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Ex-DPS principal says she used stolen money on students

Jennifer Chambers
The Detroit News

An ex-principal who stole money from Detroit Public Schools has filed a document in federal court alleging some funds were used on students.

Clara Smith, who oversaw Thirkell Elementary School, will be sentenced Sept. 14 for her role in a $2.7 million scheme with school supplies vendor Norman Shy.

On Tuesday, Smith’s attorney, Patrick M. Cleary, filed 17 pages of copied receipts from trips to amusement parks and a zoo, stays at hotels, restaurants and retailers that total nearly $37,000 and show “disbursements for the benefit of the children,” according to a letter by Cleary.

Smith admitted to U.S. District Judge Victoria Roberts in April she took $194,000 in bribes and kickbacks from Shy from 2010-14.

Prosecutors told Smith her claims money was spent on students are false and irrelevant.

Last month, they filed a sentencing memo in the case saying financial records obtained by the U.S. Attorney’s Office in Detroit prove Smith used illegal money to make purchases at Art Van Furniture, El-Mar Furs, Delta Air Lines, Royal Caribbean Cruises, restaurants, Caesar’s Hotel and Casino in Las Vegas and personal expenditures.

In addition, prosecutors said Smith disguised the nature of the kickback payments by having Shy issue personal checks to her husband and daughter and to businesses or stores to pay for personal items she had bought, prosecutors said. Smith also asked Shy to write checks to credit card companies to pay her credit card bills, which Shy did, prosecutors said.

“Even if Smith was accepting fraudulent kickbacks and using the illegal proceeds to help her school, her alleged charity was only made possible by fraud committed against taxpayers and the Detroit Public School System,” Assistant U.S. Attorney J. Michael Buckley wrote.

“Smith’s attempt to downplay the seriousness of her corrupt acts by claiming she accepted and spent kickbacks on her students ignores the fact that her so-called charitable acts were being directly funded by the crime for which she now stands convicted.”

Because Smith helped prosecutors in their investigation, the government is asking for lighter sentencing, recommending 37-46 months.

When Smith pleaded guilty to conspiracy to commit federal program bribery, a five-year felony with fines of up to $250,000, prosecutors had said she faced 46-57 months in prison under her plea deal.

Federal prosecutors allege the scheme, which started in 2002 and ran through January 2015, was hatched by Shy, 74, of Franklin, who billed DPS for $5 million in school supplies but delivered less than promised.

In return for the business, Shy allegedly paid bribes and gave kickbacks to 12 former and current DPS principals and one assistant superintendent in the form of cash and gift cards totaling $908,518.

Shy allegedly kept a ledger to record how much he owed Smith and other defendants. Smith kept a ledger to show how much money Shy owed her in kickback payments.

In May, Shy pleaded guilty to one count of conspiracy to commit federal program bribery and one count of federal income tax evasion. Shy owes DPS nearly $2.8 million in restitution.

The FBI has been investigating DPS for the past 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.

Smith retired from the district April 1.

jchambers@detroitnews.com