The FBI has launched a corruption investigation involving Gov. Rick Snyder’s K-12 reform district and Detroit Public Schools, the latest blemish for districts struggling with low test scores, falling enrollment and funding shortfalls.
FBI agents are investigating multiple officials from DPS and the Snyder-created Education Achievement Authority to determine if contracts were awarded to vendors who paid kickbacks, sources told The Detroit News.
According to a document obtained through the Freedom of Information Act, one target of the investigation is Kenyetta “K.C.” Wilbourn, ex-principal of the authority’s Mumford High School.
The investigation indicates federal agents are mining a new vein of alleged corruption in a city that has endured multiple federal prosecutions of former Detroit city officials, including ex-Mayor Kwame Kilpatrick, pension trustees and public school officials, in recent years.
Wilbourn, 40, of Harper Woods was seen as a rising star, a 4-foot-11-inch turnaround specialist at Denby High School with a “GUCCI1” personalized license plate and a 2007 Maserati. She abruptly resigned last fall after FBI agents searched her home.
“I thought she was going to be the next person to run EAA. She was that sharp,” said former DPS and EAA contractor Andrew Rio, who consulted on athletic projects. He is not involved in the investigation.“It breaks my heart, but money makes people funny.”
The corruption investigation surfaced one day after The News reported that former DPS official Barbara Byrd-Bennett, who pleaded guilty to defrauding the Chicago school system, is facing scrutiny over her tenure in Detroit.
Federal authorities alleged that as CEO of the Chicago Public Schools, Byrd-Bennett steered $23 million in no-bid contracts to two education firms in return for $2.3 million in bribes and kickbacks.
No one has been charged with a crime during the ongoing investigation involving Wilbourn.
Her defense lawyer declined comment Wednesday. So did the FBI and U.S. Attorney’s Office.
DPS spokeswoman Michelle Zdrodowski said Wednesday: “The district is not privy to the details of FBI investigations.”
“Moreover, to the extent that we are knowledgeable about investigations, we take seriously our obligation to maintain confidentiality so as to not interfere or in any way compromise those involved,” Zdrodowski said.
Wilbourn is a former Detroit teacher and administrator who was named principal of Mumford High School in April 2013. Mumford is part of the governor’s school reform district.
Snyder created the district in 2011 in an attempt to turn around low academic achievement in 15 former Detroit public schools.
“This investigation resulted from evidence of discrepancies and potential misconduct discovered internally at the EAA and immediately referred to state and federal law enforcement officials,” EAA spokesman Robert Guttersohn said.
The potential misconduct was discovered approximately 18 months ago, he added.
In summer 2014, after Chancellor Veronica Conforme was hired to replace John Covington, she instituted new financial controls, the spokesman said.
“She put in strict controls over credit cards and over any public dollars being spent by EAA employees,” he said.
She also launched a review of all EAA contracts, Guttersohn said.
The governor’s office was made aware of “irregularities” in the EAA’s financial records during a state-initiated effort to review the reform school district’s internal controls in 2014, spokeswoman Sara Wurfel said.
“They were immediately reported to both state and federal authorities,” Wurfel said of the financial irregularities. “And that is where we’re at at this point.”
Wurfel said she could not comment further because of the ongoing investigation.
Since the EAA took over operation of 15 low-performing Detroit schools in 2012, the EAA has been under heavy scrutiny by education groups and Democratic politicians in the Legislature who have worked to scuttle plans to expand its reach beyond Detroit.
Much of that criticism has centered around Covington’s management. He left the district in June 2014 with a $74,000 severance deal.
Covington’s departure came about one month after The News reported he and his staff racked up $178,000 in hotel bills and airfare traveling to 36 cities from April 2012 to February to promote the EAA and attend education training conferences.
Like other public schools in Detroit, the EAA has been hampered by declining enrollment and rapid turnover in the teaching and administration ranks. The News reported in March that the EAA has among the highest administration expenses of any large school system in the state.
The revelation of an active FBI investigation of Wilbourn comes as no surprise to one of the EAA’s fiercest critics who has long contended the reform district lacked the oversight traditional school districts have to adhere to.
“The EAA has been ripe terrain for a variety of schemes in which, in the name of helping the most vulnerable children, people have actually advanced their own agenda,” said Tom Pedroni, associate professor of curriculum studies at Wayne State University.
Rumors have swirled since Wilbourn’s abrupt departure in fall 2014.
“She was such a good educator,” said Rio, the former schools contractor.
The amount of money involved in contracts being scrutinized by FBI agents is unclear. But according to an FBI letter obtained by The News, agents have seized cash from a company headed by a longtime contractor for both Detroit schools and EAA.
That contractor is Franklin resident Norman Shy, 73, who is listed in state business records as resident agent of the educational sales company World Wide Sales. According to business filings, he also owns Allstate Sales, which contracts with Detroit schools and EAA.
The firms provided a range of services, including books, paper, equipment and classroom supplies.
The companies have been paid more than $1 million since 2011 for contracts with both school districts, according to public records.
On Nov. 19, FBI agents seized $2,301 from the Comerica Bank account of Allstate Sales, according to an FBI letter sent to the EAA in April.
The News obtained the letter through the Freedom of Information Act.
The letter revealed that FBI agents were investigating Wilbourn and a company called For-Most Educational Consultant and Training Group LLC.
The company is registered to Wilbourn’s home and she is listed on state records as the firm’s resident agent. The firm was created in July 2009 but has not filed an annual report with the state in two years.
It is unclear why the FBI seized money from Allstate Sales while investigating Wilbourn.
“I’m afraid you’ll have to talk to the FBI about that,” Shy told The News. “I had nothing to do with her company. It was with the EAA.”
The FBI sent the letter to let EAA officials know that the reform school district was a possible victim and that the money was tied to unspecified illegal activity. In the letter, the FBI said the governor’s reform school district possibly could recoup money seized from the bank.
The investigation is the latest in a wave of public corruption cases in Detroit City Hall and public schools probed by the FBI and the Justice Department. Prosecutions by the U.S. Attorney’s Office in Detroit has resulted in 38 convictions against public officials, including Kilpatrick and Monica Conyers, the former Detroit City Council president and wife of Congressman John Conyers.
News of the ongoing schools investigation did not surprise Rio, the former Detroit schools and EAA contractor. He said he has heard about federal investigators questioning the use of public school money by multiple administrators, including Wilbourn.
“I know there was some funding for programs that was not — let’s just say — kosher,” Rio said. “A lot of people should be held accountable for funds that should go to kids and don’t.”