The District Attorney expects to reach a decision by June about
whether to bring criminal charges against a local nonprofit for
skimming money from its employees’ retirement funds.
The District Attorney expects to reach a decision by June about whether to bring criminal charges against a local nonprofit for skimming money from its employees’ retirement funds.
Last August, a $22,000 audit conducted by the state’s Fiscal Crisis & Management Assistance Team “found evidence of apparent illegal fiscal practices and misappropriation of funds” by the nonprofit Mexican American Community Service Agency. Santa Clara County Office of Education Superintendent Charles Weis forwarded those findings to the Office of the District Attorney for further investigation.
“The DA is conducting follow-up inquiries to see whether or not there’s evidence that would suggest criminal activity,” said Bud Frank, the deputy district attorney assigned to the investigation. Though he would not discuss the specifics of the investigation – whether he had begun interviewing those involved or how many hours he spent on the case each week – Frank said “we are actively looking into the allegations.”
The nonprofit – which ran Gilroy’s only charter school and another charter school in San Jose – failed to make about $400,000 in payments to its charter school employees’ retirement accounts over the course of several years and instead used those funds to pay for operational costs, according to the report.
The nonprofit might have also owed as much or more to its non-school employees.
Both charter schools were closed last summer. MACSA relinquished its charter for El Portal Leadership Academy in Gilroy. Soon after, San Jose’s East Side Union High School District revoked MACSA’s charter for Academia Calmecac, said Jerry Kurr, associate superintendent of business services and administration for that district.
Although the Gilroy employees have been made whole, MACSA owes its Academia Calmecac employees a “significant” sum, Kurr said, though he did not have the exact number readily available. MACSA’s debt to its Academia Calmecac employees neared $270,000 at one point, according to the audit.
Because the audit is not admissible evidence in court, further investigation is necessary, according to the Office of the District Attorney.
“Follow-up can include interviewing various witnesses, gathering and assessing evidence, and considering how the law can be applied to the facts that are presented,” DA Spokeswoman Amy Cornell wrote. “We take these matters very seriously and are committed to a careful and thorough review of all of the facts and evidence available before making any charging decision.”
District Attorney Dolores Carr said she expected her office would reach a decision before the primary election for her seat in June.
The amount of time the investigation has taken so far “has nothing to do” with the election, Cornell said. “It’s not in the least a political move. Absolutely not.”
“I’m not a politician,” Frank said. “I don’t care about the election.”
Barring some unforeseen delay, Frank said there’s no reason his inquiry into the matter should take an additional six months. However, the government integrity unit “is a very small unit,” he said, explaining why several months have passed without a decision.
“We have to make sure we do a complete and thorough review,” Carr said. “There’s a lot of work that goes into it and these things take time.”
Frank must examine what occurred, whether what occurred violated criminal statute, whether any evidence he turns up is admissible in court and whether he can prove criminal intent, he explained.
Though he would not specify any possible charges, Frank said the outcome of the investigation could range from innocence to a “variety of white collar criminal violations.”
After the August audit, MACSA underwent a drastic overhaul, including a full change in leadership, the outsourcing of payroll services, a 42-percent reduction in workforce, and a new set of policies and procedures, former Interim Chief Executive Officer Maria Elena De La Garza said in September.
“It is important to state that the employees responsible for making these past fiscal decisions are no longer with the organization and a new management structure has been implemented,” De La Garza wrote in a letter sent last year to MACSA’s “supporters and friends.”
Former Chief Executive Officer Olivia Soza-Mendiola resigned June 30 and former Chief Financial Officer Ben Tan is also no longer employed by MACSA. Both oversaw MACSA during the skimming.
De La Garza did not return phone calls and an automatic reply e-mail said she was on medical leave directing questions to Aurora Cepeda, who was recently appointed as acting executive director, according to an e-mail sent to “MACSA’s Friends” on Tuesday.
However, on Monday, Cepeda wrote “at this time we do not have any new information to provide you with,” in response to questions forwarded to her inquiring into De La Garza’s successor, the amount of money still owed to Academia Calmecac and the implications of the District Attorney’s investigation. Cepeda referred inquiries to MACSA’s attorney, Phil Sims, who did not return phone calls.
– 2008 – The Mexican American Community Services Agency skims about $400,000 from its charter school employees’ retirement accounts over the last year, including about $140,000 from employees at El Portal Leadership Academy in Gilroy and about $270,000 from employees at Academia Calmecac in San Jose
– February 2009 – Dispatch reveals skimming scheme
– Early March 2009– District Attorney Dolores Carr announces her office will investigate MACSA’s operations and consider whether to file criminal charges
– March 19, 2009 – Consultants hired by the Gilroy Unified School District present a report to school trustees with scathing criticism of El Portal, academically and financially
– Mid-April 2009 – The Dispatch reveals that MACSA could owe more than $400,000 to non-school employees due to a similar retirement-skimming scheme
– June 4, 2009 – MACSA relinquishes its charter for El Portal; trustees accept it unanimously
– June 30, 2009 – MACSA Chief Executive Officer Olivia Soza-Mendiola resigns; Chief Financial Officer Ben Tan also leaves about this time
– Late August 2009 – Santa Clara County Office of Education completes scant report on MACSA and hands it over to the DA’s office
– Early January 2010 – While MACSA has repaid its debt to Gilroy employees, it still owes money to San Jose employees; the DA has not yet filed charges and has no timeline
– June 2010 – Primary election for District Attorney Carr’s seat, by which time she said there will be a decision on the MACSA case