14 Face Federal Charges In $2.7 Million Detroit Schools Kickback Scheme

DETROIT (WWJ) - Twelve current and former Detroit Public Schools principals, along with an assistant superintendent and a vendor, are facing federal conspiracy and bribery charges in connection with an alleged kickback scheme.

U.S. Attorney  Barbara McQuade, together with the and the heads of the FBI and IRS, announced the charges at a news conference Tuesday afternoon.

At the center of the case is 74-year-old Franklin resident Norman Shy, owner of Allstate Sales, a DPS vendor of school supplies.

According to court filings released ahead of the announcement, a total of 13 DPS principals — including one who also worked as an administrator — allegedly conspired with Shy in a scheme to line their own pockets by submitting invoices for supplies that the schools were never to receive. . The scheme began in 2002 and continued until January 2015.

Court documents filed in U.S. District Court state:

"Shy devised and engaged in a scheme to fraudulently obtain funds from DPS by agreeing with at least 13 principals to pay them a total of approximately $908,510 in kickbacks relating to business with DPS worth millions of dollars to Shy in exchange for their agreement to certify and submit, and cause to be certified and submitted, fraudulent invoices to DPS for payments to Shy for goods that were not delivered."

The principals accepted bribes and kickbacks in various forms, including prepaid gift cards, cash and checks payable directly to them or to third parties or companies for their benefit.

Invoiced supplies included auditorium chairs, supplemental teaching materials and raised line paper.

Sometimes, the complaint alleges, a portion of the supplies ordered were delivered "for the purpose of making the transaction appear legitimate." In other instances, nothing was received by the school.

According to court filings, Shy maintained a ledger to keep track of how much money Shy owed in kickback payments as a result of fraudulently submitted invoices.

The total amount of bribes and kickbacks that Shy paid to the 13 school officials was approximately $908,518, according to McQuade.  In exchange, Shy and his company allegedly received approximately $2.7 million from DPS.

Along with Sky, those charged include:

  • Clara Flowers, 61, of Detroit ($324,785); Flowers is the former principal of Henderson Academy and current Assistant Superintendent of DPS' Office of Specialized Student Services. Additionally, Shy and Flowers were each charged with one count of Tax Evasion for failing to report income.
  • Beverly Campbell, 66, of Southfield ($50,000), former principal of Rosa Parks School and Greenfield Union Elementary Middle School;
  • Clara Smith, 67, of Southfield ($194,000), current principal of Thirkell Elementary-Middle School;
  • Germla Johnson, 56, of Detroit ($22,884), former principal of Charles R. Drew Academy and current principal of Earhart Elementary-Middle School;
  • James Hearn, 50, of West Bloomfield ($11,500), current principal of Marcus Garvey Academy;
  • Josette Buendia, 50, of Garden City ($45,775), current principal of Bennett Elementary School;
  • Nina Graves-Hicks, 52, of Detroit ($27,385), former principal of Davis Aerospace Technical High School;
  • Ronald Alexander, 60, of Detroit ($23,000), current principal of Charles L. Spain Elementary-Middle School. (This school recently made news when it received $500,000 in donations from TV talk show host Ellen DeGeneres. In a video, posted Feb. 11, Alexander is seen thanking Ellen: "I am the happiest principal on Earth."
  • Ronnie Sims, 55, of Albion ($58,519), former principal of Fleming Elementary and Brenda Scott Middle School;
  • Stanley Johnson, 62, of Southfield ($84,170), current principal of Hutchinson Elementary;
  • Tanya Bowman, 48, of Novi ($12,500), former principal of Osborn Collegiate Academy of Mathematics, Science and Technology;
  • Tia'von Moore-Patton, 46, of Farmington Hills ($4,000), current principal of Jerry L. White Center High School;
  • Willye Pearsall, 65, of Warren ($50,000), former principal of Thurgood Marshall Elementary School.

Each faces up to five year in prison and fines of up to $250,000.

"It is a heavy blow to public confidence when so many school principals are charged with bribery," McQuade said, in a statement. "Public officials should take note that while it may seem easy to take bribes when they are offered, officials who betray their public trust will eventually get caught and will face the consequences."

"As a former educator, this case strikes to my very core," added David P. Gelios, Special Agent in Charge, FBI Detroit Division. "To enrich oneself at the expense of school children is bad enough, but to misapply public funds intended to educate kids in a district where overall needs are so deep, funding sources are so strained, and the need for better education is so crucial, is reprehensible and an insult to those educators working every day to make a better future for our children."

Retired judge Steven Rhodes, who is currently serving as transition manager for DPS, says all current principals charged in this case have places on paid leave, adding that he shares in the outrage over their alleged conduct.

To ensure that this doesn't happen again, Rhodes says DPS is implementing a list of checks and balances effective immediately:

"Number one: We are suspending all purchases by individual schools until further notice. Number two: All school-based purchases will require central office approval. Number three: We are suspending, until further notice, the ability of principals and assistant principals to sign off on or execute vendor agreements and contracts without central office approval," Rhodes said.

Rhodes said that the district is now reviewing all contracts and will seek an independent audit.

Among those reacting to the news on Tuesday was House Speaker Kevin Cotter, R-Mt. Pleasant, who said tighter controls on Detroit schools are clearly needed.

"This is exactly why House Republicans were so adamant that strong fiscal oversight be a prerequisite to any additional state funding for Detroit's corrupt and broken school administration. And it is why we will continue to insist that strong financial and academic reforms be a part of any long-term solution to decades of DPS failures. Detroit's children and Michigan's taxpayers simply deserve better than to be fleeced again by these crooks," Cotter said.

Tuesday's announcement comes nearly two months after ex-principal Kenyetta Wilbourn Snapp — who was once hailed as turnaround specialist for DPS — pleaded guilty to accepting nearly $60,000 in bribes from a vendor hired to perform tutoring services.

Snapp admitted, while working for the embattled state-run Education Achievement Authority, she spent the cash on herself — including on a Maserati.

[Principal Of Detroit School That Got $500K Ellen Gift Charged In Kickback Scheme]

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