Detroit Public Schools’ new emergency manager announced sweeping policy changes Tuesday to combat fraud in the wake of felony bribery charges against 13 current and former DPS employees and one vendor.
Fourteen people — including 12 current and former principals — were charged Tuesday in a nearly $1 million bribery and kickback scheme.
Emergency Manager Steven Rhodes, installed by the state March 1 to run DPS, placed current staffers on unpaid leave and suspended business with the vendor charged in the case. He also suspended all purchases by individual schools until further notice.
Rhodes said the alleged actions of the individuals charged are reprehensible and represent a breach of the public trust that has deprived DPS students of more than $2.7 million in resources.
“I cannot overstate the outrage that I feel about the conduct that these DPS employees engaged in that led to these charges,” said Rhodes, a retired federal judge who oversaw Detroit’s bankruptcy. “And I am sure that this sense of outrage is shared by the other dedicated and committed DPS employees, as well as DPS parents and everyone who is interested in the future success of DPS.”
The FBI has been investigating DPS for the last two years, after a tip from state auditors led them to an unrelated corruption case at the Education Achievement Authority, the state-created reform district that includes DPS’ lowest-performing schools.
U.S. Attorney Barbara McQuade said the result of the DPS investigation is charges against five former principals, seven current principals, an assistant superintendent and one vendor.
Under the scheme which started in 2002 and ran through January 2015, prosecutors say, current and former principals took bribes and kickback money from school vendor Norman Shy, who owned Allstate Sales, a supplier of school supplies such as chairs, raised-line paper and teaching materials.
Prosecutors allege Shy, 74, of Franklin devised and engaged in a scheme to illegally obtain money from the district by agreeing to pay 13 principals $908,518 in kickbacks.
They say Clara Flowers, 67, of Southfield, current assistant superintendent and former principal of Henderson Academy, had the duty of selecting vendors and ordering school supplies. Authorities say she conspired with Shy to submit fraudulent invoices for payment to Shy for goods that were never delivered.
Shy and his company received about $5 million in payments from DPS; of that, $2.7 million were fraudulent, McQuade said.
After her office investigated the EAA and a federal grand jury indicted three people there on criminal charges, McQuade said they next learned about Shy.
The principals charged in the case were not working with each other, McQuade said, and did not know others were participating in the fraud. She said the decision to file charges in the case has nothing to do with “DPS or the emergency manager.”
“It’s about these 14 people who breached the public trust. The real victims are students and families who attend Detroit Public Schools. ... This case is a real punch in the gut for those who do the right thing,” McQuade said.
DPS school board Vice President Ida Short, who attended McQuade’s press conference, said a lack of oversight in the district allowed such conspiracies to happen. Before the state took over the district, school board members were required to approve contracts, Short said.
“We have a czar over the district. ... We would ordinarily not have principals approving this level of contract. It’s too much money. It’s too easy for people to get greedy, as you see,” Short said. “We want to have the rights of every district in the state — to have an elected school board.”
One of the seven current principals charged, Ronald Alexander, 60, of Detroit, principal of Spain Elementary, accepted a $500,000 donation from the “Ellen DeGeneres Show” in February for technology updates, campus renovations and additional staff funding.
Also charged in the case are:
■Tanya Bowman, 48, of Novi, former principal of Osborn Collegiate Academy.
■Nina Graves-Hicks, 52, of Detroit, former principal of Davis Aerospace Tech High.
■Josette Buendia, 50, of Garden City, principal of Bennett Elementary.
■James Hearn, 50, of West Bloomfield Township, principal of Marcus Garvey Academy.
■Beverly Campbell, 66, of Southfield, former principal at Rosa Parks School and Greenfield Union Elementary-Middle School.
■Gerlma Johnson, 56, of Detroit, former principal at Drew Academy and Earhart Elementary-Middle School.
■Stanley Johnson, 62, of Southfield, principal of Hutchinson Elementary.
■Tia’Von Moore-Patton, 46, of Farmington Hills, principal at Jerry L. White Center High School.
■Willye Pearsall, 65, of Warren, former principal at Thurgood Marshall Elementary School.
■Ronnie Sims, 55, of Albion, former principal of Fleming Elementary and Brenda Scott Middle School.
■Clara Smith, 67, Southfield, principal at Thirkell Elementary.
Each of the 14 defendants faces up to five years in prison and fines of up to $250,000 on charges of conspiracy to commit federal program bribery. Shy and Flowers face up to five years in prison and fines of up to $100,000 on the tax evasion charges.
Rhodes said additional changes to be made in light of the charges include requiring central office approval for all school-based purchases, and suspending principals and assistant principals’ ability to sign off on or execute any vendor agreements and contracts without central office approval.
He is requiring two signatures on school-based invoices before they are paid; reviewing purchases made by employees identified by the U.S. Attorney; reviewing school-based vendor contracts to determine if they need to be terminated and rebid; and recruiting an independent auditor to review procurement processes to ensure they comply with state and federal regulations.
The defendants are expected to turn themselves in for a court hearing in U.S. District Court, McQuade. No dates have been set.
Staff Writer Candice Williams contributed.