Alleged fraud in Seattle Public Schools could mean staff changes, criminal charges

Feb 23, 2011

The Seattle School Board could soon decide whether some district employees should lose their jobs over alleged fraud within the school system. This week, the board expects to receive the results of an investigation into $1.8 million dollars in contracts for services that might have never been completed, or even started. 

The school board has known about the potential fraud for several months, but president Steve Sundquist says how it happened is just coming to light. The board launched an investigation to figure out who to hold accountable after an audit exposed payment "irregularities." Here's a breakdown from the "Results In Brief" in the state auditor's report:

  • The District paid $1,519,965.34 for services with a questionable public purpose.
  • The District paid $280,005.25 for services it did not receive and for services that benefitted a private company.

Sundquist calls the findings "unacceptable":

“An event like this hits people hard because they recognize that obviously there were failures inside Seattle Public Schools, both in management and perhaps in management oversight of this that enabled that.”

The report hammers Silas Potter, the manager of a now-defunct program that helped minority and women-owned businesses win contracts with the school district. In its first four years, Potter helped to award $62 million in contracts through the program, according to a Puget Sound Business Journal story by Clay Holtzman.

The state auditor found that last year, $35,000 of the district's money was deposited into the private bank account of a business Potter set up. The report also cites Fred Stephens, former executive director of facilities, for a lack of oversight. Sundquist says the school board will look at whether other staff also contributed.

“Were there red flags that could have or should have been seen, and what now as a board should we do about that? Should we consider people changes, management changes, etc? And all of that from top to bottom is on the table at this point in time.”

That means superintendent Maria Goodloe-Johnson could be on the hook. In a statement, she said she was "angry" about the audit's findings and is cooperating fully with the investigation. The school board will discuss the results in a closed session on Tuesday and take public comments the following day.

The school board also asked the King County Prosecutor to launch a criminal investigation into the alleged fraud. Sundquist says it is "far from being done."