GPS Fraud, Waste & Abuse Report #9: Don’t Mess with the IRS

Unreported income is pervasive in Gilbert Public Schools. Gifts of public funds to GPS employees funnel unreported income to select employees. Favored employees, however they are selected, enjoy special privileges and monetary benefits (meaning untaxed cash bonuses) associated with their employment. But apparently, you have to be really *special* to qualify. 

This pattern and practice of unequal benefits again raises questions of whether the GPS Business Office is properly reporting all taxable income, let alone withholding and remitting taxes. Many of those GPS employees are the level administrators whose contracts said nothing about Professional Development, which often is the vehicle for said gifts of public funds. Some lower-level employees have had professional dues paid by the district, in addition to registration and travel expenses for employees attending various conferences, all without statutorily required board approval. As with the case of Robyn Conrad-Hansen, employees contracted through SmartSchools also can receive benefits of illegal gifts of public funds from GPS without reporting those payments as income.

There’s a “Professional Growth Stipend Benefit” that is a lump sum that should have been included as taxable income during the years that GPS paid this benefit. The problem is that the GPS Employee Handbooks state that such payments have been suspended for the past many years, according to page 35 of the GPS Employee Handbooks from 2013 through 2016. GPS *helpfully* removed those handbooks from their website, but Westie archived them and provided them to state and federal elected officials and enforcement agencies, along with records of exact payments over the years that prove which employees received these gifts of public funds that enriched their pocketbooks with public funds. Hint: it’s often the same folks, year after year.

The GPS Employee Handbook contained other gifts of public funds each year to selected employees. For example, the so-called transportation benefit routinely was provided to some 100 administrators as a nice check for $350.00 at the end of each school year. One hundred GPS administrators received annual checks of $350.00 in 2014; they didn’t have to travel, and they didn’t have to keep records unless they wanted to claim additional reimbursement for travel over 750 miles. Interim Superintendent Jim Rice received a check from GPS for his travel between home and work, something that is so fundamentally wrong, there’s no way GPS can explain that, or the perhaps double payment that occurred.

There’s no doubt that these gifts of public funds were purposeful, because GPS answered an inquiry about these payments with an email from the GPS Director of Finance explaining that GPS decided 100 administrators would be deemed *vendors* so they could cut sweet little tax-free bonus checks for them: 

Every year administrators are required to sign a form that states that they will accept this amount in lieu of submitting additional miles for reimbursement. The expectation is that in the course of doing business throughout the year Administrators generally travel during work hours. And over the course of the year the miles that would be claimed would be in excess of the $350.00. Those that do not sign that form do not receive this money and they would have to collect and submit miles for every trip taken during the year. I would not necessarily categorize these as stipends. This is an arrangement to minimize the administration of mass submissions of mileage reimbursements.

That self-incriminating explanation was written to Suzy Horvath, who was absolutely livid when Westie first wrote about these GPS illegal gifts of public funds in 2014; more Westie posts on the subject appear here and then again here, verified by Vouchers 4218-4226 June 2014.  “But it’s District Policy,” she proclaimed, among some other stuff that passes for smack talk or worse in her constricted community. Thanks so much for getting this verification of tax evasion made into a public record, Suzy Horvath!

As Director of Finance, Teddy Dumlao knew that he was in the group of employees that would be improperly compensated; the group also included Budget and Procurement Coordinator Crystal Korpan, whose role was essential in recharacterizing payments to these employees as so-called vendors. GPS gave the same gifts of $350.00 again in 2015 in Vouchers 5222-5253 June 2015. This time, the payments to GPS administrators were listed as “Admin Travel Stipend.” In GPS, stipends are paid for *additional work* and other salary related reasons; those payments appear to be administered within the Talent Office rather than the Finance Office. Board members really should cut the ostrich act and look into these illegal payments and so-called stipends, but who is going to make them do that?

It appears that GPS not only failed to report the payments as taxable income, GPS also failed to properly withhold taxes and other deductions from employees. Do you believe that GPS filed IRS Forms 1099 for these payments to and/or on behalf of employees? They certainly were not included in the very few 1099s Westie received from public records requests.

GPS Director of Finance Teddy Dumlao, who regularly attends professional development and business administration conferences at GPS expense, also had his college tuition reimbursed. It appears that he is the sole GPS employee who received tuition reimbursement for college courses, which were shown in *Vouchers through April 2016* in the amount of $3,400.00. In this case, GPS recharacterized income to the Director of Finance, apparently as a reward for making possible financial schemes of various tax-evading strategies that were operating out of the GPS Business Services offices.

Teddy Dumlao readily admits he does not have a college degree that one would assume is essential for his position in GPS or any other school district. Also attracting critical scrutiny, GPS does not have a policy or practice of reimbursing college tuition for the several thousand teachers who work for GPS and who take classes to maintain their certifications. How sweet it is to be Teddy Dumlao, the same guy who shamelessly made possible the apparently illegal gifts of public funds discussed in this post!

Another top level GPS employee who enjoys the superintendent’s favor is Communications Director Irene Mahoney-Paige, whose tuition for a Chamber of Commerce program was paid directly to the Chamber by GPS. That $800.00 payment appeared in *Vouchers through August 2016.* The program seeks “to expose promising leaders to issues that affect our communities, businesses, and the public … to be better able to contribute their resources to making a difference in many ways.” Again, this appears to be a sweet reward to a selected employee.

A big question is whether Irene Mahoney-Paige has been paid as if she were on duty at GPS for the time she spends on the Chamber of Commerce program. That would allow her to collect a salary as a public employee while at the same time accumulating benefits such as paid time off, when she’s really partying with the Chamber of Commerce. Thanks for *making a difference* at taxpayer expense, Irene!

In addition to tax irregularities resulting from GPS paying the Gilbert Chamber of Commerce for a program to advance “promising leader” Irene Mahoney-Paige, these expenditures are gifts of public funds and an abuse of Kishimoto’s authority. So what did the GPS governing board know, when did they know, and what did they do about it?

Keyboard: Don’t ask the questions if you can’t stand the answers.
Westie: But taxpayers want to know!
Keyboard: So does the IRS.

The Fine Print: Westie’s Fraud, Waste & Abuse Reports chronicle deliberate misuse of authority and public funds, abuse of authority, gifts of public funds and intentional violations of Arizona statutes and administrative rules by Gilbert Public Schools top-level administrators at the behest of superintendent Christina Kishimoto. Public trust can be restored only through an impartial forensic audit by someone who doesn’t have a stake in these matters. It’s not nice to mess with the IRS! Penalties, interest, back taxes and more come to mind…

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