Leader of DPS kickback scheme pleads guilty

Jennifer Chambers
The Detroit News

Norman Shy, the alleged mastermind behind a $2.7 million bribery and kickback scheme at Detroit Public Schools, was asked Wednesday in federal court to implicate more than a dozen former and current school leaders.

U.S. District Judge Victoria Roberts asked Shy if the conspiracy extended to 13 former and current DPS principals whom Roberts identified by name, all of whom have been charged in the case.

The 74-year-old school vendor from Franklin said “yes” to all 13 names.

“I paid school officials monies and other things of value for their assistance,” Shy told the judge.

When asked by prosecutors if there were other DPS officials outside the 13 whom he conspired with, Shy said: “There may have been others. I don’t recall.”

Shy then pleaded guilty to two felony charges: conspiracy to commit federal program bribery, a five-year felony, and income tax invasion, also a five-year felony.

Shy will likely face between five and seven years in prison when sentenced Sept. 6. Sentencing guidelines call for Shy to serve from 70 to 87 months in prison.

The Mumford High School graduate was also ordered to pay $2,768,846.23 in restitution.

Shy, owner and operator of Allstate Sales, which sold school supplies to DPS, admitted he conspired with schools officials who, prosecutors say, submitted fraudulent invoices for school supplies. He did not deliver all the items he billed DPS for.

FBI investigators say Shy hatched the scheme, which ran from 2002 through January 2015, by offering cash, checks and gift cards to DPS officials in exchange for billing the district for $5 million in business with his company.

The scheme deprived DPS students of more than $2.7 million in resources, officials said. In return for the business, Shy allegedly paid bribes and gave kickbacks totaling $908,518.

Federal prosecutors also say Shy failed to report $51,667 in income on his 2011 tax return in connection with the scheme.

The feds are asking Roberts to seize Shy’s real estate and other property under forfeiture laws as part of the prosecution.

Meanwhile, former DPS principals Ronnie Sims and Gerlma Johnson appeared Wednesday morning in U.S. District Court to plead guilty to their roles in the scheme.

Sims, a former principal at Fleming Elementary and Brenda Scott Middle schools from 2005-12, is accused of accepting 24 payments from Shy totaling $58,519.23.

Sims had Shy pay most of the bribes and kickbacks to a shell company he created called Educational Consultants USA, prosecutors said.

Sims, who had a 23-year career with DPS, faces between 30 and 37 months in prison when sentenced Sept. 7.

Johnson, a former principal at Charles Drew Academy and Earhart Elementary-Middle School from 2009-15, took $22,884 from Shy, mostly in gift cards, according to the complaint.

Johnson, who worked for DPS for 29 years, cried during the hearing while six supporters sat behind her.

She initially told Roberts she accepted only $10,000 in gift cards from Shy, saying the remaining money was spent on the school.

Roberts said she did not ask Johnson how she spent the money and asked her again if she took more than $22,000 from the vendor. Johnson said yes.

“You weren’t supposed to do that, right? It wasn’t the right way to get money for your school,” Roberts said.

Prosecutors said Johnson spent some of the money on jewelry, clothes and perfume.

Johnson faces between 24 and 30 months in prison when sentenced Sept. 8.

Several other former and current DPS principals have already pleaded guilty to their roles in the scheme, including Clara Flowers, a former assistant superintendent of DPS’ Office of Specialized Student Services and former principal of Henderson Academy.