Judge: More in DPS could be involved in scheme

Jennifer Chambers, The Detroit News

Detroit — While sentencing school vendor Norman Shy for stealing $2.7 million from Detroit students, a federal judge revealed another 22 former and current Detroit Public Schools principals could be involved in a separate but similar scheme.

U.S. District Judge Victoria Roberts made the disclosure Tuesday just moments before she sentenced Shy, 74, to five years in prison for stealing federal funds from the district in a wide-ranging kickback and bribery scheme he masterminded with 13 Detroit Public School officials.

Roberts obtained information on the alleged new scheme from Shy’s presentence report written by the court’s probation department, her staff confirmed on Tuesday. The document is not public.

Former Detroit Public Schools vendor Norman Shy, center, walks into the federal courthouse for sentencing Tuesday morning in Detroit.

 

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 the DPS’ lowest-performing schools.

Gina Balaya, a spokeswoman for the U.S. Attorney’s Office, said Tuesday that she cannot comment on any specific case or confirm an investigation.

“I can tell you that our office will continue to investigate and bring charges that are supported by evidence,” Balaya said.

DPS spokeswoman Chrystal Wilson said the district does not comment on any ongoing investigations. FBI officials were not immediately available for comment on the judge’s statement.

During sentencing, Roberts told Shy that all people are in positions where they must resist temptation and it’s important to send a message to others about the crime Shy committed and its impact to students at Detroit schools.

“Many vendors now stand in the shoes of Norman Shy. They, too, may be tempted to enrich themselves at the expense of our children,” Roberts said. “This sentence is not just for Norman Shy. It is for the community he was called upon to serve.”

The sentence was below what prosecutors asked for — which was 70 to 87 months — and more than what Shy asked for: 30 to 36 months.

Also on Tuesday, Shy’s co-conspirator, Clara Flowers, an ex-DPS principal and assistant superintendent, was sentenced to three years in prison for her role in the scheme, well under the 46 to 57 months prosecutors had sought for her role in the case.

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 $2,768,846.93 in restitution.

Federal prosecutors allege the scheme, which started in 2002 and ran through January 2015, was hatched by Shy, 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 defendants in the case.

Assistant U.S. Attorney J. Michael Buckley told Roberts that Shy is a “killer of dreams” and a “thief of hope” for robbing DPS students of the chance to develop to their full potential in an already cash-strapped district.

Shy spoke briefly at sentencing, telling Roberts he feels terrible for what he did and he knows he has caused his family and the community embarrassment.

“I made a horrible mistake for getting involved in this conspiracy ... I tried to do the right thing by paying” back taxes to the IRS, said Shy, adding: “I am very sorry, your honor.”

Shy’s attorney, Christopher Andreoff, told Roberts that what Shy did was wrong and he was ashamed.

But then Andreoff blamed Shy’s co-conspirators in the case, DPS principals and an assistant superintendent, saying the fraud would not have occurred if they had not breached their duty as school officials.

“He may be a killer of dreams but there are others, too,” Andreoff said. “They had a fiduciary duty to say no.”

As part of the case, Shy has forfeited several homes and bank accounts. Prosecutors said they expect to collect $1.6 million in restitution from Shy.

Flowers, 61, was sentenced by Roberts after Shy. She pleaded guilty to charges of conspiracy to commit federal program bribery and income tax evasion.

Former DPS principal Clara Flowers, center, walks into the federal court building in Detroit on Tuesday ahead of her sentencing.

Flowers, a former assistant superintendent of DPS’ Office of Specialized Student Services and former principal of Henderson Academy, accepted $324,785 in kickback money from Shy in the scheme.

Prosecutors said Shy paid Flowers, who had the duty of selecting vendors and ordering school supplies, using different methods, including gift cards and writing checks to contractors who put a new roof on her home as well as gutter work.

Flowers spoke in court before she was sentenced, thanking friends for their support.

“I worked for DPS for 38 years, and I enjoyed every moment of it. I want to apologize to the schools, staff and parents for my involvement,” Flowers said.

Prosecutors said in Flowers’ case, her crime was more egregious because she worked for special education students at DPS.

“This conduct cannot be tolerated,” Assistant U.S. Attorney Frances Carlson said.

Flowers was the first of 10 DPS officials Roberts would be sentencing this month in the case connected to Shy. Roberts said Flowers’ conspiracy was the greatest individual loss to the district and lasted the longest compared to her DPS co-defendants.

Roberts said attempts by Flowers to say she spent the stolen money on DPS students was an insult to district leaders who spend money out of their own pockets to help students.

“Business as usual is over at DPS and loss of freedom may be the price paid by principals,” Roberts said.

The FBI did issue a statement after both sentencings.

“The FBI will not stand by idly when those in the field of education violate the public’s trust for their own personal gain. The misapplication of already scarce public funds is not only illegal, but an insult to those dedicated educators working every day to make a better future for our children” said David P. Gelios, special agent in charge of the FBI Detroit Division.

Sentencings for other former DPS principals continue on Wednesday and Thursday in the case.

JChambers@detroitnews.com