Corruption schemes ran deep at DPS

One by one, they confessed their crimes: six Detroit principals admitted cheating their students for money and gift cards — kickbacks from a vendor who wanted favors.

One principal said "I fell from the grace of God." Another said she spent the kickbacks on her students. A third man said, "I just got caught up in it."

While their demeanor and explanations varied, one common theme emerged in U.S. District Court this past week as the six Detroit Public School educators pleaded guilty to their roles in a $2.7-million kickback scheme: Corruption was a way of life at DPS for years, where businessmen offered bribes in exchange for favors, and school officials quietly obliged.

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In Lansing, lawmakers are trying to hammer out a deal to help the district pay off its $515-million debt, while teachers in Detroit are staging sickouts and protests, fearful that legislators aren't doing enough and actually want the district to dissolve. Then there's the emergency manager issue. Many at DPS blame the financial mess on state-appointed emergency managers — claiming there was a surplus before they came along — and argue a lot of the corruption occurred on their watch.The confessions came at perhaps the worst time for DPS: While principals were pleading guilty to corruption in court, DPS officials were pleading for money in Lansing amid a financial crisis that has fueled teacher outrage and public controversy over how and whether to help the city's troubled school district of about 45,000 students.

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U.S Attorney Barbara McQuade, who is prosecuting the cases, has stressed that the charges have nothing to do with DPS's existing financial troubles.

"This case is not about DPS,” McQuade said. “It is not about emergency managers. It is about these 14 individuals who breached their trust."

Tempers are flaring. Patience is wearing thin. And the school corruption case isn't helping, especially when the accused are admitting to things like helping a vendor bill for materials that were meant for special education kids, but never got delivered. That's what former Assistant Superintendent Clara Flowers pleaded guilty to on May 3. She faces up to six years in prison, plus a nearly $325,000 restitution order.

"I cannot overstate the outrage that I feel about the conduct that these DPS employees engaged in that led to the charges," DPS emergency manager Steven Rhodes said after federal prosecutors announced charges against 12 principals, an assistant superintendent and a longtime DPS vendor in March. "We want do whatever is necessary to prevent this from happening again."

This week, four more defendants are scheduled to enter guilty pleas in the case, including the man at the center of it all: Norman Shy, 74, of Franklin, a longtime DPS vendor who for years lived in a $2.4-million mansion in Farmington Hills while he was submitting fraudulent invoices to DPS for materials such as paper, chairs and supplemental teaching materials. He is accused of paying nearly $1 million in kickbacks to the principals who helped him cheat DPS. Here's how it worked:

The principals approved his inflated invoices. When Shy got paid, he kicked money and gift cards back to them. The kickbacks ranged from $4,000 to nearly $325,000.

In the end, prosecutors say, Shy was the biggest benefactor of all, billing DPS $5 million over 13 years, of which $2.7 million was ill-gotten.

Along the way, the school officials benefited, too. Flowers, an ex-principal and assistant superintendent, got a new roof and gutters on her house, in addition to $300,000 in other kickbacks. ​Another principal received $84,170 in checks that were funneled to him through a sham company he created. A third principal received rewards of all sorts from Shy: Wal-Mart and Sam's Club gift cards, cash, payments to her friends and family and payments toward her credit card bills.

"We hope that cases like this will send a message that someone is watching and will deter anyone who thinks that they can get away with stealing funds from any school district," said McQuade, who would not comment on whether more charges are coming, saying only: "We owe it to the students of DPS to investigate leads to determine whether additional acts of misconduct have occurred and to hold any wrongdoers accountable."

Among the wrongdoers is Clara Smith, principal at Thirkell Elementary-Middle School, who in pleading guilty to bribery last week offered an argument that prosecutors say is common — but flawed — in school corruption cases: I spent the kickbacks on the kids.

"I received gift cards and things like that, but a lot of that was for my students," said Smith, who faces 46-57 months in prison for accepting $194,000 from Shy. She was the first of 14 defendants to plead guilty in the case and must pay $194,000 in restitution to DPS.

Smith tried to explain that she spent most of Shy's kickbacks on field trips to Chicago and Washington, D.C., decorating her school, buying clothes at the start of the school year for students, and Christmas presents for students. She also said that she hesitated at first to take part in Shy's scheme, but did so after some persuading from Shy.

"He was saying, 'Most of the principals are doing it. I've been a vendor for 50 years, and no one has ever gotten caught,' " Smith said.

The timing of the corruption charges was especially embarrassing for DPS because of Ronald Alexander, principal of Charles Spain Elementary-Middle School. He was charged with taking kickbacks one month after he appeared on national TV, cheering and smiling as talk show host Ellen DeGeneres announced a $500,000 mega giveaway for his school. Home improvement giant Lowe's, which donated the money, said it is not taking the gift back and remains committed to helping the school repair its roof and gym. Alexander’s plea hearing is scheduled for May 18.

' If you needed money, you could get money.' 

Historically, public corruption investigations in Detroit have involved City Hall, the mayor's office, pension funds, police and Section 8 housing agencies.

School corruption cases were less frequent, though more have appeared on the court docket  over the past decade. One legal expert's theory argues that most school corruption involves teachers or principals acting independently — not as a group — so there's no big conspiracy or organized crime operation to take down.

"This was more just low-level day-to-day corruption," former federal prosecutor and law professor Peter Henning said of DPS kickback schemes. "It wasn't organized enough."

But it was a way of life, say many insiders at DPS and supporters of the accused, who have argued that corruption wasn't always about greed, but desperation. When principals and teachers couldn't get what they needed from the district, they turned to businessmen who needed favors. Field trips got funded. School supplies got replenished. Leaky faucets got fixed.

But laws were broken along the way, prosecutors say. And many benefited while taxpayers blindly paid for it.

“It’s pitiful that they’re going after principals who are probably just doing what they need to do even if it might be a little bit unethical in order to provide the students in their schools with the supplies and materials that they need — that the district and the state should be providing us,” said Cathy Brackett, a teacher at Bennett Elementary after she learned her principal, Josette Buendia, was among the accused. “I think she’s in touch with what’s actually happening in the classroom … she’s hands-on and always putting students’ interests first."

Over the past decade, the U.S. Attorney's Office in Detroit has prosecuted at least 28 individuals — including the recent 14 — in Detroit school corruption cases that ended with many going to prison.

Gallery owner Sherry Washington, is serving a 7-year prison sentence for billing DPS $3.3 million for a sham wellness program. Stephen Hill, a onetime high-level DPS official got five years in prison for taking kickbacks from Washington. And Dominique Campbell, a DPS teacher, was sentenced to three years in prison for billing DPS more than $500,000 for books and educational materials that were never delivered. She ran the scam with her mother, Sandra Campbell, who was sentenced to 70 months in prison in 2014.

Henning, a Wayne State University law professor who has been in Detroit for 22 years, said he believes the Shy case could lead to more charges, though he's not sure how much the defendants have to offer the government given they were acting independently, and not as a group.

"The government may hope that they can get someone else, but I’m not sure that there’s really much of a chance ... my bet is that it's more of a hope than a real expectation," he said.

So far, of the 14 defendants charged, six have entered into cooperation agreements, offering to help in the prosecution of others in exchange for leniency at sentencing.

According to McQuade, what led authorities to Shy and the principals was an audit of the Education Achievement Authority, a state-created agency designed to help Detroit's lowest-performing schools.

That audit triggered a bigger fraud investigation and led authorities to the once-rising education star, Kenyetta Wilbourn-Snapp, a former EAA principal and turnaround specialist who tooled around town in a Maserati with a Gucci vanity plate. The car was a gift from a vendor.

Wilbourn-Snapp, a former principal at Denby and Mumford high schools, wound up at the center of a federal corruption probe that led to criminal charges against her and two others.

Wilbourn-Snapp pleaded guilty to bribery in February, admitting she pocketed a $58,050 bribe from a tutoring vendor and spent it on herself while working for the EAA. The vendor also pleaded guilty. So did an independent contractor who delivered the bribes to Wilbourn-Snapp at a bank, and kept some for herself.

After Wilbourn-Snapp, authorities zeroed in on Shy. Through Shy, they found the school principals as investigators discovered ledgers on which Shy kept track of all the kickbacks he owed them. Shy has remained silent. So have the principals, with the exception of statements made in court.

It was Wilbourn-Snapp, perhaps more than anyone else, who publicly disclosed what she described as a pervasive culture of corruption that went hidden in Detroit schools for years.

"If you needed money, you could get money," Wilbourn-Snapp, 40, told Free Press columnist Rochelle Riley in a series of exclusive interviews last fall.

“There's a network," Wilbourn-Snapp said. "It's so deep.”

Wilbourn-Snapp said she learned how to cheat from DPS educators, starting with the principal who gave her her first teaching job.

“She would give us gift cards and the best tickets to the Pistons, and we never knew where it came from," Wilbourn-Snapp said. " And anytime we wanted to buy something that the district denied, she said ‘Here, take a Visa.’ ”

Wilbourn-Snapp's admissions left former DPS emergency manager Robert Bobb shaking his head.

"That really confirms what I felt early on and what people in the community told me from Day One," Bobb said. " 'Look out for the friends and family plan.' "

 'Cleaning house' 

In the wake of the Shy kickback case, DPS emergency manager Rhodes has brought back an inspector general to combat fraud and misconduct. Rhodes, a retired federal judge who oversaw Detroit's historic bankruptcy trial, signed an order last month re-establishing the Office of the Inspector General, which was closed last year by his predecessor, Darnell Earley,

"It's important to understand that part of the process of a fresh start is cleaning house and taking responsibility for the actions that have led to the insolvency and the other challenges that (the district) has faced and fixing them," Rhodes told the Free Press. "This is part of the process. Everyone should understand that as long as I'm there, nothing will be concealed or swept under the rug."

Rhodes' April 22 order, which is posted on the district's website, says all employees, staff, contractors, vendors, agents and representatives of DPS have to immediately report any suspected misdoings to the inspector general. They also have to provide the office with testimony and documents upon request.

The effort has already yielded some results: the discovery of a district employee being improperly paid at least $45,000 by falsely claiming overtime.

Since its creation in 2009 by Bobb, the Office of the Inspector General has focused largely on theft cases, but has also investigated ethics violations, employee misconduct, vendor fraud, waste and criminal activity. The office cracked computer theft rings and led an effort to install tracking devices on computers.

When the office was shut down to save money, critics cried foul and demanded its return.

The Shy kickback scheme made that happen.

As for the principals who did business with Shy, Rhodes says six were suspended, and the others had already left the district. All business has been suspended with Shy.

So far, Shy has remained silent about the school corruption case. Days after being charged, a Free Press reporter knocked on the door of his Franklin home. He answered the door with a Chihuahua under his right arm, but he said the FBI and his lawyers told him not to discuss the case.

Shy's attorney, Christopher Andreoff, has said his client feels bad about what transpired, accepts responsibility for his actions and is trying to resolve "any indebtedness to DPS." He mentioned restitution, but didn't elaborate.

"He’s an older man; he’s 74 years old. He has some major health considerations," Andreoff said. "This will be a horrible financial setback for him and his family."

So far, none of the accused principals has commented on Shy. With the exception of Smith, none of those who pleaded guilty has said why they did what they did, only that they did it.

None has apologized.

The defendants' status

S o far, out of the six defendants who have pleaded guilty, all face prison time and restitution orders requiring them to pay back DPS. They will be sentenced in September. Here's a look at the accused, and where they stand now:

• Clara Smith, 67, of Southfield, principal at Thirkell Elementary-Middle School, pleaded guilty on April 28 to accepting $194,000 in kickbacks from Shy. She faces 46-57 months in prison when she is sentenced in September and has to pay $195,000 in restitution to DPS.
• Clara Flowers, 61, of Detroit, an assistant superintendent of DPS’s Office of Specialized Student Services and former principal of Henderson Academy, pleaded guilty   Tuesday to accepting $324,785 in kickbacks from Shy. She faces 57-71 months in prison under the terms of her plea deal and has been ordered to pay $324,785 in restitution to DPS.  
• James Hearn, 50, of West Bloomfield, principal at Marcus Garvey Academy, pleaded guilty Thursday to accepting $11,500 in kickbacks from Shy. All of it was in gift cards. He faces 18-24 months in prison under the terms of his plea agreement and has to pay $11,500 in restitution to DPS. 
• Stanley Johnson, 62, the former principal of Hutchinson Elementary-Middle School, pleaded guilty Wednesday  to accepting $84,170 in kickbacks from Shy. He faces between 30-37 months in prison under the terms of his plea agreement and has been ordered to pay $84,170 in restitution to DPS.
• Nina Graves-Hicks, 52, of Detroit, former principal of Davis Aerospace Technical High School, pleaded guilty Thursday  to accepting $27,385 in kickbacks from Shy. She faces between 24-30 months in prison under the terms of her plea deal and has been ordered to pay $27,385 in restitution to DPS.
• Tanya Bowman, 48, of Novi, former principal at Osborn Collegiate Academy of Math, Science and Technology, pleaded guilty Thursday  to accepting $12,500 in kickbacks from Shy. She faces 18-24 months in prison under the terms of her plea deal and has been ordered to pay $12,500 in restitution to DPS.
• Norman Shy, 74, of Franklin, longtime DPS vendor and owner of Allstate Services, is charged with paying nearly $1 million in kickbacks to 12 principals and one superintendent for helping him submit fraudulent invoices to DPS for goods that were rarely delivered. Over 13 years, he billed DPS $5 million for school supplies, of which $2.7 million was ill-gotten, prosecutors allege. His plea hearing is set for Wednesday. 
• Ronald Alexander, 60, principal at Charles L. Spain Elementary — the school that received a $500,000 mega giveaway on the Ellen DeGeneres talk show in February, is charged with accepting $23,000 in kickbacks from Shy. His plea hearing is scheduled for May 18.
• Tia’ Von Moore-Patton, 46, of Farmington Hills, principal of Jerry White Center High School. She is charged with accepting $4,000 in kickbacks from Shy. Her plea hearing is scheduled for Thursday.
• Ronnie Sims, 55, of Albion, former principal at Fleming Elementary and Brenda Scott Middle School, is charged with accepting $58,519 in kickbacks from Shy. His plea hearing is scheduled for Wednesday.
• Beverly Campbell, 66, of Southfield, a former principal at Rosa Parks School and Greenfield Union Elementary-Middle School, is charged with accepting $50,000 in cash kickbacks from Shy. Her plea hearing is scheduled for May 20.  

• Gerlma Johnson, 56, former principal at Charles Drew Academy, former principal at Earhart Elementary-Middle School and current principal of Marquette Elementary-Middle School. She is charged with accepting $22,884 in kickbacks from Shy.
• Josette Buendia, 50, of Garden City, principal at Bennett Elementary School. She is charged with accepting $45,775 in kickbacks from Shy.
• Willye Pearsall, 65, of Warren, former principal at Thurgood Marshall Elementary School,  is charged with accepting $50,000 in kickbacks from Shy. She has not yet entered into a plea agreement.

Contact Tresa Baldas: tbaldas@freepress.com. Staff writers Ann Zaniewski, Rochelle Riley and John Wisely contributed to this report.