Jennifer Chambers

The Detroit News

A former principal with Detroit Public Schools who spent money she stole from the district on a cruise, Las Vegas hotels and a fur-coat store was sentenced to two years in prison on Wednesday for her role in a $2.7 million kickback scheme.

Clara Smith, a longtime principal at Thirkell Elementary School in Detroit, was given her prison sentence Wednesday for taking $194,000 from a school vendor in a scandal uncovered by the FBI that resulted in the arrested of 13 DPS officials and vendor Norman Shy.

Smith had told U.S. District Judge Victoria Roberts that she also spent the money on students, to feed and clothe them and to take them on school trips. Dozens of supporters came to court for Smith and wrote the judge letters pleading for a light sentence.

Roberts told Smith that the fraud she committed repeatedly with Shy over four years was not excusable and a sentence that did not include prison would send the wrong message to the community.

“It’s the loss to students, the loss to the community, the loss to their future when they are deprived of books and supplies. It’s really their future I care about,” Roberts said.

Smith had faced 37-46 months in prison after cooperating with prosecutors in their investigation into the district and Shy. She briefly spoke at sentencing.

“First, I want to apologize to God for letting my guard down...I know right from wrong. Then I want to apologize to my husband who’s stuck with me, and then I want to apologize to my Thirkell students,” she said.

Earlier this month, Smith’s attorney, Patrick M. Cleary, filed 17 pages of copied receipts from trips to amusement parks and a zoo, stays at hotels, restaurants and retailers that total nearly $37,000 and show “disbursements for the benefit of the children.”

Prosecutors said Smith spent the money at Art Van, El-Mar Furs, Delta Airlines, Royal Caribbean cruises, restaurants, and hotels in Las Vegas.

Smith also had Shy issue personal checks payable to her husband, her daughter and various businesses or stores to pay for personal items, court records show.

Also on Wednesday, Roberts sentenced former DPS principal James Hearn to 10 months in prison for stealing $11,500 from the district.

Hearn, who served as principal at Marcus Garvey Academy, pleaded guilty to conspiring to commit federal program bribery for engaging in a scheme with school vendor Norman Shy, who was sentenced to five years in prison last week.

Prosecutors said Hearn, just like 13 other DPS officials charged in the case, took bribes and kickbacks from Shy in exchanging for signing fraudulent invoices that over-billed DPS for supplies.

Hearn, 51, spent the illegal money on purchases at Best Buy, Pandora Jewelry, Sears and Firestone auto, according to court records.

Hearn, who paid restitution to DPS at sentencing, said Wednesday he was deeply remorseful for his crime and regretted what he did.

“Please don’t let this be a reflection of who I am. I’ve given 22 years (to education). I did make a bad decision and as I tell my students you have to accept responsibility for a bad decision,” Hearn told Roberts.

Hearn faced 11 to 14 months in prison after cooperating with the government in its investigation into DPS and Shy.

Roberts said she was “heartened” that Hearn paid his restitution before sentencing and said that’s “going to go a long way,” but reminded Hearn his crime was serious and he knew what he was doing when he repeatedly signed fraudulent invoices.

Federal prosecutors say Shy hatched the scheme, which ran from 2002 through January 2015, by billing DPS for $5 million school supplies but delivering less while keeping the leftover money.

In return, Shy paid bribes and gave kickbacks to 13 former DPS principals and one assistant superintendent in the form of cash and gift cards totaling $908,518.

Willye Pearsall, former principal at Thurgood Marshall Elementary School, was sentenced to 15 months in prison on Wednesday by Roberts.

Prosecutors say Pearsall confessed to taking $50,000 in kickbacks from Shy. Pearsall took checks payable from Shy to “Safety Net Enterprises” or “J & J Youth Services,” both companies that were owned or controlled by Pearsall.

Court records show that the money Shy paid to Pearsall’s companies were mostly transferred to Pearsall’s personal bank account or withdrawn by Pearsall as cash. Pearsall spent a portion of the kickbacks at the MGM Casino in Detroit.

Pearsall apologized to DPS, students and staff and then quoted the Bible before being sentenced.

“Proverbs 26-27 says if you dig a pit, you will fall into it. That’s what has happened. ... It’s not anybody’s fault but mine. It’s not Norman Shy’s fault,” she told Roberts. “I am an intelligent lady who made a mistake.”

According to a letter from a supporter in court records, Pearsall turned to gambling after the 2003 death of her husband, Jimmy L. Pearsall.

As part of the sentence and during a year of supervised release, Roberts ordered Pearsall not to gamble and prohibited her from entering a casino or any other gambling operation. She also must undergo treatment for gambling addiction as part of the sentence.

The last DPS principal to be sentenced is Beverly Campbell, former principal at Greenfield Union Elementary/Middle School, on Oct. 5. She faces 24 to 30 months for taking $50,000.

Josette Buendia, former DPS principal at Bennett Elementary, has refused a plea deal with prosecutors and asked for her case to be taken to trial on Dec. 5.

Buendia was indicted by a grand jury in Detroit in two felony counts of federal program bribery and one count of conspiracy to commit federal program bribery. She is accused of the following: taking $40,275 in kickbacks from Shy from May 2011 through January 2015; $3,000 in gift cards from Shy on Feb. 9, 2015; and $2,500 in cash on May 5, 2015.

JChambers@detroitnews.com