Houston ISD Board Under Fire for Bribery, Corruption Charges

Houston, TX -- Any school teacher will tell you that normally 2 + 2 = 4, but at the Houston ISD administrative building sometimes 2 + 2 = 5. Particularly when that extra one is part of a scheme to overcharge the school district for construction work or is a bribe that was allegedly paid to a school board member to secure a contract.

Houston ISD's shady math on construction contracts came to light a while back when the board dismissed the district's chief auditor.

Richard Patton, the auditor, was going through the district's financials -- in other words doing his job -- when he noticed that construction contractors hired by the district were doing some hinky stuff with work orders.

HISD has a policy that any expenditure of more than $500,000 has to be approved by the school board. State law is pretty clear that contractors can't split up work orders to keep the cost of the project below a district's imposed spending cap.

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Essentially, a contractor can't submit three $499,999.99 invoices for a $1.5 million job. Part of the reason why a contractor might want to keep the cost of a project below a district's spending cap is to expedite payment, a lot of smaller school boards only meet once a month. Another reason to circumvent a spending cap is to keep invoices on the down low, big ticket items presented to school boards have a habit of showing up on the news.

Richard Patton, the school district's former chief auditor, claims that contractors were doing exactly what they weren't supposed to do. He also discovered that this method of -- let's call it creative accounting -- was leading to some new math. Particularly $200 million in cost overruns on a $1.9 billion construction project.

Here's where it gets really interesting. The school board tried to claim that those cost overruns were because of a 38.75 percent inflation rate in construction costs.

The odd thing is that Patton found inflation in the construction industry was only about 8 percent at the time. Then again, sometimes 2 + 2 = 5. Patton did what any school kid is taught to do when you find something that might be illegal: tell the police.

Specifically, Patton went to the HISD chief of police and the district police went to the FBI. Patton's turn as a whistle blower slipped off the front page until March when HISD started putting together paper work for a bond offering.

One of the attorneys working on the bond package learned that Patton had been meeting with the feds, something that has to be disclosed to investors. After the board found about Patton's meetings with the FBI, they suspended him for scanning three personal documents on district equipment.

In a wrongful termination complaint Patton filed with the state of Texas in early June, Patton alleged that his firing had nothing to do with scanning documents. He claims that he was let go because the HISD board was not happy to find out that he had been snitching to the G-men.

All this would be bad enough, but the district is also having to deal with the news that Larry Marshall, a former Houston ISD trustee, will go to trial over allegations of bribery and money laundering.

Even though Marshall -- who served the district in one form or another for about 50 years -- decided not to seek reelection last year and stepped down in January, the district continues to his legal bills. Bills that have topped $1 million, or the average salary for about 20 teachers.

Marshall will face a federal civil trial about questionable actions regarding the awarding of construction contracts. The federal judge's decision to allow the trial comes after years of legal wrangling and investigations.

The lawsuit alleges that, in 2009, the Gil Ramirez Group, a Houston contractor, lost out on a contract to service the district's HVAC system because the company failed to pay off Marshall's campaign treasurer.

Marshall admitted his campaign treasurer had dealings with businesses bidding on HISD contracts. One of those business dealings that has raised some eyebrows involves David "Pete" Medford, who owns a company called Fort Bend Mechanical.

Fort Bend Mechanical got the HVAC contract right around the same time that Medford cut a $25,000 check to Marshall's campaign treasurer, Joyce Moss Clay. Marshall never declared the $25,000 as a donation on his campaign reports.

Clay has also admitted that she paid a consulting firm owned by Marshall some of the proceeds from the business dealings she had with contractors. Medford's attorney denies any wrongdoing.

All of the questions about how HISD awards contracts and pays construction costs come as the district is trying to sell parents on a $1.8 billion budget packed with austerity measures that will severely impact schools in primarily low-income areas.

When the state sent word that HISD would have to pay about $162 million into Texas' 'Robin Hood' financing scheme, richer districts send some of their budget to the state which then gives the money to poorer districts, the board decided to make some cuts.

As part of the belt-tightening, the district axed a $20 million program that offered students at some low performing schools extra tutoring help and kept those schools open longer.

That program, called Apollo, employed 359 tutors. The district also cut 130 administrative positions, 51 of those were staffed the rest were vacant.

The district is also planning on spending $2-$5 million to rechristen schools named after Texans and generals who fought for the Confederacy during the Civil War. The price tag for the renaming plan, as well as the manner in which the school board adopted the policy, has proven controversial and prompted a lawsuit.