When the government is involved there's plenty of room for sleight of hand

6 charged with stealing SF school funds

Six current and former San Francisco Unified School District employees, including an ex-associate superintendent, are facing a total of 205 felony charges for allegedly misappropriating $15 million in public funds, prosecutors said Tuesday.

A three-year investigation found the defendants illegally redirected government grants that were supposed to be used for after-school and health programs for a variety of purposes, including lining their own pockets, prosecutors said. The six allegedly diverted a total of $250,000 over 10 years for their personal use.

"All of this money was inappropriately used," said District Attorney George Gascón. "We had people in positions of trust diverting money frequently for personal use. This is one of the worst kinds of corruption."

The defendants include Trish Bascom, 66, who was associate superintendent of student support services, and former members of her management team. Bascom retired in June 2010, a few months before district officials publicly disclosed the "irregularities in accounting practices."

Bascom faces 94 felony charges, Gascón said.

The other defendants include Linda Sue Lovelace, 62, a former senior executive director in the student support services division; Meyla Ruwin, 51, a senior executive director who is on long-term leave; Lilian Capuli, 51, a former principal administrative analyst; and Betty Chuey Wong, 57, a senior clerk who is on leave, Gascón said.

Also facing charges is Mychel Navales, a former assistant principal at Marina Middle School who is Lovelace's romantic partner. Prosecutors say Lovelace paid her $12,700 for work she never performed for the district, and that separately, Navales, 42, embezzled $5,800 from the middle school.

The women face charges including grand theft, embezzlement and misappropriation of public money, forgery and perjury, prosecutors said. They were expected to surrender voluntarily Wednesday.

Grant money diverted

Prosecutors said Bascom and her employees diverted federal and state grant money to accounts at three community organizations that hold contracts with the district - Edgewood Center for Children and Families, Bay Area Community Resources and the San Francisco School Alliance.

The district employees then directed the spending of the illegal funds.

Some staff got bonuses

According to prosecutors, the defendants took back some of the money for themselves, paid bonuses to other school district employees, paid $400,000 in salaries to "off-the-books" workers and spent $200,000 to establish and maintain computer and phone systems in Bascom's student support services division. District officials said they used separate computer systems to "perpetuate the scheme."

Bascom is also suspected of transferring $500,000 to an account held by a firm that was considering hiring her, ETR Associates, which provides health and education consulting, prosecutors said. The firm and its executives do not face charges.

The defendants wrongly reported to state and federal officials that the money was spent according to grant specifications, prosecutors said.

While $6.7 million of the total was ultimately spent on children's programs, the expenditures did not comply with the terms of the grants, prosecutors said.

Leftover funds

Bascom's attorney, Stuart Hanlon, said he hadn't seen the list of charges against his client, but that it had been a long-standing practice in the district to transfer grant funds to community organizations to ensure leftover funds wouldn't have to be returned.

She was following pre-existing protocol, he said.

So far, Edgewood and Bay Area Community Resources, which offer a range of youth services, have returned $4.7 million, said Gentle Blythe, school district spokeswoman.

No complicity

Officials from both nonprofits said they cooperated with the investigation and were not complicit in the acts of the district employees.

"In 2010, when our organization had concerns about directives given to us by various SFUSD school officials, we brought those concerns to the attention of senior district administrators, which triggered the current investigation," said Martin Weinstein, Bay Area Community Resources CEO. His agency provides services that include after-school programs. "Since then, we have cooperated fully with the school district and law enforcement officials."

The School Alliance, which helps create and support district reform efforts, hasn't returned any funds to the district and invested $250,000 of the grant funds in the stock market and lost it, the district attorney said. Officials there did not return calls for comment.

Since the problems were discovered three years ago, the school district says it has created safeguards for tracking grant money.

Superintendent Richard Carranza said in a statement. "We conducted a top-to-bottom review of the department and its practices, and have put in place several measures to prevent any similar wrongdoing in the future."

The missing $15 million

According to San Francisco prosecutors, the money was misappropriated and illegally spent in the following ways:

$250,000 for personal use ($100,000 returned to date)

$6.7 million spent on student programs, although in violation of grant terms

$4.7 million returned to the district from two nonprofits

$1.2 million in administration fees to nonprofits

$250,000 lost in the stock market by the S.F. School Alliance

$1.4 million in funds still held by S.F. School Alliance

$470,000 in unauthorized salaries and benefits

$200,000 in computers and telephones for the district's student services division

Sources: San Francisco district attorney's office and San Francisco Unified School District