor.

The Office says there were four reported cases in 2007; 17 reported cases in 2012.

Minnesota has 399 independent school districts.

Attorney Cheryl Gill said as the economy goes down, fraud goes up.

"Public entities especially have to put in systems and controls that as far as possible prevent this from going on. There's no fool-proof way to do this," Gill said. "A smart embezzler will always get around the system. Always."

Gill, a partner with Johns, Flaherty & Collins, said when the books balance, theft is not easy to detect.

"You have to go behind the transaction to find the fraud," she said. "Any good embezzler or any good thief is always going to make detection difficult."

For a superintendent who dealt with a theft problem, Ron Wilke said eventually system controls will find it.

"We do have those controls in place to make sure it doesn't happen again," said Wilke, superintendent of the La Crescent-Hokah School District. "It's that whole piece of verify. Verify to trust."

After embezzlement cases, Healdsburg may launch new youth soccer league in California

With two of the presidents of the Healdsburg Youth Soccer League accused of embezzlement in the past three years, City Hall has stepped in to launch a new league through its Parks and Recreation department.

City officials said they want to ensure the sport continues to be offered to children in Healdsburg.

“Kids are the ones that suffer if you don’t have a program. That’s why the recreation department is taking it on,” City Manager Marjie Pettus said Friday.

She said the city has the support of the Youth Soccer League for “taking the program over.”

“It’s not like we’re snatching (it) out from under them,” Pettus said.

On Thursday, the day after soccer league president Mitzi Giron was arrested on suspicion of stealing more than $30,000 from the organization, the city announced it would offer recreational youth soccer leagues for boys and girls aged 4 to 10.

Sign-ups begin Monday with practices in August and games beginning in September.

“Once we got wind of what was going on we felt we needed to provide that service to our community. It looked like they weren’t able to do it,” Assistant City Manager David Mickaelian said Friday.

Giron, 30, is suspected of taking the money over an 18-month period. Healdsburg police say they believe she began withdrawing money from the league bank account for personal reasons, using an account debit card, beginning in July 2011.

That was one month before previous league president Kyle Hoffman was sentenced to nine months in jail for stealing $58,000 from the league.

The latest arrest stunned members of the community, not only because it involved another league president in such a short period of time, but because Giron was considered particularly devoted to soccer and coaching.

She played in the Healdsburg Youth Soccer League as a child and was active for years as a mentor, including a stint several years ago as coach of the high school girls junior varsity team.

“She was dedicated to the soccer community — that’s what’s shocking,” said Michelle Payne, a former league board member.

And safeguards supposedly had been been put into place after Hoffman’s theft, including that any checks written on the league bank account require signatures from at least two board members.

“Recommendations were put in place for the new board - a safety net — so it wouldn’t happen again. Those were not followed,” said Payne, who left the organization in late 2010 after Hoffman’s arrest. “I recommended an outside source for accounting too,” she said. “Obviously something went awry.”

As vice-president of the league in 2011, Giron, along with other members of the league board, sat through Hoffman’s courtroom appearances.

The league was brought to the brink of insolvency as a result of Hoffman’s pilfering, then rescued by community donations.

“She knew the efforts we all made to get us out of this mess he (Hoffman) got us into,” Payne said.

League officials went to police Tuesday with their suspicions of Giron. They had been attempting to get some of the money back before they contacted authorities.

Giron turned herself in to police Wednesday and was booked into Sonoma County Jail on charges of felony embezzlement and theft. She was released on $10,000 bail on the promise to appear at 8:30 a.m. Monday in Sonoma County Superior Court Dept. 9.

City officials said the arrest of two league presidents in such proximity made it doubtful the community would have come to the rescue a second time to keep the organization afloat.

“How do you go back and ask for help again?” said Mayor Susan Jones.

Members of the League board could not be reached for comment Friday and it was uncertain if they intend to disband entirely or attempt a comeback in future seasons.

The city will charge a $68 fee that includes a jersey and shorts. City staff will provide training opportunities and support to volunteer coaches.

Asked if the city will break even, Assistant City Manager Mickaelian said “it depends on how many sign up.” Last year, about 170 children participate in the soccer league.

“If we don’t break even this year, we will next,” he said.

Former school clerk sentenced in embezzlement in Ohio

A former Warren County Career Center clerk on Wednesday was placed on house arrest for 120 days and ordered to pay restitution of $4,753 she embezzled from the school.
Judge Robert Peeler also placed Teresa A. Lindsey, 47, of Wayne Twp., on probation for three years during a hearing in Warren County Common Pleas Court.

Assistant County Prosecutor John Arnold urged Peeler to send a cautionary message to others tempted to embezzle from schools or community groups by sending Lindsey to jail.

However Peeler said the sentence allowing Lindsey, a single mother, to care for her son and continue working two part-time jobs, was a better solution.

“Most people go to jail for these theft in office offenses,” Peeler said. “We have to send a message here.”

Lindsey admitted stealing the money while working as a clerk in the school’s adult education department and altering paper and computer records to cover the thefts. A change in bookkeeping systems at the school partially obscured the entirety of the embezzlement, Warren County Prosecutor David Fornshell said.

The discrepancies were discovered in June 2012 after the new accounting system was set up at the school, north of Lebanon in Clearcreek Twp. Lindsey, a part-time worker for more than a decade, resigned the same month, school officials said.

At the hearing, Lindsey apologized and promised to never embezzle again. Convicted of tampering with records and theft in office, Lindsey is “forever disqualified from holding any public office, employment, or position of trust in this state,” according to court records.

Peeler barred her from returning to the school. Officials said additional safeguards had been added to prevent future embezzlement.

Former CVUSD transportation director to be sentenced for embezzlement in California

A former transportation director of the Coachella Valley Unified School District is scheduled to be sentenced this afternoon for misappropriating and embezzling district funds.

Raul Portillo Lopez, 57, was convicted last September of 25 felony counts of misappropriation of funds and one felony count of embezzlement. The Indio jury that convicted him also found true a sentence-enhancing allegation that the theft total exceeded $65,000.

His girlfriend, Clemencia Ochoa, who trained drivers for the district, was convicted in the same trial of three felony counts of grand theft in excess of $400 and one misdemeanor count of petty theft for signing time sheets for overtime she never worked. She was sentenced in October to three years probation.

The crimes took place between 2003 and 2007, according to the prosecution.

Lopez, who worked for the district for 25 years and as transportation director for the last 10, authorized more than $109,000 in payments for vehicle parts, but the money instead was paid to his own auto repair shop, according to Deputy District Attorney William Robinson.

Lopez also authorized payments of more than $75,000 to an auto body shop for bus repairs that were never done and gave the body shop's owner a cut of the money, and he approved more than $17,000 in fraudulent overtime pay for Ochoa, Robinson said.

Lopez, who was put on administrative leave in July 2007, started with the district in 1981 as a mechanic and worked various jobs in the transportation department. He was promoted to director in 1997, and was responsible for 100 employees and a nearly $7 million budget, Robinson said.

In the fall of 2006, district officials suspected the transportation department wasn't being run efficiently and hired a consultant, who "concluded there was mismanagement, at the very least," Robinson said.

Lopez resigned from the district in 2007 and Ochoa retired in 2010, according to the school district.

Ex-VCU professor facing prison time for embezzlement

A retired VCU Dental professor could spend 20 years in prison for stealing from a university organization.
James Hardigan pleaded guilty to embezzlement on Thursday.
Prosecutors said that during Hargigan’s tenure, he opened an investment account for the VCU Dental Faculty Practice Association without the group’s knowledge.
Hardigan is then accused of moving more than $100,000 of the group’s money into his personal account.
Hardigan’s sentencing is scheduled for Aug. 9.