Tuesday, April 19, 2016

Another case of corruption in Detroit and the children suffer most

Vendor in Detroit schools corruption case lived like a king

DETROIT — In 2002, Norman Shy was settling into his new, custom-built mansion in Farmington Hills, Mich. — complete with an indoor lap pool, massive marble foyer, paneled library, movie theater and nine bathrooms.
Life was good for the school supply vendor.
But behind the glamour was a scammer, prosecutors allege in a federal criminal case, and he would go undetected for years.
Here, in this 11,000-square-foot estate, public records show, is where the central figure in a Detroit school corruption case lived for years while allegedly cheating the Detroit Public Schools out of millions of dollars with the help of 12 principals and one administrator. Shy's home was featured in a Michigan House Envy article in the Detroit Free Press in 2013. He sold the home in November 2014.
According to court documents, principals used Shy as their school supply vendor for items such as chairs, workbooks and paper, but the supplies rarely made it to the classrooms. In return for their help, the principals allegedly received $1 million in kickbacks that came in all forms: payments made to sham companies that the principals had created, cash, gift cards and house repairs, including a new roof and gutter work for one administrator.
Detroit Public Schools unknowingly paid for it all, prosecutors allege, claiming Shy was the biggest benefactor of all. Over 13 years, he billed the district $5 million, of which $2.7 million was ill-gotten, they say.
But the FBI caught on.
On March 29, weeks after another Detroit principal and vendor pleaded guilty in a kickback scheme, Shy was charged with bribery and tax evasion in U.S. District Court. Prosecutors said a school corruption investigation into the state's embattled Education Achievement Authority reform school district led them to Shy, who allegedly ran a kickback scheme from 2002 through 2015.
He has since cut a deal in the criminal case and is waiting for a guilty-plea hearing to be rescheduled. A May 12 hearing was postponed.
Almost the entire time he was allegedly bilking the struggling Detroit school system, Shy was living in his Farmington Hills estate, which he sold for $2.4 million before moving to Franklin, Mich.
When contractors who built the house learned of the criminal case against Shy, they were outraged and claimed Shy had caused them plenty of legal grief over the years. After the house was built, Shy sued eight contractors for more than $500,000, claiming poor workmanship. The cases settled for significantly less.
"It touched a raw nerve," marble contractor Harry Ashbaugh said of the federal case. "To live like lords and pretend they are great business people turns my stomach."
Ashbaugh's company, Glenn's Tile & Carpet, installed the marble, tile and granite at Shy's house. Shy sued Ashbaugh for $400,000, claiming poor workmanship. Ashbaugh settled the case for less than $20,000.
Donald Worthington, the general contractor who oversaw the entire construction project of Shy's house, said Shy forced him out of business after 40 years of building houses. Shy sued Worthington's company, Affinity Building, in 2005, alleging shoddy work. Worthington settled the case for $25,000, and then shut down his business.
"I certainly didn't like him. He was using attorneys to break me," said Worthington. "This was the only house I ever had any problems with."
According to Worthington, Shy rarely wrote checks and paid him $5,000 a month in cash, which he would deliver to him in wads of hundreds, bound together with a rubber band. According to Shy's lawsuit against Worthington, he paid the contractor more than $125,000 in cash for the work he did on his home.
Shy's website says he teaches "interactive, communication seminars." He has a bachelor's degree in television and radio from Michigan State University in 1966 and a master's degree from Wayne State.
According to records filed in Oakland County Circuit Court, Shy often used intermediaries — or middlemen — in doing business with the school district, where for years he was on an approved list of vendors.  His company was Allstate Sales, which he ran out of his Farmington Hills estate. But sometimes, the middlemen wouldn't pay Shy, so he would sue them — in some cases, winning judgments against them.
So far, Shy has remained silent about the school corruption case.  Days after getting charged, he answered the door of his Franklin home with a Chihuahua under his right arm, but declined to answer questions about the case.  He said the FBI and his lawyers told him not to discuss his case while it's pending.
Shy's attorney, Christopher Andreoff, said his client feels bad about what has transpired and that he is cooperating with the government to resolve the case. He mentioned restitution, but didn't elaborate.
"We are attempting to resolve the manner to minimize any expense on behalf of the government, and there are issues that we are trying to resolve relating to any indebtedness to (Detroit Public Schools)," Andreoff has previously said, noting his client is accepting responsibility for his actions.
"He’s an older man; he’s 74 years old. He has some major health considerations. This will be a horrible financial setback for him and his family."

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