The district attorney’s office does not expect to announce potential charges any time soon for administrators of a local nonprofit who allegedly skimmed from employee retirement funds to pay operating costs, District Attorney Dolores Carr said.
The district attorney’s office does not expect to announce potential charges any time soon for administrators of a local nonprofit who allegedly skimmed from employee retirement funds to pay operating costs, District Attorney Dolores Carr said.
Santa Clara County Deputy District Attorney Bud Frank with the Government Integrity Unit is carefully reviewing a thin report he received last week from the county Office of Education. The report “found evidence of apparent illegal fiscal practices and misappropriation of funds” by the Mexican American Community Services Agency, county schools Superintendent Charles Weis wrote in a letter. Now, Frank must figure out, among other things, who or what institutions within MACSA the DA can actually prosecute, Carr said. Making sure the right person, if any, faces charges and that the evidence is there takes longer than a week to decide, she stressed.
“We don’t really have anything new to say. We’re still reviewing the report, and it will take some time to review it and determine how to proceed,” DA Spokesperson Amy Cornell said. “We understand the community is interested in this, but we have to fully review everything in the report.”
The county’s report contains 38 pages – 11 of which are either blank, nearly blank or cover sheets – that often repeat the same information and that echo what The Dispatch reported in February.
The reports alleges that the nonprofit that ran Gilroy’s only charter school – El Portal Leadership Academy – and a charter school in San Jose – Academica Calmecac – secretly did not make about $400,000 in payments to its employees’ retirement accounts.
Instead, administrators used those funds to pay for operational costs. Carr commissioned Weis to pen the report in March.
Weis’ report, which cost $22,000, did not finger any specific employees at MACSA for the allegedly illegal actions, but both Weis and MACSA interim Chief Executive Officer, Maria de la Garza, said that the two employees responsible for the actions were no longer with the agency.
Former Chief Executive Officer Olivia Soza-Mendiola resigned June 30 and former Chief Financial Officer Ben Tan is also no longer employed by MACSA, but neither Weis nor Garza would comment on whether these were the two employees responsible.
“The real question before the DA now is should she prosecute and, if so, whom. The two people who had immediate oversight are no longer working at the agency,” Weis said after releasing his report. “I don’t think that absolves them from guilt but that will be up to the DA to decide.”
MACSA is currently undergoing a drastic overhaul, including a 100 percent change in leadership, the closure of both agency-run charter schools, the outsourcing of payroll services, a 42 percent reduction in workforce, and a new set of policies and procedures, according to De La Garza. In a letter to MACSA’s “supporters and friends,” she emphasized that those responsible for the graft are no longer with the organization and a new management structure has been implemented.
In addressing the most obvious manifestation of the agency’s financial troubles – the money owed to employee pension funds – De La Garza pointed out that the agency has fully repaid the former employees at El Portal. At one point, MACSA owed those employees more than $140,000.
If the agency hadn’t paid back its El Portal employees, the Gilroy Unified School District would have been held liable for the debt, Superintendent Deborah Flores said with a sigh of relief.
When an El Portal employee brought the deficiency in his retirement fund to the district’s attention last fall, the district approached MACSA to develop a repayment plan and is happy to say MACSA is “100 percent caught up,” Flores said.
Still unsure of how the issue eluded her staff, Flores said the failure to pay the retirement accounts won’t happen in the future if the district has anything to do with it. However, with the charter school closed, the issue is moot, she said.
Although the nonprofit processes its own payroll, it can’t make payments directly into the public pension funds, Flores said.
The agency forwards its retirement contributions to the district, who in turn sends the money on to the state.
To put MACSA’s retirement contributions, or lack thereof, in perspective, Flores said Gilroy Unified processes $25 million annually in retirement funds.
In the meantime, MACSA still owes former employees of its San Jose charter school, Academia Calmecac, about $175,000, according to De La Garza. The balance owed to Academia Calmecac employees neared $270,000 in May, according to the county report.
“While the reason for the misuse of these funds was the lack of revenue to meet operating expenses, we hold ourselves fully accountable for rectifying the situation as well as ensuring that this practice has been stopped and will never occur again,” De La Garza wrote.
She added later that her office is also still reviewing the report and winding through the “discovery phase,” much like the DA’s office.
