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Wednesday, February 23, 2011

SAO's Report on Financial Investigation of Small Business Program

Here is a link to the State Auditor's report. (Thank you to Mirmac 1 for providing the link.)

I may try to go thru this to provide a timeline. I see that I was misled in a couple of places by district staff when I asked about a police report.

If this doesn't make something happen, I don't know what will.

37 comments:

Orca Mom said...

Despite her "I'm very angry" BS statement, lets ask her why she did a testimonial video on Potters Website before it was removed last summer.

Its all tied into the Chamber Of Commerce. Google Potters Small business development program and see all the familiar names (Charles Roland? no wonder his "parent group" died down so quick, he found a job with Silas) that show up.

Clearer and clearer all the time.

Charlie Mas said...

I can't help noticing that everyone associated with this scandal has already left the District: the Program Manager, the Executive Director of Facilities, and the Internal Auditor have all separated from service.

It would appear that there is no one left to fire, so we shouldn't be surprised when the District doesn't fire anyone.

mirmac1 said...

I wouldn't say that. Ron Kennedy should be boxing up his stuff (if he isn't already.

Orca mom said...

Ron English is still there Charlie.

Check out his being an instructor in the program.

Mr. Edelman said...

My prediction earlier in the year was that the superintendent would be gone by summer and would likely announce her departure this spring.

The reason she will leave is because she will be nudged along by Board directors. The four who are up for reelection do not want her around when they're trying to sell the public on four more years.

Here's a date to keep in mind: March 9th, the day of an executive session on the superintendent's evaluation. If the superintendent has still not resigned, the Board directors will have some questions for her.

If she is still superintendent next fall, it will be a gift for any of the opposing candidates in the upcoming elections. My guess is that incumbents will have heard from their wealthy constituents by then. These constituents understand that a sweep of the Board will mean a serious loss of power.

Melissa Westbrook said...

Yes, and if she leaves the cry will be, "We have to keep the Board so we have continuity. We can't have all these leadership changes."

Yes, we can. We need people to provide real oversight. I'm tired of waiting and asking.

Dorothy Neville said...
This comment has been removed by the author.
Dorothy Neville said...

To start compiling the timeline, here are two items from January 2009.

Winter 2008/2009, there were two investigations into the Small Works Program.

Gary Morehead of The Sutor Group: A Network of Construction Specialists reported that:
The SWR program lacked a documented detailed staff procedure.
The SWR program invited quotes (and therefore awards contracts) from contractors, giving preference to those contractors participating in the Small Business Development Program (SBDP) or being a Historically Underutilized Business (HUB).
There was an inherent conflict of interest between the SBDP/HUB and SWR programs due to the fact that they are being administered by the same staff.
There were SWR program procedures that have not been followed. In addition, the SWR program has not formally adopted the Collective Bargaining Agreement provisions into written procedure, and therefore these provisions are not being followed.
The contract and contractor files maintained by SWR were generally incomplete and unorganized.
Management response:

See document for the management response, which was written by Mr Morehead, not the district (as far as I can tell from the wording). According to the response, management has reviewed the conclusions and recommendations and agrees that they are correct. Management agrees that many things need to happen to bring the SWR into compliance and says that those things are underway.

Kariuki Nderu, the SPS internal auditor also performed a review of the Small Works Roster program. The report is dated January 13, 2009

He stated that he found the most recent board presentation of the SWR, September, 2007. That presentation claimed that $24 million in contracts had been awarded to Minority Business, Small Business and Women Owned Business from the program so far. However, his research found that during approximately the same interval of time, he could only find $2.5 million in contracts. "The process for offering small work contracts has been informal and Silas Potter has handled most of the awarding without documented oversight. Due to the fact that most small works contracts are paid through the General contractor, the process of determining how much has been awarded and paid to small works is less transparent and we do not have sufficient data to determine how much was actually awarded at this time."

Dorothy Neville said...
This comment has been removed by the author.
Dorothy Neville said...

To start compiling the timeline, here are two items from January 2009.

Winter 2008/2009, there were two investigations into the Small Works Program.

Gary Morehead of The Sutor Group: A Network of Construction Specialists reported that:
The SWR program lacked a documented detailed staff procedure.
The SWR program invited quotes (and therefore awards contracts) from contractors, giving preference to those contractors participating in the Small Business Development Program (SBDP) or being a Historically Underutilized Business (HUB).
There was an inherent conflict of interest between the SBDP/HUB and SWR programs due to the fact that they are being administered by the same staff.
There were SWR program procedures that have not been followed. In addition, the SWR program has not formally adopted the Collective Bargaining Agreement provisions into written procedure, and therefore these provisions are not being followed.
The contract and contractor files maintained by SWR were generally incomplete and unorganized.
Management response:

See document for the management response, which was written by Mr Morehead, not the district (as far as I can tell from the wording). According to the response, management has reviewed the conclusions and recommendations and agrees that they are correct. Management agrees that many things need to happen to bring the SWR into compliance and says that those things are underway.

Kariuki Nderu, the SPS internal auditor also performed a review of the Small Works Roster program. The report is dated January 13, 2009

He stated that he found the most recent board presentation of the SWR, September, 2007. That presentation claimed that $24 million in contracts had been awarded to Minority Business, Small Business and Women Owned Business from the program so far. However, his research found that during approximately the same interval of time, he could only find $2.5 million in contracts. "The process for offering small work contracts has been informal and Silas Potter has handled most of the awarding without documented oversight. Due to the fact that most small works contracts are paid through the General contractor, the process of determining how much has been awarded and paid to small works is less transparent and we do not have sufficient data to determine how much was actually awarded at this time."

Dorothy Neville said...

Sorry about the duplicate posts. Blogger kept telling me I was typing in my capcha wrong, but it still posted. Anyway, the point is that the board and management KNEW that the Small Works Roster Program needed overhauling and was ripe for abuse and corruption two years ago.

Dorothy Neville said...

"See document for the management response, which was written by Mr Morehead, not the district (as far as I can tell from the wording)"

Now I am thinking that this management response was written by Fred Stephens.

Sick of it all said...

Lest we forget:

A little over two years ago, MGJ brought in (another group on whose Board she sits) The "Coucil of Great City Schools to review, evaluate and recommend changes to the whole Capital/Facilities functions of SPS.

Page 31 of their review dated "Summer 2008" includes the following:

"FINAL NOTE
It is important for the reader to note that the Council’s findings, as critical as they
are, reflect conditions that existed prior to the arrival of Dr. Maria Goodloe-Johnson as
superintendent, who took the reins of the district in July 2007. She was joined by Don
Kennedy, who, on November 1, 2007, became the district’s Chief Financial and
Operations Officer. In his newly configured position, Mr. Kennedy took leadership
responsibility for the district’s business functions of the Capital Projects Program,
Enrollment, Facility Services, Finance, Information Technology, Planning, Procurement,
and School Support Services—among other district functions.

In a matter of just a few months after their appointments, Dr. Goodloe-Johnson
and Mr. Kennedy requested that the Council assemble a series of Strategic Support
Teams to review and evaluate the leadership and management, organization, and
operations of the district’s business functions; and to develop recommendations that
would help the district achieve greater operational efficiencies and effectiveness. As the
Strategic Support Teams moved forward with their reviews, the Council observed that the
Superintendent and Mr. Kennedy began using the Council’s recommendations as they
became available to set new directions, change leadership and management as
appropriate, and adopt new procedures in the district’s business divisions. The Council
believes that the superintendent and the chief operations/finance officer are on the right
track and, in time, should be able to substantially improve district operational efficiency
and effectiveness."

Now, how much longer do they need?

Orca Mom said...

Hey "Sick"-

This administration has made the words "leadership
responsibility" into an oxymoron.

LEAVE.LEAVE,LEAVE,LEAVE............

ma'am said...

from the audit:
[i]Environment: District program staff stated, although they had concerns about the program, they did not bring them forward due to fears of reprisal. We found many District employees were unaware of the District’s whistleblower and anti-retaliation policies or did not trust the policies.[/i]

If the Superintendent was not directly aware of the fraud taking place she should still be fired for promoting a climate where employees are/were scared to speak up against top staff. She nominated these guys for awards and publicly endorsed the newly formed company. From the School Beat Oct 29, 2009
Seattle Public Schools receives award for role in helping small businesses
Superintendent Maria L. Goodloe-Johnson, Ph.D., accepted the "Pillar Award" for Seattle Public Schools at the first annual 2009 Regional Small Business Development Program (RSBDP) breakfast held October 13. This program assists small business owners and their employees in developing the knowledge, skills and capabilities to compete for government contracts. Also receiving the Pillar Award are program partner-sponsors Sound Transit, Port of Seattle, Washington State Department of Transportation, City of Seattle and Tacoma Public Schools.
There is a picture of all three crooks together:
http://www.seattleschools.org/area/news/sbnews/sb_staffcomm_102209.html?wrapper=0

Anonymous said...

To echo blog comments on your previous post about the Times front page article:

Please, Please, PLEASE, do not encourage any board member to think of "Dr" Enfield as an interim replacement for MG-J.

She needs to go ASAP, as well as, the Broad contigent.

ken berry

Anonymous said...

charlie at 11:39

I think the seattle nicey-nice water is getting to you - you're evolving to politically clueless!

all the people responsible bailed out = dump on and fire some 50 or 70 grand a year mid level functionary!

Not Me!

Kathy said...

Will the public have access to Eakes (board's attorney) report?

cascade said...

Don't be politically clueless people. The people who annointed our superintendent will NEVER go for ousting the Super, the COO/CFO, the CAO and 4 board members. AIN'T GONNA HAPPEN. Too much instability for the civic/downtown set. And it puts the possibility of mayoral control back in the game, which whould be awful.

Get real. Get smart. Push for getting the Super and her lackey CFO/COO out of here. Let Enfield be the interim Super while we do a nationwide search. Who knows how good she'd be? (And since she can't deviate even one millimeter from the super's agenda, no one actually knows.) Anyhow, doesn't matter. Need her to get rid of the other 2.

Then get yourselves and your friends and their friends to find people to run this fall. Support them financially and publicly.

That's a realistic plan. That's the ONLY plan from my perspective.

Dorothy Neville said...

More documents.

The former internal auditor Nderu, who wrote the critical report about the SWR program in January 2009 ended up part of the program.

He was paid to offer classes in Small Business Tax Preparation. Note that the invoice is sent to a third party firm, this is clearly not part of regular SPS accounting.

He was part of the organizing committee for the new company.

He knew that Silas was hiring Elaine Ko (I think she is making a common mistake here and intends to ask for W4 forms, not W2)in May, before Silas officially left SPS.

He advised the new company what to do with the 35 thousand dollar check. See that on June 14th, he knew about the check and knew it was going to the private company, not the school district. According to the audit report, it was June 28th when Nderu turned around and reported this money to the state auditors. One does wonder what happened in those two weeks.

Here is the Bellevue Invoice correspondence referenced by the SAO.

Here is the proposed transition to the new company Silas proposed. This was sent to Fred Stephens in March 2010. Please note the details at the end, how the new company will bill SPS and others membership fees.

And a little communication during Silas' transition from employee to consultant.

Dorothy Neville said...

Charles Rolland was chastized for not providing the database he was contracted to create in a timely fashion. Note that the SAO references a database that doesn't work. I do not have nearly as many documents as the SAO does, so I cannot connect all the dots.

Here is Charles Rolland months later wanting money. For what? I do not know, the invoice was not attached to the email I got. Note that it was for more than the contract, so Silas had to redo the contract (in order to pay him what he wanted?).

ma'am said...

Thanks for sharing, Dorothy. Do you know if the timing of the district's audit request coincides with your public records request?

Dorothy Neville said...

Megan, the audit work started in August. I submitted my open records request for all these emails in December 2010, the day Nderu quit. So far I have gotten three batches, I am expecting more. I asked for emails between Nderu, Potter, Stephens and Kennedy. I have not yet gotten any from Kennedy (although he was cc'd in a few that I did get).

The first batch I received in early February, which allowed me to reference some of this in my testimony at the 2/16 public hearing on the Construction Audit. The second and third batches I received last night.

Inside as well said...

Make no mistake: EVERYONE in the building knew Potter was pulling a con. Those that did'nt know HOW he was pulling it were one thing but EVERYONE in the building knew he was doing it.

By hiring other family members, it was clear that he had official sanction to carry on.

Theres no way MGJ can say she had no idea.

Trust us or ask someone you may know who works in the Stanford Center.

StepJ said...

The P.I. has a story up about some of the contract recipients, including the Urban League.

The Real Arnold said...

http://webcache.googleusercontent.com/search?q=cache:wy5LV_eD4rIJ:www.seattleschools.org/area/news/sbnews/sb_staffcomm_102209.html+Silas+Potter+School+Beat&cd=2&hl=en&ct=clnk&gl=us&source=www.google.com

Here is a picture of three now familiar people.

The Real Arnold said...

Potter and Friends

The Real Arnold said...

Sorry about the double post there. I didn't know how to do a link.

Anyways, scroll about a third of the way down.

Unknown said...

Question: The Board can hire a Superintendent. Can the Board FIRE a Superintendent?

Charleston, SC said...

Oh, please don't send any of these people back to us. Charleston's public school district is a mess and getting worse. We still haven't figured out how to open the closets full of skeletons MGJ left with us before moving on to Seattle. This place is still being run by her understudies and they are no better, if not worse. We can only imagine what will be found when the state of SC finally gets around to doing what the state of Washington has done. Good luck.

Melissa Westbrook said...

Yes, the Board can fire the Superintendent for cause.

I suggest they do it.

Bird said...

Yowza! Nice catch, Real Arnold.

I'm not sure how Maria can expect to stay around after this...

Superintendent Maria L. Goodloe-Johnson, Ph.D., accepted the "Pillar Award" for Seattle Public Schools at the first annual 2009 Regional Small Business Development Program (RSBDP) breakfast held October 13. This program assists small business owners and their employees in developing the knowledge, skills and capabilities to compete for government contracts. Also receiving the Pillar Award are program partner-sponsors Sound Transit, Port of Seattle, Washington State Department of Transportation, City of Seattle and Tacoma Public Schools.

She can't really say she didn't know about all this crazy stuff, now can she?

I don't think there is any way out for her on this. She has to go.

Dorothy Neville said...

Wonder how that Pillar Breakfast was paid for. Any carving stations and live music you think?

SSD Emp said...

Keep digging. MGJ knew, Kennedy knew. Everyone in that building knew. Potter had been spanked countless times on other issues that involved breaking various policies and work rules.
It was just a matter of time before he got caught with his hand in the cookie jar.

StepJ said...

An ice sculpture for sure!!

Thank you Melissa and Dorothy for all of your research, meeting attendance, public testimony, and I'm certain countless hours of effort.

I truly wish this will be the death knell for the Superintendent. The story has even been picked up by the AP.

I am in a "waiting for the egg to hatch mode." With all of the recent resignations, including perhaps the head of the Urban League, I wonder who might honor agreements behind closed doors if the Superintendent resigns?

Just from past actions and words it would seem likely that she will rely on weathering the media storm and count on members of the School Board to not hold her personally accountable.

I hope it will be realized by those that do wish to be re-elected that turning the head to the misdeeds of the Superintendent (monies squandered on fraudulent enterprises are monies stolen from our schools) will be held against them come election time.

A shout out to Linda Shaw at "The Times." Your reporting provided my family and many others certainty and sleep filled nights when none was to be had. Please keep dogging the Superintendent. Our children and schools will benefit from your vigilance.

kprugman said...

Fire the superintendent first - then push the Board members to resign. You don't want the fox in charge of finding new hens. Perhaps philanthropists and textbook publishers can write and sell a new TV series called Reform - already we know they can write good fiction that's at least as good as Lost.

Jet City mom said...

Not saying it was timed (really, I'm not) but how is it that Dr. Goodloe-Johnson manages to NEVER be around when things get hot? I saw on the news that she's out of town somewhere. It never fails.

First time is happenstance- 2nd time is coincidence- third time is enemy action?

Too bad WPPSS disbanded , Ron English could have gone back to work for them.

& I realize that it isn't Friday yet- however- I am concerned that the Seattle community colleges no longer participate in the Federal loan program- this is really going to impact students who are interested in continuing their education, but can't afford to go out of the area.