DISD, P-Cards, and $1 Million Dollars (Part I)
[Flashback: Ex-US Attorneys Lead DISD Inquiry ]
Last summer, The Dallas Morning News produced a series exposing concerns over the DISD's use of "procurement cards." Their revelations of possible wrongdoing led Superintendent Michael Hinojosa to hire the law firm, Fish and Richardson, to investigate potential abuses identified by the Morning News and other "self-proclaimed watchdogs."
Hinojosa appeared on TV shoulder-to-shoulder with high-profile former U.S. Attorney Paul Coggins, and former Dallas City Attorney Madeleine Johnson (both with the Fish and Richardson law firm) assuring the public they would get to the bottom of it all.
Initially, the District authorized $500,000 in payments for Coggins' and Johnson's services. In January, that figure was upped to a cool $1 million dollars.
The details of the investigation have been strictly "hush-hush." But what really happened (and is happening) behind the scenes?
We found out.
First, a quick trivia question (that we'll answer shortly): can you guess how many procurement card "suspects" were personally interviewed by Paul Coggins and Madeleine Johnson? Fifty percent of them? All of them? More? Less?
Can you guess? We'll tell you in a moment.
So back to the story. What's really gone on behind the scenes of the investigation?
For the answer to these questions, we can thank would-be former DISD principal Ardis McCann.
Oh, he doesn't know we have him to thank, but here's why we do:
Because when, after the investigation into him, McCann was given a choice: quit or be fired by the District's legal review committee (Ron Peace, Denise Collier, Eric Anderson, Derrell Coleman, Luis Tamez, Bruce Weaver and Steve Flores).
McCann didn't like either choice and chose "option 3" -- fight back.
McCann hired Arlington lawyer Daniel Ortiz to represent him. Ortiz subpoenaed and deposed several people.
One of the nice things about people getting into legal battles is that information comes out, in the course of discovery and depositions, that mere mortals (like us) otherwise wouldn't have access to.
So we ended up with the depositions and a whole lot more (links to the actual depositions are at the bottom of this article)!
So let's devote part one of our series to summarizing what we've learned so far about the investigation.
One of the first things we learned is that virtually all of the investigation was conducted by 3 people:
- Peter David Nielsen, a 52-year old private investigator who lists his work address as his home in Rockwall
- Kiprian Edward "Kip" Mendrygal, a 30-year old lawyer for Fish and Richardson who, at the time he was put on the case, had only been licensed to practice law for about 3 years
- A paralegal named Amalia Macias
We learned that an electronic database, presumably the same electronic database used by The Dallas Morning News and Dallas.Org in researching procurement card spending was processed by Navigant - described by Mendrygal as a "forensic accounting firm."
Navigant (according to Mendrygal) provided the investigative team with a list of the following facts and figures used to figure out whom, out of the 1,200 to 1,700 cardholders, Mendrygal's team would interview (in his own words):
- "A list of the top 100 spenders"
- "People who spent large amounts of money on shopping cards, gift cards at various vendors; Wal-Mart, Target, Home Depot, who spent large amounts of money buying gift cards"
- "People who spent alot of money at department stores; Dillard's, Foley's, Ross, Marshall's, TJ Maxx, Kohl's, JC Penney, Sears, places where the purchases may or may not have an educational purpose"
Most of the information, if not more, provided by Navigant was already available online at Dallas.Org.
In addition, Mendrygal's team developed two more "criteria" for determining who would be questioned and interviewed:
These were "people who had been subject to a parallel investigation," according to Mendrygal's deposition.
Mendrygal went on to explain:
"What I mean by that is for several months leading up to the story breaking in the Dallas Morning News about allegations of [procurement card] abuse, there were several open records requests that were filed by third parties; the Dallas Morning News, certain self-proclaimed watchdogs [Ed Note: he probably could have dropped the "s" and there's another nickname I can add to my repertoire!] who were investigating certain expenditures by certain individuals. We decided that if somebody else was investigating somebody for [procurement card] issues, we might as well follow up as well."
The last criteria was, well to put it bluntly, tattling!
Mendrygal explained, "[...] we tried to ask each individual whether or not they knew anybody -- through direct knowledge or rumor, gossip, innuendo, second-hand, third-hand or fourth-hand knowledge anybody that may have used their [procurement card] inappropriately."
Between 1,200 to 1,700 people at DISD had procurement cards. How many of those did Fish and Richardson end up interviewing?
"To date," Mendrygal says in his March 22 deposition, "we've interviewed about 200 people."
That's $1 million dollars (over $750,000 of which has already been spent) for 200 people.
And who conducted these interviews?
According to Mendrygal, primarily it was Nielsen and himself.
But what about Coggins and Johnson? What did they do?
Coggins provided "supervisory-level guidance of the investigation," according to Mendrygal.
"He steers the ship. He has the high-level meetings," explained Mendrygal, "we have strategic discussions with him regarding what we're going to do next and how, those sorts of discussions, Madeleine Johnson the same."
So, according to the Fish & Richardson Engagement Letter, DISD has been paying a third-year law graduate and a home-based "private eye" who, according to their depositions, worked 35-45 hours a week and 40-50 hours a week respectively, on 200 employees.
We submitted an open records request, today, for the bills.
Oh, I almost forgot to answer the question posed earlier: how many "suspects" did Coggins and Johnson interview personally?
If you guessed "one apiece" you were right.
As Mendrygal explained in his deposition: "Myself and Mr. Nielsen [conducted most of the interviews] and in a very rare instance--Madeleine Johnson participated in one interview and Paul Coggins participated in one interview."
Why did Johnson participate? According to Mendrygal, "just because she had an interest in getting a background for how the program had been created and developed."
So as opposed to gathering and organizing receipts in house, instead of retaining certified public accountants, instead of using resources which were already prepared, DISD made the decision to spend $1 million dollars using a $350-an-hour law firm to investigate between 12% and 16% of the transactions committed with its procurement cards.
There's more. Much, much more. But we'll save it for part two!