A federal grand jury subpoena of Fresno Unified School District records demands answers about the use of public bond money and focuses on school district officials who oversaw no-bid contracts for multimillion-dollar construction projects.
The subpoena, dated Aug. 24 and released Tuesday as the result of a public records request by The Bee, asks the district to turn over a wide range of financial documents dating to 2009 related to “leaseback” construction agreements and money spent from the $280 million Measure Q bond that voters approved in 2010.
The investigation specifically targets projects with Harris Construction and Bush Construction, asking for documents related to preconstruction services.
The subpoena names leaseback contracts used to build Gaston Middle School and make improvements at Fresno and Bullard high schools. All of those projects were awarded to Harris Construction via the leaseback method of financing and were financed with Measure Q funds.
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The investigation comes after a recent court decision said that Fresno Unified improperly used the leaseback method when it hired Harris Construction to build Gaston Middle.
Leaseback agreements were designed to allow cash-strapped districts to build schools by going outside of the traditional competitive bidding process and handpicking consultants to front the cost of a project and then be repaid by the district incrementally over time. Fresno Unified used the leaseback process even though it had the money to pay for the $37 million project.
The subpoena relates to a U.S. Department of Justice investigation into potential violations of federal law.
Federal subpoena signed by U.S. Attorney Benjamin Wagner
The investigation is probing district officials’ personal emails and phone records, and asks for any information related to financial dealings between the contractors and officials, including their involvement in the passage of Measure Q and campaigns to get Fresno Unified trustees elected. Harris and its owner, Richard Spencer, were the largest donors to Measure Q, contributing $30,000. And for the 2012 board election, Spencer, family members and company employees pitched in nearly $10,000 to the campaigns of three trustees.
The subpoena also asks about Bush and Harris’ financial involvement in district events like the annual convocation held at the Save Mart Center, in addition to general documents related to business expenses for district officials’ transportation, entertainment and meal costs.
The subpoena does not name specific Fresno Unified officials, but requests expansive personnel records from “each present and former officer, director, employee or agent of FUSD who has or had any responsibility for, or has or had participated in formulating, proposing, recommending, establishing, approving, negotiating or otherwise working on” the contracts in question.
$37 millionAbout how much Harris Construction was paid to build Gaston Middle via a leaseback contract
Chief Operations Officer Karin Temple and Chief Financial Officer Ruthie Quinto sign off on all facility contracts. Temple and Quinto said Tuesday they will cooperate fully with the subpoena but deferred other questions to criminal defense attorney Carl Faller, who the board recently hired to provide legal counsel while the federal investigation is ongoing. The district has not responded to requests for information about Faller’s salary.
The Bush and Harris Construction firms also did not return calls.
Trustee Brooke Ashjian first said in July that the FBI was investigating the district over its use of leaseback contracts, but Superintendent Michael Hanson denied any knowledge of an investigation.
District officials are expected to testify by Nov. 19.
Trustees met in a special board meeting on Tuesday afternoon, but it was a closed session and Board President Cal Johnson said there was nothing to report.
The board meets in regular session Wednesday at 5:30 p.m. at district headquarters, 2309 Tulare St. in downtown Fresno.