Monday, October 31, 2011

Pottergate Updates

Here's are some notes from the press conference and follow-ups from it.

Press Conference

As I noted elsewhere, Board President Steve Sundquist was yet again AWOL from a public event.  Standing in was Vice-President DeBell. 

King County Prosecutor Satterberg addressed the press first (the room was full, mostly with reporters from the TV stations and their camerapeople).  Mr. Satterberg read his statement in a neutral tone but his words were anything but.  He used phrases describing Potter like "helped himself" in explaining the loss of district funds.  He said that Mr. Potter liked to deal in cash and there were frequent large cash withdrawals made by his alleged co-conspirator, David Johnson, that were passed onto Mr. Potter.  He said that Potter had no bank account and that information on his district computer files lead to Grace of Mercy documents (the non-profit that Mr. Johnson was "running"). 

Mr. Satterberg stated that Mr. Potter had admitted to all this (which leads me to believe that Potter will plead guilty next Tuesday OR, if not,  he has something he might be use for leverage for a deal and/or immunity.  He said Potter knew that Emerald City Cleaning,  the for-profit company set up by the second alleged co-conspirator, Lorrie Sorensen, was not going to be doing any cleaning work. Sorenson was told this was "easy money" to be made by all of them. 

Mr. Satterberg noted that it was not the job of the prosecutor's office to determine if the district had received value for its work from other vendors nor if the work done was a good use of public funds.  He said that they had to have "evidence of intent to deceive without service" to bring charges.   Their review found no evidence that any other vendors had done that.  (To note: two vendors, Tony Orange, and Leon"Skip" Rowland refused to cooperate with the prosecutor's office without immunity.  The prosecutor declined to give them that immunity.) 

He said there was no evidence that Fred Stephens, the former head of Facilities and Potter's direct supervisor, knew about what was happening or profited from it.   (There may be no evidence that Mr. Stephens knew but I find it hard to believe he didn't have a single inkling of what was going on.) 

He stated that the conditions for the embezzlement (theft) were there and included wide autonomy for Potter, minimal oversight and lax oversight. 

Michael DeBell stated that the district had asked the SAO for hte audit.  He talked about the Board then launching their own investigation and the new internal controls and the new Internal Auditor. 

I asked about the Board lag of six months between when the SAO started their investigation and the Board started theirs.  Apparently, they were working on shutting the Potter programs down first.  I also pointed out that the position of Internal Auditor isn't new; there had been an Internal Auditor in place who also worked for Potter.  Michael acknowledged this and said that Auditor had not done his job properly (not to mention was working for Potter). 

Interestingly, Mr. Satterberg had not interviewed MGJ nor did he think he needed her or Don Kennedy to come to the trial to testify, if a trial is to be held. 

What is interesting from reading the Prosecutor's investigation report is that many people working around Potter knew of his plan to migrate the Regional Small Development Program from the district to Potter's control (because the program was being ended at the district).   What is interesting as well is that City of Bellevue employees and Tacoma Public Schools employees knew this as well but were not surprised.  So even though Mr. Potter had no right to place the $35k check from Tacoma into his own account (as well as two others from Bellevue), he had not deceived either Tacoma or Bellevue and so had committed no crime against them.

He also hired an architectural firm to redo space in Bellevue for his new venture and he billed the district the $6300 invoice.  The district did not pay it.  However, he didn't even try to conceal it and so did not deceive the district.  So no charge there, either. 

He is quite a smooth character. 

The former Internal Auditor, Kariuki Nderu, was also cleared of criminal charges but it seems he may have violated district policy.   But he's gone now so that is in the past. 

The vendors in the prosecutor's report include:
  • the Urban League - From 2006-2009, the Urban League received $595k.  They had a contract that they received from the district to work with minority and women-owned businesses that was awarded for one year and then expanded to two years.  Some of the work was to be sub-contracted and approximately $311lk was.  The district also agreed to a 2-year personal services contract with the UL for a web-based software database fro about $59k.  Apparently the district did not like the software and that's where it ended the contract, with a prototype.   The prosecutor's office found insufficient evidence to support filing of criminal charges against the UL or any of its members.
  • Ralph Ibarra - a friend of Potter who had a personal services contract for $156k.  The prosecutor had this to say, "...it appears that the bilings submitted by Ibarra to the District were related to work that fit within the agreed scope of work..."  They called the invoices "not detailed" but there was insufficient evidence to support filing of criminal charges against Mr. Ibarra.
  • The Platinum Group - this is an interesting company as several of the employees who ended up working for Potter were the adult children of other people Potter knew.  They had a personal services contract for $65k.  The prosecutor found them to have  detailed invoices and there was insufficient evidence to support filing of criminal charges against the company.
  • Charles Rolland - former head of CPPS, he had a personal services contract for about $65k.   The prosecutor had this to say, "Although documentation regarding the number of hours worked is lacking and conflicts with statements of some District employees, there is insufficient evidence to show that Rolland failed to perform the work described in his invoices."  No charges filed.
  • Eddie Rye - Mr. Rye has a radio talk show and he had a personal services contract for $48k.  The prosecutor showed that some of the invoices for work performed by Rye appeared on some Grace of Mercy invoices and there were three checks to Rye that came from David Johnson.  Mr. Rye's other invoices fit within the scope of his work and there was insufficient evidence to support filing of criminal charges against him.
  • Elaine Ko - She used to work for the Port of Seattle and had a personal services contract that paid her about $17k.  The SAO found an e-mail from KO to Potter where she agreed to help him transition the RSBDP from the distrit to Potter's private business once a second contract had been approved by the District.   Ko says she thought the district supported the transition.  The prosecutor had this to say," Because it appears the District gave tacit approval of Ko's contract and the subsequent invoices, the PAO believes that there is insufficient evidence to support filing criminal charges against Ko."
  • Velma Veloria - She is a former state legislator (and did some paid lobbying for the district at one point, possibly with Potter).  She had a contract for $10k.  She billed the district directly as well as through the Urban League.  The prosecutor's office found insufficient evidence to support filing of criminal charges against her.
  • Tony Orange - A contractor who is refusing to cooperate with the prosecutor, he had a personal services contract  for $162k for "apprenticeship outreach, recruitment, database management and meetings."  The SAO noted in its investigation that Mr. Orange only submitted a couple of invoices for all of fiscal year 2009 and that the invoices for attending various meetings did not jive with other district employees recollections.   This investigation remains open.
  • Leon Rowland -Another contractor refusing to cooperate with the prosecutor, he had a personal service contract through his company, Banner Cross.   He was paid $91k and the SAO classified about $77k of that as a loss to the district.  He billed the district $65k for 1900 workbooks and 1900 DVDs (each for $25).  There were only 75 documented participants for each of the 4 courses  ruahgt which would have made for 300 needed workbooks.  There is also evidence that the district was billed for classes that seemed to not have been held.  The investigation remains open.
There are a few names that seem to be left out so I need to follow up with the prosecutor.

One is State Rep Sharon Tomiko-Santos who is alleged to have worked with Potter in making contacts at the State Legislature.   (Just like Fred Stephens, her name comes up in both the Potter case and the MLK, Jr. building issue.) 

Another is Eleonor Oshitoye who worked on Potter's transition team as well as Marie Cruz who was his administrative assistant at the district and also part of his transition team.  Two others on the team were Percy Jones (who I believe was a vendor at one time) and Dr. Charles Horne

Mr. Ibarra, Elaine Ko, and Kariuki Nderu were also to be a part of Potter's new business according to a document outlining the business plan.

Potter, Johnson and Sorensen are scheduled to be arraigned next Tuesday, November 8th.  (Yes, I will be in court to witness this process.)


dan dempsey said...

Holy Smokes I see where Potter failed. He neglected to give Melissa and Charlie personal service contracts it seems everyone else had one.

dan dempsey said...

Michael DeBell stated that the district had asked the SAO for the audit. He talked about the Board then launching their own investigation and the new internal controls and the new Internal Auditor.

Michael agonized over extending MGJ's contract but voted to extend it.

Then on October 19 2011 the goofy board approved a hasty ill-defined superintendent evaluation instrument.

Any hope the Board will ever supervise anything correctly seems unlikely. Check those action reports.

Mark said...

I have knowledge of this scandle that wsas going on and reported this information to Fred Stevens on numerous occassions and was told to mind my own business. Eventually my position as Maintenance Manager was conviently terminated in a supposed budget cut.

Miss Waterlow said...

Am I alone in thinking this is a scandal that needs to die? I understand that it has important implications for the competence and dedication of the School Board incumbents. To the extent that it can be used to unseat them, keep the issue before the voters. But, beyond that, I think it’s small beer.

Plus I find it pretty repugnant that the press will dig deeply, urgently, persistently into a $1.8 million scandal while being so blasé and happy-to-be-ignorant about the real things that are endangering our schools: corporate influence, tax injustice, and massive, unconstitutional underfunding being a few that come quickly to mind.

Incidentally, IMO, the coverage of this and the contracts with AME et al has been not too slightly tinged with racism - at least in the Times. I’m extremely parsimonious in using that word, by the way, but can’t convince myself that it’s not apt in this case.

If all this sounds off the wall, can you explain to me why the story should maintain its place on our list of grievances? Thanks.

Anonymous said...

I have had the misfortune of listening to one of Skip Rowlands talks of entrupaneurship with a group of active duty Soldiers. The gist of his talk was about kissing ass, empowering black women specifically, and that money is everything. Myself and a lieutenant colonel spoke up because we couldn't believe the audacity this guy had to say the things he said. The Colonel and I are Caucasian, by the way. I lt took every ounce of restraint not to lose all my bearing, tell him just how I felt and leave the room.