Feds look at bank records in EAA, DPS corruption probe
The FBI and Justice Department subpoenaed personnel files and bank records or email account information for more than a dozen current and former officials at Gov. Rick Snyder’s K-12 Detroit reform district as part of a wide-ranging corruption investigation, The Detroit News has learned.
Those former officials include ex-Chancellor John Covington, chief of staff Tyrone Winfrey and former Mumford High School Principal Kenyetta “K.C.” Wilbourn, according to federal grand jury subpoenas obtained by The News late Tuesday.
Federal agents also were interested in contracts with vendors who supplied education materials, student-to-student conflict resolution coaching and sporting goods, according to documents obtained through the Freedom of Information Act.
The subpoenas offer new insight into an ongoing investigation into whether officials at the Education Achievement Authority and Detroit Public Schools received bribes or kickbacks from contractors.
“We commend the EAA staff who found and reported these issues to the authorities,” reform school district spokesman Robert Guttersohn said. “The EAA has and will continue to work closely with the FBI. Any misuse of funds is intolerable.”
Last year, the Justice Department issued subpoenas to the EAA for personnel files and bank account information for seven officials, including Wilbourn.
The details emerged one week after The News first reported that Wilbourn was an FBI target and that agents were investigating multiple officials from the Snyder-created Education Achievement Authority and Detroit Public Schools.
Wilbourn, 40, of Harper Woods, meanwhile, 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.
Wilbourn, who made $140,000 per year, resigned on Nov. 19 in a three-sentence email sent to Covington’s replacement, Chancellor Veronica Conforme, that included one last request.
“Please be so kind as to assist me with pay out of the 46 days I have accrued,” Wilbourn wrote to Conforme at 5:10 p.m. that evening. “My apologies and best in your endeavors.”
On Nov. 25, Conforme sent then-EAA General Counsel Michelle Crockett a memo detailing “several” conversations she had with Wilbourn as she was preparing to leave the EAA.
Wilbourn confided that she did things that “may appear to be illegal,” Conforme said.
“She would ghost write for vendors and help them respond to RFPs and she said she reported these things to DPS conflicts of interest,” Conforme wrote. “She said she would also take a cut or have vendors over bill and three people for the price of one — she mentioned Esperanza on this issue.”
The FBI inquiry of contracts also focused on the services of Esperanza Detroit, a firm that provides “student advocates” to engage in conflict resolution within EAA schools, records show.
The EAA’s attorney provided an FBI agent with a list of payments to Esperanza Detroit in the 2012-13 and 2013-14 school years totaling $561,452 and $837,354, respectively.
Conforme said Wilbourn also told her that she “got a vendor to hire her uncle and then would take his money to send to his uncle’s daughter,” according to the letter, which was to be sent to law enforcement officials.
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.
Records show that the EAA’s top attorney was in close contact with the FBI in the weeks leading up to raid on Wilbourn’s home and her abrupt resignation.
On Oct. 3, 2014, Crockett told an FBI Special Agent Brenda Jeanetta in an email that Wilbourn was contracting with vendors “without the knowledge of central office staff.”
“It appears that she is contracting with these individuals on her own and is having them sign an old Master Service Agreement from last school year,” Crockett wrote the FBI agent.
Crockett said Wilbourn told her she was “unaware that vendors needed to go through a different process to be approved to work within the district.”
Snyder created the district in 2011 in an attempt to turn around low academic achievement in 15 former Detroit public schools. He addressed the on-going FBI probe Monday while rolling out a new proposal for overhauling Detroit’s fractured public school system.
“I think it’s fair to say it complicates it,” Snyder said of the corruption probe.
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.
In June 2014, the EAA was served with a subpoena and ordered to surrender personnel files and bank account information for seven people:
■Gregory King, principal of the EAA’s Pershing High School.
■Ex-Denby High School Principal Tracie McKissic.
■Antoinette Pearson, principal of the EAA’s Mary McLeod Bethune Elementary/Middle School and a former DPS principal.
■Steven McGhee, former principal of the EAA’s Central Collegiate Academy.
■Georita Bates, business manager at Mumford High School.
Bates is referenced in an email in May 2014 between Crockett and FBI Special Agent Douglas R. Wood Jr.
Crockett told the FBI agent that Bates was “transferred to another position” after she and the EAA’s chief financial officer Harry Pianko discovered Bates “had signed off on a contract with ... (a vendor) for goods services totaling over $500,000.”
The EAA board had given then-Chancellor Covington permission to enter into contracts of up to $250,000 without board approval.
“Because no one other (than) Covington can sign contracts, and this agreement was clearly outside of his signature authority … we pulled the agreement and notified K.C. (Wilbourn) of the issue,” Crockett wrote in a May 9, 2014, email to the FBI agent.
Covington approved of transferring Bates into another position at the EAA and Wilbourn “became her own business manager,” Crockett said.
Covington said he learned about the investigation last week after The News reported about Wilbourn being targeted by FBI agents.
“I haven’t done anything wrong. That’s not a feeling, that’s a fact,” Covington told The News. “I have not been subpoenaed, I have not been questioned by anybody about this.”
Winfrey did not return a message seeking comment Tuesday.