If they only had a brain

Think the federal investigation of DISD is over? Not so fast, U.S. Attorney Paul Coggins says.
Mark Graham

OK, so they poured water on Waldemar Rojas. He melted. That's great. I don't know why they never think of these things until the end of the movie. Now everybody at Dallas school district headquarters is crossing their fingers, holding their breath, waiting for the odd winged creatures that came with him from San Francisco to fly away in a screeching horde.

But this is Dallas, not the movies, and, unfortunately, the exorcism of Witchy Bill from his post as Leader of our Children and even the departure of his scary creatures won't get us anywhere near back to Kansas. Rojas made a mess of coming here to clean up a mess created by the former superintendent who came here to clean up a mess, remember? Now we have archeological layers of mess. And the mess is still the real issue.

People are already talking about how we should just forget about any real outcome from the FBI fraud investigation at DISD. The Dallas Morning News ran a story recently that painted U.S. Attorney Paul Coggins as very pessimistic about ever getting anything serious on anybody at DISD. The same story made Dallas FBI Special Agent in Charge Danny Defenbaugh sound kind of pooped out and ready to throw in the towel. The article quoted a suit on the Citizens Council--that weird 1950s throwback private business group that still thinks it runs the city--as saying we need to get this whole thing behind us.

The Morning News followed the story with a lead editorial saying that it was gosh-darn bad news about the federal probe's tanking, but that "...corruption may be impossible to prove" and that "it is also possible former Superintendent Yvonne Gonzalez exaggerated when she said tens of millions of dollars had been stolen from the public school system." The newspaper concluded: "If school officials hope to win voter approval for a major bond issue anytime soon, they need to start focusing on sound financial management."

What is this talk of a bond issue? You've got to be kidding. People on the Morning News editorial board and on the Citizens Council and the Chamber of Commerce and places like that just need to take those three words, "school bond issue," right out of their vocabularies. There's no way anybody's going to support a bond issue until there is some really convincing resolution of the corruption issue in the Dallas school system. Weird as Rojas may have been, nobody thinks he was the real problem. It's the board and the school headquarters staff.

I talked to Coggins. He was emphatic, and, I have to say, pretty convincing, in saying the impression given by the News' coverage and editorial was wrong and that the federal probe is robust and ongoing. He said federal investigators have winnowed many allegations that probably won't float, but there are "half a dozen to a dozen fairly serious things" on which his staff and the FBI are still pushing hard. "I'm going to pursue this thing whether the timing is good, bad, or indifferent," he said.

Coggins didn't say the News' reporter got him wrong. He said his quotes, accurately reflected in the body of the story, were intended to caution people that really suspicious circumstances and even outright bad behavior do not always a federal case make. His complaint was that the headline over the story ("DISD charges unlikely: But federal grand jury reviews some material") and the editorial that followed it may have given the impression that he was pulling away from DISD. He says he is not.

During the investigation and prosecution of former Dallas City Councilman Al Lipscomb, Coggins sure didn't look like a punch-puller. Why not believe him now?

It's true the agony of DISD has been before us all for what seems like a very long time, and maybe you can't blame the News' editorial board and the Citizens Council for wanting it to go away, to get fixed. The problem is, you can't get to the fixed part, and you definitely can't get to the bond issue part, without first doing something dramatic to dispel entrenched public mistrust.

Too much stuff is out there, known or suspected or rumored. The leads that have been provided to the FBI include much more than whispered suspicion. There is an awful lot of information in circulation right now that tends to paint DISD as a free-money factory.

According to voluminous files of DISD financial transactions that were provided to the FBI, and that I also have seen, this is how it worked for years and may still work at DISD headquarters: If you had asked the district how it paid money to vendors, it would have shown you a fairly detailed purchasing control system based on the required use of purchase orders and a review of those orders by its purchasing department. Purchase orders submitted by departments of the district were compared against the budget. If a department put in an order for computers, for example, and the purchasing department saw in the books that that department's budgeted amount for computers wouldn't cover the expense, the purchase was not authorized. Good system, eh?  

So guess how they did it really. An analysis of DISD expenditures between 1996 and 1998 found that, of $878 million in expenditures, $407 million were paid out through the use of so-called payment vouchers, circumventing the use of purchase orders and any review by the purchasing department. Payment vouchers were intended originally for petty-cash expenditures. They were not subject to review. But for years there was no upward limit at DISD on the amount for which a payment voucher could be issued.

The FBI has been provided lists of literally thousands of payment voucher transactions of suspicious nature. Whether any of those transactions was actually a criminal act is something the feds or somebody else will need to spell out.

Some of this is major money. The FBI has been shown transactions in which payment vouchers were used for expenditures of several million dollars each. Vouchers were used to hire lawyers, pay for construction, buy equipment, hire consultants, many things. The list of voucher transactions provided to the FBI included many dozens of payments to teacher credit unions, private investment firms, banks, literally hundreds of places where someone could have been stockpiling cash. These certainly could all have been entirely legitimate payments as well, but somebody needs to establish that fact before we all blow kisses and forgive and forget.

Another huge issue is the question of so-called phantom vendors to which DISD has been making payments of many millions of dollars a year. These are vendors for which the records show only a name and a post office box number. The accounts do not contain any of the information required by DISD's own rules for vendor identification. No Social Security, taxpayer identification, or telephone number. No representative's name. No information about who the vendor really is or why they are being paid.

Some of the people who have worked with this list have tried on their own to track down the P.O. boxes and have found that many of them are registered to other P.O. boxes. And those P.O. boxes are registered to still more P.O. boxes. Can you think of any reason why legitimate vendors to a school system would set themselves up that way?

The files given to the FBI include a list of some 5,000 check numbers for checks that were delivered to DISD headquarters but are simply missing from DISD's accounts. In addition, the files include hundreds of checks that were paid by DISD but that were drawn on departmental accounts that don't exist. The banks paid the checks, but the checks didn't reconcile when they came back to the district.

Nobody noticed, because for years DISD didn't reconcile any of its accounts. The banks did it for them. Some service, eh? I guess the banks wanted to hold on to those huge deposits. Apparently the banks reconciled against their own accounts, not the district's budget accounts.

Even though the district wasn't reconciling its own accounts at all, the FBI has been shown evidence and has been provided with names of bank employees who supposedly can confirm that the district used so-called "maintenance tapes" to go back into bank records and alter past transactions. The only bank employee I have talked to about this vigorously denied it was true, but the FBI's informant insists that it is true and that he has documentary proof.

In its story suggesting the corruption probe is over, the Morning News did report that a recent audit had found that more than a quarter of all DISD vendors are DISD employees, in violation of school policy. What the Morning News did not do was connect any of the dots: thousands of missing checks; a system set up with the banks in which account records can be fudged and re-fudged over the years; customary practice by which millions of dollars can be paid out of the building on an essentially unreviewed petty-cash voucher; hundreds of no-name blind-alley vendors set up deliberately to keep anybody from knowing who they are. A quarter of the known vendors are employees (nobody knows how many of the blind-alley vendors are employees, because no one knows who they are). It's a theft machine.

Here is an irony. Remember our last superintendent, who had to go to the pokey for fraudulently using school funds to buy $16,729 worth of Chinese furniture for her office? She must have been the only person in the administration building who didn't know about the payment voucher trick. Instead, her assistant, Freda Jinks, who later turned her in to the feds, had her use the purchase-order system. Gonzalez was bound to get caught that way.  

So ding, dong, the Wicked Witch of the West is gone, but now what? Does this sound like a situation that can be solved through even the most powerful wishful thinking? It looks as if Coggins and the FBI are grinding away at it. It took years to create this mess. What better thing could the rest of us do than take a deep breath and tell ourselves, "OK, no Kansas anytime soon; maybe later." Of course, it would help, in the meantime, if they wouldn't sign up any new witches. Anyway, haven't we just about used up the four major directions by now?

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