Texas School District 'Vulnerable' Resulting In A $4 Million Loss

by Gary Snyder

The two former Beaumont Independent School District employees who embezzled more than $4 million from the school district were sentenced in federal court. Former chief financial officer and the district's former comptroller, pleaded guilty in April.

The CFO was sentenced before Judge Ron Clark to 68 months (more than 5 years) in federal prison. He must also make more than $4 million in restitution to the district. The controller was sentenced to four years in federal prison and will have to pay more than $1 million in restitution.

The two were two of the three BISD employees who had the authority to conduct wire transfers of district money without notifying anyone else, according to the stipulations. Both "exploited this vulnerability" and transferred approximately $4 million in 18 separate wire transfers to personal bank accounts.

The state took over following the 19-count federal indictment of the two school officials. 

The Texas Education Agency issued a damning report that found a near-complete lack of accounting controls at the district, not to mention school administrators who obstructed the investigation by disappearing for the entire time state investigators were in Beaumont.

Perhaps more stunning than the district’s failure to set up basic internal controls — for example, having one person make transactions and a different person review them — was their refusal to set up those controls after the investigations and the indictment of its finance officials made the problem obvious to all.

“The person responsible for the embezzlement told the TEA that he was able to embezzle substantial funds over a significant period of time because no one was watching his activities,” according to the report. The district insisted it started implementing some controls in August 2013, after one review, but the CFO was able to embezzle $570,925 after that date, according to investigators.

Among other findings, the TEA reported that Assistant Superintendent Patricia Lambert approved some $454,000 worth of printing contracts for a small business owned by her son, who was not an approved vendor. The district’s defense, which TEA rejects, is that Lambert somehow doesn’t qualify as a “local government official” under the law, so it wasn’t technically a violation of federal law. (source)

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