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SUMMARY
In May 2006, the Office of the Auditor General received a
complaint alleging financial misconduct by Mr. Stewart Waite, former Business
Manager, and Mr. William Bean, former Superintendent, for the Red Mesa Unified
School District No. 27. As a result, our Office conducted an investigation of
those financial improprieties and submitted our report to the Arizona Attorney
General’s Office. During our investigation, we determined that Mr. Waite and Mr.
Bean embezzled and misused public money. In addition, our investigation further
revealed that Ms. Sadie Tso, Board President, also violated state laws. The
Attorney General has taken evidence of Mr. Waite’s, Mr. Bean’s, and Ms. Tso’s
activities to the State Grand Jury, which indicted them on felony charges. See
the Conclusion on page 17 of this report.
Our investigation determined that from April 2005 to July 2006, almost $360,000
in public monies was embezzled, and an additional $520,000 in other public
monies was misused, as follows:
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Mr. Waite, former Business Manager, embezzled at least
$274,693 by misusing district monies and credit card privileges to purchase
personal items totaling $196,555 at various retail outlets; $63,618 in cash
advancements; and $520 in personal travel; and authorizing a $15,000
district check to himself, of which $14,000 was for his own personal use. In
addition, Mr. Waite misused public money by participating in the issuance of
payouts of employment contracts totaling more than $304,000 for both himself
and Mr. Bean. Further, Mr. Waite failed in his fiduciary responsibilities
and violated procurement laws by circumventing procurement procedures when
purchasing items totaling $187,924 for the District’s equestrian education
program.
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Mr. Bean, former Superintendent, embezzled at least
$85,305 by also using the district credit card for personal purchases, such
as $49,245 in cash advancements, $33,282 at various retail outlets, and
$2,778 for personal travel. In addition, Mr. Bean misused public money by
improperly disbursing gifts totaling $28,280 to other district employees and
students without substantiating the public purpose for such gifts. Further,
Mr. Bean unlawfully authorized payouts of their employment contracts
totaling more than $304,000 for both himself and Mr. Waite.
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Ms. Tso, Governing Board President, also misused public
money by solely authorizing the contract payouts totaling more than $304,000
for Mr. Waite and Mr. Bean outside any formal board meeting or approval.
In addition, during the onset of our investigation, Mr.
Waite, Mr. Bean, Ms. Tso, and another board member established as the Board
Clerk collectively altered public records and made false statements to the
Auditor General’s Office to conceal their financial misconduct and impede the
investigation. Such conduct constitutes illegal acts.
The District’s internal controls over travel, purchasing, and credit card
activities were inadequate, as evidenced by the ability of Mr. Waite and Mr.
Bean to initiate, approve, and reconcile those types of activities on their own.
As a result, Mr. Waite and Mr. Bean were able to embezzle and misuse district
monies for more than 1 year, and the District was unable to detect and deter
their thefts.
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