Lynn Walsh

A story written for Texas Watchdog:

Project GRAD program — where HISD administrator moonlights as executive director — gets funding boost from HISD
Fri Aug 13 15:09:00 2010 CST
By Lynn Walsh

Another high school in the Houston Independent School District will receive funding for a program to increase graduation rates after trustees approved more than $59,000 for the new program at a Thursday meeting.

Phillis Wheatley High School in northeast Houston will add Project GRAD (Graduation Really Achieves Dreams) Houston to its campus. According to the Project GRAD Houston website, the nonprofit is part of a national program that works to increase high school graduation and college attendance rates for low-income students. The national program grew “from a scholarship program which began in partnership with (the) Houston Independent School District in 1989.”

HISD trustees unanimously approved the $59,221 cost associated with the program for Wheatley bringing the total cost of Project GRAD Houston’s contract with the district to $1.9 million for the 2010-11 school year.

In June HISD trustees approved a renewal of the contract between the Houston district and Project GRAD Houston. The agreement for the coming school year includes work at three high schools — Jefferson Davis, John Reagan and Jack Yates — and five elementary schools, Thomas Jefferson, James Ketelsen, Adele Looscan, Clemente Martinez and Sidney Sherman.
graduation caps

Texas Watchdog reported earlier that HISD administrator Ann Stiles had been working full-time for HISD’s Project GRAD program. She earned more than $67,000 a year from HISD while also serving as the executive director for the nonprofit, earning $120,201 in 2008, according to IRS documents. The total paycheck for the two jobs comes to more than $187,000 annually.

HISD Superintendent Terry Grier revealed Stiles’ moonlighting Monday to trustees and the public at a board meeting.

“I want to bring it to the board’s attention as it is probably an ethical issue that should be discussed,” Grier, who took over as the school system chief last September, told the group. He didn’t elaborate.

Stiles’ letter of resignation from HISD is dated Aug. 2. The reason for the resignation, according to the document, is “other employment.” Stiles did not return a call left Wednesday at Project GRAD’s office.

“There does not appear to be a violation of any policy,” and the district knew about her moonlighting, HISD spokesman Norm Uhl said by e-mail. “I just don’t think the question of the possible appearance of a conflict had been asked until now.”

Contact Lynn Walsh at at 713-228-2850 or lynn@texaswatchdog.org. Follow news about the Houston Independent School District on Twitter, #HISD.

A story written for Texas Watchdog:

Owner of company implicated in HISD E-Rate ethics probe denies giving gifts to employees
Fri Aug 13 14:22:00 2010 CST
By Lynn Walsh

Cell phones, playoff sporting tickets, trinkets and thousands of dollars in personal checks — all allegedly given to Houston Independent School District employees by federal technology program vendors that had a multi-million dollar contract with the Houston district — but the owner of one company says he had nothing to do with it.

Frank Trifilio, head of the now-defunct Analytical Computer Services, said he and his company never gave gifts to HISD employees, beyond an occasional fast-food lunch, and sought to distance himself from one-time business partners in an interview with Texas Watchdog. Trifilio, of Houston, said HISD confused Analytical with his subcontractors in the federal E-Rate program and that his company was the scapegoat in an investigation that resulted in his being banned from doing business with the district.

From 2005 to 2008, Trifilio and his business partners allegedly showered gifts including cash, meals and fishing trips on employees managing E-Rate, an HISD memo detailed by Texas Watchdog last month. Analytical provided $45 million in technology services between July 2005 and June 2009, a district contracts database shows. A federal lawsuit stemming from the improper gifts was settled by the district this year, and HISD has strengthened its ethics policy for E-Rate employees and board members.

Trifilio said he’s also suffered consequences.

“I lost everything, including my family,” Trifilio said. “I went through all of my savings just to get lawyers in Washington to defend me. I had to lay off 200 employees because the company went bankrupt.”
present

Trifilio said ACS, which was the umbrella organization for other technology vendors also implicated in the ethics probe, stopped operating in January 2007.

Analytical Computer Services “gave cellphones to approximately 26 district employees at one time or another from approximately August 2002 to February 2007,” according to the district memo penned by an outside law firm for HISD.

“I never provided phones for anyone at HISD,” Trifilio said. When asked if it is possible that one of his 200 employees could have, he expressed disbelief: “No, I sign off on all of the bills. I would have seen something like that.”

Trifilio said HISD confused his company with subcontractors Acclaim Professional Services, owned by Larry Lehmann, and Micro Systems Enterprises, where Frankie Wong was president. Wong is in prison for his role in a bribery scandal involving the Dallas Independent School District.

“We were the scapegoat” in the controversy because of confusion over vendor identification numbers, Trifilio said. Micro Systems and Acclaim took on some of the contracted work because the district believed the volume was too much for one company to handle, Trifilio said.

“In the E-Rate program, you cannot split up vendor numbers for projects, so HISD put in my SPIN number and my name,” he said. “Our number was being used, but we were not doing the business.”

E-Rate obtain the numbers from the Universal Service Administrative Company, which under the direction of the FCC administers the E-Rate program, said Richard Patton, HISD’s E-Rate compliance official. Patton said he was not aware of any limitations on the vendor ID numbers like what Trifilio described.

“I became the umbrella organization because ACS was the only company with a SPIN number,” Trifilio said. “We (Micro Systems) were archenemies. The relationship was nothing but a title.”

Professional basketball suite tickets appear to be the most valuable of the gifts that HISD lawyers found came from Trifilio’s company. Then-Superintendent Abelardo Saavedra “and a guest attended three Houston Rockets playoff games in the Analytical Computer Services Inc. (‘ACS’) suite in 2005,” apparently NBA playoff games 3, 4 and 6 against the Dallas Mavericks in the playoffs’ first round.

In an earlier interview with Texas Watchdog, Saavedra said he was invited to the games by HISD trustees, took his wife, but didn’t realize it was a vendor’s suite. He said he subsequently sent Trifilio a check for $300 to cover the costs.

Trifilio said he cashed the check, which was accompanied by “a very nice letter.”

Trifilio said the suite at the Toyota Center belonged to him and ACS but downplayed the appearance of a cozy relationship between his company and the district.

“The suites were mine,” Trifilio said. “Trustees were probably invited by a general manager. There were as many ACS employees there as there were board members.”

Other allegations outlined in the memorandum include gifts from ACS of fanny packs and koozies, or foamlike beverage containers, to HISD. Trifilio denies that ACS ever provided such items unless HISD employees picked them up at a convention.

Why would HISD employees and trustees attend a basketball game at an E-rate vendor’s suite?

Trifilio said the fact that board members were there is irrelevant because “the board members have zero influence in us getting any E-Rate contracts. The procurement is done on a lower level.” Board members vote on contracts or sign off on them after they are approved by district staff, depending on their value.

Trifilio said Analytical and district staff had a “camaraderie” with each other, which led to some district employees also attending games in the company suite.

“We had people (at HISD) all the time, at least eight people there, 40 hours a week,” Trifilio said. “They became friends with people over there. They had their own badges. They felt as if they were employees at HISD.”

Trifilio said when his company took HISD employees out to lunch, which he said happened a handful of times, the conversation was focused on current work.

“We didn’t talk about upcoming bids,” he said.

Former district technology employees William L. Edwards, Steve K. Kim and Laura M. Palmer were the primary recipients of the gifts and meals, the memo from HISD firm Bracewell & Guiliani said. Their names were closely guarded by the school district for years and were only released after a Texas Watchdog public information request that the district challenged to the attorney general’s office.

According to the memo, Edwards and Palmer accepted a ride on Wong’s fishing boat, the “Sir Veza” — the same name of a $305,000, 46-foot yacht connected to the E-Rate scandal in Dallas. Dallas ISD’s technology chief, Ruben B. Bohuchot, is in a federal prison in Fort Worth after being found guilty in the bribery and money laundering scheme.

Wong created a company to maintain the “Sir Veza,” according to the Justice Department.

“We worked together, but we hated each other with a passion,” Trifilio said, even though he mentioned he had taken his sons fishing on the boat. “We did north side, they did south side and that is that.”

Trifilio cooperated with the grand jury in the Dallas investigation, even though there was no information he could contribute, he said.

Trifilio said he had not talked to Lehmann. Texas Watchdog has attempted to contact Lehmann multiple times but has been unable to reach him.

Trifilio said he owns a rehab and renovation company.

“I am 65 years old, and I am cleaning toilets,” he said, adding that he works alone.

“No more subcontractors.”

Contact Lynn Walsh at at 713-228-2850 or lynn@texaswatchdog.org. Follow news about the Houston Independent School District on Twitter, #HISD.

A story written for Texas Watchdog:

HISD says travel policy revisions still on track for start of school; timeframe won’t allow for required board approval
Thu Aug 12 16:40:00 2010 CST
By Lynn Walsh

While the Houston Independent School District has nearly doubled its payments to a local travel agency this year compared to 2009, a district official’s promise of a new district-wide travel policy by the start of the school year has not held true.

UPDATE (5:07 p.m.) But that official still maintains the revisions will be ready next week.

Poor planning, a preferences for costly direct flights, agency fees for flight bookings and a toothless travel policy have led to unnecessary costs for district travel, a Texas Watchdog investigation found.
Texas Watchdog has been asking HISD administrators and Superintendent Terry Grier about the high travel costs and sometimes disregard of the travel policy’s preference for driving short distances.

Grier has said the district would carefully look at “any issues you have with travel” and declined further comment. Responses from HISD administrators have generally been via prepared statements that leave some questions unanswered.

One thing HISD Chief Financial Officer Melinda Garrett did tell Texas Watchdog in June is that a new policy would be in place by the start of this school year.

“As a result of the new organizational change and elimination of the regional offices, many policies and administrative regulations are being reviewed. This includes travel. The district will have updated travel guidelines ready for schools and departments prior to the start of school.”

The start of classes for some schools is Monday.

The August board meeting for HISD trustees is tonight, the last opportunity before the start of school for trustees to approve a new policy. The agenda contains no mention of such.

Texas Watchdog asked both Garrett and Grier’s Chief of Staff Michele Pola about the approval of the new policy. Neither has responded.

UPDATE (5:07 p.m.): Garrett said in an e-mail this afternoon that the district is still on track to update travel guidelines in its finance procedures manual for distribution next week. But it’s unclear how they can do so without board approval tonight. These “travel policies are established and approved by the Board of Education,” the document says.

The meeting begins at 5 p.m. at the Hattie Mae White Educational Support Center, 1800 W. 18th St.

Texas Watchdog will be there and will again ask about the status of a new travel policy.

Follow @TexasWatchdog on Twitter for live updates from the meeting tonight or search #HISD on Twitter.

Editor’s note: Texas Watchdog published a brief item about Garrett’s statement around 4:45 p.m. That item has been incorporated into the update paragraphs above.

A story produced for Texas Watchdog:

Video: Lee High School’s $1 million repair project
Thu Aug 12 10:42:00 2010 CST
By Lynn Walsh

Take a video tour inside Lee High School, where a library addition has settled and shifted away from the rest of the school. Houston Independent School District trustees gave the OK last month for up to $1 million in structural repairs, to be managed by Matrix Structural Engineers.

A story written for Texas Watchdog:

HISD employee double-dips with contractor to earn $187K a year; Grier: ‘Probably an ethical issue’
Wed Aug 11 05:03:00 2010 CST
By Lynn Walsh

A Houston Independent School District administrator has had a lucrative side job for at least three years — running an education nonprofit that has a nearly $2 million contract with HISD, something Superintendent Terry Grier says is “probably an ethical issue.”

Ann Stiles’ job at HISD in recent years has been overseeing the school system program coordinated by her own group, Project GRAD Houston, which tries to prevent low-income children in HISD from dropping out of school. Project GRAD has a $1.86 million contract with the Houston district, which school trustees renewed in June.

As HISD teacher specialist for Project GRAD, Stiles is a full-time HISD employee, earning a salary of $67,318 this year plus benefits, district spokesman Norm Uhl said.

But that’s not her only source of income. Stiles is also the executive director for Project GRAD Houston, where, according to the group’s IRS form, she earned $120,201 in 2008 and listed an average 40 hours of work per week. The total paycheck for the two jobs comes to more than $187,000 annually.

Stiles’ moonlighting was revealed Monday by Grier to school system trustees and the public. “I want to bring it to the board’s attention as it is probably an ethical issue that should be discussed,” Grier, who took over as the school system chief last September, told the group. He didn’t elaborate.

However, school officials had previously known of Stiles’ two jobs, Uhl said, though he did not elaborate on how long the district had known.

Asked whether an HISD employee is allowed to also work for a nonprofit that contracts with the district, Uhl said in an e-mail, “there does not appear to be a violation of any policy and it was known that she worked for the district. I just don’t think the question of the possible appearance of a conflict had been asked until now.”

Project GRAD Houston’s IRS form and its Web site list HISD Trustee Paula Harris as one of the group’s board members. Her name appears on the group’s IRS form on the same page as the one identifying Stiles as executive director. Harris and another HISD trustee, Anna Eastman, had questioned Grier about Stiles’ dual employment at the Monday meeting, but Harris did not volunteer publicly that she is a Project GRAD board member.

Stiles has submitted a resignation letter to the school district, effective Aug. 31, Uhl said. A school district staffer told the trustees Monday that the resignation had been turned in, though it was unclear exactly when it was submitted.

HISD salary records show Stiles has been a district employee since August 1993. She was initially hired as a teacher at Jefferson Elementary School, Uhl said.

The first reference to Project GRAD in Stiles’ employee file at HISD is in 1997, Uhl said, where Stiles is listed as a math teacher at the now-closed Lamar Elementary serving as a “Teacher Trainer under Project Grad.”

She began working as Project GRAD’s teacher specialist for HISD in August 2000, earning a salary of more than $40,000, Uhl said. Salary records show her HISD pay increased each year, up to the $67,318 she earned last year.

It was not clear at press time when Stiles became an employee of the nonprofit organization Project GRAD. IRS forms for the nonprofit were available online as far back as 2006, and all three years’ forms describe Stiles as the executive director.

Texas Watchdog called the Project GRAD Houston office number, asking for Stiles. A receptionist said Stiles was in a meeting and took a message. As of print, Stiles did not return the phone call.

HISD’s headquarters at 1800 W. 18th St. is 8.5 miles away from the Project GRAD office at 3000 Richmond — a 25-minute drive in traffic, according to Google Maps.

According to its website, Project GRAD (Graduation Really Achieves Dreams) Houston is part of a national program that works to increase high school graduation and college attendance rates for low-income students. The national program grew “from a scholarship program which began in partnership with (the) Houston Independent School District in 1989.”

The group was founded by former Tenneco oil chief James Ketelsen and his wife, Kathryn; James Ketelsen is Project GRAD Houston’s president and board chairman, while Kathryn Ketelsen is one of Harris’ fellow directors. HISD named an elementary school after James Ketelsen in 2002.

In June HISD trustees approved a renewal of the contract between the Houston district and Project GRAD Houston. The agreement for the coming school year, for $1.86 million, includes work at three high schools — Jefferson Davis, John Reagan and Jack Yates — and five elementary schools, Thomas Jefferson, James Ketelsen, Adele Looscan, Clemente Martinez and Sidney Sherman.

The possible addition of a ninth site, Phillis Wheatley High School in northeast Houston, prompted Grier’s mention of Stiles’ dual employment at Monday’s school board meeting. The addition of Wheatley and the additional costs of $59,221 associated with it are up for approval by school trustees Thursday (agenda item D-4).

Do you think HISD should have a policy that prohibits an employee from receiving a taxpayer-funded salary from the school district while at the same time working for a business or nonprofit that contracts with the district?

Let Texas Watchdog know what you think. Contact Lynn Walsh, Lynn@TexasWatchdog.org or 713-228-2850. On Twitter, @TexasWatchdog or @Lwalsh, and follow #HISD for stories, meeting highlights and more on HISD.

A story published for Texas Watchdog:

Video: HISD Trustee Harvin Moore addresses TEA accountability ratings
Tue Aug 10 18:16:00 2010 CST
By Lynn Walsh

More Houston Independent School District schools are receiving higher state accountability ratings than last year, recent reports released from the Texas Education Agency show, but critics blast the standards as too low.

Over 100 schools in the Houston Independent School District received the highest state rating of “exemplary” this year and almost 250 schools in HISD made “adequate yearly progress,” or AYP, a federal requirement for campuses and states that measures reading, math and graduation and attendance rates. In both instances, the number of schools meeting the standard is greater than last year.

But what does it all mean? AYP ratings are a result of the No Child Left Behind Act of 2001. TAKS test results are used when determining both federal AYP ratings and TEA accountability ratings–exemplary, recognized, not acceptable, etc. But critics say the standards have gotten so diluted as to be a poor measure of achievement.

The Texas Tribune reported on the issue last month, underscoring the measure’s unreliability.

In fifth grade reading, 44 percent of students who were projected to pass actually failed. In eighth grade math, 38 percent. In 11th grade reading and math, 30 percent and 28 percent, respectively.

Houston Chronicle columnist Rick Casey questioned the use of the Texas Projection Measure last week:

Schools and school districts are bumped up one rating level if the TPM projects their students to do well enough to reach that level within the next few years.

I don’t blame administrators or teachers, especially those with responsibility for educating low-income children, for liking the TPM. They have a tough job, and they enjoy getting public credit for making gains, even if those gains don’t show up in passing rates on the high-stakes test.

And the West University Examiner raised questions about specific HISD schools that made it on the state’s list of “acceptable” schools:

Curiously, also listed as recognized is Fondren Middle School, called a failing school by HISD and placed in the Apollo program for schools in need of immediate turnaround or risk potential closure by the state. Other Apollo schools were included in the acceptable category, including Ryan, Dowling and Attucks middle schools. Four high schools in the Apollo initiative, Sharpstown, Lee, Jones and Kashmere, were named unacceptable. Kashmere and Key were previously on the state’s acceptable list until a recent TEA ruling that demoted both due to findings of test data improprieties.

It is not just the media that is questioning the rating system used by the TEA. HISD trustee Harvin Moore has for months raised concerns over the current rating system during board meetings. Moore has even opined on the issue on his personal blog, The Transformation Times:

“Each year, state standards boards have announced that they are lowering their ‘cut scores’ (number of questions a child must answer correctly to pass) for various noble reasons, usually because ‘the test questions are harder this year, so the same level of proficiency is reflected by a smaller number of correct answers.’”

Moore discussed with Texas Watchdog what he believes may be the solution to inflated state accountability ratings and lowered cutoff scores: Common Core. Watch the clip below for more.

Contact Lynn Walsh at 713-228-2850 or lynn@texaswatchdog.org. Follow news about the Houston Independent School District on Twitter, #HISD.

A story written for Texas Watchdog:

HISD summer school costs to be covered by individual schools: West University Examiner
Wed Jul 21 19:27:00 2010 CST
By Lynn Walsh

A $19 million federal funding shortfall at the Houston Independent School District has been passed on to individual school campuses, according to an article in the West University Examiner.
Programs normally funded by the Houston Independent School District’s central office, like summer school and preschool will now have to be funded by individual school budgets, the article says.

This is not the first time summer school funding has been at the center of budget conversations at HISD. In April, HISD Chief Financial Officer Melinda Garrett and other top administrators were scrambling to find a way to fund summer school programs across the district.

Garrett said HISD normally spends about $28 million to fund summer school, and most of the money for the summer programs comes to the district in the form of Title I funds, federal funding aimed at boosting achievement among poor students. Title I funds are redirected to school districts from the state of Texas.

According to the Examiner, principals at schools across the Houston district were told of projected budget cuts in federal Title I funding for the 2011-12 school year on June 22, just two days before HISD trustees passed the $1.6 billion budget.

The article says:

“Board members were not officially informed of the adjustment until July 14, well after some were alerted by principals in their respective districts; many trustees felt slighted by the miscommunication and have also expressed that a drastic shift in expenses passed to individual schools should have been brought before the board for a vote.

“It’s a sensitive issue we should have addressed up front,” trustee Lawrence Marshall told The Examiner.”

Texas Watchdog has questioned the transparency of the 2010-11 HISD budget process before, asking Garrett if the scheduled public hearing and comments from citizens would really change what the budget looks like, because of their timing on the night of the vote.

Garrett has fired back via the Houston Press, which has updated its earlier item on the funding issue. She tells the alt-weekly that the $19 million figure may change, and that “trustees have known for months about the summer school funding problems.”

For weeks Texas Watchdog has been trying to get answers from HISD to find out how summer school will be funded in coming years. After phone call, e-mail and in-person requests, Texas Watchdog is still waiting for answers from the district.

In the article, the Examiner also describes its difficulty in obtaining information: “HISD originally declined comment. Since last week … HISD leaders have scurried to produce a cohesive explanation for the cuts.”

Contact Lynn Walsh at 713-228-2850 or lynn@texaswatchdog.org. Follow all her reports on the Houston Independent School District by searching #HISD on Twitter.

A story produced for Texas Watchdog:

Lee High School to get up to $1 million in structural repairs
Fri Jul 16 00:15:00 2010 CST
By Lynn Walsh

Lee High School will be repaired after Houston Independent School District trustees agreed to an emergency use of capital funds at the July board meeting earlier tonight.
The engineering firm Matrix Structural Engineers will lead the project, which could cost up to $1 million, after trustees passed the agenda item unanimously.

HISD administrators have said the school in District VIII is in need of structural repairs. A portion of the school has sunk 9 inches, HISD Superintendent Terry Grier said Thursday night.

Grier said this would not be a permanent fix and told trustees that the building will eventually need to be replaced. Grier on Monday questioned whether adding a planned running track to the campus in northwest Houston is the best investment right now. Trustees did not discuss the track Thursday night.

According to HISD, Lee High School was part of the 2007 Bond Program and received $5.5 million for renovation or repair work. The district says some of the work has already been completed but most is still in the design process.

This stabilization project, according to HISD, cannot be paid for with that pool of money, which was for “major building systems/ADA improvements,” not structural renovations.

According to the contract, Matrix will be responsible for obtaining contractors to stabilize the structure, continually monitoring the structural stability of the high school and assisting HISD in evaluating contractor proposals.

Also at Thursday’s meeting, Trustee Diana Dávila resigned. Find more background in this Houston Chronicle piece, and view video of Dávila’s statement below.

A story produced for Texas Watchdog:

HISD considers emergency structural repairs to Lee High School
Thu Jul 15 12:33:00 2010 CST
By Lynn Walsh

Houston Independent School District trustees are set to decide whether to use emergency funds to repair Lee High School at a board meeting later today.

The school is in need of structural repair, HISD administrators said Monday at a board workshop meeting. The board will decide whether to use capital funds on an emergency basis to pay for needed engineering, consultation and construction work.

HISD Superintendent Terry Grier said this would not be a permanent fix and told trustees that the building will eventually need to be replaced. Grier said a new running track is scheduled to be added to the high school and questioned whether adding a track to the campus in northwest Houston is the best investment right now.

“There is only so much room at that site,” Grier said. “If a new school needs to be built, we want to make sure there is enough room for it.”

HISD needs to use emergency funds, because there is not any leftover bond money or a present bond allocation associated with Lee to do the work.

Houston ISD trustees will also vote on whether to approve several grants, including a $1.8 million grant for an algebra readiness program.

The board meeting begins 5 p.m. at the Hattie Mae White Educational Support Center, 4440 West 18th St. Be sure to follow @TexasWatchdog or #HISD on Twitter for up-to-the-minute updates.

A story written for Texas Watchdog:

Gift-giving culture flourished at HISD; vendors lavished cash, dinners and tickets on employees
By Lynn Walsh

A private birthday party at an upscale steakhouse, Houston Rockets playoff tickets, checks totaling $30,000 and the offer of a personal loan for an undisclosed sum were given to Houston Independent School District employees by private companies seeking millions of dollars’ worth of technology contracts with the school system, public records show.
The gift-giving stretched all the way to the schools’ top office — then-Superintendent Abelardo Saavedra and his wife saw three Rockets playoff games in a vendor’s luxury suite at the Toyota Center in 2005. The gifts were said to have begun as early as that year and as late as 2008, according to a memo from an outside law firm hired by the school district.

The frequency of the gifts suggests a culture where vendors extended the type of largesse — including personal loans and just plain cash to help with family problems — that some people would be embarrassed to seek from close friends and family. Vendors schmoozed with school officials and the district’s top technology officers on a private yacht and may have paid for one school system worker to go to Las Vegas twice, the records allege; one firm with a $45 million tech contract with the school system paid for cellphones for 26 school system workers at various times during the given period.

Such practices brought federal sanctions, costing the district around $1 million in direct costs — that’s about how much the district may spend to rehabilitate Lee High School in northwest Houston — and the loss of another $105 million federal technology funding.

But the practices did not yield any criminal charges for anyone involved with HISD, even though some of the allegations look similar to those in the case that sent a Dallas Independent School District employee to federal prison in a bribery and money laundering scandal. The gifts given to the HISD workers involve the very same federal tech program, called E-Rate, as the one in the DISD case, and they even involve some of the same players, such as Frankie Wong, a Houston businessman who entertained both DISD’s chief tech officer as well as two of HISD’s top tech officers on his yacht. The DISD official is now in a federal prison in Fort Worth, and Wong is being held at a federal facility in Bastrop.

Two of the employees named in the memo continued to receive pay raises and promotions while allegedly violating HISD E-Rate ethics policies, records show.

The revelation of the depth of the gift-giving also sheds new light on public, but vague, comments made recently by Saavedra’s replacement, new HISD Superintendent Terry Grier, suggesting Grier may have concerns about how vendors and contractors are chosen by the school system. Grier described seeing names of private firms being put on, and then removed, from lists of potential school system vendors with “no rhyme or reason except, quite frankly, influence where influence has no business coming from.”

Grier’s comments came right before HISD trustees approved minor construction and repair contracts in May. In his comments Grier called into question the entire contract approval process at HISD, but in the last two months Grier has declined to elaborate.

Except for trinkets like gift bags and drink holders, such gifts had been banned under HISD’s policies dating back to 2004, according to the Sept. 3, 2008, memo from two Bracewell & Giuliani lawyers to officials with the Federal Communications Commission and the Universal Service Administrative Co.

A new policy adopted by HISD trustees in March of this year banned gifts and limited campaign contributions from E-Rate vendors. The policy is aimed at squelching any improper relationships between HISD employees and vendors in the E-Rate program, which could bring HISD close to $90 million.

Grier “is comfortable with the progress that has been made,” he said via E-Rate compliance officer Richard Patton. “He thinks the past is behind us.”

Federal officials were scrutinizing the district as early as 2006, and that year shut down funding that benefited the vendors under the E-Rate program and sued the district.
The gifts

According to the memorandum, Saavedra “and a guest attended three Houston Rockets playoff games in the Analytical Computer Services Inc. (‘ACS’) suite in 2005.” The district contracted with Analytical Computer Services for more than $45 million between July 2005 and June 2009, a contracts database shows.
Houston Rockets shirt

The Rockets played three home games at Toyota Center in the 2005 NBA playoffs — games 3, 4 and 6 against the Dallas Mavericks in the playoffs’ first round. The Mavericks took the 7-game series, 4 games to 3, and were eliminated in the conference semifinals.

A little less than a month after the May 5, 2005, game 6 playoff match, Saavedra sent a check for $300 to Frank Trifilio “as reimbursement,” the memorandum says. Frank H. Trifilio is listed as the owner of ACS in the settlement agreement between HISD and the federal government that ended the controversy.

In an interview Wednesday, the former superintendent said he attended basketball games with his wife “in a suite at the invitation of one or two board members” and said it was probably in 2005. When asked which board members invited him, Saavedra said he did not recall but remembered “two or three board members” being there. The former superintendent, who left HISD in August, now works as a consultant and plans to teach at Texas A&M this fall.

According to HISD trustee conflict disclosure forms none of the trustees accepted any gifts, meals or tickets worth more than $50 throughout all of 2005. In fact, in all of the trustee conflict disclosure forms from 2005 to January of this year, board chairman Larry Marshall was the only trustee who reported accepting anything over $50 during that time period.

Back in 2009, Marshall reported receiving game tickets to both an Astros game and two Houston Texans NFL games. During an interview with Texas Watchdog last year, Marshall said, “I can’t say that there’s a high degree of frequency, but invitations flow. Invitations flow, and you’re constantly being invited to something.”

The ethics loophole exempts board members from having to report meals, gifts and entertainment from a vendor if the vendor is present. The loophole — which results in a lower ethical standard than the one imposed on district employees — is in state law and applies to other local officials.

“I did not realize it was a suite of a vendor,” Saavedra said.

Saavedra said once he realized it was a vendor’s suite, he knew he had to reimburse the firm for the tickets.

“I did not know the value of the tickets, so I sent a check for $300 along with a letter explaining them to inform me if the check did not cover the cost,” he said.

Saavedra said he is not sure if the check was ever cashed, and said he did not know attending the Rockets game with his wife was against E-Rate rules.

“I knew some of the trustees and some of the staff members were attending, and I believe the (HISD) head of technology was there as well, but I did not know it was against the policy or a violation,” Saavedra said.

The policies in place in 2005 did not say whether employees can accept tickets, meals, etc. and then pay for them later. But the policy in 2005 explicitly banned “game tickets (i.e. football, basketball, baseball, soccer, and other sporting events)…” That policy specifically referenced “district employees” and did not make reference to HISD trustees or the superintendent – something Saavedra pointed out to Texas Watchdog during the interview Wednesday.

“If a full reimbursement is made by such recipient in a timely manner, the item ends up not being a ‘gift,’” Patton said by e-mail in response to a question from Texas Watchdog. Reimbursement is “probably not the best method to limit the appearance of a conflict. … But, the policy does not specifically disallow the practice.”

Saavedra is not the only HISD employee named in the memorandum, which was from Bracewell & Giuliani lawyers George Foote and Kristin Berkland. Steve Kim, one of three former HISD technology employees at the center of the federal E-Rate investigation, “may have taken” trips to Las Vegas on the dime of vendor Hewlett-Packard in May 2005 and Frankie Wong in February 2005, according to the memorandum.

HISD documents show that “an unidentified district employee” registered for a conference in May 2005 at Mandalay Bay Resort and Casino, the memo says. But HISD is “unable to confirm that Mr. Kim accepted a trip to Las Vegas from HP on any of these dates,” the memo says.

Kim worked as a manager of network operations in the networking department and as of 2006 he earned more than $89,000 annually. Kim was terminated by HISD in April of 2007 via a letter of resignation effective April 10, 2007. He had worked for HISD since 1997.

Texas Watchdog was unable to reach Kim at a phone number listed for a Steve Kim in Sugar Land.

Wong was at the center of another scandal in Dallas, and was sentenced to prison after being found guilty of conspiracy to commit bribery, conspiracy to launder money, and eight counts of bribery concerning programs receiving federal funds.

The charges and convictions stem from business Wong, then president of Micro Systems Enterprises, conducted with Dallas Independent School District as an E-Rate vendor more than five years ago, according to an article in the Dallas Morning News. Micro Systems Enterprises also did business as Micro Systems Engineering.

In the settlement agreement between HISD and the federal government, Analytical Computer Services is listed as being a “joint venture or associated company” with Micro Systems. A company called Micro System Enterprises received more than $7 million through contracts with HISD from July 2005 to June of last year, according to a contracts database obtained by Texas Watchdog under the Texas Public Information Act.

The investigation appears to have been triggered, or at least helped along, by an e-mail sent anonymously from a whistleblower inside HISD.

The e-mail begins by accusing Kim of “taking cash and gifts and trips from ACS who also operates as MSE.” The e-mail, addressed to the school board, also names Laura Palmer, another of the three former employees accused of accepting gifts and meals from E-Rate vendors. Palmer was an assistant superintendent for technology and information systems as of September 2006, and had retired as of October 2007, public records show. Texas Watchdog left messages at a home number listed for a Laura Palmer in Houston since last week, but did not receive return calls.

“There are a lot of great people here that will get affected and more importantly HISD does not need to suffer any more negative media,” the whistleblower writes. … “I care about where I work and don’t want to work in a department that is led by a shady manager.”

“The only document we ever found was an anonymous e-mail,” Chris Gilbert, a partner at the Houston-based Thompson and Horton firm, told Texas Watchdog. Thompson and Horton provides legal services to HISD. “To this day we still don’t know who the author of the e-mail was.”

In February 2006, according to the memorandum, a birthday party for Palmer was held at Truluck’s restaurant. “Approximately 15 people were in attendance and Mr. Bill Froechtenicht of MSE (Micro Systems Enterprises) paid for dinner.” The Truluck’s seafood and steak chain has multiple locations around the country, according to its website, and it’s unclear which one was the location of the birthday dinner.

Payments and gits to Palmer did not stop there. The memorandum relays comments from HISD’s inspector general, who said employee William Edwards told him that Palmer accepted personal checks and a boat ride from vendors:
checkbook

“In or around the summer of 2007, Mr. Larry Lehmann [managing partner and owner of Acclaim Professional Services] wrote checks in the total amount of approximately $30,000 to Ms. Palmer to help her with her son’s personal issues. Mr. Edwards reported that he saw Ms. Palmer accept some of the checks. Ms. Palmer reportedly cashed some, but not all, of the checks and repaid the amounts she received shortly after receiving the money.”

The memo does not elaborate on the nature of the personal issues.

Edwards, a former assistant superintendent of HISD’s Technology and Information Systems department, is the third former HISD employee accused of accepting gifts and meals from E-Rate vendors.

The memorandum links both Edwards and Palmer to accepting a ride on Wong’s fishing boat, the “Sir Veza” — the same name of a $305,000, 46-foot yacht connected to the E-Rate scandal in Dallas. Wong had created a company, Statewide Marketing LLC, which together with Micro Systems Engineering kept up the boat and made it available for the Dallas ISD’s technology chief, Ruben B. Bohuchot, who was also found guilty in the bribery and money laundering scheme, according to the Justice Department.

According to the memorandum, Edwards was offered a loan from Lehmann sometime between Jan. 1, 2005 and Dec. 31, 2008, to repair Edwards’ airplane. Edwards declined the loan, and the document doesn’t describe the amount of the loan.

Edwards earned more than $132,000 as of 2004, salary records show. He was hired in 1993 and was terminated by HISD via a resignation letter in March of 2005. No working phone number could be located for Edwards.

The memorandum also lists these gifts:

* ACS gave cellphones to approximately 26 district employees at one time or another from approximately August 2002 to February 2007.

* ACS gave Palmer 100 fanny packs in and around February 2006.

fanny packs

* In August 2006, Hewlett-Packard offered HISD two complimentary passes, worth more than $1,000 each, to the 2006 HP Technology Forum, which was held at the George R. Brown Convention Center in Houston. District employees Mark Landrum and Carl Bradley attended the event. Calls and e-mails to both Landrum and Bradley were not returned. A voicemail message left for Hewlett-Packard’s media office was not returned.

* Hewlett-Packard in April 2005 sent a computer and printer to HISD technology employees Ken Eaton and Wayne Franklin as a thank you for serving on a panel. The computers were supposed to be donated to an HISD school but remained at the school district’s west region office. Calls and e-mails to Eaton were not returned. Franklin is no longer employed at HISD, a district spokesman said. From July 2005 to June of last year Hewlett-Packard is listed as receiving close to $20,000 from contracts with HISD, according to a contract database Texas Watchdog obtained from the Houston school district. Hewlett-Packard banned ACS and Micro Systems Engineering from selling its equipment in late 2006, the Houston Chronicle reported.

Palmer, Kim and Edwards

During their employment at HISD, Palmer, Kim and Edwards all signed conflict of interest forms acknowledging they were aware of HISD’s policies against conflicts of interest. According to Patton, if an employee is “offered” a gift, “the recipient should report such action to my office so we can log the occurrence and educate the vendor about our policies.”

For years, Palmer and Kim did not disclose receiving any meal exceeding $50 per meal or $100 annually to the district. One of Palmer’s disclosures was signed and dated just days after the birthday dinner in her honor.

Edwards did not disclose “any gift, service, favor, loan or remuneration in excess of $25,” from any vendors associated with HISD. When asked on district forms to report any gifts, all three employees wrote, “none.”

Within months of the federal government’s freezing of HISD’s E-Rate funding in 2006, Palmer got a 45 percent pay increase and promotion, according to HISD personnel records. Palmer was listed as an assistant superintendent for technology and information systems as of February 2006, earning more than $122,000, a big boost over her previous salary of about $84,000 in 2005. She was earning more than $126,000 in fall 2007 and had worked with the district since 1994.

Texas Watchdog placed calls and e-mailed HISD’s current Chief Technology Officer Gregory Valdez to ask him if the culture of accepting gifts and meals from vendors has changed. Valdez did not return any phone calls or e-mails.

After the Federal Communications Commission filed a lawsuit against the district in 2006, funding under the E-Rate technology program was frozen, causing the district to lose $105 million in federal funding.

More than three years after the lawsuit was filed against HISD, the district paid $850,000 to settle the suit, and is once again receiving money under the federal program.

In Appendix A of the settlement agreement is a list of companies for which HISD submitted “false claims for payment” to the Federal Communication Commission for E-Rate projects; ACS and several associated companies are included in the list.

On top of signing a settlement agreement, HISD signed a subsequent compliance agreement that required HISD to hire an E-Rate compliance officer, who makes $150,000 annually. HISD hired Patton in February using a headhunting firm that reportedly charged $67,200.

Patton has spent hours training employees and board members on stricter ethics rules to avoid a repeat of the earlier problems. He has recommended HISD spend an additional $10,000 a year on monitoring software.

Texas Watchdog was unable to get in contact with ACS, Acclaim Professional Services or Micro Systems.

A contact number associated with ACS in an HISD contracts database was disconnected Monday, and the number associated with Micro Systems in the same database rang to a company voicemail for a different company. Texas Watchdog left a voicemail message that was not returned as of the deadline for this story. ACS no longer exists, according to Texas Secretary of State corporate filings. A phone number associated with a company called Acclaim Professional Services with the same address listed in the federal settlement for a company by the same name was disconnected.

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

Photos all from flickr users, used via Creative Commons licenses. Image of a birthday cake by Rob J Brooks, a checkbook by oblivion9999, a fanny pack by amerainey, a Houston Rockets T-shirt by user aJ Gazmen GucciBear.