DETROIT – Thirteen former or current principals within the Detroit Public Schools (DPS) district face federal conspiracy and bribery charges in an alleged scheme to receive kickbacks from a school supplies vendor.

The former and current principals are accused of conspiring with the vendor Allstate Sales to give them payments -- through DPS funding -- in exchange for kickbacks.

View all of the federal complaints here:

The school officials are accused of submitting fraudulent invoices to DPS for payments to the vendor for supplies which never were received. This was all done in exchange for kickback payments from the vendor, according to federal complaints.

U.S. Attorney Barbara McQuade said the charges come after a two-year investigation that started as a tip from the state who was conducting an audit on the Education Achievement Authority. However, all of the accused worked with DPS.

“This case is a real punch in the gut for those who are trying to do the right thing,” McQuade said.

McQuade said the vendor was paid $5 million from the district, of that amount, McQuade said investigators believe $2.7 million was fraudulent.

How it worked

In the complaints, Norman Shy, 74, is named as the owner of Allstate Sales, a company which was on DPS' approved vendor list. Allstate sold and provided school supplies such as auditorium chairs, supplemental teachers materials and raised line paper.

According to a criminal complaint, Shy devised a plan in 2009 with Clara Flowers to siphon the money from the district.

"Shy devised and engaged in a scheme to fraudulently obtain funds from DPS by agreeing with at least 13 DPS principals to pay them a total of approximately $908,518 in kickbacks relating to business with DPS worth millions of dollars to Shy in exchange for their agreement to certify and submit, and cause to be certified and submitted, fraudulent invoices to DPS for payment to Shy for goods that were not delivered," the criminal complaint said.

Flowers, who was the principal at Henderson Academy before being promoted to the Office of Specialized Student Services, had the authority to choose the vendor for several schools -- and she went with Shy's company, a criminal complaint said.

Investigators said Shy kept a ledger of how much money he owed Flowers in kickback payments as a result of the fraudulently submitted invoices.

To disguise the kickbacks, Shy paid Flowers in checks payable to contractors who performed work at her home, checks payable to her business “Always Travel Together,” and prepaid gift cards, a criminal complaint said.

Shy faces conspiracy, bribery and tax evasion charges. Flowers also faces a tax evasion charge in addition to conspiracy and bribery charges.

The rest of the defendants all face conspiracy and bribery charges.

Whistleblower breaks her silence

The federal hammer coming down on these principals and administrators was no surprise to current EAA Chancellor Veronica Conforme, who stepped into the authority devoted to the worst performing schools in 2014 and right into the middle of an FBI investigation.

"I could see that there was fraudulent activity," Conforme said. "It was clear that there were invoices that were inconsistent, that did not look right."

Conforme cooperated with the Feds and gave them a call when an outgoing principal told her that kickbacks from vendors were commonplace in DPS.

The charges the U.S. Attorney brought concern multiple DPS employees but only one vendor, Norman Shy. Local 4 spoke with Shy’s attorney who says his client has no comment.

DPS transition manager: This behavior is 'absolutely unacceptable'

DPS transition manager Judge Steven Rhodes said the six accused current district employees have been suspended without pay.

"I cannot overstate the outrage that I feel about the conduct that these DPS employees engaged in that led to these charges," Rhodes said. "This behavior is absolutely unacceptable and will never be tolerated."

Rhodes said the district is immediately implementing checks and balances to prevent similar crimes from happening. They include: suspending all purchases made by individual schools, requiring central office approval for purchases, reviewing all school-based vendor contracts and bringing in an independent auditor to do a thorough review and assessment.

"It disturbs me greatly that we lost $2.7 million that could have been used to educate children," Rhodes said. “It breaks my heart that we have to suffer this."

Rhodes said he understands the importance of trust that the community and parents have put in the district.

"I took this job because I want to help the children of the city of Detroit. I will not let these circumstances distract me from my goal," he said.

Rhodes said he is implementing the following checks and balances to avoid another situation like this:

Suspend all purchases by individual schools until further notice

All school-based purchases will require Central Office approval

Suspend, until further notice, the ability by Principals and Assistant Principals to sign-off on or execute any vendor agreements and contracts without Central Office approval by the Superintendent’s Office, Finance and/or Procurement

Require two signatures (principal and Deputy Network Leader of Operations) on all school-based invoices before they will be paid

Conduct a review of all purchases made by the DPS employees identified by the US Attorney

Begin a full review of all school-based vendor contracts to determine if all or a portion need to be terminated and rebid

Recruit an independent auditor to do a thorough review and assessment of procurement processes and procedures to ensure they are in compliance with all state and federal rules and regulations.

Principal surprised by Ellen among those accused

Among the defendants is Spain Elementary-Middle School principal Ronald Alexander. His school was showcased on The Ellen Show when Ellen surprised him with a $500,000 donation.

According to the complaint, Alexander submitted fraudulent invoices to DPS for payment to Shy for goods that were not delivered in exchange for kickback payments.

Latest charges part of corruption probe in district

Earlier this year, former Detroit high school principal Kenyetta Willbourn-Snapp pleaded guilty to accepting nearly $60,000 from a company hired to perform tutoring services.

Wilbourn-Snapp was principal at Denby and Mumford high schools and drove a Maserati.

She also pleaded guilty to conspiracy and a tax crime.

Wilbourn-Snapp faces three years or more in prison, although cooperation with investigators could get her a shorter sentence.