Years after excessive pay scandal, criminal case moves forward against ousted Centinela Valley superintendent

More than a year since his arrest and nearly five since the Centinela Valley Union High School District was rocked by a corruption scandal, disgraced former Superintendent Jose Fernandez will be back in court next week.

Fernandez, 59, will appear in a downtown Los Angeles courtroom on Monday for a preliminary hearing that could last five days and include testimony from as many as 30 witnesses.

A judge will determine whether there’s enough evidence to try Fernandez for allegedly carrying out an embezzlement scheme in which he duped school board members and taxpayers in the tiny, low-income district so he could enjoy lavish compensation and unusual perks.

He was arrested in August 2017 on a dozen felony counts, including embezzlement by a public official, misappropriation of public funds, grand theft and conflict of interest. If convicted, Fernandez could be sentenced to up to 15 years in state prison.

The Los Angeles County District Attorney’s Office launched its investigation in February 2014 after the Daily Breeze revealed the superintendent had collected $663,000 in total compensationleading the tiny school district serving students in Hawthorne and Lawndale. It was later learned Fernandez had actually collected $750,000 in compensation in 2013.

The newspaper also uncovered a nearly $1 million, low-interest home loan from the district and a $750,000 life insurance policy Fernandez took out before the school board could approve it.

Prosecutors alleged he “surreptitiously” buried these and other perks in an overwhelming volume of documents that went before school board members.

Where the case stands

Few details of the criminal case have emerged since Fernandez surrendered his passport and was freed on $495,000 bond in September 2017.

The preliminary hearing was postponed several times last year, most recently because Deputy District Attorney Stefan Mrakich was assigned to a murder trial in November.

Several past and present Centinela Valley officials — including retired Assistant Superintendent of Human Resources Bob Cox, former school board member Sandra Suarez, and current trustees Gloria Ramos and Hugo Rojas — have confirmed they received subpoenas out of the blue last week.

Fernandez is still making payments on the loan to the school district for his $1.6 million home, said Ron Hacker, assistant superintendent of business services.

Fernandez’s two-story house in Ladera Heights and 17 bank accounts were among assets frozen days before his arrest because investigators feared he might use it as collateral to make bail, pay for his defense or liquidate to avoid paying restitution, according to a search warrant.

In January 2018, Fernandez asked a judge to release funds so he could hire a new attorney, but the request was denied and he was ordered to report to a financial evaluator, records show.

He is now represented by Vicki Podberesky, a Los Angeles criminal defense attorney with expertise in white-collar cases. She could not be reached for comment.

Fernandez answered a phone call from a reporter late last week, but said he could not talk and hung up.

No indictment from grand jury

The defense is not allowed to present its side at a preliminary hearing, but Podberesky’s cross-examination of witnesses could offer a glimpse of her strategy.

Although it was never revealed publicly, the District Attorney’s Office convened a grand jury nearly three years ago to consider criminal charges against Fernandez. However, no indictment was ever issued, which could explain why it took prosecutors more than three years to bring charges against him.

According to court records, a judge in October 2018 granted Podberesky access to the sealed transcripts from secret grand jury proceedings in May 2016.

Greg Risling, a spokesman for the District Attorney’s Office, declined to comment on the proceedings.

Moving past a ‘low point’

Ramos and Rojas, who served on the school board at the time of the controversy, both said they are pleased to see the case move along.

“I look forward to seeing that Mr. Fernandez gets what he deserves,” Rojas said.

Ramos said Centinela Valley, which operates three traditional high schools and a continuation school, has made strides in rebuilding the community’s trust.

“Although it was extremely painful, we’re doing so much better academically, with community relations and having tight relationships with feeder schools,” she said.

District officials meet more frequently with parents and leaders from feeder schools, a sign that Centinela Valley has moved past a “low point” that damaged its reputation, said board President Daniel Urrutia. He was elected in November 2015, long after Fernandez was fired.

Current Superintendent Gregory O’Brien, who was hired that year, also said district officials have moved past the scandal, but that it remains in the back of their minds.

When the district approved early retirement incentives for employees, for example, “the question came up of, ‘Do you plan to take advantage?’ ” O’Brien said. “I said, ‘Absolutely not, it’s not for me.’ ”

(O’Brien earns an annual salary of $221,707, according to the school district.)

He said district officials will be watching the case against Fernandez, but don’t want it to affect students.

“It’s not that we should forget or ignore,” O’Brien said. “I want our students to recognize that our district is focused on their success. … We don’t want our adult issues to cloud or disrupt that learning.”

Ex-Centinela Valley superintendent pushed through private retirement plan worth $294,000 to him, testimony reveals
Disgraced former Centinela Valley school Superintendent Jose Fernandez was “extremely” eager to secure a supplemental retirement plan for the district from which he stood to gain $294,000, according to court testimony Monday.

“JF is extremely hot on this,” then-Assistant Superintendent of Human Resources Bob Cox wrote in a September 2012 email to a school district lawyer about a program that would give longtime employees additional retirement benefits.

A portion of the redacted exchange was read aloud by a prosecutor on the sixth day of the preliminary hearing in the corruption case against Fernandez, who is accused of bilking taxpayers out of hundreds of thousands of dollars by finding ways to dramatically boost his pay and benefits leading the tiny, Lawndale-based district.

Cox, the latest former Centinela Valley Union High School District official to take the witness stand in downtown Los Angeles, said he used the terms “white hot” and “extremely hot” in emails to describe Fernandez’s sense of urgency about getting the plan approved months before a pension reform law took effect.

Prosecutors allege the supplemental retirement program was part of a scheme Fernandez devised to spike his pension, and that he failed to mention his own potential benefit when presenting it to the school board, which approved the plan in December 2012.

A judge will decide whether Fernandez should be tried on a dozen charges, including embezzlement, misappropriation of public funds and conflict of interest, which could send him to prison for as many as 15 years if he is convicted.

The supplemental retirement plan offered employees with more than 15 years of service as much as 7 percent of their pay, covered entirely by the district. It was billed as a way to save Centinela Valley money by giving veteran educators an incentive to retire early, offering an unusually long seven-year timeline for those eligible to participate.

Fernandez’s defense attorney, Vicki Podberesky, said the idea was to get more district veterans on board.

“Essentially, the longer the time period of the program, the more employees could participate,” she said.

Cox, a former sportswriter for the Daily Breeze who succeeded Fernandez as superintendent but is now retired, said he understood that Fernandez would become eligible just before the seven years were up.

At the time, it caught the attention of Public Agency Retirement Services — or PARS — the private company that offers the plans. Senior Vice President Eric O’Leary emailed Fernandez noting the potential for a conflict of interest, or at least the perception of one.

Fernandez was unable to collect the benefits because he was fired before he turned 55.

Deputy District Attorney Stefan Mrakich also spent time questioning the superintendent’s hiring practices. Cox said it was normal for Fernandez to skirt the district’s protocols and not seek his input even though he was in charge of human resources.

“I think it shows an overall pattern on Mr. Fernandez’s part where he’s in control,” Mrakich said.

The day also featured testimony from current Centinela Valley school board member Hugo Rojas, who was elected in November 2009 and voted weeks later to approve the controversial employment contract at the center of Fernandez’s case.

Unlike two former board members who testified that they were initially unaware of a provision in the contract giving Fernandez the option to obtain a nearly $1 million, low-interest home loan, Rojas said the trustees did discuss it prior to casting their votes.

But Rojas said he didn’t find out that Fernandez had executed the loan to buy his two-story Ladera Heights home until he read about it in the Daily Breeze in February 2014.

He said he didn’t remember seeing a copy of a $910,000 check to a Santa Monica escrow company that prosecutors allege was a “surreptitiously” included in several pages of financial records under a consent calendar of routine board agenda items.

Rojas said he confronted Fernandez about the “disturbing” revelations in the Daily Breeze. The superintendent replied that the newspaper’s reporting was inaccurate, Rojas said, and he was told, “Don’t worry about it, legal is going to work it out.”

With a long witness list, tedious questioning and a case file with thousands of pages of documents, the preliminary hearing is taking longer than expected and may have to resume in March.

Assistant Superintendent of Business Services Ron Hacker is expected to testify on Tuesday