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Serving Northern St. Louis County, Minnesota

New documents provide troubling evidence of potential fraud

Marshall Helmberger
Posted 1/8/11

As we report in this week’s paper, the Minnesota Commissioner of Administration has ruled that Johnson Controls is subject to the Minnesota Data Practices Act, at least in regard to its work for …

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New documents provide troubling evidence of potential fraud

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As we report in this week’s paper, the Minnesota Commissioner of Administration has ruled that Johnson Controls is subject to the Minnesota Data Practices Act, at least in regard to its work for the St. Louis County School District.

That’s a major victory and not just for people in our area who have sought answers to some of the troubling questions surrounding this entire project. This determination will apply across the state and will enable citizens elsewhere in Minnesota to track the activities of public contractors like Johnson Controls.

In the past, JCI has sought to keep important public documents under wraps. It denied access to materials requested this past summer by the Coalition for Community Schools and, later, attempted to deny our request as well, until we brought the matter to the Department of Administration, which oversees disputes over access to public records.

Johnson Controls has since provided most, if not all, of the material requested by the Timberjay, but has still not complied with the request for information from the Coalition, which it dismissed out of hand back in July.

But some of the information the Timberjay has now obtained is critical to understanding the degree to which financial data were misused in the development of the school district’s restructuring plan. The most important document we have now obtained is what I refer to as the “master spreadsheet,” which reveals all of the numbers used by JCI to support its claim that the school district would save $5.6 million by passage of its $78.8 million facilities plan. We’ve been seeking this spreadsheet for more than a year, but JCI has maintained from the beginning that the spreadsheet is proprietary and even school officials were not allowed to keep a copy. I have since forwarded the spreadsheet to a local, retired engineer who worked as a project consultant to private industry for decades, who is assisting me in analyzing the document.

In doing so, it has become increasingly clear why JCI attempted to keep this documented from close scrutiny. In combination with other documents we have already obtained from the school district, the master spreadsheet provides clear and convincing evidence that projected savings were significantly exaggerated and that enrollment and revenue projections were far rosier than the projections JCI had developed for the district barely a year earlier. Despite reducing the number of schools from seven to four and a half, the spreadsheet appears to show savings in transportation, which certainly won’t be the case. The district will be adding bus routes as a result of the changes, and students will be transported significantly further in most cases. There’s no way you can wring savings from that.

In next week’s paper, I plan to outline the exaggerations in savings from staffing reductions. The following week, I plan to examine the inconsistencies in enrollment and revenue projections.

The revelations contained in the spreadsheet raise some very troubling questions about who, if anyone, at the school district office or on the school board, reviewed these numbers, or was involved in their creation. I’ve forwarded a copy of the spreadsheet to Superintendent Rick and have asked for an answer to those questions.

The answers will not just be of interest to readers. They should be of particular interest to the school board, which will have three new members take office on Monday. If, in fact, the discrepancies we have uncovered are verified, they would represent material misrepresentations of fact, a key element in any fraud investigation.

Given credible evidence of potential civil or criminal wrongdoing, board members will have a legal obligation to investigate. Failure to do so could leave them complicit, and potentially liable, should existing or future investigations confirm criminal or professionally negligent acts.

After all, it’s one thing to say you didn’t know. It’s quite another to be informed, and to do nothing.

While we have been forced to rely on partial information in the past, access to the master spreadsheet has now given us the clearest picture yet of how financial figures may have been manipulated by JCI officials, or others, to make a fraudulent case for a destructive school district restructuring, one that has netted JCI millions of dollars in fees.

Johnson Controls, fraud, ISD 2142, Timberjay