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The just-released “risk review” outlines specific potential criminal violations, including fraud, embezzlement, larceny and forgery, which the Auditor’s Office is formally referring to federal and state law enforcement authorities, State Auditor Tim Keller told the Journal on Tuesday.

“After reviewing bank statements and school records, we discovered an apparent forgery scheme that funneled over $475,000 from the school to an employee’s personal bank account,” Keller said. “As a result, hundreds of kids were defrauded of funding that should be going to their education. That’s the fundamental issue.”

In addition, the employee deposited about $177,000 worth of checks that were payable to the former executive director – her mother – as well as to her boyfriend, who was a vendor for the school, according to the report.

Bank records indicate that the money was used by the former assistant business manager to pay for personal day-to-day expenses, bills and loans. It was unclear how many of those checks were legitimate, something that will be made clearer after law enforcement authorities get involved, Keller said.

The mishandling of finances may have been going on since 2010, Keller said.

Although names were not used in an audit, the assistant business manager was Julieanne Maestas, according to La Promesa. Her mother, school founder Analee Maestas, was the executive director of the school.

According to the report, subpoenaed bank records appear to show that Julieanne Maestas diverted the funds through a process of “dual endorsing,” in which checks are made payable to one person but endorsed over to another person, who can then cash or deposit the checks.

Julieanne Maestas deposited more than 500 checks written to 53 vendors into her personal account, according to the report.

Because she was the assistant business manager and her job was to pay bills, Keller said, it is believed that Julieanne Maestas initiated the vendor checks, which were signed by her mother. Julieanne Maestas then is believed to have fraudulently endorsed the back of each check with the vendor’s name and subsequently signed her own name beneath it, depositing the money into her personal account.

In September 2016, Analee Maestas was asked to resign and Julieanne Maestas was discharged, said La Promesa’s current executive director, Chris Jones. The next month, the Public Education Department suspended the school’s board of finance and took over control of the school’s finances.

Analee Maestas remains a member of the APS Board of Education.

APS board President David Peercy said Tuesday in a written statement that he had not been in touch with Keller and had not seen the investigation report. “La Promesa is a charter school authorized by the state, not APS,” Peercy said.

“While its former executive director, Dr. Analee Maestas, is a member of the APS Board of Education, she is an elected official, not an APS employee. As the investigation continues, we will work with Dr. Maestas to get a better understanding of the situation and will wait until we have more information before making appropriate decisions.”

Phone messages left for Analee Maestas and her attorney, Marc Lowry, were not returned.

The Journal was unable to contact Julieanne Maestas.

In responding to the investigation report, La Promesa’s Jones said Tuesday that in April 2017 he self-reported financial irregularities and has “fully cooperated with the investigation of the OSA (Office of the State Auditor), answering questions and furnishing documentation upon request.” Suspicious activity was also reported to the Public Education Department and the Public Education Commission, he said.

“Our consistent message has been that we are taking steps and corrective measures to move forward from the previous administration’s mismanagement of school finances,” he said.

Jones said that in addition to the removal of the executive director and assistant business manager, other corrective steps taken include the resignation and replacement of two of the school’s Governance Council members; intense Governance Council training in the areas of school finance, legal obligations and academic requirements; and the revision and adoption of new financial policies and procedures that have been approved by the PED.

“We are anticipating that the missing money will be returned, and we are working with the New Mexico Public School Insurance Authority as well as our contracted business manager and the PED to reconcile the substantial losses that the school has faced,” Jones said.

La Promesa’s annual operating budget is about $2.9 million, he added. “So half a million dollars is a significant amount.”

PED spokeswoman Lida Alikhani said in a written statement Tuesday that the department “has been aware of these concerns and at all appropriate points took steps to ensure that the State Auditor’s Office and law enforcement officials were made aware of them.”

Charter schools, she said, must be held accountable for their financial and academic performance. “Our students and taxpayers deserve better, and we are confident those responsible for any illegal or unethical actions will face the appropriate consequences.”

The scrutinizing of La Promesa’s finances began after Analee Maestas submitted a receipt to the PED for a $342.40 reimbursement for carpet cleaning at La Promesa. But the invoice appeared to have been written over, and the cleaning company reported that it had worked on ducts at Maestas’ home, not the school carpets.

The Office of the State Auditor determined that a number of financial control problems existed at the school.

It subsequently ratcheted up its investigation in April when a La Promesa vendor called the office’s confidential hotline saying a 1099 tax form he received from the school showed $7,128 in checks having been written to him and “endorsed by persons other than myself.”

The vendor said he’d never received the money, and the work he supposedly did had never been performed.