TEA cites BISD with financial infractions, mismanagement

Superintendent Dr. Timothy Chargois

Texas Education Agency investigators issued a preliminary report on an investigation into the fiscal management of the Beaumont Independent School District dated Thursday, March 6, that offers no less than two dozen citations of administration and school board trustees failing to perform their jobs in a proper manner.

According to TEA spokesperson DeEtta Culbertson, BISD officials will have 10 business days to respond to the TEA’s findings before a final report can be determined. The final report will be released to the school district and the public by the TEA after agency investigators review BISD’s response to the preliminary report and amend the report where needed.

As it stands, the preliminary report offers to Superintendent Timothy Chargois, BISD administration, and school board trustees nine findings of malfeasance in purchasing, procurement and fiscal oversight. Among the findings are that the Board of Trustees and Superintendent Chargois failed to monitor the district’s finances to protect the district from fraud and abusive spending; the superintendent failed to manage the day-to-day operations with internal financial controls, allowing more than $4 million to be embezzled from BISD; the superintendent failed to manage BISD operations in allowing a convicted extortionist he named the assistant superintendent of secondary education, Patricia Adams Collins Lambert, to enter into two separate contracts in excess of $50,000 each annually with companies owned by her grown son and operated from a Houston area apartment bedroom while at the same time allowing Lambert to lie on a disclosure form wherein she neglects to name her affiliation to the companies she signed BISD checks over to; and the superintendent failed to ensure that proper records were kept of BISD’s past and present financial archives.

Also noted by TEA investigators were three areas of concern related to “deficiencies in the audit work performed by BISD’s external auditor,” roughly $11 million missing from BISD’s general fund, and conflicts of interest in routine execution of purchasing agreements.

TEA Division of Financial Compliance Director David Marx noted that the preliminary report released to BISD was not all-inclusive of the problems noted in the financial offices of the school district by this investigative team or TEA investigations into other areas of the district’s day-to-day operations still underway.

“These findings do not address all the concerns raised before, during and after our investigation,” Marx wrote to Superintendent Chargois in the preface of the recently released preliminary report. “Additional investigative work may be conducted in the future to address additional concerns.”

The financial investigation, according to the TEA investigative team notes, was instigated, in part, by citizen complaints alleging BISD violated procurement and purchasing laws, and by the rapid depletion of the school district’s general fund balance. According to investigators, the financial report is incomplete because investigators were “denied the opportunity” to interview key BISD staff due to BISD making the employees unavailable, and administration’s lack of cooperation that “hindered the investigators’ efforts to conduct the investigation.”

Still, investigators were able to detect problems in the finance department of BISD, noting that administrators should have been able to detect the problems as well.

“The board’s inability to detect fraud, waste and abuse is particularly troubling because outside entities have been able to detect fraud, waste and abuse,” the investigators report.

Changing of the guard

TEA spokesperson Culbertson said that, despite the fact that the team working on the BISD multi-pronged investigation has lost two critical members this month, the case is still very active.

“Just because somebody left the agency doesn’t stop the investigations they were working on,” Culbertson said, referring to the departure of lead investigator Emi Johnson, who has been working on the BISD investigation since its genesis. Also relinquishing their post at the TEA is newly added special teams investigation leader Margie Johnson, who Culbertson said “determined that the job is really not a good fit for her.”

Culbertson assured that whistleblowers and informants would still be afforded the same confidentiality previously offered under the guidelines of TEA regulations, although some information previously kept under wraps could become public once the TEA investigation is complete.

“We’ll follow the rules according to the agency’s regulations — confidentiality is not just one person’s rule,” she said. “Now, once the investigation is complete, that’s a different story. Some things that weren’t public could become public later on.”

According to the TEA spokesperson, preliminary reports on investigations of BISD’s governance and testing procedures are pending and expected any day now.

“Everything is going according to the process,” she said. “We’re working to get things wrapped up as soon as possible.”

Deja Vu

The Texas Education Agency’s investigative report on the fiscal management problems noted at the Beaumont Independent School District (March 6, 2013) heavily criticizes Superintendent Chargois on failing to perform his job in accordance with the law, but portions of the noted problems began long before Chargois was named the school district’s named leader. According to documentation entered into evidence for the TEA financial investigation and an ongoing federal investigation into embezzlement of BISD funds, almost $2 million of the known $4 million siphoned from district funds via wire transfers to the district’s chief financial officer occurred while then-Superintendent Carrol Thomas held the BISD reins.

Concerned citizens Danny Major and Mark McClellan looked further into Thomas’ propensity for leaving behind a school district in financial shambles and were able to find a parallel between BISD and Thomas’ prior superintendent gig at North Forest ISD in Houston. The details are spelled out in a court proceeding that begins as soon as Thomas left North Forest and the new superintendent ordered an audit of the district’s finances.

According to court documents, four months after Thomas left North Forest, school district finance officer Olufemi Lukan and a financial audit team hired by Thomas’ successor discovered millions of dollars expended in improper wire transfers from the district coffers “to a third party with little or no documentation,” more than $7 million missing from the school fund balance attributed to “miscellaneous expenditures,” missing laptop computers, and “the district’s bank accounts had not been reconciled in approximately five years.”

Also like with BISD, when TEA investigators finally arrived to investigate the fiscal deficiencies already noted by other investigators, it was the acting superintendent following in Thomas’ footsteps who was in the hot seat for all the problems that had been occurring in the district – Thomas’ replacement in North Forest was fired, but subsequently rehired after a school board trustee election turned the tides of administration at North Forest.

Circuit Judge Robert Parker offered the opinion of the Fifth Circuit U.S. Court of Appeals when he stated that, “(North Forest) was suffering from severe financial problems prior to and during (the acting superintendent’s) tenure as the superintendent. Multiple audits of the business office showed ongoing performance problems such as failures to conduct bank reconciliations, unrecorded checks and deposits, and large budget deficits. … TEA evaluation highlighted a number of financial and accounting problems in the district, and further, recommended external auditors and reorganization of the business office. The external auditors found the district’s financial records ‘the worse they had ever seen.’”