The perfect crime

DISD crooks continue to elude an FBI probe

"The address the tapes were coming from at DISD," Fish says, "is a room that doesn't exist."

Linda Houllahan, the BOA account executive who handled the DISD account during that period, first heatedly told the Dallas Observer that no such tapes had ever existed. "That's not a true statement," Houllahan said on the phone. "We don't receive tapes from DISD, and we never have."

But a while later in the same very animated conversation, Houllahan said, "They send us a tape of what their [check] issues are."

That tape runs in the bank's computer, she said.

When the Observer pointed out she had said just a few minutes earlier that there were absolutely no tapes going back and forth, Houllahan said she had meant there were no tapes capable of altering old transactions. Later in the same conversation, she conceded that the tapes can cancel old transactions, but she insisted they can't erase them.

Fish, a former Silicon Valley CEO, says the Open Records Project attacks investigative issues differently than either the FBI or KPMG. "We do large database manipulation. They do sampling. We suck up the entire financial database and look for trends."

Fish says the FBI in particular is not able to "attack 10 gigabyte databases the way we do. Our computers are a factor of 100 times better than the FBI's. When we try to give them information, we have to save it as text files [the most primitive form of computer data], because their computers can't handle it otherwise."

FBI spokeswoman Marjorie Poche balked at the suggestion that Fish and his crew are running computers superior to anything the FBI owns. But she conceded his machines may be better than the equipment available to the agents doing the DISD investigation.

"He's probably right if he's talking about the case agents working on DISD," she said.

U.S. Attorney Coggins also scoffs at the notion that the FBI does not possess a computer capable of solving complex crimes. "Some of the best FBI computer cases in the world have been made here," he says.

He says the Dallas FBI bureau has a huge amount of work on its plate besides DISD, including several complex national and international cases, to say nothing of a massive amount of information to sift in the DISD case itself. "They have talent, but it is fair to say that their talent is spread thin."

Coggins said his staff has been meeting with the FBI about DISD in order to "focus the investigation." He pointed out that the FBI is being assisted in the DISD probe by the IRS.

Other people who have talked to the FBI say it's not just a question of computers. Philip Timmons, an electrical engineer whose company tried to do some construction work for DISD, thinks the sophistication of the fraud artists at DISD is way ahead of the sophistication of the FBI agents chasing them.

"I spent hours explaining our deal to an agent downtown," Timmons says. "This stuff is very complex. When I was done, she said, 'You know, we just had our house remodeled, and the contractor got a 25 percent down payment from us. Maybe if you did that you wouldn't have these problems.'

"Everything I said just went right over her head."

Timmons' solution was to put his entire complaint, including all of the evidence he presented to the FBI, on the Web. His page is www.dallas.crooks.com, if you feel like checking it out.

Maybe Timmons is right, and the FBI just doesn't get it. So what's KPMG's problem?

According to its contract with DISD, KPMG was supposed to pass on any promising criminal leads to a private criminal investigator hired by the board, Dave Gillis. But Gillis, a former FBI agent experienced in education fraud, did not renew his contract with the district when it expired this year.

Gillis would only tell the Observer that, "It was not working in the way that it was envisioned at the time that I was employed." He declined to comment in any detail on his reasons for bailing.

But people who have dealt with Gillis say he walked away from the investigation because KPMG was not passing on any information at all, as required in its contract, and in fact KPMG was making wholesale decisions not to pursue hundreds of criminal leads without consulting anyone outside its own staff.

Mike Wilson, KPMG's head forensic auditor in Houston, said it would be "an inaccurate statement" to say KPMG had passed on no information to Gillis. "We passed on lots of information to him," he said, but client confidentiality rules prohibit him from going into detail.

Fish says KPMG approached him about cooperating with them on a formal basis. But he says the first thing KPMG asked him to do was sign what he calls a "gag order," promising not to make any of his findings public. Fish wouldn't do it.

Hanley of KPMG says such a confidentiality agreement is standard operating procedure and accounting practice. But Fish says the agreement KPMG wanted him to sign would have taken all the DISD data his group had fought to make public and turn it back into secret information.

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