6 charged with embezzling millions from SF schools

May 14, 2013 - 7:35 PM

SAN FRANCISCO (AP) — Six current and former San Francisco school district employees were charged Tuesday with embezzling about $15 million in grant money from the district, officials said.

The suspects face multiple felony grand theft and embezzlement counts for diverting federal and state grant money into hidden slush fund accounts through several nonprofits over a 10-year period, district attorney George Gascon and San Francisco Unified Schools Superintendent Richard Carranza announced at a news conference.

A three-year investigation found the six suspects, including a former associate superintendent and two former senior executives, used about $250,000 for personal expenses and another $500,000 for unauthorized salaries and bonuses, officials said.

About $6.7 million of the grant money went toward educational purposes, but not for what was specifically intended, Gascon said. One of the nonprofits involved even risked $250,000 in the stock market and lost, he said.

The scheme occurred during a period when the district faced a $113 million deficit, had to give layoff notices to teachers, and summer programs were being reduced or slashed altogether, Gascon added.

"We had people that were in positions of trust that were taking money, who were diverting this money for personal use," Gascon said. "This is one of the worst kinds of corruption."

About $4.7 million of the grant money has been recovered. The nonprofits charged about $1.2 million in administrative fees during that period, Gascon said.

"We are mortified at the thought that trusted employees would conceive of such a scheme to divert funds from the children for whom they are intended," said Carranza, who participated in the district's probe in 2010 while he was a deputy superintendent.

Those facing charges include former associate superintendent Trish Bascom; former senior executive directors Linda Sue Lovelace and Meyla Ruwin; former principal administrative analyst Lilian Capuli; former assistant principal Mychel Navales and Betty Wong, a typist.

The suspects were expected to turn themselves in by Wednesday and could be arraigned as early as Thursday, prosecutors said. The investigation is ongoing.

Gascon said Bascom was the ringleader of the scheme as she had primary control over money distributed to the nonprofits hired to provide services for the district. At times, the nonprofit would write checks to individuals who allegedly would put them into their personal banking accounts.

"They would request funding for certain things and the checks would be made out to them personally," Gascon said. "They had complete control."

Bascom's lawyer, Stuart Hanlon, said his client was head of the district's Student Support Services and was instrumental in aiding gay and lesbian youth and afterschool programs for impoverished youth.

"What they are alleging is that she created a slush fund. She didn't. I don't know what they are alleging," Hanlon said. "The Trish Bascom I know is an honest, hard-working woman who has devoted her life to the children of San Francisco.

"I don't know if any of these women are guilty," Hanlon continued. "You are presumed innocent until proven guilty. You don't convict people through the press. We'll see what the evidence shows."

Efforts to reach suspects and other attorneys were not immediately successful.

One of the nonprofits, the San Francisco School Alliance, took in between $5.5 and $6.3 million and charged a half-million dollars in administrative fees, Gascon said. The nonprofit even ventured $250,000 in the stock market and lost, he added.

A call to Terry Bergeson, executive director of the alliance, was not immediately returned.

While the other two nonprofits involved have returned more than $4 million, San Francisco School Alliance has not returned any money yet, Gascon said.

"If someone came and gave you $4-5 million in your account, and they will tell you when to use it and for you to take an administrative fee without a clear definition of what that money is being used for, that should raise some concerns," Gascon said. "We're definitely concerned about that."