The San Diego County District Attorney’s office has dropped an investigation launched amid considerable fanfare in 2002. Although the investigation of purchases by the San Diego County Schools (SDCS) apparently ended in May, no word of the decision to drop the probe surfaced until a San Diego deputy district attorney confirmed it on June 6 in response to an inquiry by eSchool News. Other officials who at the outset had reported suspicions to law enforcement and in the press remained silent.

The firm involved, NSX Technologies Inc., is a technology reseller. The firm operates a web site known as PC & MacExchange. NSX President Todd McKelvie estimated his company has sustained $3 million in lost business as a result of the initial insinuations and bad press, even though no wrongdoing ultimately was found. McKelvie declined to be interviewed by eSchool News when the allegations were first reported.

The company came under suspicion in 2002 after San Diego Superintendent Alan D. Bersin reportedly received an anonymous letter alleging “unlawful activities” within the school system. The letter reportedly implicated the company in a plot with at least one school district employee to defraud the district on a wide range of technology purchases (see “Police investigate alleged computer theft in San Diego schools).

The allegations, which first were reported in the Register-Guard of Eugene, Ore., and later in the San Diego Union Tribune, eventually led to an investigation in which police–in conjunction with the local district attorney’s office–raided NSX headquarters in search of evidence of corruption by the company and its president. No charges were ever filed.

NSX Technologies’ product catalog includes everything from hard drives and keyboards to mouse pads and power strips. McKelvie, who lost SDCS as a client when news of the letter broke, told eSchool News the effects of the allegations and negative press were disturbing.

“Everything I had worked so hard for these past seven years was gone because of this,” McKelvie said. “But I’m not the kind of person who is going to fold because of someone else’s wrongdoing.”

Now, he says he’s looking to clear his name–and lift any remaining cloud from his firm.

McKelvie said he believes his firm might have been the victim of insider sabotage–fomented by a group of disgruntled former employees whom he believes stole client databases and other information in efforts to start a competing firm and wrest business away from NSX.

Though he has no hard evidence to support his theory, McKelvie said he has been threatened on more than one occasion by one of six former employees.

When SDCS received that anonymous letter, he said, “within 10 seconds, I had cops at my house and my Oregon office.” Since then, he added, “we’ve had to fight to save customers.”

McKelvie suspects the allegations also led to an audit of his business by the Internal Revenue Service (IRS)–an investigation he says went nowhere. “More than $5 million in business and I received a ‘no change’ from the IRS,” he said. “That says something.”

Allegations against NSX were fueled by comments from school board member John de Beck, who grew suspicious of the district’s technology purchases after a laptop he’d ordered never arrived.

de Beck told eSchool News for its original report that 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.

In this particular case, he said, it appeared some amount of equipment was ordered, signed off on, and paid for–but either never was received or somehow was returned to the company.

de Beck criticized the district’s internal controls for being too lax and said the setup had been subject to corruption in the past.

Former schools police chief Tom Hall, who is now retired and could not be reached for comment, initially told eSchool News that the letter, combined with an initial search of company and school documents, “would lead one to believe that some amount of foul play was taking place” and said that the department would continue to “[examine] the evidence” before pressing formal charges against NSX.

On June 1 of this year, eSchool News received a letter from McKelvie’s lawyer, Richard Boesen. The letter, dated May 25, said San Diego Deputy District Attorney Robert Kearney “is closing the investigation and has declined to prosecute this matter.”

When contacted by eSchool News, Kearney acknowledged that his office had closed its investigation, saying “there was not sufficient evidence” to pursue the case any further.

Asked what happened to the missing equipment, Kearney said, “A lot of what went missing was eventually found” by the school district. District officials did not respond to repeated requests for interviews.

Today, McKelvie said, NSX continues to work with more than 500 schools and districts.

Zach Marsh, a microcomputer specialist and technology purchaser for the 70,000-student San Juan Unified School District in southern California, said he’s worked with McKelvie’s company off and on for more than 10 years and has had no complaints.

Marsh estimates he spends upwards of $50,000 a year with NSX for replacement and repair parts used to upgrade the district’s machines.

No matter what, he said, NSX always does its best to deliver the “highest quality parts at the lowest possible cost.” What’s more, he said, McKelvie has a reputation for going out of his way to fill unusual requests, such as finding a rare part or selling traditionally bundled products piecemeal at a discounted rate.

Looking back on three years of lost business, McKelvie said he still isn’t sure what went wrong.

“I just had people coming after me,” he said of his troubles. “I don’t know what it is all about, really. I guess some people just don’t like successful people.”

Links:

San Diego City Schools
http://www.sdcs.k12.ca.us

San Diego City Schools Police Department
http://prod031.sandi.net/policeservices

NSX Technologies Inc.
http://www.macx.com