When school board member John DeBeck ordered a new laptop through a company under contract with the San Diego City Schools, he fully expected to receive it. But when the machine failed to arrive, he became suspicious.
Now, authorities are investigating an alleged scam within the school system in which one or more district employees, reportedly working in concert with Oregon-based computer reseller NSX Technologies Inc., might have swindled the city’s schools out of thousands of dollars worth of computer equipment over the last several months.
According to San Diego City Schools Police Chief Tom Hall, the investigation began several months ago, following an anonymous letter to police alleging “unlawful activities” within the school system.
Upon receiving the tip, Hall said police served several search warrants and found enough evidence to indicate potential corruption on the part of NSX Technologies and at least one school system employee.
“We found activity that would lead one to believe that some amount of foul play was taking place,” he said. “We are examining the evidence.”
NSX Technologies is a major reseller of software and hardware products to both schools and corporations. Its catalog includes everything from hard drives and keyboards to mouse pads and power strips.
Although one company representative said he had heard about the ongoing investigation, Todd McKelvie, the company’s president, declined an interview with eSchool News. McKelvie’s lawyer, Richard Boesen, said his client would not comment on an ongoing investigation.
DeBeckwho was unaware that an official investigation already was under waysaid he became suspicious of a problem when the laptop computer he had ordered supposedly was received by the school system and then suddenly disappeared.
“At first, we had thought it simply got placed in another schoolno big deal there,” he said.
According to DeBeck, the school system has a procedure for checking all purchases it makes and receives before sending payment. Once a piece of equipment is ordered and an invoice is received, then a purchase order is created, he said. Only when the equipment is delivered is the purchase order signed and the transaction completed.
However, in this particular case it appears some amount of equipment was ordered, signed off on, and paid forbut either never was received or somehow was returned to the company, he said.
So far, it is unclear exactly how much equipment is unaccounted for. On Aug. 16, the San Diego Union-Tribune reported as much as $600,000 worth of merchandise was missing. But police chief Hall said that number is inaccurate.
“We never released that information at all,” he said. “We are not prepared to commit to a number.”
He did say the investigation involves a myriad of computer components, including hard drives, floppy drives, laptops, and some fully equipped desktop computers.
Hall, who called the investigation “very complex,” said the police have enlisted the help of two investigators from the district attorney’s office, several special auditors, and inspectors from a regional computer forensics task force to help sort through the evidence. It will be the job of computer forensics experts to dig through the district’s computer files and find records that might have been deleted or erased to cover up any illegal activity, he said.
DeBeck said this is not the first time the San Diego City Schools have experienced potential accounting problems that led to costly mistakes in receivables and the loss of computer equipment. In fact, police investigated reports of a similar problem not more than two years ago, he said.
DeBeck said the school system had been forewarned during the first such investigation that its accounting system was disorganized and susceptible to corruption.
“During the last investigation, the police investigators told us that our internal controls were terrible,” he said.
DeBeck said he had hoped Superintendent Alan Bersin, a lawyer and former businessman, would step in and denounce questionable practices within the district’s accounting office. But so far, he said, there has been little change.
“You would assume that there would be a better set of checks and balances when you have such a large system as this,” DeBeck said.
Steven Baratte, a spokesman for San Diego City Schools, told eSchool News the district is currently reviewing its business practices.
“The district is currently in the process of a business-modernization overhaul designed to improve the efficiency and increase the accountability of all aspects of its business,” he said. “We are currently taking a look at all of our business policies including those in our accounting department.”
So far, no criminal charges have been filed against NSX Technologies or any district employees, Hall said. However, at least one employee has been placed on paid leave and removed from the work force for an undetermined amount of time.
Police say the investigation is still under way.
San Diego City Schools
NSX Technologies Inc.
San Diego City Schools Police Department
County of San Diego District Attorney’s Office