The Mexican American Community Service Agency’s problems are
mounting as its Gilroy charter school faces closure and its debt to
employees could be double what the nonprofit originally
revealed.
The Mexican American Community Service Agency’s problems are mounting as its Gilroy charter school faces closure and its debt to employees could be double what the nonprofit originally revealed.
Gilroy Unified School District trustees recently commissioned an independent auditor to report on MACSA’s charter school, El Portal Leadership Academy. The report revealed that MACSA owed El Portal employees $140,000 that was skimmed off the employees’ retirement accounts without their knowledge while additional district staff reports showed dismal academic performance. In early May, trustees will consider options for dealing with the school, which can range from developing a task force to revoking the school’s charter altogether.
The Board of Trustees is set to hear from MACSA administrators at Thursday evening’s board meeting.
“We should be frank with everyone that revocation is an option and should be on the table,” said Board President Javier Aguirre.
Yet as the organization is struggling to repay its debt to El Portal employees, details are emerging that MACSA’s debt could be double what administrators initially let on. MACSA administrators originally said they owed about $140,000 to El Portal employees and about $250,000 to employees at Academia Calmecac, its San Jose charter school.
But MACSA could have skimmed up to an additional $400,000 from its non-school employees, according to a source from AIG Valic, an investment firm that handles retirement packages for MACSA’s non-school employees. The employer contribution to these accounts has been in arrears since 2005 with sporadic deposits that were completely cut off over a year ago, the source said. Not only did the nonprofit not provide the promised employer match, it also diverted the retirement money employees had set aside in their paychecks – all without employee knowledge.
“The issue is that what they did is downright wrong,” said the source, who estimated that about 30 to 40 non-school employees were affected. “If an organization is having financial trouble, they can cut off their contribution, yes. The part that’s not legal is the embezzlement part.”
MACSA Chief Executive Officer Olivia Soza-Mendiola and Chief Financial Officer Ben Tan did not return phone and e-mail messages.
The nonprofit has already repaid $90,000 to El Portal employees and has plans to pay the rest by June, according to district staff. MACSA also planned to repay $120,000 to Academia Calmecac employees by March, Tan said in February.
MACSA Board President Louis Rocha said all employees would eventually be repaid though he did not have an exact date for the non-school employees.
Rocha said the decision to use employee and employer retirement contributions for other purposes was not a board decision. He became aware of the issue in February, he said.
“This is not news that we were glad to hear but once we became aware of it, we began working with the administration to get it corrected,” Rocha said.
Gilroy trustee Denise Apuzzo said she would be asking MACSA to address any issues with its non-school employees’ accounts at the upcoming board meeting. She said a systemic problem “would open another set of questions” and “could jeopardize funding.”
In the meantime, District Attorney Dolores Carr has asked the Santa Clara County Office of Education to conduct an investigation of MACSA’s two charter schools, said Cathy Grovenburg, assistant superintendent of business services with the county education office. The investigation, which will cost about $20,000 on top of the $10,000 audit GUSD conducted last month, will commence in May and is expected to last four to six weeks. The county office of education has brought in the state Fiscal Crisis and Management Assistance Team to conduct the investigation, which Gilroy school district Superintendent Deborah Flores said was not a routine practice.
The county will be shining a light specifically on the fiscal issues surrounding MACSA’s delinquent contributions to its school employees’ retirement accounts, Grovenburg said. Though the DA made a referral to the county office of education in mid-March, Grovenburg said her office had already planned to look into the matter, which “we take very seriously.”
However, Carr said she did not know whether this report would include any investigation into the skimming going on with MACSA’s non-school employees.
“That’s not our place to do that,” she said when asked if she would assign someone from her office to investigate beyond the county office of education’s inquiry. “That’s law enforcement’s job.”
“Our place is to look at the evidence once it’s compiled and determine whether criminal activity took place,” said Deputy District Attorney Bud Frank with the Government Integrity Unit.
Carr said employees who suspect they had been defrauded should get in touch with local law enforcement agencies. Without formal complainants and facts, Carr said her office could not assign investigators to the case. Carr would not say what charges MACSA administrators might face in relation to the retirement skimming.
It was unclear as of press time if the San Jose Police Department had an active investigation on MACSA.
However, Frank was insistent that the district attorney’s office was not taking the situation lightly.
“We are completely sincere in saying that we take all forms of allegations of criminal activity seriously,” he said. “We don’t want anyone to fall through the cracks.”
