Ann Zaniewski

Detroit Free Press Education Writer

An employee pocketed $59,000 in fraudulent overtime.

A principal set up a food store in a school without permission.

About $2,500 was collected at a school for a field trip and bagged for pickup by an armored car — but then seemingly disappeared.

And of course, there is the now-famous vendor kickback scandal that resulted in criminal charges against 13 current and former school district employees and the vendor himself, Norman Shy.

►Related: For years, officials at DPS missed red flags tied to Shy

►Related: Convicted DPS vendor: 'Dear Judge ... I am so ashamed'

Those tidbits highlighting improper — and sometimes illegal — activity that occurred within the Detroit Public Schools Community District, formerly known as Detroit Public Schools, are in a new report released today by the district's Office of Inspector General.

The office investigates suspected fraud and abuse. Steven Rhodes, the district's transition manager, reinstated the office in April after then-emergency manager Darnell Earley's controversial decision to eliminate it in summer 2015. Rhodes has since added audits to the office's list of functions.

The report includes summaries of investigations of what happened in the latter half of 2014 through April 2015 and in 2016. The cases include missing technology equipment, missing money, fraudulent transcripts provided by an employee at the time of hire and payroll over-payments.

►Related: New report details more fraud, theft in Detroit schools

►Related: M-STEP results for Detroit: EAA's overall proficiency less than 5%

Inspector General Bernadette Kakooza wrote in the report that while some of the older cases are from the prior fiscal year, she wanted to include them because there was no annual report released in 2015 after the office was eliminated.

Rhodes, in a news release, said: “The Office of the Inspector General is a critical element for the new district and our commitment to zero tolerance for wrongdoing and misconduct by any individual or organization affiliated with this district."

Here are some of the report's highlights:

In July 2014, the office began investigating a principal who had set up a food store within a school without following district guidelines for fund-raising or cash management. The principal was referred for discipline and subsequently removed from the job.

In August 2014, the office learned that an employee had received $50,000 in salary over-payments during a one-year period. The person was referred for discipline and made to pay back the money.

About $2,500 that had been collected by staff at a school for a student field trip and bagged for pickup by an armored car disappeared, according to a tip the office got in October 2014. Staff members had given the money to a school bookkeeper for deposit handling. Investigators learned that a signature in a log book indicating the deposit was picked up had been forged. The money was never picked up. The office identified the employee who had access to the school vault and referred to the case the Wayne County Prosecutor's Office. An employee administrative hearing was held at the district; disposition is pending.

is pending. A joint investigation with the FBI launched in December 2014 revealed that an employee had manipulated a lottery process to benefit his or her tutoring company to the tune of $1.3 million. The employee, after admitting to wrongdoing, was fired.

In February 2016, allegations surfaced that an employee was falsifying records to obtain overtime pay. The employee had approved the overtime on the district's payroll system using a supervisor's password, obtaining $59,000 over a five-year period. Both the employee and supervisor, who claimed to have no knowledge of what was happening, were referred for discipline; the employee was ultimately fired.

A vendor's contract was terminated after an investigation launched in April 2016 revealed that a principal had arranged with the vendor to hire family members to provide tutoring services. The vendor had received payment for services not rendered. Another former principal had a similar arrangement with the same vendor. The office recommended that the district seek to recover $35,000 from the vendor, who was banned from the district.

In May 2016, the U.S. Attorney's Office announced charges against Carolyn Starkey-Darden, the district's former director of grant development, for billing the district $1.275 million over seven years for never-delivered tutoring services through companies she created. Though the report does not name Starkey-Darden, it references federal program fraud charges being brought against an employee in connection with an investigation that the Inspector General's Office launched in 2011 and referred to the FBI that same year.

The Inspector General's Office got a tip in June 2014 about an administrator who authorized $18,000 in payments to a vendor for textbooks and other supplies that were never delivered. The matter was investigated and referred to the FBI. Federal authorities announced charges in March 2016 against vendor Shy, an assistant superintendent and 12 principals accused in a kickback scheme that they said bilked the district out of $2.7 million. All defendants, except for one principal, have pleaded guilty.

Robert Bobb, the district's first state-appointed emergency manager, created the Office of Inspector General in 2009. Between then and the time Earley closed the office in June 2015 amid a restructuring, it had performed about 720 investigations, Kakooza previously told the Free Press.

After bringing back the office in April, Rhodes restructured it effective July 1 to focus on two primary functions: fraud investigations and forensic and internal audits, duties once performed by the Office of Auditor General.

Detroit Public Schools Community District officials have put up posters in buildings to remind employees that the district has an anonymous fraud hotline, 313-870-3436. Tips can also be e-mailed to inspectorgeneral@detroitk12.org.

Contact Ann Zaniewski: 313-222-6594, azaniewski@freepress.com or on Twitter @AnnZaniewski