CPS school

Students at a Chicago Public Schools building in June 2011. (E. Jason Wambsgans/Chicago Tribune / June 7, 2011)

In the year leading up to the overhaul of Chicago Public Schools leadership, the school district was beset by troubling instances of fraud and employee misconduct, including $1.13 million in improper benefits paid to retired teachers, systemic abuse of the federal free lunch program at a West Side high school, and a scheme by a central office employee to use school funds to buy items he later exchanged for cash.

Those are among more than two dozen cases detailed in the annual CPS inspector general’s report released to the public Wednesday.

At a time of transition for CPS -- operating under an interim chief executive, with a school board on its way out as a new mayor was on his way in – the report suggests  a lack of institutional authority and control.

In some cases, employees took advantage of lax oversight in the free lunch program to enroll their children despite earning six-figure salaries. In other cases, employees were circumventing the district’s computer system to access pornographic material online or visiting dating sites, the report found.

One assistant principal at an undisclosed high school who was also employed by a local travel agency steered more than $22,000 in school funds to the business, an obvious conflict of interest, said the report. Other employees were falsifying school attendance records and working part-time jobs on the side, Inspector General James Sullivan’s report alleged.

“There are 40,000 CPS employees and, for the most part, only a few of them hit our radar screen,” Sullivan said. “Generally speaking, CPS employees are working hard and doing their best, it’s just that there are a few unscrupulous employees who come to our attention each year.”

The report includes investigations conducted between July 1, 2010, and June 30, 2011, a period almost entirely under the direction of interim chief executive Terry Mazany and the previous Board of Eduction. CPS’ new chief executive Jean-Claude Brizard took the helm in May, while the board was sworn in the following month.

A CPS official on Wednesday called the report’s findings “serious” and “disappointing,” and said the district’s new leadership team “will not tolerate any activities of this nature that compromises the integrity of our district.”

Spokeswoman Marielle Sainvilus said the district already has taken steps to correct many of the problems identified in the report, including now requiring purchase orders for all district-related work and holding managers more accountable for misconduct that surfaces on their watch.

“We are also being proactive and working with (the inspector general) and making them a partner to review all control issues,” Sainvilus said. “We have a responsibility to maintain public trust.”

Other allegations include:

•    A teacher misappropriating as much as $56,486 from money collected from parents in a tuition-based after-school program and more than $40,000 taken from an elementary school’s PTA checking account. The teacher was discharged and convicted of felony theft.

•    Another teacher took a vendor check in exchange for books and deposited it in his own personal bank account rather than the school’s account. The teacher was later charged with numerous counts of theft.

•    A vendor for a mentoring program at a high school was double dipping for the same services by being a subcontractor for another entity contracted by another public agency.

•    Loss of a valuable package of CTA fare cards by an employee who said he left them on the dashboard of his unlocked delivery truck.

•    An elementary school teacher using a CPS email account to solicit sexual partners for himself and his girlfriend on Craigslist. The teacher received a six-day suspension and a written warning.

•    A CPS research technician who stored seven pictures of non-frontal male nudity on her CPS issued laptop. The technician was laid off and designated ineligible to be rehired.

•    A member of two Local School Councils whose wife’s company sold nearly $4,000 in sweatpants to both schools.  

•    An elementary school teacher charged with videotaping men and boys in a waterpark locker room.

The inspector general reported that between 2007 and 2011, payments for holiday, vacation and sick time totaling more than $1.13 million improperly were collected by 185 retired teachers hired as substitute teachers.

Under an agreement between the district and the Chicago Teachers Union in 2007, retired teachers are not eligible to receive benefit pay and are to be paid at a per diem rate for substituting. In the report, Sullivan called upon the district to review its policies, tighten controls over retired teacher pay and attempt to recover money improperly paid.

At North-Grand High School in Humboldt Park, where earlier investigations found employees had illegally signed up their children for free or reduced school lunches, Sullivan’s office conducted 21 investigations. The findings revealed a litany of misconduct, including 11 school employees and two other district employees who did not work at the school who allegedly falsified applications to enroll their children for free or reduced lunches.

The cases include a bilingual teacher who lived in Oak Park who enrolled her daughter for free lunch for two years despite an annual salary in excess of $100,000. They  also included a CPS reading coach who earned more than $100,000 annually who enrolled his daughter in the program for at least four years.

The investigation also found that the school’s principal, who has since retired, was improperly allowing her daughter to student teach at the school under the principal’s supervision. The report noted that the principal initially lied to the inspector general about the practice, saying she had received approval from central office.

In another case, a CPS manager bought 4,800 pairs of sneakers with $206,400 donated by a CPS-affiliated charity in the most recent year probed by officials, but the manager did not properly bid out the purchases. The scheme, which began in 2005, was enabled by completing purchase orders that avoided financial safeguards and were not approved by the board of education.

In a separate scheme, the IG found that this same employee stole thousands of dollars from CPS by exchanging items bought for CPS for cash and personal items, including one time when he bought champagne, condoms, a mattress and a $300 coffee maker. The employee – who admitted his children were using CPS computers while at college and living in New York –  has since resigned. The matter was turned over to the state’s attorney’s office.

Tribune reporters Noreen S. Ahmed-Ullah, Monica Eng and Jared Hopkins contributed

jhood@tribune.com