By Stephen Young
By Stephen Young
By Stephen Young
By Jim Schutze
By Rachel Watts
By Lauren Drewes Daniels
So far the feds have caught minimum-wage janitors fudging on their overtime, roofing supervisors taking kickbacks, and a former superintendent stealing money to buy bad Chinese furniture.
That may be all we ever see. If it is, the reasons are simple, according to a variety of people inside and outside the school district. The FBI, depending on whom you talk to, is either not smart enough to catch anybody, or they're smart enough but they're not all that interested, or they're just too busy.
Meanwhile, KPMG Peat Marwick, the accounting firm doing the hands-on auditing, appears to be devoting more of its energy to keeping bad news out of the media than to catching anybody.
This very depressing portrait of the effort to clean up 3700 Ross comes from people who have tried to feed information and tips into the investigation as well as from people who have done some of the investigating.
The issues in the fraud audit are not new, and they certainly don't involve anything that has happened yet on the watch of the new superintendent, Waldemar Rojas. Most of them, especially the allegations of high-level financial fraud, stretch back several regimes.
But these investigations, nonetheless, were supposed to give us the big answer: Is the ongoing financial mess at DISD the product of stupidity? Or is it the work of clever criminals?
What is not generally known is that in the last year both KPMG and the FBI have been shown evidence of what could be staggering amounts of fraud and theft carried out at high levels in the district over many years.
Look, for example, at what the investigators have been handed by one man: Russell Fish, an unpaid volunteer computer geek who heads up a citizens group called the Open Records Project. Fish says the FBI asked his group to run a bookkeeping operation on its computers that neither the FBI nor KPMG had the wherewithal to do themselves. Taking raw data on tape from the district, Fish and an army of volunteer computer experts wrote powerful software that allowed them to array the district's general ledger against its checking account.
Fish found 5,000 checks unaccounted for. He gave his results to the FBI more than a year ago, along with evidence that Bank of America, DISD's bank, had examined its records and found a substantial number of "paid-no-issues" -- checks the bank said it had paid but that DISD later said it had not issued.
Fish says the combination of missing checks with the bookkeeping problems at the bank and other sloppy practices means it is possible someone has been or is still "stealing checks and using them as currency."
"It's a key to the bank," he says.
Fish says he has also uncovered at least 100 "phantom vendors" -- businesses to whom DISD regularly sends checks for which the addresses are P.O. boxes. When Fish tried to track down who owned the P.O. boxes, the trail just led to other P.O. boxes. And those P.O. boxes led to other P.O. boxes.
"The P.O. boxes just go off the edge," he says. "One P.O. box leads to someone else at a P.O. box, and you just go and go and go, and you never find anybody."
In other words, some DISD employee could be sending the checks to himself/herself and/or cousins.
In a normal operation, one still might be able to get vendor information off the purchase orders. But Fish found $407 million in expenditures that were made in a period of only a few years without any purchase orders at all. The authorizations to issue the checks, he says, don't even have signatures.
Fish and the Open Records Project got their hands on all of DISD's financial records two years ago through a Texas Open Records Act demand. Fish is taken seriously by the players in the DISD fraud investigation. U.S. Attorney Paul Coggins conceded that members of his staff had met with Fish. "We'll take help anywhere we can," Coggins said.
Bill Hanley of KPMG Peat Marwick, the major accounting firm hired by the school board to carry out a criminal audit of the district, says, "I like Russell, and what he's trying to do is tremendous. He's got more capabilities than a lot of people."
But some of the people who take Fish seriously obviously are uncomfortable that he takes his findings public. One of the spookier things Fish says he has uncovered is a kind of stealth invasion of bank records by which certain records at Bank of America may have been destroyed. Fish thinks someone at DISD was sending so-called "maintenance tapes" -- computer records on magnetic recording tape -- over to BOA for BOA to run in its own computers, in order to "update" the district's records. He says the tapes from DISD were "going in and removing records of some checks, including some which had been issued and had already cleared the bank.