DOJ Busts Detroit Public Schools Kiddy Kickback Racket

Shout out to Barbara McQuade:

Barbara McQuade

You go, girl!!!!!!

Detroit Businesswoman Convicted of Defrauding the Detroit Public Schools 

A federal jury in Detroit returned guilty verdicts yesterday against a Detroit businesswoman for conspiracy to defraud the Detroit Public Schools (DPS) of $3.3 million and money laundering conspiracy, announced United States Attorney Barbara McQuade.

Ms. McQuade was joined in the announcement by Special Agent in Charge Andrew G. Arena, Federal Bureau of Investigation, and Special Agent in Charge Erick Martinez, Internal Revenue Service, Criminal Investigation.

Found guilty was Sherry Washington, 54, a partner in an entity doing business as “Associates For Learning.” The jury deliberated for about one hour and 20 minutes before returning the guilty verdicts after a two-week jury trial conducted before United States District Judge Paul D. Borman.

“These defendants exploited the Detroit Public Schools system and essentially stole $3 million that could have been spent on school children,” McQuade said. “We hope that this prosecution will discourage others from taking money that is intended to benefit students.”

According to the superseding indictment, Associates for Learning contracted with Stephen Hill, the former Executive Director of the Risk Management Department at DPS, to facilitate a wellness program for DPS employees, despite the lack of any bidding process or a written contract, in violation of DPS policies. The original proposal was for $150,000 for a six month pilot program. However, in 2005 and 2006 Associates for Learning submitted three inflated, fraudulent invoices to DPS, each for approximately $1 million, which DPS paid by electronic wire transfers. As part of the conspiracy, Hill was paid five percent cash kickbacks by members of Associates For Learning. Washington was also convicted of money laundering in an attempt to conceal the kickbacks.

Seven others charged in this case have all pleaded guilty for their roles in the conspiracy to commit program fraud by submitting fraudulent invoices to DPS for services and thereafter participating in making kickbacks to Hill. Those include Gwendolyn Washington, Marilyn White, and Sally Jo Bond, who were business partners of Sherry Washington’s; Duane Polk, Valerie Polk, Thomas Ray Taylor, and Stephen Hill The original indictment, returned on April 18, 2010, had also named former DPS Risk Management executive Christina Polk-Osumah, who died of natural causes on September 2, 2010.

Sentencings for the defendants are set for July and August.

The case was investigated by special agents of the FBI and IRS with the cooperation of Detroit Public Schools, Office of Inspector General. The case is being investigated and prosecuted by Assistant United States Attorney J. Michael Buckley of the Public Corruption Unit.