A First Amendment battle has erupted between a prominent South Florida developer and a blogger, who so far has only been identified as “John Doe.”

Raanan Katz, a minority owner of the Miami Heat, and his family-owned company R.K. Associates are suing the anonymous blogger for defamation and libel for reports he claims are false and malicious.

The blogger’s Fort Lauderdale attorney, Robert Kain, argues in court papers that his client is a “citizen journalist” deserving of First Amendment protection because his reporting on Katz is about “matters of public concern.”

“Doe is an anonymous citizen journalist critically reporting what he considers to be abusive litigation tactics and prior criminal convictions by a well know public person Raanan Katz and Katz’ companies,” the papers say.

Katz’s filed the case in state court in June, but it has since been removed to federal court in Miami. Katz dropped an additional claim for false advertising against the blogger last week.

“The true thrust of our case is defamation,” said Todd Levine, a Miami lawyer for Katz and the company.

Kain calls Katz’s litigation a “classic slap suit” by a big developer seeking to suppress a critic.

“There is no defamation, you can read it,” Kain said in an interview. “Mr. Katz needs to realize that sometimes in doing business you will be criticized.”

In the blogger’s defense, Kain includes the assertion that his client has a First Amendment right to “maintain his anonymous status.”

Levine calls the nameless blogger a “coward hiding behind the cloak of the Internet.”

Katz’s son, Daniel Katz, vice president and owner of the company, is also a plaintiff against John Doe. The blog details previous legal battles and activities involving Raanan, his son and their real estate company.

KATZ AND HIS PROMINENCE ARGUED

R.K. Associates owns over six million square feet of commercial space in Florida and New England, including 14 shopping centers in South Florida,the company website says. Their properties include two in Hallandale Beach and the landmark Searstown Plaza in Fort Lauderdale.

The privately-held company was founded by the elder Katz, who remains the principal owner of the company. (View the South Florida properties owned by R.K. Associates in the map below.)

View Raanan Katz in South Florida in a larger map

Katz, an Israeli immigrant, has a street named after him in Sunny Isles Beach, according to news articles. The renaming of Northeast 170th Street at Collins Avenue was done as part of a $7 million eminent domain settlement with the city.

The elder Katz was called “one of the most prolific real estate owners in Miami-Dade” in a 2008 article in Miami New Times.

John Doe publishes articles about the Katz’ and their real estate company in the blog in called “RK Associates.” It is published free on blogspot.com, a Google-owned company. The domain is RKAssociatesUSA and the information is also posted on a second website based in the United Kingdom.

The archive on the US site shows 22 posts about Katz and his company starting in May.

“There are some things that are taken from other people’s claims that may not be defamation,” Levine acknowledged. “But there are other parts that really surpass opinions and come out to be a conclusion or moral of a story…to [falsely] show that the company and my clients are ‘criminals’…a clear indication that my clients are bad people.”

The blog details previous legal battles and activities involving Raanan, Daniel and their real estate company. A recent post claims the company “ripped off the single mother of a special needs child.”

According to a post dated July 24: “RK Associates, Raanan Katz, and Daniel Katz automatically renewed her lease, without her knowledge and consent, from January 1, 2009 for the next five years and filed legal action against her claiming damages for five years in advance in the amount of about quarter a million dollars.”

Levine said some content posted by John Doe is accurate, but the lawyer did not elaborate on what was true.

TRUTH AS A DEFENSE

Attorney Jon Kaney, a board member of the Florida First Amendment Foundation, said the blogger has a First Amendment right to publish stories if what is being said can be supported by facts.

“The blogger’s opinion, if it is based on facts that he has disclosed or in this case linked to, and he tells the reader what the company is doing and then shares his opinion that he believes it is inappropriate or whatever the case may be, then that’s protected.”

Kaney is a partner at Cobb & Cole in Daytona Beach.

“Truth is always a defense to defamation,” Levine acknowledged. “But (the blogger) would have to prove this. And this person signs off every post with ‘always true.’ He is saying, this is the only spot where you are going to find information about my client.”

Other articles on the blog discus alleged racketeering charges against the Katz’ and their company and allegations of falsely asking for rental reimbursement associated with a property the company owns.

Levine says the blogger and his lawyer are trying to make people believe Raanan Katz is a public figure, which would require Katz to offer a higher level of proof to win in court. The Katz’ “are not Donald Trump-type businessmen that make themselves out to be celebrities. He owns shopping centers; he doesn’t have a radio show; he doesn’t have a magazine like Oprah;, he isn’t on red carpets.”

Having Sunny Isles Beach name a street after the developer isn’t enough to make him a public figure, Levine argues.

“If I told someone to meet me at Raanan Katz Boulevard they wouldn’t know where that was,” Levine said, comparing the street named after Katz to a school driveway.

Sunny Isles Beach has also named a public gymnasium after Katz and his wife.

Raanan Katz was an original partner of the expansion franchise for the Heat and has “been a fixture at courtside” games since the team’s inaugural season in 1988, according to the company website.

WHO IS JOHN DOE?

While much is publicly known about Raanan Katz, that can’t be said for his critic.

On one of his blogs, Doe identifies himself only a male living in Boston.

The Katz complaint initially accused “John Doe” of being a competitor. But Levine has backed away from that contention, and now says he believes Doe “is a disgruntled employee or disgruntled tenant,” he said.

Either way, Levine intends to find out precisely.

He said a subpoena has been issued to Google in an attempt to unmask John Doe.

Friend of Rep. Borris Miles runs Costa Rican ‘medical tourism’ firm; HISD approves $600K contract with doc linked to same firm
Wednesday, Jul 13, 2011, 07:55AM CST
By Trent Seibert & Jennifer Peebles

A state lawmaker and Houston schools vendor who arranged all-expenses-paid trips to Costa Rica for Houston schools trustee Larry Marshall has a friend and business associate who runs a Costa Rican medical tourism company — the same company that played a major role in the medical tourism event Marshall attended in Costa Rica in November.

State Rep. Borris Miles, a Democratic state House member from Houston whose insurance agency services some of the Houston schools’ flood insurance policies, is an associate of DiCarlos Davis, a Houston businessman who is CEO of International Healthcare Access. The firm’s website touts weight loss services, cancer treatments, dental care and cosmetic procedures that are available from its affiliated doctors in Costa Rica.

Records show Davis’ firm was a major participant in the November medical tourism “familiarization trip” that Marshall attended in Costa Rica, a trip Miles has said he arranged. Miles has said he wants to help people lower their health care costs by exploring medical tourism.

Also representing Davis’ company at that November event in Costa Rica, public records indicate, was Kenneth D. Wells, a Houston doctor to whom the Houston Independent School District is giving a $600,000 no-bid consulting contract as an adviser on employee health care issues.

Agenda item regarding consultant Kenneth Wells

Wells is an advocate of medical tourism, in which people travel to other nations to receive medical treatment or undergo procedures that would be much more expensive in the U.S. His consulting firm’s online bio says his “work on medical tourism” is “one area of innovation” for him, and Wells is slated to deliver a speech Wednesday on medical tourism to a group of Houston human resources professionals at the DoubleTree Guest Suites hotel on Westheimer Road. He did not return a call for comment for this story.

Miles has said the Costa Rican government picked up the expenses when Marshall and others went on the four-day “familiarization” trip — called a “fam trip” in medical-tourism industry lingo — last November. Miles had extended the same offer to most of the Houston Independent School District’s trustees, and has said he has also offered it to other school systems’ trustees and other politicians as well.

The revelation of the ties between Miles and Davis come at a time when HISD’s business practices are under increased public scrutiny.

Texas Watchdog recently reported that HISD trustees president Paula Harris — she is a friend of Miles; he is godfather to Harris’ children — voted four times on $28 million in contracts that included work for a firm owned and run by another of Harris’ close friends, while HISD also hired the friend’s firms to do more than $100,000 in no-bid work ranging from tracking down truant teens to dry cleaning drapery. Texas Watchdog also recently reported that another friend of Harris’, Demetra C. Jones, the wife of Harris’ campaign treasurer, had been paid $75,000 in no-bid work to arrange after-school classes and programs.

The closeness of HISD officials to people who have business interests before the district worries some.

“Whatever the talk, whatever speeches are being made, so much of what is happening at HISD doesn’t really seem to be about educating kids,” said Mary Beckner, an HISD parent. “Students are being used as a shield for the money to be made.”

GROUP TRIP TO SAN JOSE

Marshall, Wells, Davis and Davis’ wife, Myra, all flew to San Jose, Costa Rica’s capital, on the same flight last November, records show: Continental Flight 1528, nonstop, economy class, out of Bush Intercontinental. Also on the flight with them was Charles Coonrod, an executive for an employee benefits brokerage firm called Foundation Strategies that has done business with HISD, along with a staffer of the trust that provides health insurance to Metro Transit Authority employees.

Zeph Capo, a staffer for Houston’s largest teachers’ union, the Houston Federation of Teachers, has also said he went on the trip, but Capo’s name does not appear on the same flight reservation with the others. His boss, union chief Gayle Fallon, has said the Costa Rican government has been “hustling” HISD on medical tourism.

Wells and Coonrod also appear with Marshall and others in a group photo taken on the trip that Texas Watchdog found on Miles’ Facebook page several weeks ago.

Marshall has said he made two trips to Costa Rica last year, in April and November, both arranged by Miles.

The abbreviation “IHCA” appears next to both Davis and Wells’ names in the November event’s glossy color schedule, which says both Wells and Davis would give presentations during the opening day talks at San Jose’s DoubleTree Cariari hotel on the benefits of medical tourism.

International Healthcare Access’ name and logo is displayed prominently on the November medical tourism conference schedule, along with those of the Council for International Promotion of Costa Rica Medicine, also called ProMed, and Costa Rica’s tourism bureau.

International Health Care Access’ website lists Davis as CEO of the firm; business corporation registration records on file with the Costa Rican government list Davis as the firm’s “gerente” — Spanish for manager or director.

Texas state records show Davis runs, has run or has been involved in a number of small businesses in Houston, including the firms TMA Risk Services, DatasorsConsulting, Vortel Inc., and Epix-GHS Inc.

When a photographer for the Houston Chronicle captured Miles celebrating his win over incumbent Al Edwards in March 2010, Miles was shown enjoying the triumph with Davis, whom a caption for the newspaper’s online edition described as Miles’ “business partner.”

Reached by phone Tuesday, Miles said he was in the insurance business with Davis and sometimes uses Davis as a consultant. He said he has no business interest in International Healthcare Access.

Davis and his wife have given Miles $11,250 in campaign donations over his political career, all in 2005-06, according to records from the Texas Ethics Commission. (Miles bested Edwards for the House District 146 seat in 2006, but Edwards returned to beat Miles in 2008.) And a person identifying himself as Borris Miles donated $250 toward Davis’ charity run in the 2011 New York City Marathon, according to the charity’s Web site.

Reached by Texas Watchdog on his cell phone Tuesday, Davis asked that questions be sent to him via e-mail. He had not responded to the e-mail as of presstime.

Davis also has a business tie to Harris. When Davis’ firm DatasorsConsulting sought to do business with the city of Fort Worth last year, online records show the firm listed as its address 315 W. Alabama St., the Montrose office building owned by Harris and her husband, and from which the Harrises run multiple businesses. (However, the company’s official registered address with the state is near the West Loop.)

While Miles told the Houston school trustees that his office would handle the arrangements on behalf of Costa Rica’s tourism ministry, e-mails made public by the school system indicate the plane reservations for the November trip for Marshall, Wells, Coonrod, Allen and others were on one itinerary, connected to Davis’ e-mail address, and all linked with Davis’ Continental Airlines frequent flyer account number.

DOC INKING DEAL WITH HISD

Meanwhile, the exact nature of Wells’ affiliation with IHCA is not clear.

The conference schedule doesn’t elaborate on his connection to the firm or why he was there as its representative. He is not one of the two people identified publicly on Costa Rican government documents available online for IHCA’s corporate registration.

And IHCA is not mentioned on Wells’ LinkedIn profile or his official online bio from his Houston-based health-care consulting firm, called Alken Health Resources, which advises employers on health care issues.

HISD trustees, including Marshall, voted June 23 to approve contracting with Alken, paying up to $640,000. The contract is still being negotiated, the school system said in an e-mail last week. HISD and many other government agencies do not require competitive bids to be sought for professional services.

Wells “provides unique services in medical cost containment as a licensed physician with extensive corporate health care plan management experience,” reads a summary of Wells’ services given to HISD trustees prior to their vote.

The summary listed numerous steps the Houston district had taken to help employees stay healthy and cut health care costs, such as employee assistance programs and over-the-telephone “wellness coaching,” and told the trustees that “Alken Health Resources’ healthcare industry expertise as well as the knowledge of the medical community will provide key resources and strategies to integrate these programs, establish appropriate measurable goals, evaluate program effectiveness, and provide key support and intervention to ensure the success of these programs.”

With roughly 30,000 employees — the district is one of the largest employers in Houston — the rising cost of employee health care is a major issue for HISD which, like many school systems in Texas, is trying to make ends meet in the face of severe cutbacks from the state and a down economy.

Medical tourism isn’t mentioned anywhere in the material given to the trustees before they voted, though it does mention “domestic medical travel” as a cost-cutting HISD initiative.

A brochure available on Alken’s Web site lists “international travel health services/medical tourism” as one of numerous example solutions for employers trying to stop the spiral of workers’ health care costs. And he’s a member of three LinkedIn groups concerning medical tourism, including “Medical Tourism & Travel Developers.”

In addition to being president of Alken, Wells also is medical director of Xenith Group, a financial services firm launched by two whistleblowers from Allen Stanford’s failed financial empire.

“Other health and wellness specialties include providing companies with a corporate medical director on a contractual basis and medical tourism consulting,” reads Xenith’s description on the LinkedIn networking service.

With both a medical degree and a master’s in business administration, Wells’ resume includes a stint as medical director for oil-and-gas giant Tenneco. He is also a former board member of the Christus Health System and of Houston’s Saint Thomas University, and is a former U.S. Army National Guard Flight Surgeon of the Year, according to his LinkedIn resume.

The “fam trip” in Costa Rica last November took participants on tours of clinics and hospitals where medical tourism procedures are performed. All three hospitals listed for visits on the schedule are also listed on International Healthcare Access’ site as being affiliated with the firm.

The trip also featured relaxation in hot springs for the attendees along with trips to a volcano, zipline rides and sightseeing at a suspension bridge, according to the event schedule.

***
Contact Jennifer Peebles at jennifer@texaswatchdog.org or 281-656-1681. Follow her on Twitter at @jpeebles or @texaswatchdog. Contact Trent Seibert at 832-316-4994 or trent@texaswatchdog.org. Follow him on Twitter at @trentseibert or @texaswatchdog.

Lynn Walsh contributed to this story.

Wife of Houston ISD trustees president Paula Harris’ campaign manager does $75K in no-bid consulting for HISD
Tuesday, Jun 28, 2011, 08:55AM CST
By Lynn Walsh and Jennifer Peebles

The Houston school system has paid the wife of the school board president’s campaign treasurer $75,000 in no-bid work over the last two years as a consultant, arranging classes and after-school programs on subjects including CPR, English as a second language, jazz dance and parenting.

Demetra C. Jones, the wife of prominent Houston lawyer Franklin D.R. “Frank” Jones Jr., and her businesses have been paid $78,110 by the Houston Independent School District since 2009, records released by the school system show.

Frank Jones is the campaign treasurer for Paula Harris, who was elected to the HISD trustees in 2007 and who became the trustees’ president in January. Frank Jones has also done legal work for the Houston schools, including serving as lead negotiator for the school district when it hired current Superintendent Terry Grier away from the San Diego, Calif., schools two years ago.

Demetra Jones is the former longtime head of human resources and risk management for Harris County Precinct One, working under County Commissioner El Franco Lee for two decades. She previously served as office manager in City Hall for state Sen. Rodney Ellis when he was a Houston city councilman some 20 years ago, and was public affairs manager for Ellis’ Houston investment bank, Apex Securities, according to two resumes available online.

She has a master’s degree in education from the University of Houston, and she has taught in the past at both U of H and Lone Star College, her resumes said.

None of the work done by Demetra Jones and her firms was subjected to competitive bidding, and none of it was ever subjected to a vote by the HISD trustees. Individual school principals and HISD department heads made the decision to hire Jones’ firms, a district spokesman said.

Trustees’ votes aren’t required for individual consultant agreements worth less than $25,000 each or less than $100,000 in the aggregate, HISD spokesman Jason Spencer said in an e-mail. A formal “request-for-proposal” process is not required for hiring educational consultants.

Records show the work done by Jones’ companies was billed in dozens of separate expenses of usually several hundred dollars or a couple thousand dollars at a time. “The services were requested in accordance with current procedures,” Spencer said.

The school district put the amount paid to the Jones’ businesses at $74,700.

Demetra Jones did not return phone messages left for her by Texas Watchdog. Frank Jones did not return phone messages or an e-mail for comment.

“HISD needs to have an arm’s-length policy between their board and their contractors or vendors,” said Andy Wilson with Public Citizen of Texas. “It may be that (Jones) was the most qualified person to run these programs — but when she’s awarded a no-bid contract and has financial and political ties to the chair, the public is going to catch a whiff of that and be outraged.

“This could be innocent, but there’s no way to be certain.

“Between this and other recent issues, HISD needs to take a good, hard look at rewriting their ethics rules. Especially in our schools, and especially in this budget crisis where dollars are so precious, we need to insure our school money is going to the most qualified, lowest cost people, not the politically or financially connected ones.”

The revelation of Jones’ work for HISD makes her the second close friend of Harris found to have been paid thousands of dollars by the school system for no-bid work. Texas Watchdog has previously reported that HISD paid companies connected to Pearland businesswoman Nicole C. West for services including private investigations work to find truant teens, dry cleaning drapes and tutoring elementary school students. Harris also voted four times to approve a total of $28 million in HISD contracts that included work for one of West’s firms.

Meanwhile, both Texas Watchdog and the Houston Chronicle have recently reported that HISD trustee Larry Marshall traveled to Costa Rica last year on an all-expenses-paid trip funded by the Costa Rican government and arranged by state Rep. Borris Miles, an insurance agent who also services some of HISD’s flood insurance.

Harris declined to comment to a reporter who approached her after last Thursday’s school board meeting. She also did not return phone messages for comment or respond to a list of e-mailed questions from Texas Watchdog. But in public comments she made during the Thursday meeting — a couple of hours after Texas Watchdog supplied HISD with an extensive list of questions for this story — Harris defended what she said were her many friendships with HISD vendors and others working in and for HISD.

“That presentation we saw (during the meeting) is dedicated to the 12,000 teachers, all of the principals, all of our partners, all of our vendors, all of the folks that provide a great service and provide great added value to the Houston Independent School District. And I’m not ashamed ever to say that I’m friends with some of ‘em. … Sometimes it’s hard to be my friend. They’re gonna do a story every week about my friends, I’ve got so many friends in this district, so many places I sit on (in) this district. But that’s fine. Just know,” she said, echoing something Jesus told his disciples in the book of Matthew, “if you don’t deny me, I won’t deny you.”

ABOUT THE CLASSES

The class offerings Demetra Jones has arranged for HISD are varied.

Among the classes she and her company Training & Leadership Consulting, also sometimes called Training Leadership & Consulting or TL Consulting, arranged for HISD, records show:

$2,100 to put on CPR and rescue breathing classes this fall for second- and third-graders in the health science magnet program at Whidby Elementary;
A total of $10,000 to lead GED and English-as-a-second-language classes for parents at Ortiz Middle. Records are unclear as to whether the payment was for 200 total hours or instruction or for 220 hours of each subject.
$2,250 to put on jazz dance classes at Scarborough High this past spring;
and $2,600 for 13 Saturday ESL classes for parents at Lewis Elementary.
TL Consulting is “… deeply involved in learning about the educational state-of-the-art, investigating research and designing instructional materials,” reads a testimonial attributed to Ortiz Middle on the company’s website, along with this one from Lewis Elementary: “Training Leadership & Consulting have exceptional certified instructors … making a difference in our schools.”

Meanwhile, records show another of Jones’ firms, the FDR Group, was paid $5,040 for preparing Sterling High students for the Texas Assessment of Knowledge and Skills tests last October, and another $3,900 to put on parenting classes last September. HISD’s online check register shows checks for those amounts — but written on different dates — made out directly to Demetra C. Jones last fall, with Jones having the same HISD vendor number as the FDR Group.

The school district can’t just make teachers work in after-school programs without paying them more for it, Spencer said: “In many instances, vendors who provide after-school programs do so at a lower cost rate than teachers.”

TL Consulting application for all-girls academy after-school programs
TL Consulting application for all-girls academy after-school programs

The school district said it has no consulting agreements for the new all-girls’ academy that is slated to launch this fall. But TL Consulting has had on its website recently a downloadable PDF application for after-school programs at the all-girls’ school, with offerings as varied as robotics, lacrosse and “Wacky Writing.”

“Young Women’s College Preparatory Academy After School Program provided by Training and Leadership Consulting Inc.,” the application reads. “For questions regarding all offerings, please contract Demetra Jones, TLC Inc.,” it says, and lists TL Consulting’s phone number and e-mail address.

The PDF was available on TL Consulting’s website as recently as early yesterday afternoon — but it appeared to have been removed from the website later in the day.

KEEPING UP WITH THE JONESES

Frank Jones has been Harris’ campaign treasurer since at least 2008, online campaign finance records show. Harris also confirmed Frank Jones was her campaign treasurer in a recent interview with Texas Watchdog for a previous story.

Demetra Jones was also the contact person for a $250-a-head campaign fundraiser for Harris that was held one evening last week at the posh Tony’s restaurant on Richmond Avenue. Invitations for the event, one of which was obtained by the West University Examiner, asked people to mail checks to Demetra Jones at the same 315 W. Alabama St. address as the office building where Paula Harris and her husband, Dwayne, base multiple businesses they run. The Harrises own the building, according to property records.

When it first sought certification as a minority business from the Houston city government in 2009, TL Consulting reported that one of its largest previous jobs was $300 in training it put on for DPM Investments, Paula and Dwayne Harris’ investment firm, though the company submitted $600 worth of invoices from DPM to back up its application.

“Demetra’s experience includes planning, developing and implementing human resource strategies; preparing new hire recruitment policies; structuring development training programs; and developing educational, health and safety seminars,” Demetra Jones’ online bio says. “Mrs. Jones’ services have been acquired by local governmental offices, school districts and private business entities.”

TL Consulting’s address is listed in much of the HISD paperwork as a residence on MacGregor Way, south of the Texas Southern University campus — the same address where both Frank and Demetra Jones are registered to vote. However, one document Jones filed this month with HISD lists the company’s address as 315 W. Alabama St., the Harrises’ office building.

Harris County records show Training and Leadership Consulting is a registered assumed name, commonly known as “doing business as,” with Demetra Jones as the owner. (Though the firm calls itself “Training and Leadership Consulting Inc.” on its Web site, and uses the “Inc.” on HISD paperwork, the Texas Secretary of State’s office had no record last week of a corporation by that name, or a TL Consulting, tied to a Demetra Jones. Demetra Jones also signed off on HISD paperwork as recently as this year indicating the firm is a sole proprietorship or individual, not a partnership or corporation, and city of Houston records show the company is a sole proprietorship.)

Frank Jones is listed as the registered agent of the FDR Group, a limited liability company, in business records from the Texas Secretary of State’s office.

A current co-chairman of the Houston Library Board, Frank Jones is a prominent attorney specializing in public finance and government issues. His official biography from his law firm, Greenberg Traurig, lists among his major accomplishments as playing a major role in the creation of the Reliant Park complex, Minute Maid Park and the Toyota Center.

Frank Jones is also HISD’s appointee to the authority in charge of redeveloping Houston’s Old Spanish Trail/Alameda Road neighborhood. He was appointed by the Harris County Commissioners Court to the board of the Gulf Coast Waste Disposal Authority.

APPROVING THE WORK

In three cases, records indicate the classes put on by Jones and her firms began even though there wasn’t enough money in the proper budget fund to pay for them — but school principals moved money around and made it happen.

TL Consulting was to put on GED and ESL training at Ortiz Middle School between Sept. 27, 2010, and May 21 this year. But budget officers wrote as late as Nov. 19 that there were “not enough funds” to pay for it, records show. Two weeks later, the funds had been made available.
FDR Group was hired to put on TAKS preparation classes Oct. 4-18 for the juniors and seniors at Sterling High School. But as late as Nov. 10 — which would have been after the classes had ended — HISD’s legal office complained to the high school that there weren’t enough funds in the budget, records show. That day, money was moved around to pay for it.
TL Consulting was hired to put on $20,000 worth of after-school enrichment programs at Alcott Elementary between Sept. 7, 2010, and July 8, 2011. But as late as Sept. 13, HISD’s legal office said there were “no funds in (the) budget” for it, records show.
At the same time, five sets of classes appear to have begun before two of HISD’s top administrators, the district controller and general counsel, signed off on the contracts for them. In two cases, records show the two administrators signed off on the contracts after the classes were already supposed to be over:

The TAKS prep classes at Sterling High were slated to end Oct. 18. But HISD General Counsel Elneita Hutchins-Taylor didn’t sign the contract for the classes with FDR Group until Nov. 11, and HISD Controller Kenneth Huewitt didn’t sign until six days after that, records show.
For a second set of GED and ESL classes at Ortiz Middle, slated to run Sept. 27-Dec. 17, HISD’s top lawyer didn’t approve the contract until Jan. 3, and the controller approved it four days after that.
In most of the cases, Jones and her firms were hired not at the request of HISD’s central office but at the request of individual school principals and the manager of HISD’s after-school programs, records show.

Sterling High Principal Leviticus Williams wanted Jones’ companies hired to prepare juniors and seniors for the TAKS test last fall, and wanted Jones’ firms hired to put on parent enrichment classes at the school this spring, records show. Williams did not return an e-mail message or multiple phone messages left at his school office.

Also not returning an e-mail or phone message was Jonnelle Hollins, the after-school chief. Her name appears on documents as requesting to hire Jones and her firms for eight after-school and GED/ESL programs, including those at Oates, Alcott and Blackshear elementaries and Worthing and Scarborough high schools.

“Evaluating the qualifications of (an educational) consultant is the responsibility of the school/department” hiring them, Spencer said. To hire an educational consultant, the school is required to submit to HISD’s Finance Department the consulting contract and a W-9 tax form, he said.

HISD, which has nearly 300 schools, has long had a culture of empowered principals. HISD principals, for instance, largely set their own schools’ budgets, based on the funds they’re allocated by the central office.

FRANK JONES’ LEGAL WORK FOR HISD

While the school system was hiring his wife to arrange after-school programs, HISD also hired Frank Jones to take the lead on cutting the deal to bring Grier to Houston from California two years ago.

F. JONES
The firm was to be paid a flat $20,000 for its services in negotiating with Grier, along with any travel or out-of-pocket expenses incurred, according to HISD’s agreement with the firm.

HISD relied on Frank Jones even though his firm, Greenberg Traurig, does not appear on the list of law firms that the district trustees approved for legal services in June 2009 for school year 2009-10. But the vote on that annual list also allows the school system to hire additional lawyers on an as-needed basis without additional approval from the trustees, Spencer said.

Greenberg Traurig was picked for the job by the school board’s Superintendent Search Committee, Spencer said. HISD signed a contract with Jones and Greenberg Traurig in August 2009, and the district inked its contract with Grier the following month.

However, Greenberg Traurig’s name does appear on the list of law firms for school year 2011-12 that district trustees voted to approve last Thursday night. Harris abstained from the vote but did not offer an explanation of why she abstained.

Greenberg Traurig is one of five law firms that had to recently pay back money to Harris County for “unsubstantiated travel and entertainment expenses incurred during trips to sell county bonds,” the Houston Chronicle reported. An internal audit showed outgoing county Financial Services Director Edwin Harrison went on out-of-town trips, including travel to Costa Rica, with attorneys doing bond work for the county. The firm paid back about $128,000, and could lose another $175,000 in billing the county is challenging.

“Our hope is that we’ve repaid the money back and we’re done with it,” Frank Jones told the Chron. “Certainly, we felt we had a legitimate issue, but if the county decides that it doesn’t warrant payment, we’re done. They’ve been a great client to the firm, and we just want to put it behind us.”

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Texas Watchdog Editor Trent Seibert contributed to this story. Contact Lynn Walsh at lynn@texaswatchdog.org or 713-228-2850. Contact Jennifer Peebles at jennifer@texaswatchdog.org or 281-656-1681.

Houston ISD tech vendors spent ‘significant funds’ to entertain trustees Larry Marshall, Manuel Rodriguez, court filing alleges
Thursday, Jun 23, 2011, 09:08AM CST
By Lynn Walsh and Jennifer Peebles

Vendors selling computer equipment to the Houston public schools spent “significant funds” to entertain school trustees Larry Marshall and Manuel Rodriguez, attorneys representing whistleblowers and the federal government allege in court documents, calling the payments “unlawful” and “designed to secure business from” the Houston schools.

Meanwhile, the court documents also allege that one of the Houston Independent School District’s top officials in the early part of the last decade, Cathy Mincberg, had an extramarital affair with a consultant whom the school district paid more than $5 million — a consultant she was reported by the local press to have had a hand in hiring.

The federal government has taken over as lead plantiff in the lawsuit, and court filings do not elaborate in court filings on what, specifically, the “significant funds” included or how much money was involved. Calls for comment to the plantiff’s lawyers were not returned.

The revelations come on the heels of reports that a Houston schools vendor, insurance agent and state Rep. Borris Miles, offered to arrange all-expenses-paid trips to Costa Rica to most of the school system’s trustees last year — and that Marshall went on two of the trips. It also follows reporting by Texas Watchdog that school trustees president Paula Harris voted on $28 million in contracts that included work for a company owned and run by one of her closest friends.

Rodriguez disagreed with the federal government’s claim that “significant funds” were spent on him. “I wouldn’t say anything over $50, I don’t think,” Rodriguez told Texas Watchdog earlier this week, recalling receiving nothing other “other than a dinner or two and a possible (ball) game.”

Marshall referred questions to the Houston schools’ press office.

Neither Marshall nor Rodriguez — nor former trustee Diana Davila, who was named along with them in court documents — have been charged with any crime; in fact, the case in question is a civil matter. In it, the plantiffs accuse an intertwined network of tech vendors of showering Houston Independent School District trustees and administrators with gifts and freebies and of using their close connections to HISD personnel to keep competitors at arms’ length from the school system.

“These unlawful payments, designed to secure business from” the Houston Independent School District, the court filing reads, “were part of the reason that HISD has been unable to participate in E-Rate funding and has incurred substantial fines/penalties, all to the detriment of HISD students.”

Federal officials recently unfroze $70 million in federal technology funding for HISD through the program, called E-Rate, which puts computers and networking equipment in schools. To settle the case, the school district also agreed to pay an $850,000 fine and stepped up its ethics policies governing swag from E-Rate vendors, such as implementing a “quiet period” during the bidding process, in which E-Rate vendors can’t communicate with school officials.

The E-Rate scandal at HISD has largely focused on a handful of former top administrators in the district’s technology department, who are alleged in court documents and other public records to have received tickets to sporting events, trips out of state, fine meals, gifts of the latest gadgetry and even a $60,000 personal loan from those doing E-Rate business with the school system. But HISD’s trustees’ names have rarely come up in the mess — until now.

Davila she didn’t recall any of the E-Rate vendors spending any money on her or giving her any gifts, perks, meals or ballgame tickets, beyond some campaign contributions worth a total of $1,500.

“I wasn’t privileged,” Davila, who stepped down from the HISD trustees last year. “Maybe I wasn’t privileged, or I should be saying ‘Thank God I didn’t,’” she said with a laugh. “I guess I didn’t look like the athletic type or something — they figured I’m a female I don’t like sports, and they’d be right.”

Even when she got the campaign contributions eight years ago, she said, she had no idea who the donors were — and no idea of the controversy they would cause in the years to come.

“I had no idea who they were, just like so many others who give money,” Davila said. “I don’t know what business or what type of business they do with HISD, or if they do any business with HISD. When you have these fundraisers and people host them for you, you don’t think to sit there and ask, ‘OK, are you doing business with HISD?’, because, you know, that’s not relevant at a fundraiser, I don’t think.”

The vendors spent the “significant” entertainment funds for the three trustees even though HISD specifically warned vendors about such actions when it put out “requests for proposals” for E-Rate projects in late 2002, the plantiffs alleges in another court filing.

“Supplier conduct: No gratuities of any kind of will be accepted including meals, gifts or tips. Violation of these conditions will subject the supplier to immediate disqualification from the proposal process,” the school district’s RFPs said, according to the feds.

However, Houston school trustees have said in the past that they have accepted travel and gifts, such as tickets to sporting events like Houston Rockets basketball games, and that they feel allowed to do so under a provision of the HISD ethics policy that allows them to receive freebies as “guests.” For instance, when queried about his acceptance of the Costa Rica trip, Marshall told the Houston Chronicle that he understood he did not have to disclose such gifts because Miles, the arranger of the trip, was present on it.

The suit also alleges Mincberg, who was HISD’s chief business officer from 2000 to 2004, was having an extramarital affair with an HISD consultant.

The consultant in question was one the school system was paying $1,400 a day, Wade Jacobs, whom the Houston Press in 2001 called “HISD’s $2 million man”:

… in the last three years he’s become HISD’s Mr. Fix-it, master of its computer universe and major project guru to everyone from the superintendent on down. Since inking a district contract in 1999, Jacobs’s California-based Infinet Technology Group has been paid $1.74 million. A contract extension is potentially worth another $1.3 million through next year.

Jacobs and his firm stopped working with HISD in 2004, as did Mincberg, “around the time a story broke about on an HISD E-Rate investigation,” the lawsuit says.

“Jacobs was able to use his intimate relationship with Mincberg to benefit his friends who wanted technology business with HISD,” including several of the companies in the intertwined tech vendors who are the defendants in the case, the suit says.

A former biology teacher at Lamar High, Mincberg served as an HISD trustee from 1982-95 and did two stints as president of the trustees, but, according to the Press, she may be most widely remembered for once floating the idea that teachers should also drive school buses for an extra $10 an hour. She also made an unsuccessful bid for Houston City Council.

The suggestion that Mincberg and Jacobs were having an affair is not new and was mentioned in the Houston Press story from 10 years ago, which noted that Mincberg had divorced former Harris County Democratic Party chairman David Mincberg around the same time.

Mincberg later became a top official with the Portland, Ore., school system. She is currently the head of a Portland-based education nonprofit, the Center for the Reform of School Systems. She did not return a call for comment this week.

Houston E-Rate civil suit – third amended complaint
Houston E-Rate civil suit – third amended complaint

***
Texas Watchdog Editor Trent Seibert contributed to this story.
Contact Lynn Walsh, lynn@texaswatchdog.org, 713-228-2850 or on Twitter, @lwalsh. Contact Jennifer Peebles at jennifer@texaswatchdog, 281-656-1681 or on Twitter at @texaswatchdog or @jpeebles.

HISD vendor state Rep. Borris Miles offered trustees all-expenses-paid Costa Rican trip, email shows
Thursday, Jun 16, 2011, 06:27PM CST
By Lynn Walsh, Trent Seibert and Jennifer Peebles

A state representative who services the Houston Independent School District’s flood insurance policy — and who is a close friend of two HISD trustees — offered to arrange an all-expenses-paid trip to Costa Rica to a majority of HISD’s trustees, according to an e-mail obtained by Texas Watchdog.

State Rep. Borris Miles, a Houston Democrat, offered in November to take most of the trustees to Costa Rica, saying he was arranging the free trip at the behest of the government of that Central American nation, the email shows.

It also shows Miles also offered to allow each trustee to bring along a guest, and wrote that the Costa Rican government would waive deductibles on “medical tourism” procedures, effectively offering the trustees and their guests deep discounts on the services.

It was not immediately clear whether any of the HISD trustees took Miles up on the offer. Three trustees reached by phone Thursday afternoon said they didn’t remember getting the e-mail. A fourth said he deleted it.

“I remember receiving it and thinking it was strange and deleting it,” said trustee Harvin Moore.

The revelation of the trip offer comes on the heels of Texas Watchdog’s recent story revealing that HISD trustees president Paula Harris, a close friend of Miles, voted on contracts that included work for a company run by another close friend, Pearland businesswoman Nicole West.

Multiple news stories in the past year have raised ethics as an issue in HISD, the nation’s seventh-largest school district.

One trustee resigned last year soon after she had tried to get her husband appointed to an HISD oversight board. And the federal government recently unfroze millions of dollars in HISD technology funding it blocked after it was revealed that HISD tech officers accepted big-ticket personal loans and other gifts and freebies from tech vendors.

HISD’s ethics policy says that “a public servant who exercises discretion in connection with contracts, purchases, payments, claims, or other pecuniary transactions shall not solicit, accept, or agree to accept any benefit from a person the public servant knows is interested in or likely to become interested in any such transactions of the District.”

Further down in the policy, it says that officials can accept “a gift or other benefit conferred on account of kinship or a personal, professional, or business relationship independent of the official status of the recipient,” and says that officials can accept “food, lodging, transportation, or entertainment accepted as a guest.”

“I’ll let the policy speak for itself,” HISD spokesman Jason Spencer said in response to a slate of questions sent via e-mail Thursday afternoon. In a statement sent to Texas Watchdog last week for a previous story, Spencer said the district “has one of the strongest ethics and conflict of interest policies of any school district in Texas.”

The e-mail from Miles does not specify why the HISD trustees would have a special interest in medical tourism.

“As you may be aware the concept of Medical Tourism/Travel is to provide employers, insurance companies and employees with competitive options for medical treatment by targeting select high value procedures,” Miles wrote in the e-mailed invitation. “Many of these procedures are being performed in other locations (Costa Rica being one), by highly trained physicians (many of them educated in the top U.S. medical schools) at hospitals that are JCI certified (the same international accreditation group that certifies US hospitals for international treatment) …

“For agreeing to be a part of the tour, the Costa Rican government is sponsoring all travel related expenses (airfare, hotels, ground transport, and meals). All travel arrangements are being coordinated
by our office.”

Phone messages left at Miles’ legislative office and his Houston insurance office were not returned Thursday afternoon.

“I don’t remember this email in particular, and I doubt that anyone took him up on his offer. We don’t take those kinds of trips,” trustee Manuel Rodriguez told Texas Watchdog Thursday afternoon.

“This is the first I’m hearing about Costa Rica,” said Greg Meyers, a trustee and former president of the trustees. “I’ve unequivocally never been invited anywhere out of the country by a vendor.”

Trustee Carol Mims Galloway also said she’d never seen the e-mail, and said she never uses her official Houston ISD e-mail account anyway, preferring to use a personal e-mail account. (Texas Watchdog is attempting to contact all nine of the trustees this afternoon, and will update TexasWatchdog.org with those comments.)

The e-mail was sent to Galloway, Rodriguez, Harris, Marshall, Meyers and Moore.

Miles is a close friend of both Harris and Galloway. In remarks at a school board meeting earlier this year, Harris said Miles was like a brother to her, and Miles said Galloway was like a “mother” him and had almost become his mother-in-law.

Trustees Mike Lunceford and Anna Eastman do not appear to have been copied on the e-mail offer, for reasons that were not clear. Current trustee Juliet Stipeche was not on the school board last November and was not copied on the e-mail, but the person whose unexpired term she filled, Diana Davila, was copied on the e-mailed invitation, even though she had resigned from the school board some months earlier.

Records made public by HISD Thursday afternoon show that HISD’s flood insurance is serviced by “Texas Farmers,” though the records do not identify the agent who sold or serviced any of HISD’s insurance policies. Miles’ agency is a Farmers Insurance firm.

His e-mail called the trip ” an important trade mission that could be a critical tool in helping us control healthcare cost in the U.S. … These procedures are being performed at a 50% – 75% reduction in cost. The result of which is, a reduction in claim cost which drive premiums down. While this will results in greater savings for U.S. employers (public and private), the win for the employees is that all deductibles are being waived and they are allowed to take a companion with them for the procedure, in addition to visiting some of the best locations in the world (in this case Costa Rica).”

***
Contact Lynn Walsh at 713-228-2850 or lynn@texaswatchdog or on Twitter at @lwalsh.
Contact Jennifer Peebles at 281-656-1681 or jennifer@texaswatchdog.org.
Contact Trent Seibert at 832-316-4994 or trent@texaswatchdog.org.

Texas school systems hang on to big-bucks reserve funds while laying off teachers
Tuesday, May 10, 2011, 08:06AM CST
By Lynn Walsh and Steve Miller

Texas’ largest school systems are laying off teachers by the hundreds and thousands while hanging on to the tens of millions of dollars in their “rainy day” and reserve funds — and some in those communities, including some teachers, say that’s a bad idea.

The Houston public schools, the state’s largest school system, has laid off more than 700 teachers to solve its budget crunch while having $279 million in reserves. The Dallas schools are considering laying off more than 1,110 employees and expect to have $85 million to $95 million in reserves at the end of the fiscal year. And the San Antonio public schools have more than $63 million in reserves, though they have found other jobs for teachers who faced threats of layoffs.

None of the three systems currently plans to dip into those bank accounts to save teachers’ jobs, though their budget proposals for the next fiscal year are in varying states of flux.

“I think they should be using the rainy day fund,” said teacher Susan Wingfield, who will be laid off at the end of this school year after 11 years in the Houston schools, the last seven teaching art at Lamar High. “We need to educate these students … We need to spend money on teachers’ salaries to do that instead of laying them off.”

The Austin and Amarillo public school systems both plan to use some of their reserves to plug their budget holes and prevent or reduce layoffs, spokesmen for those districts said. The Austin schools have $165 million in reserve and plan to use $43 million of it, while the Amarillo schools don’t yet know how much of their $55 million in reserves they will spend.

But school officials in some districts say they need to keep their rainy day funds for an even rainier day than today. And some say the state should spend its rainy day money first, before school districts dip into their own reserves.

A reserve fund “is not money that just sits there,” said Amy Beneski, director of governmental affairs for the Texas Association of School Administrators.

The state of Texas does not require a public school district to keep money in a savings or reserve account, nor does it specify how much money a school district should keep in reserve, according to both Allen Spelce, a spokesman for the state comptroller, and DeEtta Culbertson, a spokeswoman for the Texas Education Agency.

However, the amount of a school district’s reserves factor into its bond ratings, a sort of credit rating for public entities. The worse the bond rating, the more it costs to borrow money.

“The rule of thumb is about two (to) three months of operating capital,” Culbertson said.

That’s a problem for some school districts already. Dallas would need about $150 million to run its schools for two months, but has less than $100 million in the kitty. Two months of running the San Antonio schools would cost $67 million, spokesman Leslie Price said, but the school system is short a few million dollars toward that goal.

“For us, the challenge is that we have to make ends meet for a year or two, but can’t go too deep into the fund,” Dallas ISD spokesman Jon Dahlander said. “It’s just not there. With that $85 million or $95 million, with the current projected cuts in the legislature — the House wants $126 million – we’d bottom out completely.”

The amount of reserves also figures into the state’s rating system for school districts’ financial integrity, called FIRST. It requires school systems to “maintain approximately 60 days of operating expenses in their general fund account,” Culbertson said.

The school systems have a right to worry about drawing down their reserves and hurting their ratings, said Lonnie Hollingsworth of theTexas Classroom Teachers Association. “I’m sure that’s justified. But some districts have more than the suggested two months in reserve. And in a regular year, I’d say they need to be spending that on teacher salaries, but this time around, it’s going to save teacher jobs.”

The Austin schools will still have three months of expenses on hand after drawing down $43 million from its reserves this year, AISD spokesman Andy Welch said. The system has cut more than 1,100 jobs through attrition and layoffs, including 500 teachers laid off, he said.

The Houston schools have reserve funds in two accounts — the rainy day fund, holding about $80 million, and the “undesignated fund balance,” which holds about $199 million, the district’s financial head, Melinda Garrett, recently told trustees.

Houston has “never tapped into the rainy day fund,” HISD spokesman Jason Spencer said in an e-mail. With about $130 million a month in operating expenses, the $279 million on hand would likely keep the 200,000-student system running for about two months.

Six of Houston’s nine school trustees told Texas Watchdog in recent interviews that they did not oppose using some of the district’s rainy day fund to ease the school systems’ budget crunch, though all six also said the state legislature should first dip into the state’s rainy day fund to help school districts across Texas.

“I am not opposed,” trustee Manuel Rodriguez said. “There might be a possibility of taking $10 million out of one of the funds to help plug the hole or reduce the gap, but, you know, once that money goes away, it doesn’t come back very easily.”

Also supporting the use of some reserve money were HISD trustees Harvin Moore, Mike Lunceford, Carol Galloway, Anna Eastman and Juliet Stipeche. Unable to be reached for comment were Larry Marshall, Greg Meyers and trustees president Paula Harris.

“I am not saying we won’t use it,” Moore said. “But the state needs to do all they can from their rainy day fund before school districts use their reserve funds.”

The state’s rainy day fund receives money from oil and gas production taxes, said R.J. DeSilva, a spokesman for the state comptroller. Currently there is $8.2 billion in the fund, though $3 billion of that is likely to be tapped to fill the state’s budget shortfall for the current fiscal year.

“The state can afford to let some of that money go,” Galloway said. “They should release some of that money for education, because if we don’t educate our young people, I can just imagine what situation we will be in ten years from now.”

But local school districts’ rainy day or reserve funds generally must come from property taxes, and they can be slow to build up.

“No one is expecting the budget to get any better in 2013, so they are holding on to it,” Beneski said.

And there’s always the chance of some major unforeseen catastrophe on the horizon. Rodriguez recalled how, when Hurricane Ike hit the Gulf Coast in 2008, the Houston schools had to shut down for several days — but still had bills to pay during that time. (Hurricane expenses were actually paid by the school system’s insurance carriers and not out of the rainy day fund, Spencer said.)

“Something has to be able to sustain unforeseen emergencies and needs,” Rodriguez said.

He compared the reserve funds to an individual retirement account.

“You have your IRA and you lose your job. You don’t run to liquidate your IRA right away…You look for other jobs, you find ways to survive without having to go and dismantle your retirement plan. So, that’s where we are. I am willing to dip into it, but not in large quantities to where we destabilize the district’s financial stability.”

***
Contact Lynn Walsh at lynn@texaswatchdog.org or 713-228-2850 or on Twitter at @lwalsh. Contact Steve Miller at 832-303-9420 or stevemiller@texaswatchdog.org

.

Houston ISD leaders won’t criticize trustees president Paula Harris for voting on contracts that included work for close friend’s firm
Thursday, Jun 16, 2011, 09:30AM CST
By Lynn Walsh

The leadership of the Houston Independent School District hasn’t said in so many words that it’s entirely appropriate for HISD trustees president Paula Harris to vote on contracts that included work for a company owned and run by one of Harris’ closest friends.

But they certainly aren’t condemning her for it.

(See the orignal Texas Watchdog story by clicking here.)

Trustee Carol Mims Galloway said she didn’t know whether the votes presented a conflict of interest. Trustee Manuel Rodriguez said it was a personal decision, Greg Meyers said it was “up to the individual board member,” and Harvin Moore said it was a “judgment call.” HISD Superintendent Terry Grier said through a spokesman that he would not voice an opinion on the matter. And the school system’s spokesman criticized Texas Watchdog for characterizing Harris’ votes as a potential conflict of interest.

When asked whether Harris should have abstained from voting on $28 million in contracts that included work for her friend’s company, Galloway said she wasn’t sure.

“Well, I do not know … but if it’s a very closely related friend, I would think so, but, I do not know to what extent, because I don’t know people in her circle because she’s so much younger than me,” said Galloway, a former Houston city councilwoman.

Galloway said she was not aware of Harris’ relationship with Nicole West, who is an owner or principal in a handful of firms that have done business with HISD. She said the friendship between Harris and West never came up as a topic of discussion while trustees prepared to vote on the various contracts. Galloway said she knows West but doesn’t “know her that well or who she’s associated with.”

In remarks she made as she was being installed as president of the HISD trustees earlier this year, Harris said she was the godmother of West’s children, and added that both she and West were godparents to the children of state Rep. Borris Miles, D-Houston, whose insurance firm has provided flood insurance to HISD, records show. At the same meeting, Miles called Galloway his “my dear mother and friend” and said she “almost was my mother-in-law.”

Rodriguez also said he was not aware of the relationship between Harris and West, and said the decision to abstain from voting is a personal one for each trustee. “That’s normally left to our ethics,” he said. “If there is some sort of association, relation, we recuse ourselves from voting and abstain if that’s something that you feel might come into play in any way.”

Said trustee Mike Lunceford: “If you look at the rules, (West is) not a family member.” Harris “has said she has no conflict, so, at this point, I have nothing to go by to say that there would be.”

Meyers echoed Lunceford’s comments.

“I know there are no policies or laws that have been violated. I think, from my standpoint, it is up to the individual board member if they think there is any need to abstain,” Meyers said. “… One of the things I would like to point out was, last year when I was board president, even though we had (or) have one of the strongest ethics policies, I think, of any school district that I could think of, last year we embarked on adding to it and put in that ‘black out’ period and I think that’s something that has really strengthened what we do further. And it shows that the bidding process, the (request for proposals) process, the whole process of dealing with a vendor, is very important to the board because it passed unanimously. So, (it was) another attempt to make what we do and how things are governed, as far as process-wise, even stronger.”

Among the amendments made to the conflict-of-interest policies last year was the addition of a “code of silence” period — generally covering the entire bidding-and-contracting process — during which trustees and many HISD administrators are forbidden from communicating with potential vendors.

“I have never been approached by another trustee about a contract vote,” trustee Anna Eastman said in a written statement. “I have had people who are not on the board contact me regarding upcoming votes on contracts.

“I need to know that our procurement process is free from influence to remain focused on my ultimate goal, which is graduating young adults from every corner of this city equipped to realize fully their goals and dreams.”

While the leadership may not object, some in the HISD community are critical. A group calling itself “Educators for a Better District IV” — the HISD district Harris represents — have circulated an e-mail in recent days criticizing Harris’ connection to West. “We find it strange that while our schools are suffering and in need of education dollars, those dollars have gone into her best friend’s pocket,” the email reads. No current HISD employees identified themselves publicly in the missive.

Harris’ votes broke no laws, ordinances or HISD rules. The district’s conflict-of-interest policy for trustees forbids HISD from contracting with business entities “in which a Trustee or anyone related to the Trustee in the first degree of consanguinity (blood) or affinity (marriage) … has any pecuniary interest.” It makes no mention of friends or acquaintances.

In an interview with Texas Watchdog last week, Harris said her votes were ethical because West is not a relative. She said she has never used her influence to help West gain business with the school district.

“It doesn’t look good, in the sense that someone is getting all these contracts in all these different fields,” said Robert Wechsler, research director for City Ethics, a national nonprofit that works to improve local government ethics programs. “It definitely sounds fishy, but it’s hard to say that there was a violation,” he said, given that the Houston school district’s ethics policies don’t mention anyone but relatives.

“One of the problems is that this is one of these areas that ethics codes don’t deal with that well,” Wechsler said. “It is hard to define a ‘friend.’ It’s hard to define a ‘girlfriend’ or ‘boyfriend.’ So, usually, they’re not included. It’s only family members and business associates — you can say you are partners, or you own a business together — those kinds of things are factual. (But) nobody wants to go to the next step of defining what a friend is or what a lover is, so they’re usually left out, and they usually cause a lot of problems.

“It’s really important to point out with ethics laws that they’re minimum requirements,” he said. “It doesn’t mean that because it doesn’t say you can’t do it, like with friends, that means it’s OK to (approve) lots of contracts to your friends. It’s one of those areas (where) you really have to look at the spirit of the law.”

Harris and the other trustees merely voted up or down on slates of vendors to be approved for each contract. The makeup of each slate for each contract was determined by HISD’s administrative staff based largely on the estimated cost, and the trustees had no input into which companies were included in each slate, HISD has said. The votes on all four contracts were unanimous.

“If just knowing someone means that you can’t vote, or that you have to disclose it, then, that’s problematic,” Moore said. “The question is, how well do you have to know someone before you need for everybody to realize that you know someone? And then, what sort of relationships count? … I don’t know how you define that, for a friendship. It’s easy to define for (a) relationship, because that’s in the law and it’s pretty consistent. And you are either related to someone or you’re not. You just can’t do any business. But knowing someone — that’s where it probably becomes more of a judgment call.”

Some government agencies’ ethics policies do consider the involvement of people other than family members as conflicts of interest. Just this week, the U.S. Supreme Court upheld the constitutionality of the Nevada state ethics law, which had been challenged by a city councilman who had been censured by the state ethics commission over a conflict of interest. The councilman had voted to approve a land-use change for a proposed hotel-casino that employed the councilman’s campaign manager, an old friend, as a consultant.

Trustee Juliet Stipeche returned a phone call for comment but could not be reached by press time.

Trustee Larry Marshall, a retired longtime HISD administrator, also didn’t return calls but lavished praise on Harris at last week’s school board meeting, the evening after Texas Watchdog’s story was published regarding West and Harris’ connections. Marshall — who has previously recused himself from votes on the grounds of having a potential conflict of interest — said the district was lucky to have Harris as president, calling her “sweeter than a politician’s promise and colder than a mother-in-law.”

Grier, who was hired by the trustees, has previously questioned HISD’s contracting processes, saying he discerned “no rhyme or reason except, quite frankly, influence where influence has no business coming from.” However, a spokesman last week said Grier did not want to give his personal opinion of Harris’ relationship with an HISD vendor.

“Dr. Grier is not in the business of passing moral or ethical judgments on the decisions made by his bosses on the Board of Education,” HISD spokesman Jason Spencer said in an e-mailed statement. “However, his administration has made it clear to you that there are no policies or laws prohibiting members of the HISD Board, or any governmental entity in Texas, from voting on contracts with companies that happen to be headed by people with whom they are friends.”

Spencer challenged Texas Watchdog’s statement in last week’s story that Harris’ votes presented a “potential conflict of interest”: “The fact that it appears you were unable to find anyone willing to go on the record making an allegation is very telling,” Spencer wrote. “It is also very telling that, to my knowledge, no one has filed a complaint against Ms. Harris in this matter.”

***
Jennifer Peebles contributed to this report.
Contact Lynn Walsh at 713-228-2850 or lynn@texaswatchdog or on Twitter at @lwalsh. Contact Jennifer Peebles at 281-656-1681 or jennifer@texaswatchdog.org.

Texas Watchdog probes Houston ISD’s business ties to friend of trustees’ president
Friday, Jun 10, 2011, 10:25AM CST
By Jennifer Peebles

As part of its ongoing look at potential conflicts of interest for people in government, you may have seen that yesterday Texas Watchdog took a closer look the Houston school system’s business relationship with a close friend of the president of the school district’s trustees.

See the full story by clicking here.

Some key points from the story by Texas Watchdog reporter Lynn Walsh:
*Houston Independent School District trustees president Paula Harris has voted four times to approve contracts that included work for a firm called Westco Ventures, which is owned and run by a close friend of hers, Pearland businesswoman Nicole West, records show. Harris is the godmother of West’s children.

*The total value of the contracts is $28 million, though Westco is receiving only part of the work; total payments by the district to Westco so far total more than $1.5 million, records show.

*The school district has also done $125,000 in business with Westco and other West-owned ventures that did not require approval by the school board, including HISD’s payment of more than $19,000 to West’s private investigations firm, who were hired to track down truant high school students, records show.

*Harris says she has never used her influence to help West gain business from the school district. Harris’s votes were legal under state law and were allowed under Houston ISD ethics rules.

In addition to the full text of the story — which includes an embedded spreadsheet of payments in West’s firms and an interactive map of site-specific work West’s firm has done for HISD — you can also read all of our questions to Houston ISD leading up to our report and the school district’s complete statement in response to them. There’s a first batch of questions, with the answers included in it, and a second batch with a separate statement from HISD.

And if you know of anyone else in local government who faces a potential conflict of interest, please let us know. We’re news@texaswatchdog.org.

Seventeen HISD schools eyed for closure, consolidation in latest round of ‘right-sizing,’ budget discussions
Tuesday, Apr 12, 2011, 05:51PM CST
By Lynn Walsh

Many of the 17 Houston elementary and middle schools now being considered for possible closure or consolidation next year have had steep drop-offs in enrollment in the past decade, school system data shows.

The Houston Independent School District has been discussing whether or not to close some of its smallest schools since last year. HISD trustees have seen the list of possible schools go from 66 in December to 37 in March.

HISD trustees were set to vote on the possible closure of four elementary schools this week. But the district has put that decision on hold and is once again widening the pool of schools it will consider for closure or consolidation.

On the most recent list, released Tuesday by HISD spokesman Jason Spencer, there are 13 elementary schools and four middle schools. They are:

Elementaries:
Memorial
Paige
N.Q. Henderson
Port Houston
Gordon
Pleasantville
Stevenson
Houston Gardens
Burrus
Rhoads
Grimes
McDade
Love
Middles:
Ryan
M.C. Williams
Key
Black

View HISD’s 17 schools being considered for closure/consolidation in a larger map
View HISD’s 17 schools being considered for closure/consolidation in a larger map

The list contains some familiar names of schools that have been at the center of the small school closure discussion since the beginning, including, Love, McDade, Grimes and Rhoads elementaries — the four schools HISD trustees were set to consider closing Thursday.

More than half of the schools on the list received the state’s highest academic rating, “exemplary,” in 2010. Only one of the schools, Key Middle School, received the lowest academic rating of “academically unacceptable.”

About the 17 schools
View more data about all of the schools in the interactive table below, including enrollment numbers and program funding information. Use the table to group and filter results based on school type, enrollment, etc.)

However, many of the schools have substantially lost students since 2000, according to HISD data, and many are projected to have only a minimal increase in the number of students, at best, through the 2019-2020 school year.

All of the schools on the list receive additional funding for their small size through the district’s “small school subsidy.” This year, HISD expects to spend more than $10 million on the subsidy it provides to schools it considers under-enrolled. To receive the subsidy, elementary schools must have 500 students or less, middle schools must have 750 or less and, for high schools, the cutoff is 1,000 students.

Two of the middle schools, Key and Ryan, are part of the district’s academic turnaround model, Apollo 20. This school year only nine middle and high schools in HISD were chosen as Apollo 20 schools, four high schools and five middle schools.

In February, HISD trustees approved a list of 11 elementary schools to participate in the Apollo 20 program next school year, one of those schools, Grimes, is being considered for closure next school year.

HISD says it will schedule community meetings in the coming weeks as it moves forward with the process of possibly closing or consolidating these schools. See enrollment figures and other data on the schools below.

Schools’ building capacity

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Contact Lynn Walsh at 713-228-2850 or lynn@texaswatchdog.org or on Twitter at @lwalsh

See Houston ISD’s ‘small schools,’ schools in ‘right-sizing’ discussion on interactive map
Wednesday, Jan 26, 2011, 06:36AM CST
By Lynn Walsh

As the discussion over possible school closures and consolidations at HISD continues, Texas Watchdog wants to hear from you. What do you think the district should do with “small schools?” Should the “small school subsidy” continue? Let us know what you think. Contact Lynn Walsh, Lynn@TexasWatchdog.org, 713-228-2850 or on Twitter @LWalsh.