MISAPPROPRIATION OF FUNDS I FINANCIAL MISMANAGMENT I FRAUD – Audit Reveals Possible Fraud at San Ysidro Elementary School District for Misappropriating Funds and Financial Mismanagement
May 13, 2019
In April 2018, the Fiscal Crisis and Management Assistance Team (FCMAT) and the San Diego County office of Education entered into an agreement for FCMAT to provide an “extraordinary audit of the San Ysidro Elemenatry School District”. This audit was in response to allegations received by the county office, which included claims of possible fraud, misappropriation of funds, financial mismanagement and other illegal fiscal practices.
The bulk of the audit focused on a $23.7 million dollar solar project with Manzana Energy, Inc. There is much controversy around this project for two key reasons: (1) the project was not hired using a public and competitive process, rather the project was awarded to Manzana Energy, Inc, whose owner, Art Castañares, had a strong relationship with the district and its board members; and (2) Art Castañares agreed to provide the campaign funding for Marcos Dias and Rodolfo Linares school board members, in exchange for their agreement and support to reinstate the $23.7 million dollar solar project that has been cancelled back in 2011 for non-performance.
In short this recent audit revealed that the district had paid too much for public financing and repeatedly failed to properly manage contracts and purchases. Conclusions following the investigation were as follows:
“Potential for Fraud: Based on the findings in this report, there is sufficient evidence to demonstrate that fraud, misappropriation of funds and/or assets, or other illegal fiscal activities may have occurred in the specific areas reviewed.
Deficiencies and exceptions noted during FCMAT’s review of the district’s financial records and internal control environment increase the probability of fraud, mismanagement and/or misappropriation of the district’s assets. These findings should be of great concern to the San Ysidro Elementary School District and the San Diego County Office of Education and require immediate intervention to limit the risk of fraud, mismanagement and/or misappropriation of assets, or other illegal fiscal activities in the future.”
The San Diego Union Tribune has released a more detailed article summarizing the audit that revealed fraud, misappropriation of funds and financial mismanagement: https://www.sandiegouniontribune.com/communities/south-county/story/2019-05-09/audit-of-san-ysidro-reveals.
The complete findings of the audit have been published in this 105-page PDF: https://drive.google.com/file/d/1-kA0dsyh0LUv5GVgI7BCNjrnF658IOjh/view
For anyone whom has fallen victim to fraud, misappropriation of funds and other financial mismanagement, we encourage you to reach our to our offices at 619-432-5145 for a free consultation with one of our experienced investment attorneys and fraud lawyers.