GPS Fraud, Waste & Abuse Report #13: Student Enrollment Fraud

This FW&A Report connects the dots between the million dollar ADE repayment demands and rampant consultant fraud that proliferated in GPS during Christina Kishimoto’s tenure.  There’s been a major turnover in the GPS administration since Kishimoto scurried to Hawaii before this news hit, but in the vacancies left by Kishimoto’s miscreants, GPS continues to promote the same folks who participated in various schemes that reek of fraud. The new GPS governing board members who promised change for the better are perpetuating Einstein’s definition of insanity … doing the same thing, hiring  and promoting the same people who caused problems in the first place, and expecting different results. Keep shoveling and maybe you’ll find that pony!

The scandal currently enveloping the GPS administration is a result of inaccurate enrollment data reported to the state. ADE uses that data to distribute state tax dollars to Arizona school districts because AZ public funds follow the student. You would expect that GPS could properly report student enrollment, but then you also would expect that GPS could pay employees on time and in full. GPS has been unable to do much of anything correctly in the business offices.

Christina Kishimoto’s disdain for following the law was on full display in the fiasco that’s behind the ADE million dollar repayment demand. Her top dogs fell into line and helped with this 2014-2016 atrocity that’s just now coming to light. It’s no wonder the CFO is one of the top dog administrators who left the district at the end of the 2016-2017 school year.

We already knew that Kishimoto hired *consultants* to do the jobs of regular employees.  It appears the guy whose official job was to report student attendance to ADE as a high-ranking employee in the GPS White Castle also was generously paid as a consultant to cook the books for GPS. Jeremy Betts, whose consulting company is SERS Consulting, apparently was collecting fees for his company’s services during fiscal year 2015-2016 that appear to be the same work that Betts did in return for his GPS salary. More fraud: GPS was at the same time violating crystal-clear Arizona laws and state procurement rules for school districts.

Recently, GPS actually answered Westie’s emailed question shown below (amazing, right?) with the following statement:

Westie: I requested information about all employees designated as coordinators. I note that Jeremy Betts, whose position description online is “SAIS Technology Coordinator,” was not included in the W-2s or in the contracts that were produced. Please produce the information for Jeremy Betts, whose online resume shows that he was employed by GPS through August 2016.

GPS response: Jeremy Betts’ online resume is incorrect, he does not have a 2015-2016 contract. All other legally disclosable documents within the scope of your request have been provided to you.

In February 2016, Jeremy Betts’ LinkedIn profile states he worked for GPS from 2011 until August 2016. The GPS website today shows Jeremy Betts is still the district’s SAIS Technology Coordinator Business Data Analyst:

GPS website, July 12, 2017

In fact, you can call Jeremy Betts’ phone number today and get his voicemail!
 


 

Betts’ LinkedIn profile states SERS Consulting provides “Consulting services for school districts covering enrollment reporting, state compliance standards, financial data analysis, and staff training.” Betts’ GPS job appears to be the same thing, according to the district website.

Here’s where the disgusting odor of fraud emanates.  It appears that immediately after Betts registered his company on May 20, 2015, Betts scored a lucrative consulting contract with GPS for the fiscal year July 1, 2015 through June 30, 2016, totaling $24,600.00 [it could be more $$$$, but this is the amount Westie documented]:

Acquiring *consulting services* from a full time GPS employee would put Kishimoto and her minions afoul of some strict state laws.  A.R.S. 38-503(C) prohibits public employees from providing their employers with any equipment, material, supplies, or services unless provided under an award or contract let after public competitive bidding. AZ Attorney General guidance states that districts must follow the School District Procurement Rules, regardless of the expenditure amount, when purchasing goods or services from employees: “Following the guidelines for oral or written quotations is not sufficient to comply with the requirements of A.R.S. 38-503(C).”  

It gets worse: the IRS has issued clear guidance about employing independent contractors, whether they’re called consultants or another name, but GPS regularly flouts such rules.

A big red flag for the IRS is when employers pay consultants on a regular basis, such as bi-weekly or monthly, instead of when a consulting project is completed. [Ahem. Take a look at the regular payments under a *blanket purchase order* to SERS Consulting in the vouchers image above.]

Another is paying departing employees as consultants shortly after they leave; those payments have the appearance of being improper parting gifts or rewards. GPS hits all those marks, and more, in what appears to be a pattern and practice of funneling public money to selected recipients.

Lookie who pops up as the recipient of possibly fraudulent GPS consultant payments: Jeff Gadd, the newly named CFO for GPS for the 2017-2018 school year! [Another example of Einstein’s definition of insanity: hiring the same people again and again. Sheeeesh.] Jeff Gadd transferred from being a vendor, or consultant, depending on which GPS report you use, to a lucrative six-figure executive job as the GPS Chief Financial Officer for a one year term on September 2, 2014. Since CFO Thomas Wohlleber’s term began on July 1, 2015, it appears that Betts’s company’s consulting contract was awarded during Gadd’s days at the CFO helm. Dots connected! More insanity, more fraud, more fleecing the taxpayers?

In addition to the fact that fraudulent schemes appear to proliferate in GPS, with some of the same people turning up time and again in running the schemes, there’s a matter of fiduciary responsibility now that the currently serving members of the GPS governing board know about these schemes. Provisions of A.R.S.§35-211 should be applicable in this situation, requiring public employees return any unauthorized payments plus legal interest:

A.R.S.§35-211 When any person who is obligated to approve, audit, allow or pay claims or demands upon the state, approves, audits, allows or pays, or consents to, or connives at, approving, auditing, allowing or paying a claim or demand against the state not authorized by law, such person, and the person in whose favor the claim or demand was made, shall be liable for any funds procured in such manner, plus twenty per cent of such amount and legal interest upon the amount paid from date of payment.

It sure looks like the public is being fleeced while the people entrusted to administer the operation of the school district profit. Elected officials have allowed these conditions to manifest, multiply and mutate into a flagrant scheme of self-enrichment for a favored few public officers and employees. That cannot be tolerated in a public organization whose responsibility is to educate students.

Running off to Hawaii won’t save Christina Kishimoto from the long arm of Arizona law. As for the cloud over Kishimoto’s new job in Hawaii, there’s no umbrella big enough to shield her from what comes next.

You know there’s more to this story. Westie’s next FW&A report will detail another GPS employee’s lucrative consulting contract, illegitimate travel reimbursements and a full year’s pay for a job that appears to have been non-existent. All these gifts of taxpayer money constituted a big, fat wet kiss from Kishimoto to one of her BFFs. Sheeeeeesh.

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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. These  reports come directly from public records, many of which GPS slow-walked and stonewalled in attempts to keep perfidies hidden. Everything in the FW&A Reports has already been reported to state and federal elected officials and enforcement agencies.


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