Ex-U.S. Bankruptcy Judge Steven Rhodes
Detroit Public Schools have seen dark days, and Tuesday is definitely one.
After federal authorities announced charges against 12 current and former high school teachers, an assistant superintendent and a vendor in a multi-million dollar kickback scheme, retired U.S. Bankruptcy Judge Steven Rhodes expressed disgust and took action, placing all the current employees on administrative leave without pay.
Rhodes, the district's transition manager who replaced Emergency Manager Darnell Earley, issued a statement Tuesday afternoon:
I cannot overstate the outrage that I feel about the conduct that these DPS employees engaged in that led to these charges," Rhodes, the district's Transition Manager said in a statement. " And I am sure that this sense of outrage is shared by the other dedicated and committed DPS employees, as well as DPS parents and everyone who is interested in the future success of DPS."
The actions of these individuals are reprehensible and represent a breach of the public trust that has deprived our students of more than $2.7 million in resources.
This behavior is absolutely unacceptable and will never be tolerated. Illegal behavior of any kind will result in immediate suspension and possible termination.
Rhodes said the district has suspended any business with Norman Shy, 74, of Franklin, owner of Allstate Sales, a DPS vendor of school supplies. Federal authorities alleged in criminal complaints that each school official conspired with Shy to "knowingly certify and submit" fraudulent invoices to DPS so that Shy could get paid for goods never delivered. The goods included auditorium chairs, supplemental teaching materials and raised line paper.
In return, Shy allegedly paid bribes and kickbacks, using a portion of the payments he received from DPS from the fraudulent invoices, authorities said in a news release. School officials were paid in various forms. In all, Shy allegedly paid to the 13 school officials about $908,518 in kickbacks and bribes. In exchange, Shy and his company received approximately $2.7 million from the school system for the fraudulent invoices.
To ensure "this does not happen again, we are immediately putting into place the following checks and balances," Rhodes said.
- Suspend all purchases by individual schools until further notice
- All school-based purchases require Central Office approval
- Suspend, until further notice, the ability by Principals and Assistant Principals to sign-off on or execute any vendor agreements and contracts without central office approval by the superintendent’s office, Finance and/or Procurement
- Require two signatures (principal and deputy network leader of operations) on all school-based invoices before they will be paid
- Conduct a review of all purchases made by the DPS employees identified by the U.S. Attorney;
- A full review of all school-based vendor contracts to determine if all or a portion need to be terminated and rebid
- Recruit an independent auditor to do a thorough review and assessment of procurement processes and procedures to ensure they are in compliance with all state and federal rules and regulations.
Interim Superintendent Alycia Meriweather will assure leaders are in place at the six school affected when students return April 4 from spring break.
"I took this job because I want to help the children of the city of Detroit," Rhodes said. "I will not let these circumstances distract me from my goal of leading the orderly transition of DPS from state control to local control, as promptly and efficiently as possible."
