March 10, 2009 at 1:00 am

DPS settles suit with ex-superintendent

Terms of resolution not revealed; Coleman says firing was for launching probe of district finances.

Coleman )

DETROIT -- Detroit Public Schools on Monday settled a lawsuit with former superintendent William Coleman III.

Coleman, who was seeking at least $25,000 in a lawsuit filed May 2007, claimed the Detroit Board of Education fired him that March because he launched an internal investigation into financial irregularities in the district.

"William Coleman has been rightfully restored as a man of character and integrity who cares deeply about public education," said his attorney Bertram Marks. He said he could not discuss terms of the settlement.

Coleman alleged in the lawsuit that he had asked then-Chief Financial Officer Dori Freelain to explain why she made $12.1 million in wire transfers to Long Insurance over 20 months from 2005 to 2007 without evidence of purchase orders, contracts or scope of services. Coleman has said his ouster came after he placed Freelain and another employee on paid administrative leave, pending the outcome of an investigation into the Office of Risk Management, which Freelain oversaw.

Freelain's attorney could not be reached Monday, but she has previously denied wrongdoing.

The district last year sued to recover some of what it said amounted to $46 million in alleged inappropriate wire transfers from the risk management office.

The FBI is investigating the risk management department, said Connie Calloway, Coleman's successor, who is on administrative leave while she contests her termination in December.

Robert Bobb, the district's emergency financial manager who started on the job last week, said he worked to resolve the lawsuit quickly and move the district forward.

"The resolution of this matter will enable us to continue to work with great speed to determine the full extent of the school district's deficit, and to avoid the uncertainty of a trial and a continuing legal expense already totaling hundreds of thousands of dollars."

Bobb said an independent panel of lawyers representing both sides evaluated the case.

The settlement was lower than the panel's recommendation, he said.

"I speak for William Coleman when I say that we are happy that he was vindicated in Dallas, Texas, and we're certainly happy a resolution was reached in the civil matter in Detroit," Marks said.

A Dallas grand jury accused Coleman of accepting bribes when he worked there in exchange for steering technology contracts to a Houston businessman.

The charges, which included conspiracy, money laundering, bribery and obstructing justice, later were dropped.

Last year, Coleman was sentenced to a year of probation and fined $5,000 after pleading guilty to attempting to influence a grand jury, a misdemeanor, during the federal schools corruption case.

You can reach Jennifer Mrozowski at (313) 222-2269 or jmrozowski@detnews.com">jmrozowski@detnews.com.