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9486 in the collection
3 indicted in DISD bilking: $39 million in computer payments allegedly steered to vendor
Ohanian Comment" And Dallas honchos thought they were in line for the Broad Prize.
The only reason scandals haven't erupted elsewhere is that local reporters haven't gone after the story.
By Kent Fischer
A lucrative business relationship that resulted in the indictment Tuesday of two former Dallas school administrators and a Houston computer vendor began five years ago on a tropical island known best for its white-sand beaches and laid-back lifestyle.
As the wives took in the sights of Key West, Fla., the DISD officials and the computer vendor talked shop, according to the indictment. Among their discussions was the district's desire to upgrade its technology through a computer deal that would allow DISD to lease the machines while the vendor oversaw their upkeep and maintenance.
The Dallas Independent School District's desire for such a deal, called a "seat management" contract, was not yet public, according to a federal indictment unsealed Tuesday. That meant the informal talk gave the vendor, Houston-based Micro System Enterprises, a leg up on the competition.
Fast forward nearly six years, and the three men who took that trip to Key West stand accused of engineering a $2.4 million fraud against DISD, the proceeds of which paid for a 49-foot sport-fishing yacht, credit card payments, more trips to Key West and tens of thousands of dollars in bribes made via wire transfers, checks and "envelopes filled with cash," the indictment alleges.
The indictment alleges the three men steered $39 million in district computer payments to Mr. Wong's company and its affiliates. The men then used shell companies and phony invoices – and even enlisted the help of their employees and relatives – to siphon off millions of dollars for their personal use, the indictment says.
The indictment is the latest black eye for a district struggling to maintain public faith in the wake of continued scrutiny of how it spends its money and who benefits. Just two weeks ago, a former U.S. attorney hired by the district to investigate its defunct credit card program released a blistering report detailing $20 million in annual spending that was virtually unmonitored by those in charge.
Tuesday's indictment stems from an 18-month investigation into computer contracts awarded by DISD and its "E-rate" program, a federal subsidy for the installation and maintenance of school computer networks and telecommunication systems.
"When public officials aren't making the decision, aren't calling the shots based on balls or strikes on what they see, but rather are subject to influence, that is when we in federal law enforcement must step up to the plate," U.S. Attorney Richard Roper said.
Mr. Wong and Mr. Bohuchot pleaded not guilty to all charges in U.S. District Court on Tuesday afternoon. They were released on their own recognizance. Mr. Coleman did not appear in court, but his attorney, Bertram Marks, told The Detroit News that he expects his client to be proved innocent, adding that he had not received official notice of the indictment.
"If there is an indictment, I am absolutely positive that Mr. Coleman will be fully exonerated. Mr. Coleman is cooperating with the FBI to root out corruption. He certainly has not been a part of the corruption," Mr. Marks told the Detroit newspaper.
Mr. Bohuchot's attorney, Mike Gibson, said nothing illegal transpired between Mr. Bohuchot and Mr. Wong.
Mr. Bohuchot "received no money from the seat contract or the E-rate contract that was illegal," Mr. Gibson said. "There is no evidence that Mr. Bohuchot, after the [district's request for bids was published] involved himself in any way with any vendor whatsoever."
"The indictment speaks of deceit. There was no deceit," Mr. McNeil said. "There were no phony invoices whatsoever. There were no phony records. In fact, over the last three years, we have fully cooperated ... we've opened our books and records. We have nothing to hide."
The indictment comes nearly two years after The Dallas Morning News first detailed the seafaring relationship between Mr. Bohuchot and Mr. Wong. The articles revealed how Mr. Wong gave Mr. Bohuchot the unfettered use of a deep-sea-fishing yacht that Mr. Wong's company had bought a few months before DISD awarded its huge E-rate contract.
A few weeks after the first stories appeared in The News, federal investigators opened a public corruption investigation into the district's deals with Micro System.
Old colleagues
Ties between Mr. Coleman and Mr. Bohuchot go back nearly a decade to when they worked together in the San Francisco school district. Former San Francisco Superintendent Bill Rojas brought the two men to Dallas when he became schools chief here in 1999. Mr. Coleman was a DISD deputy superintendent and chief operations officer until 2000.
In late 2001, Mr. Bohuchot and Micro System began discussions on the "seat management" contract, according to the indictment. Micro System representatives then contacted computer maker Hewlett Packard to discuss a possible partnership on the deal.
Public records obtained by The News in fall 2005 showed that, after the Key West trip, Mr. Bohuchot pushed the bidding process at a breakneck pace and urged that the contract be awarded to Hewlett Packard over the objections of the district's purchasing department.
Mr. Bohuchot's attorney, Mr. Gibson, said the trips and boat use had no influence on his client's dealings with Micro System. He added that several other top DISD administrators used the Micro System boat, which was seized by FBI agents last week.
"If it's illegal in Dallas to take people to Mavs games or Ranger games, the whole town would shut down," Mr. Gibson said. "A conflict of interest is not illegal."
Hewlett Packard won the $18 million contract, with Micro System receiving at least $4 million as a subcontractor. Soon after, Mr. Wong orchestrated $2 million in payments to a company he created called Statewide Marketing, according to the indictment.
Mr. Wong also used Statewide to pay Mr. Coleman's newly created consulting company, Kenbridge, $256,000. The payments to Mr. Coleman were for "sales planning and marketing services" that he never performed, according to the indictment. The indictment says his role was to "facilitate" a meeting between Mr. Bohuchot and Mr. Wong.
Mr. Coleman cashed out at least $189,000 of the Kenbridge money in checks written to himself, according to the indictment. By that time, he had moved to Detroit public schools, where he was chief operations officer. Later, he was named acting superintendent.
Last fall, when investigators began questioning the Micro System payments to Kenbridge, Mr. Coleman created phony promissory notes and told investigators and members of a grand jury that the payments were loans, the indictment alleges. Those phony loan papers resulted in Mr. Coleman's obstruction of justice charges.
Mr. Coleman's contract with the Detroit school district was not renewed in March. He responded by suing the district, saying he was fired because he asked the FBI to investigate a shady district insurance contract.
The indictment alleges that soon after their scheme involving the seat management contract, Mr. Wong and Mr. Bohuchot began working on another deal. This time, their goal was DISD's federal E-rate grants, which were expected to surpass $125 million in 2003.
The E-rate program is funded primarily by consumers through a surcharge on their phone bills. It distributes $2.25 billion to schools and libraries each year. Since 2003, 14 people and 12 companies have been charged with fraud crimes related to E-rate, not including the DISD scandal.
In the fall and early winter of 2002, Mr. Wong began putting together a consortium of companies that he wanted to bid on DISD's E-rate projects. Among those companies was one that he created, Acclaim Professional Services, which would handle the money and disperse payments to the group's other members, according to the indictment.
The Sir Veza II was one of two boats used by former DISD administrator Ruben Bohuchot. Around the same time, Mr. Wong's company, Statewide Marketing, bought a $305,000 deep-sea-fishing boat. According to the indictment, Mr. Bohuchot was active in the purchase, arranging for its inspection and rechristening. He told those involved that he and Mr. Wong were "business partners," according to the indictment.
The indictment states that the boat's captain testified that Mr. Wong told him to "keep Mr. Bohuchot happy because [Mr. Wong] had no use for the yacht if [Mr. Bohuchot] didn't want to use it."
Coincidence?
Three months after the purchase of the yacht, rechristened the Sir Veza, Mr. Wong's consortium won the DISD contract, which Mr. Bohuchot helped to write. The deal opened the door to some $35 million in district E-rate payments that would eventually land in Acclaim bank accounts, the indictment says.
But winning the DISD E-rate contract wasn't enough. Mr. Wong and Mr. Bohuchot needed help skimming off the money, so they enlisted the help of a Micro System employee and an unnamed relative of Mr. Bohuchot, who went to work for Acclaim, according to the indictment.
The indictment does not name the individuals who assisted in the fraud, but instead refers to them by the initials "K.N." and "B.C." Mr. Bohuchot's son-in-law, Bernard Cabatingan, worked for Acclaim, The News reported in a front-page story July 30, 2005.
Mr. Cabatingan's wife, Aimee, a teacher at Thomas Jefferson High School, hung up on a reporter calling to seek comment from her husband Tuesday.
Both "K.N." and "B.C." received at least $75,000 in payments from Acclaim, Micro System and Kenbridge – money they passed on to Mr. Wong or Mr. Bohuchot via wire transfers, checks or "envelopes filled with cash," according to the indictment.
Soon after the News story broke, the federal government halted DISD's E-rate payments, and the district put Mr. Bohuchot on paid administrative leave. In November , he agreed to resign from the district after trustees offered him a $65,000 deal to walk away.
Nearly a year later, Mr. Bohuchot resurfaced in Detroit, where his old friend Mr. Coleman was running the school district. In a deal similar to one they are accused of executing in Dallas, Mr. Coleman asked a local businessman to include Mr. Bohuchot in a bid for an $11.6 million computer contract there.
That deal soured after local media began reporting on the two men's history in Dallas.
Tuesday's indictment charges Mr. Bohuchot and Mr. Wong with eight counts of bribery each; Mr. Coleman is charged with two counts of bribery. Each man is also charged with one count of conspiracy to commit bribery and one charge of money laundering.
Mr. Bohuchot is also charged with filing false tax returns. In addition, he and Mr. Coleman are charged with obstruction of justice.
"I'm always disappointed when public officials engage in corruption and when public funds are placed at risk by someone who doesn't have the true nature of their job at heart," said Mr. Roper, the U.S. attorney.
Staff writer Jason Trahan contributed to this report.
CENTRAL FIGURES
RUBEN BOHUCHOT, 58, of Dallas was an assistant superintendent at DISD in charge of technology and its procurement. He resigned from the district in February 2006.
FRANKIE WONG, 46, of Houston was co-owner and president of Micro System Enterprises, a computer vendor that was, at one time, one of DISD's largest suppliers. In January, he sold Micro System. He told a judge Tuesday that he is working in real estate.
WILLIAM COLEMAN, 51, of Detroit is a former DISD deputy superintendent and chief operating officer. He joined the Detroit Public School District in 2002 and served as its interim superintendent until March, when his contract was not renewed. He did not appear in court Tuesday with Mr. Wong and Mr. Bohuchot.
SIR VEZA and SIR VEZA II were the sport-fishing yachts that Mr. Bohuchot helped Mr. Wong buy through Statewide Marketing, a company formed by Mr. Wong. Mr. Bohuchot had free access to the boats, which were docked in Galveston.
Potential penalties
If convicted of the charges against them, the men face the following maximum penalties:
• Conspiracy to commit bribery – five years in prison and a $250,000 fine
• Bribery – 10 years in prison and a $250,000 fine
• Money laundering – 20 years in prison and a $500,000 fine
• Obstruction of justice – 20 years in prison and a $250,000 fine
• Filing a false tax return – three years in prison and a $250,000 fine
http://www.dallasnews.com/sharedcontent/dws/dn/latestnews/stories/053007dnmetdisdindictments.206735e6.html
JIM MAHONEY / DMN
Former DISD official Ruben Bohuchot was indicted Tuesday. Indicted were Ruben Bohuchot, a former DISD associate superintendent for technology; William Coleman, a former DISD deputy superintendent who later became interim superintendent of schools in Detroit; and Frankie Wong, president of Micro System. They were charged with bribery, conspiracy and money laundering.
JIM MAHONEY / DMN
Former DISD computer vendor Frankie Wong (center) left the federal courthouse in Dallas on Tuesday after being indicted on charges of bribery, conspiracy and money laundering. Mr. Wong's attorney, Barry McNeil, said Mr. Wong's company broke no laws and won its DISD contracts "straight up."
Also Online
Archive
• 1/18/07: Vendor that let official use yacht closes
• 10/10/06: New flap for DISD ex-official
• 1/29/06: Golf perk wound up in DISD contract
• 11/18/05: DISD buys out official
• 11/05/05: Tech chief for DISD leaves job
• 10/30/05: DISD official pushed breakneck bidding
• 8/23/05: DISD vendor's funding frozen
• 8/16/05: DISD has no record of inquiry
• 7/30/05: DISD kin got jobs at vendors
• 7/24/05: Helping to land the big one?
Documents
• Criminal docket (.pdf)
• Grand jury indictment (.pdf)
• Government's motion to unseal indictment (.pdf)
• Granting of government's motion (.pdf)
• Standing order designating case for enrollment (.pdf)
— Kent Fischer
Dallas Morning News
2007-05-30
http://www.dallasnews.com/sharedcontent/dws/dn/latestnews/stories/053007dnmetdisdindictments.206735e6.html
INDEX OF OUTRAGES
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