A blistering independent audit of a Pueblo-based charter school network released Wednesday has been forwarded to the Pueblo district attorney’s office for review of whether laws were broken.
Colorado Education Commissioner Dwight Jones called for “swift action” in a strongly worded news release about the findings of the report, which was ordered last year to examine the troubled Cesar Chavez School Network, which has two schools in Pueblo and one in Denver.
Jones also encouraged the Internal Revenue Service to review the network.
“Leaders of Cesar Chavez School Network squandered taxpayer money, ignored basic legal requirements, overcompensated senior staff, engaged in nepotism and failed to provide accountability over the resources entrusted to them,” Jones said.
The target of the investigation, Lawrence Hernandez, the former director and co-founder of the network, called the probe “a sham.”
Hernandez, who was fired last year by his board as allegations became public, now lives in Denver.
He has filed a lawsuit in federal court over his termination.
“I spoke to the auditor for less than an hour, and he had already written the report,” Hernandez said Wednesday. “Basically, he told me he was going to write whatever his clients told him to write.”
Stephanie Garcia, president of Pueblo District 60’s board, said district personnel this week have been placed into the schools to monitor whether “instruction is occurring.”
The 193-page report by Sacramento, Calif.-based MGT of America was issued at the request and expense of the Colorado Department of Education, Pueblo City Schools and the Charter School Institute.
“In general, we found that the network entities engaged in conflict-of-interest transactions and significant nepotism,” according to the report’s executive summary.
Other findings:
• The network carried 26 credit cards and charged nearly $400,000 in 2008-09, including more than $133,000 for travel and almost $27,000 for meals. Cellphone charges for executives’ children were paid for out of the credit-card accounts.
• Executives were paid excessively, almost 200 percent more than comparable charter-school leaders, which may be deemed an excess-benefit transaction by the IRS. Specifically, Hernandez and chief financial officer Jason Guerrero earned about $300,000 apiece in total compensation.
• Board-meeting minutes were not produced or were not adequate. For 34 of 179 meetings held from 2000 to 2009, no minutes were maintained.
• Hernandez and Guerrero for years were improperly allowed to vote in meetings.
• Hernandez and his wife, Annette, who was the chief operating officer, had hired 20 relatives to work in the network.
