Madera County Superintendent of Schools — Ezequiel Tafoya Alvarado Academy Report

Extraordinary Audit August 31, 2023 Madera County Superintendent of Schools Michael H. Fine Chief Executive Officer August 31, 2023 Cecilia A. Massetti, Ed.D., Superintendent Madera County Superintendent of Schools 1105 S. Madera Ave. Madera, CA 93637 Dear Superintendent Massetti: In October 2021, the Madera County Superintendent of Schools and the Fiscal Crisis and Management Assistance Team (FCMAT) entered into an agreement for FCMAT to conduct an AB 139 Extraordinary Audit of the Ezequiel Tafoya Alvarado Academy public charter school to determine if fraud, misappropriation of funds or other illegal activities may have occurred. The agreement states that the main focus of FCMAT’s review is to determine, based on the sample test- ing performed and auditor’s judgment, whether the former executive director of the charter, or his family (1) collected compensation or property from the charter they were not entitled to; were involved in any undisclosed or inappropriate related-party transactions that were in conflict with state and federal policies and standards, or that violated conflict of interest laws or board policies, and whether charter funds were used for reasons other than legitimate educational purposes; and (2) based on that assessment, determine whether fraud, misappropriation of funds or other illegal fiscal practices may have occurred. In accordance with the scope of the study agreement, the team reviewed and tested transactions for fiscal years 2016-17 through 2019-20. Testing and the subsequent results of FCMAT’s review are intended to pro- vide reasonable but not absolute certainty about whether the charter’s financial transactions and activity were sufficiently accurate. This report contains the study team’s findings and recommendation in the above areas of review. FCMAT appreciates the opportunity to serve the Madera County Superintendent of Schools and the Ezequiel Tafoya Alvarado Academy public charter school and extends its thanks to the staff for their assis- tance during fieldwork. Sincerely, Michael H. Fine Chief Executive Officer Michael H. Fine • Chief Executive Officer 1300 17th Street – City Centre, Bakersfield, CA 93301-4533 • Tel. 661-636-4611 • Fax 661-636-4647 www.fcmat.org Table of Contents About FCMAT ..................................................................................................iv Introduction .......................................................................................................1 Background ................................................................................................................1 Fieldwork ....................................................................................................................2 Scope and Procedures ...........................................................................................2 Study Guidelines ......................................................................................................4 Study Team ................................................................................................................4 Fraud Definition and Internal Controls ...............................................................5 Occupational Fraud ..............................................................................................................5 Internal Controls ....................................................................................................................7 Control Environment ............................................................................................................8 Control Activities ...................................................................................................................8 Findings ............................................................................................................9 Board Meetings ........................................................................................................9 Relationship Between Former Executive Director and Property Owner ..........10 Gifts of Public Funds ...............................................................................................11 Nepotism ...................................................................................................................12 Acquisition of Vehicles ..........................................................................................25 Cell Phones and Other Electronic Devices .....................................................36 Cash Withdrawals ..................................................................................................39 Payroll Advances .....................................................................................................41 Bonuses ....................................................................................................................44 Fuel Purchases ........................................................................................................47 Fiscal Crisis and Management Assistance Team Madera County Superintendent of Schools ii Trips ............................................................................................................................51 Miscellaneous Expenditures ...............................................................................56 Legal Expenditures ................................................................................................77 Donation of Portable Buildings ...........................................................................79 Cafeteria Snack Bar ................................................................................................81 Book Publication ....................................................................................................83 Conclusion .....................................................................................................86 Recommendations .......................................................................................88 Appendix ........................................................................................................89 Fiscal Crisis and Management Assistance Team Madera County Superintendent of Schools iii About FCMAT FCMAT’s primary mission is to assist California’s local TK-14 educational agencies to identify, prevent, and resolve financial, human resources and data management challenges. FCMAT provides fiscal and data management assistance, professional development training, product development and other related school business and data services. FCMAT’s fiscal and management assistance services are used not just to help avert fiscal crisis, but to promote sound financial practices, support the training and development of chief business officials and help to create efficient organizational operations. FCMAT’s data management ser- vices are used to help local educational agencies (LEAs) meet state reporting responsibilities, improve data quality, and inform instructional program decisions. FCMAT may be requested to provide fiscal crisis or management assistance by a school district, charter school, community college, county office of education, the state superintendent of public instruction, or the Legislature. When a request or assignment is received, FCMAT assembles a study team that works closely with the LEA to define the scope of work, conduct on-site fieldwork and provide a written report with findings and recommendations to help resolve issues, overcome challenges and plan for the future. 90 80 70 60 50 40 30 20 10 0 FCMAT has continued to make adjustments in the types of support provided based on the changing dynamics of TK-14 LEAs and the implementation of major educational reforms. FCMAT also develops and provides numerous publications, software tools, workshops and professional learning opportunities to help LEAs operate more effectively and fulfill their fiscal oversight and data management responsibilities. The California School Information Services (CSIS) division of FCMAT assists the California Department of Education with the implementation of the California Longitudinal Pupil Achievement Data System (CALPADS). CSIS also hosts and maintains the Ed-Data website (www.ed-data.org) and provides technical expertise to the Ed-Data partnership: the California Department of Education, EdSource and FCMAT. FCMAT was created by Assembly Bill (AB) 1200 in 1992 to assist LEAs to meet and sustain their financial obligations. AB 107 in 1997 charged FCMAT with responsibility for CSIS and its statewide data management work. AB 1115 in 1999 codified CSIS’ mission. seidutS fo rebmuN About FCMAT Studies by Fiscal Year 98/99 99/00 00/01 01/02 02/03 03/04 04/05 05/06 06/07 07/08 08/09 09/10 10/11 11/12 12/13 13/14 14/15 15/16 16/17 17/18 18/19 19/20 20/21 21/22 Fiscal Crisis and Management Assistance Team Madera County Superintendent of Schools iv About FCMAT AB 1200 is also a statewide plan for county offices of education and school districts to work together locally to improve fiscal procedures and accountability standards. AB 2756 (2004) provides specific responsibili- ties to FCMAT with regard to districts that have received emergency state loans. In January 2006, Senate Bill 430 (charter schools) and AB 1366 (community colleges) became law and expanded FCMAT’s services to those types of LEAs. On September 17, 2018 AB 1840 was signed into law. This legislation changed how fiscally insolvent dis- tricts are administered once an emergency appropriation has been made, shifting the former state-centric system to be more consistent with the principles of local control, and providing new responsibilities to FCMAT associated with the process. Since 1992, FCMAT has been engaged to perform more than 1,400 reviews for LEAs, including school districts, county offices of education, charter schools and community colleges. The Kern County Superintendent of Schools is the administrative agent for FCMAT. The team is led by Michael H. Fine, Chief Executive Officer, with funding derived through appropriations in the state budget and a modest fee sched- ule for charges to requesting agencies. Fiscal Crisis and Management Assistance Team Madera County Superintendent of Schools v Introduction Background Introduction Background The Ezequiel Tafoya Alvarado Academy is a public charter school located in Madera, CA, about 25 miles northwest of Fresno, CA in Madera County. The rural community is 60% Hispanic or Latino, with a median household income of $42,581 in 2019. The charter school has 615 students (2021-22), and the unduplicated pupil count, which includes students who qualify for free and reduced-price meals, was 92% in 2021-22. Founded in 2005, the school serves grades K-8 and is contained on one Madera site of approximately eight acres. The site is shared by a church, Building for Christ Ministry, which also owns both the property and buildings used by the charter. The school has been at this location since its inception. As a public charter, the school is primarily funded through state apportionments and in-lieu of property taxes and receives public funding specific to various state and federal programs. Similar to more traditional school districts in California, all funds received by a charter school are public, collected from taxpayers to be used in the educational process and subject to the same spending restrictions. The charter school’s sponsoring local educational agency (LEA) is the Madera Unified School District. A sponsoring LEA is required of all public charter schools in the state. The sponsor is responsible for ensuring the charter school complies with all applicable laws and the terms of its charter, as outlined in California Education Code (EC) Section 47604.32. These responsibilities also include monitoring the charter’s fiscal condition, ensuring it complies with all reporting requirements, and providing general guidance and assis- tance on various educational, operational and fiscal issues. While charter school governance structures vary throughout the state, a public charter is required to have a governing board that typically oversees school policies and procedures, school operations, and the charter’s fiscal health. The number of board members can vary by charter school. Between 2016-17 and 2019-20, the ETAA governing board consisted of five to seven trustees, each serving a two-year term, and selected through an application process. The charter requires all trustees to be a parent of a student enrolled at the school, and trustees have the duty of “setting and enforcing school policy,” as indicated on the application. The charter administration consists of an executive director who oversees all the staff and operations of the school. The same executive director was employed by the charter school from the inception of the charter in 2005 until his termination by the governing board in 2020. In October 2021, the Madera County Superintendent of Schools received information regarding possible fraud, misappropriation of funds or other illegal fiscal practices that may have occurred at ETAA. In con- sultation with FCMAT, the county superintendent requested that FCMAT conduct an AB 139 extraordinary audit pursuant to EC 1241.5 (c) to determine whether the former executive director or his family collected compensation or property from the charter they were not entitled to; were involved in any undisclosed or inappropriate related-party transactions that were in conflict with state and federal policies and standards, or that violated conflict of interest laws or board policies, and whether charter funds were used for reasons other than legitimate educational purposes. Based on that assessment, FCMAT was asked to determine whether fraud, misappropriation of funds or other illegal fiscal practices may have occurred at ETAA. EC 1241.5(b)(c) permits a county superintendent to review or audit the expenditures and internal controls of any school district or charter school in that county if they have reason to believe that fraud, misappro- priation of funds, or other illegal fiscal practices may have occurred that merit examination. According to Fiscal Crisis and Management Assistance Team Madera County Superintendent of Schools 1 Introduction Background the Education Code, the review or audit conducted by the county superintendent will focus on the alleged fraud, misappropriation of funds, or other illegal fiscal practices and is to be conducted in a timely and effi- cient manner. This is in accordance with Education Code Section 42638(b), which states the following: If the county superintendent determines that there is evidence that fraud or misappro priation of funds has occurred, the county superintendent shall notify the governing board of the school district, the State Controller, the Superintendent of Public Instruction, and the local district attorney. FCMAT subsequently began conducting fieldwork at the charter, including compiling relevant documenta- tion to determine whether the alleged fraud, misappropriation of funds, or other illegal fiscal practices may have occurred at ETAA. Fieldwork Investigating allegations of fraud requires several steps, including interviewing potential witnesses and gathering evidence from internal and external sources. FCMAT reviewed, analyzed and tested business records including payroll documentation, accounts payable disbursements, reconciliations, general ledger activity, financial reports, board policy and administrative regulations, board meeting minutes, email and hard copy communications, and other internal documents from various departments and independent sources. FCMAT also conducted interviews with former and current charter personnel, including the business office and other district staff, as well as current and former charter school board members to obtain information on the practices and events that transpired during the 2016-17 through 2019-20 fiscal years, including any alleged mismanagement, fraud or abuse. Scope and Procedures This review’s primary focus is to determine and report to the Madera County Superintendent of Schools and the charter school whether there are reasonable assurances, based on testing, that fraud, misappropri- ation of funds or other illegal activities may have occurred. Specific audit objectives include evaluation of policies and procedures, internal controls, and charter school transactions to determine whether the former executive director or his family collected compensa- tion or property from the charter they were not entitled to; were involved in any undisclosed or inappro- priate related-party transactions that were in conflict with state and federal policies and standards, or that violated conflict of interest laws or board policies, and whether charter funds were used for reasons other than legitimate educational purposes. Fraud investigations consist of gathering adequate information about specific allegations and performing audit test procedures to determine whether fraud has occurred; evaluating the loss; and determining who was involved and how it may have occurred. During interviews, FCMAT study team members asked questions pertaining to charter and governing board policies and procedures, job responsibilities, internal controls, payment practices and authorizations, com- pensation adjustment procedures, and open-ended questions designed to elicit information about possible irregularities related to the scope of work. Fiscal Crisis and Management Assistance Team Madera County Superintendent of Schools 2 Introduction Background FCMAT performed the following audit procedures using available documentation requested from the char- ter school, as well as through the interviews conducted during fieldwork. As previously outlined, the scope of FCMAT’s review was 2016-17 to 2019-20. 1. Reviewed the compensation of the former executive director and his family members employed by the charter school between 2016-17 and 2019-20 to determine whether governing board authorizations were obtained prior to any payments being made and to test compensation for reasonableness compared to other positions at the charter school. 2. Determined whether any nepotism policies were in place during the period of review, including whether the former executive director used public funds to improperly compensate personal associates or family members. 3. Reviewed the relationship and transactions between the charter school and the property owner, including the church located on the same property as the charter school as well as a construction company also owned and operated by the property owner. 4. Evaluated the use of any external consultants retained by the charter school during the scope of FCMAT’s study. 5. Reviewed all charter vehicle purchases and uses during the scope of study to determine the educational need for each vehicle and the appropriateness of any vehicle usage. 6. Examined the use of fuel cards by the former executive director and his family members employed by the charter school to determine the educational purpose for any fuel purchases that occurred during the scope of FCMAT’s review. 7. Examined the purchase and use of various portable electronic devices, such as mobile phones, watches and tablets during the period of study, including the initiation and approval of each purchase and the disposition of each device at the time fieldwork was conducted. 8. Examined cash advances, cash withdrawals and any loans provided to the former executive director during the scope of study, including whether board action or approval was provided for any such transactions. 9. Reviewed trips by the former executive director using public charter school funds during the scope of study to determine each trip’s educational purpose. 10. Reviewed the expenditures of public charter school funds made by the former executive director and his family members employed by the charter school. Transactions were reviewed in both the charter school’s bank account and through the former executive director’s charter school credit and debit cards to determine each expense’s educational purpose. 11. Examined whether public charter school funds were used for any personal legal expenses of the former executive director and his family members during the scope of study. 12. Reviewed the charter school’s daily student snack bar program to determine if reasonable deposits were made representing the snack bar sales as overseen by the former executive director. Fiscal Crisis and Management Assistance Team Madera County Superintendent of Schools 3 Introduction Background 13. Reviewed internal controls to determine any deficiencies in collecting, counting, storing and depositing cash, as well as the reconciliation of the charter school’s bank accounts. 14. Examined the donation of public property (i.e., portable buildings) by the charter school to the property owner, including whether governing board approval was obtained for the donation, and determine why the charter school donated rather than sold the portable buildings 15. Reviewed the use of public funds for a book publication by the former executive director to determine the educational purpose to the charter school. Obtained and reviewed governing board policies, board meeting agendas and minutes, and administrative regulations to determine if established processes were followed for the approval of expenditures, compensation adjustments and other fiscal transactions. 16. Interviewed, or attempted to interview, charter school staff and current and former board members to determine their knowledge and involvement in the various transactions reviewed by FCMAT. FCMAT’s findings and recommendations are the result of the above audit procedures. Study Guidelines FCMAT initially visited the charter school in March 2022 to begin conducting interviews, collect data and review documents. Subsequent visits occurred to collect additional information. This report is the result of those activities. Study Team The study team was composed of the following members: Jeffrey B. Potter, CFE Marcus Wirowek, CFE FCMAT Intervention Specialist FCMAT Intervention Specialist Leonel Martínez FCMAT Technical Writer Fiscal Crisis and Management Assistance Team Madera County Superintendent of Schools 4 Fraud Definition and Internal Controls Fraud Definition and Internal Controls Fraud can include an array of irregularities and illegal acts characterized by intentional deception and misrepresentations of material facts. The principal mechanism to deter fraud or illegal practices is strong internal controls. Internal controls include processes designed to provide reasonable assurance that the district’s operations are effective and efficient, that its financial information is reliable, and that its opera- tions are compliant with all applicable laws and regulations. The internal control structure includes policies and procedures used by district staff, accounting and information systems, the work environment and the professionalism of employees. A material weakness is a deficiency in the internal control process whereby errors or fraud may occur. Because of the weakness, employees in the normal course of business may not detect errors in time to correct them. A material weakness also can be a violation of law or regulations. Although all employees have some degree of responsibility for internal controls, the governing board, superintendent (or equivalent) and senior management are ultimately responsible. Occupational Fraud Occupational fraud occurs when an organization’s owners, executives, managers or employees use their occupation to deliberately misuse or misapply the employer’s resources or assets for personal benefit. The three main types of occupational fraud are asset misappropriation schemes, corruption schemes, and fraudulent financial statement schemes. Asset misappropriation schemes include cash skimming, falsifying expense reports and/or forging company checks. Corruption schemes involve an employee(s) using his or her influence in business transactions to obtain a personal benefit that violates that employee’s duty to the employer or the organization. Financial statement fraud includes the intentional misstatement or omission of material information in financial reports. Occupational fraud is one of the most difficult types of fraud and abuse to detect; however, the most common method of detection comes from tips, which help prevent occupational fraud three times as often as any other detection method. According to the 2022 Report to the Nations conducted and published by the Association of Certified Fraud Examiners (ACFE), corruption schemes, including those instances where corruption was one of multiple schemes, accounted for 50% of the cases reviewed, with a median loss of $150,000. There is a direct correlation between the perpetrator’s position and authority in an organization and the losses incurred. Losses from fraud by owners and executives are more than double the fraud by managers and nearly three times higher than losses incurred as a result of fraud by employees. Although there are many different types of fraud, occurrences of potential misappropriation are most common when employees are in positions of trust and have access to assets. When someone who is law- fully entrusted with property takes it for his or her personal use, embezzlement can occur. Common elements in all fraud include the following: • Intent, or knowingly committing a wrongful act. • Misrepresentation to accomplish the act. • Reliance on weaknesses in the internal control structure. • Concealment to hide the act. Fiscal Crisis and Management Assistance Team Madera County Superintendent of Schools 5 Fraud Definition and Internal Controls Disguising personal purchases as purchases of supplies, merchandise, or as payments for property tax, insurance or rent, is also a common fraud scheme. School districts and charter schools can be defrauded when common supplies such as paper, ink and janitorial products are taken home for personal use. Large supply purchases may also include uncommon line-item personal purchases such as work boots, clothing or items for use at home. Certain factors must be present for a perpetrator’s unethical behavior to occur. The ACFE fraud triangle (Cressey, 1953) includes three factors: incentive/pressure/motivation, opportunity, and rationalization/atti- tude. An extension of the fraud triangle is the fraud diamond, which adds capability to the mix (Wolfe and Hermanson, 2004). A perpetrator of fraud usually has the following: • Incentive/Pressure/Motivation m A need to get something accomplished, is self-promoting, has financial pressures or personal reputation to protect. • Opportunity m In a position of authority or provides an essential function in the organization. • Rationalization/Attitude m Confident that fraudulent behavior will go undetected, often including a justification that certain acts, behaviors or circumstances are worthy of personal compensation above the individual’s annual salary and benefits. • Capability m Able to understand the financial systems and can override internal controls. This report presents findings demonstrating that the former executive director had the opportunity, motiva- tion, rationalization/attitude, and capability to divert public charter school funds for personal use, including for himself, his family members, his associates, and for other noneducational purposes. Fiscal Crisis and Management Assistance Team Madera County Superintendent of Schools 6 Fraud Definition and Internal Controls Internal Controls Internal controls are the principal mechanism for preventing and/or deterring fraud or illegal acts. Illegal acts, misappropriation of assets or other fraudulent activities can include an assortment of irregularities characterized by intentional deception and misrepresentation of material facts. Effective internal control processes provide reasonable assurance that a district’s operations are effective and efficient, that the financial information pro- duced is reliable, and that the organization operates in compliance with all applicable laws and regulations. Internal control elements provide the framework for an effective fraud prevention program. An effective internal control structure includes the policies and procedures used by staff, adequate accounting and information systems, the work environment, and the professionalism of employees. The five interrelated elements of an effective internal control structure and their definitions are included in the table below. Internal Control Element Definition Commonly referred to as the moral tone of the organization, the control environment includes a code of ethical conduct; policies for ethics, hiring and promotion guidelines; proper assignment Control Environment of authority and responsibility; oversight by management, the board or an audit committee; investigation of reported concerns; and effective disciplinary action for violations. Identification and assessment of the organization’s objectives in Fraud Risk Assessment order to develop a strategy to react in a timely manner. The development of policies and procedures to enforce the governing board’s directives. These include actions by man- Control Activities agement to prevent and identify misuse of the district’s assets, including preventing employees from overriding controls in the system. Establish effective fraud communication. Ensure that employ- ees receive information regarding policies and opportunities to Information and Communication discuss ethical dilemmas. Establishing clear means of commu- nication within an organization to report suspected violations. Conduct ongoing monitoring that includes periodic performance Monitoring assessments to help deter fraud by managers and employees. The following is a partial list of deficiencies and omissions that can cause internal control failures: • Failure to adequately segregate duties and responsibilities related to authorization. • Failure to limit access to assets or sensitive data (e.g. cash, fixed assets, personnel records). • Failure to record transactions, resulting in lack of accountability and the possibility of theft. • Failure to reconcile assets with the correct records. • Unauthorized transactions, resulting in skimming, embezzlement or larceny. • Lack of monitoring or implementation of internal controls by the governing board and man- agement, or because personnel are not qualified. • Collusion among employees where little or no supervision exists. Fiscal Crisis and Management Assistance Team Madera County Superintendent of Schools 7 Fraud Definition and Internal Controls A system of internal controls consists of policies and procedures designed to provide the governing board and management with reasonable assurance that the organization is achieving its objectives and goals. Traditionally referred to as hard controls, these include segregation of duties; limiting access to cash; management review and approval; and reconciliations. Other types of internal controls, typically referred to as soft controls, include management tone, performance evaluations, training programs, and maintaining established policies, procedures and standards of conduct. A strong system of internal controls that includes all five of the above elements can provide reasonable but not absolute assurance that the organization will achieve its goals and objectives. Control Environment The internal control environment is critical because it establishes the moral tone of the organization. Though intangible, it begins with the leadership and consists of employees’ perception of the ethical con- duct displayed by the governing board and executive management. The control environment is a prerequisite that enables other components of internal control to be effective in achieving the goals and objectives to prevent and/or deter fraud or illegal acts. It sets the tone for the organization, provides discipline and control, and includes factors such as integrity, ethical values and com- petence of employees. The control environment can be weakened significantly by a lack of experience in financial management and internal controls. Control Activities Control activities are a fundamental element of internal controls and are a direct result of policies and pro- cedures designed to prevent and identify misuse of the district’s assets, including preventing any employee from overriding controls in the system. Control activities include the following: 1. Performance reviews, which compare actual data with expectations. In accounting and business offices, this most often occurs when budgeted amounts are compared with actual expenditures to identify variances and followed up with budget transfers to prevent overspending. 2. Information processing, which includes the approvals, authorizations, verifications and reconciliations necessary to ensure that transactions are valid, complete and accurate. 3. Physical controls, which are the processes and procedures designed to safeguard and secure assets and records. 4. Segregation of duties, which consists of processes and procedures that ensure that no employee or group is placed in a position to be able to commit and conceal errors or fraud in the normal course of duties. In general, segregation of duties includes separating the custody of assets, the authorization or approval of transactions affecting those assets, the recording or reporting of related transactions, and the execution of the transactions. Adequate segregation of duties reduces the likelihood that errors will remain undetected by providing for separate processing by different individuals at various stages of a transaction, and for independent review of the work. Fiscal Crisis and Management Assistance Team Madera County Superintendent of Schools 8 Findings Board Meetings Findings Board Meetings During the period of FCMAT’s audit (2016-17 to 2019-20), board meetings were short, often lasting less than one hour, according to current and former board members. Attendance was sparse; meetings were typically attended only by the board members and charter administration, and rarely included community members or other staff. No representative from the charter’s sponsoring district, Madera Unified, attended the meet- ings during this time. The former executive director, with the assistance of his business manager, created the agenda for each meeting without regular input from governing board members. Board packets containing the agenda and any supporting documentation were provided to board members upon their arrival at each meeting, pre- venting any prior review. All packets were collected by the former executive director following each meet- ing’s adjournment. Interviews indicated that former board members lacked sufficient knowledge of their roles and responsi- bilities and were unaware of their oversight responsibilities related to areas such as charter policies and governance, school operations, and expenditure authorizations. Some board members indicated the former executive director asked them to serve on the board. The charter school requires all board members to be parents of students who are enrolled at the charter school. Board members also indicated that expenditures of school funds were generally approved at each board meeting, although this was a brief action that occurred within the meeting’s consent agenda. Any questions about expenditures by board members were often discouraged or went unanswered by the former exec- utive director to ensure the meetings were brief. Because the board packets were provided upon arrival at the meeting, the list of expenditures could not be reviewed beforehand, and board members could not determine if the list was correct or complete. Expenditures typically lacked any supplemental information or details. During the period of FCMAT’s review, board members were unaware of any comprehensive governing board policies or administrative regulations although the charter has indicated that such policies have since been developed and implemented. Governing board policies and administrative regulations are the corner- stone of an educational entity and lay the foundation for effective local governance and oversight. A lack of formal policies or adherence to any adopted policies prevents a governing board from addressing charter school issues timely, effectively and consistently, and makes it difficult to understand the school’s rules and regulations. Fiscal Crisis and Management Assistance Team Madera County Superintendent of Schools 9 Findings Relationship Between Former Executive Director and Property Owner Relationship Between Former Executive Director and Property Owner The former executive director was employed in the same capacity by ETAA from the charter school’s incep- tion until his termination by the governing board in 2020. During his tenure, he maintained a close relation- ship with the charter school’s property owners, Building for Christ Ministry. In addition to the church, the property owners also own and operate a construction company, Alvarado Construction. The primary principal of Building for Christ Ministry and Alvarado Construction is also a cofounder of ETAA, and this is reflected in the charter school’s name, Ezequiel Tafoya Alvarado Academy. (Ezequiel Tafoya was the principal’s father.) The primary principal is a former ETAA board member, and the former senior pastor of the church. Numerous building improvements initiated by ETAA have been performed primarily, or exclu- sively by Alvarado Construction. The former executive director purchased property from the principal within Madera County, and secured a private party mortgage for the purchase from the principal. The principal’s family members performed construction services at the charter’s site, which were paid by ETAA, and the principal’s spouse was previ- ously employed by the charter, according to staff interviews. In October 2017, the charter school also paid the funeral reception costs for the property owners’ daughter (included in the Miscellaneous Expenditures section of this report). Interviews indicated that following the former executive director’s departure in 2020, the relationship between ETAA and the property owner has steadily deteriorated, with the property owner indicating in February 2023 that it would like ETAA to vacate the property. The charter school subsequently filed legal action to halt this process. The dispute was ongoing at the time FCMAT’s fieldwork was concluded. Fiscal Crisis and Management Assistance Team Madera County Superintendent of Schools 10 Findings Gifts of Public Funds Gifts of Public Funds For purposes of state law, public funds are identified as any monies that are collected and retained by a school district or charter school or are deposited in a school district’s or charter school’s account. All funds received by the charter school, regardless of the funding source, are considered public funds unless the school is acting as a custodian for privately raised funds in a separately maintained agency fund or account. The legality of any expenditure is determined by the “gift of public funds” provision in Article 16, Section 6 of the California Constitution. This constitutional provision prohibits making any gift of public money to any individual (including public employees), corporation, or other government agency. For educational entities, it precludes the use of public funds for personal or noneducational purposes, either by those in a capacity to expend or obligate public funds, or through the donation of public funds to other individuals or entities for noneducational purposes. In the absence of a statute granting public local educational agencies the legal authority to make a special, or noneducational expenditure, the California Constitution states the following: ...the Legislature shall have no...power to make any gift, or authorize the making of any gift, of any public money or thing of value to any individual, municipal or other corporation whatever... To avoid being a gift, expenditures of public school funds, including those of a public charter school, must be for a direct and primary public purpose. An approved public purpose must be within the scope of a school’s jurisdiction and purpose, which does not extend to purposes such as aid to the indigent or the promotion of social welfare, though these may be lawful public purposes for other agencies. It is also well established that expenditures of public funds that involve a benefit to private persons (includ- ing public employees) are not gifts within the meaning of the California Constitution if those funds are expended for a public purpose. This means that public funds may be expended only if a direct and substan- tial public purpose is served by the expenditure, and private individuals are benefited only incidentally to the promotion of the public purpose. To justify the expenditure of public funds, an LEA’s governing board must determine that the expenditure will benefit the education of students within its schools. Expenditures that most directly and tangibly benefit students’ education are more likely justified. Expenditures driven by personal motives are not justified even if they have been a longstanding local custom or are based on benevolent feelings. If an LEA’s governing board determines that a particular expenditure serves a public purpose, the expen- diture is less likely to represent a gift of public funds. Accordingly, if an educational entity has governing board policies stating that specific expenditures are allowable, there is increased certainty that the expen- diture may be considered an appropriate use of public funds. As noted above, the charter had no such policies in place during the period under review. Fiscal Crisis and Management Assistance Team Madera County Superintendent of Schools 11 Findings Nepotism Nepotism Similar to other public entities, LEAs in California must be aware of any conflicts of interest involving family members, relatives, and associates within their organizations. Nepotism is defined as the practice among those with power or influence of favoring family members, friends, or associates, especially by giving them jobs, additional compensation, perks or other benefits, that may not necessarily be available to other employees. To prevent issues or concerns related to nepotism, it is imperative that LEAs have approved policies, procedures, employee handbooks and other measures in place to minimize or eliminate exposure to this practice. Board policies on nepotism often include a clause prohibiting the appointment of any person to a posi- tion for which their relative maintains management, supervisory, evaluation, or promotion responsibilities and prohibits any employee from participating in any decision that singularly applies to any of his or her relatives. During the period of FCMAT’s audit, ETAA lacked a board policy on nepotism. Such a policy was not adopted and implemented until 2020-21. The ETAA Employee Handbook for 2019-20 also addresses nep- otism, although the charter could not locate any charter policies or an employee handbook that included nepotism provisions prior to the 2019-20 school year. FCMAT found several instances where the former executive director’s family members and associates may have been provided additional compensation, perks, and/or benefits that may have not been provided to other employees. In addition, many of these perks were not board-approved. Son #1 The former executive director’s son, Son #1, was hired in the summer of 2014 as a custodian. Around November 2014, he was promoted to kitchen staff, and in 2015 or 2016, he was promoted to perform night security. He was ultimately terminated on June 30, 2019. According to interviews, the positions were funded from the unrestricted general fund. Son #1 was required to provide night security at ETAA’s only charter school site, located at 26247 Ellis Street in Madera, CA. The minimum qualifications for the night security position were not available to FCMAT. Accordingly, FCMAT could not determine if Son #1 was qualified for the position. FCMAT was also unable to locate a policy on charter vehicles issued to employees to determine whether this position quali- fied for the use of a charter vehicle. During his employment, Son #1 was issued a vehicle to perform his duties. Staff stated that Son #1 was initially issued a 2014 Mazda 3, and later a Ford F-150 Raptor pickup truck. FCMAT could not determine why Son #1 was issued a vehicle to perform his security duties for a school with only one site covering only eight acres. In addition, FCMAT could not determine why Son #1 was issued a premium, high-performance off-road pickup truck. Interviews and documentation indicated that, aside from the former executive direc- tor’s family members, no other employees were issued vehicles to perform their duties. The vehicle was not stored at the charter school and was driven exclusively by Son #1. In February 2018, Son #1 was involved in an auto accident in the Ford F-150 Raptor. According to an email by the former executive director, “(Son #1) was the driver. No witnesses. No charges filed. He accidentally hit a cement wall while reaching for an item in the truck….”. FCMAT could not determine if the accident resulted in any disciplinary action by the charter school. Fiscal Crisis and Management Assistance Team Madera County Superintendent of Schools 12 Findings Nepotism Along with a vehicle issued to Son #1, FCMAT also determined he was issued a fuel card. Interviews with staff indicated that Son #1 may have used the card to purchase gasoline beyond the capacity of his assigned vehicle. In some instances, FCMAT identified multiple fuel purchases in the same day using the same card. Son #1’s first vehicle, a Mazda 3, has a fuel tank capacity of approximately 13.2 gallons. Depending on the year and according to Edmunds.com, most F-150 pickup trucks have a fuel tank capacity of either 23.0 or 26.0 gallons, and an mpg of between 17 city / 23 highway and 19 city / 26 highway. Below is a sample of dates and times when fuel purchases exceeded the vehicle’s fuel tank capacity, or where multiple purchases occurred in a single day. • Wednesday, June 7, 2017 Son #1’s fuel card was used to purchase 23.7 gallons at 8:48 p.m. and an additional 17.8 gallons eight minutes later, at 8:56 p.m. The total gallons purchased that day were 41.5 gal- lons. These purchases occurred in Fresno, CA, 25 miles from ETAA. • Tuesday, June 13, 2017 Son #1’s fuel card was used to purchase 15.1 gallons at 5:32 p.m., 17.6 gallons at 5:33 p.m., and 15.2 gallons at 11:43 p.m. The total gallons purchased within several hours were 47.9 gallons. These purchases occurred in Fresno, CA and Clovis, CA. Clovis is approximately 27 miles from ETAA. • Thursday, June 15, 2017 Son #1’s fuel card was used to purchase 21.4 gallons at 6:17 a.m., 13.3 gallons at 1:08 p.m., 17.3 gallons at 2:36 p.m., and 13.9 gallons at 8:50 p.m. The total purchased that day was 65.9 gallons. These purchases occurred in Fresno, CA and Clovis, CA. • Tuesday, June 27, 2017 Son #1’s fuel card was used to purchase a total of 54.1 gallons at 6:31 p.m. This purchase occurred in Fresno, CA. • Wednesday, June 28, 2017 Son #1’s fuel card was used to purchase 24.2 gallons at 8:11 p.m. and another 33.4 gal- lons at 8:27 p.m. The total gallons purchased that day was 57.6 gallons. These purchases occurred in Fresno, CA. Although FCMAT could not obtain all fuel statements for the period of the audit, total fuel charges for Son #1 were determined to be as follows: Month of Purchase Purchasing Party Total Gallons Cost ($) December 2016 Son #1 185.90 539.51 June 2017 Son #1 853.10 2,727.59 October 2018 Son #1 130.70 500.76 March 2019 Son #1 50.30 194.88 April 2019 Son #1 115.70 450.16 Totals 1,335.70 4,412.90 Fiscal Crisis and Management Assistance Team Madera County Superintendent of Schools 13 Findings Nepotism Based on the fuel statements received by FCMAT, the total fuel used by Son #1’s assigned fuel card in the months sampled by FCMAT was 1,335.7 gallons at a cost of $4,412.90. FCMAT could not determine the edu- cational purpose of these charges. FCMAT also could not locate a policy on employee use of gas cards. While the charter school has several buses for student transportation, these vehicles use diesel fuel, which was not purchased using Son #1’s fuel card. The buses obtain fuel at a local fuel depot, rather than at more traditional gas stations where the fuel card was used. Lastly, documents revealed that Son #1 was also issued a charter cell phone. Issuing cell phones to certain positions can be a common practice, but FCMAT determined that most employees at the charter were not provided with these devices. FCMAT could not locate a policy on charter cell phones issued to employees. Son #1 - Criminal History In California, all public-school employees must follow Education Code 45125, which states: ….to have two fingerprint cards bearing the legible rolled and flat impressions of the person's fingerprints together with a personal description of the applicant prepared by a local public law enforcement agency having jurisdiction in the area of the school district, which agency shall transmit the cards, together with the fee required by subdivision (f), to the Department of Justice; except that any district, or districts with a common board, may process the fingerprint cards if the district so elects. LEAs are required to monitor criminal reports received from the Department of Justice. It is important for LEAs to determine any relationship between an employee’s assigned duties, such as being responsible for the school’s night security, and any criminal convictions that may occur during employment. The list below outlines several instances where Son #1 was charged with various criminal conduct. Although the decision to hire or retain is ultimately up to the governing board, interviews indicated that the board was unaware of the crimes that Son #1 was charged with. • February 3, 2016: Driving under the influence with a blood alcohol level of 0.08% or more. • March 27, 2016: m Assault by means likely to produce great bodily injury. m Battery with serious bodily injury. m Second degree robbery. • December 16, 2016: Assault by means likely to produce great bodily injury. • November 13, 2017: Driving under the influence. This charge occurred while operating a vehicle assigned by ETAA. In an internal email communication, the former executive direc- tor stated the following to charter staff: Fiscal Crisis and Management Assistance Team Madera County Superintendent of Schools 14 Findings Nepotism Although being charged with a crime does not necessarily jeopardize employment with an LEA, FCMAT has concerns regarding the treatment that Son #1 received. Aside from Son #2, FCMAT could not determine if other employees were allowed to retain their employment with the number and severity of the charges filed against Son #1. Son #2 Much like Son #1, Son #2 was hired as a custodian in the summer of 2014. He later joined the kitchen staff in November 2014, and became the night security in 2015 or 2016. He was ultimately terminated on June 30, 2019. During his employment, Son #2’s positions were funded by the unrestricted general fund. On May 9, 2019, an email from the former executive director to the fiscal manager stated that both sons were “… suspended with pay” until June 30, 2019, at which time they would be using a “reduction in force” as the reason for termination, effectively allowing the sons to apply for unemployment benefits. That email is shown below. During FCMAT’s interview with the former executive director, he stated he did not approve any unemployment benefits for Son #2 and indicated such benefits would not be appropriate given the circumstances of the termination. A Notice of Unemployment Insurance Claim filed from the Employment Development Department (EDD) states that the position of night security was eliminated on July 7, 2019, with a last day worked on June 30, 2019. After a review of board agendas for June and September of 2019, FCMAT could not determine if the board approved either son’s termination and position elimination. According to interviews with charter staff, the position of night security was not filled the following school year. Fiscal Crisis and Management Assistance Team Madera County Superintendent of Schools 15 Findings Nepotism (Social Security number and address redacted by FCMAT.) After a review of personnel files, FCMAT could not determine if Son #2 was qualified for the position of night security. Along with Son #1, Son #2 was hired to provide night security at ETAA’s only school site and issued a Ford F-150 Raptor for his position. As with Son #1, FCMAT could not determine why Son #2 was issued a vehicle to perform his duties for a charter school having only one, eight-acre site. FCMAT could not determine why Son #2 was also issued the same high-performance off-road vehicle. In August 2016, Son #2 was involved in a traffic accident. Although FCMAT could not locate or determine the details of the accident, it confirmed that the charter vehicle issued to Son #2, the Ford F-150 Raptor, was involved. In April 2017, Son #2 was involved in a hit-and-run accident with the assigned Ford F-150 Raptor. According to the police report, Son #2 did not provide a statement to the responding police officer. On September 22, 2017, a claim was filed with ETAA’s auto liability insurance. The description from the claim states: ... was driving when it struck a fence, causing damage. IV incurred minor damage. No injuries reported. After the accident, Son #2 was assigned a different Ford F-150, which also belonged to the charter school. That vehicle was not the high-performance Raptor model. FCMAT is uncertain why there was a delay of nearly six months in reporting the accident to ETAA’s insurance company. In October 2017, Son #2 was involved in another auto accident. In an email communication, the charter’s insurance adjuster asked the following questions: (Son #2) veered into his lane while they were on Olive Street and they were trying to get onto Northbound Highway 99. Can you please ask (Son #2) to confirm what happened? Did he veer into the lane of the other car and hit the other car's left side with his truck's front end? Any damage to the school's truck? The truck is a Ford truck license no: 4343WJ. Fiscal Crisis and Management Assistance Team Madera County Superintendent of Schools 16 Findings Nepotism FCMAT could not determine if any disciplinary action was taken or if Son #2 was assigned another vehicle. FCMAT found that a gas card was also issued to Son #2 and may have been used for noneducational purposes. In addition to the amount of fuel purchased, FCMAT found some instances where Son #2, much like Son #1, used the fuel card multiple times in one day. Again, depending on the year, most F-150s have a fuel tank capacity of either 23.0 or 26.0 gallons. Below is a sample of dates and times when fuel purchases exceeded the vehicle’s fuel tank capacity or where multiple charges occurred in a single day. Note that all dates provided below occurred within a period of one week, totaling 244.4 gallons of fuel purchased, and included the weekend, which are nonwork days • Sunday, June 4, 2017 The Son #2 purchased 10.0 gallons at 1:38 a.m., 8.6 gallons at 2:23 a.m., and 12.5 gallons at 4:46 a.m. The total purchased within four hours was 31.1 gallons. The purchases occurred in Fresno, CA, 25 miles from ETAA. • Tuesday, June 6, 2017 Son #2 purchased 11.8 gallons at 5:50 p.m., 11.3 gallons at 6:47 p.m., and 37.0 gallons at 6:50 p.m. The total purchased in one hour was therefore 60.1 gallons. The purchases occurred in Fresno, CA. • Wednesday, June 7, 2017 Son #2 purchased 16.7 gallons at 1:26 a.m., 14.6 gallons at 4:22 p.m., and 17.3 gallons at 8:03 p.m. The total purchased that day was 48.6 gallons. The purchases occurred in Fresno, CA and Clovis, CA. Clovis is approximately 27 miles from ETAA. • Friday, June 9, 2017 Son #2 purchased 12.1 gallons at 8:31 p.m., 8.8 gallons at 9:46 p.m., and 37.5 gallons at 9:50 p.m. The total purchased in two hours was 58.4 gallons. The purchases occurred in Fresno, CA. • Saturday, June 10, 2017 Son #2 purchased 25.1 gallons at 8:31 p.m., and 21.1 gallons at 11:31 p.m. The total pur- chased in three hours was 46.2 gallons. The purchases occurred in Fresno, CA. Based on internal ETAA emails, Son #2’s gas card was eventually revoked. FCMAT could not find any docu- mentation that required repayment of any fuel purchases that may not have been for an educational pur- pose since the personnel files for both sons were missing and unavailable to FCMAT. Based on bank statements from ETAA’s Valero Fleet Services account, it appears Son #2 was issued a gas card again in November 2018 and charged an additional 127.1 gallons of gas for that billing cycle. From the sample audited by FCMAT, total fuel charges for Son #2 were as follows: Month of Purchase Purchasing Party Total Gallons Cost ($) December 2016 Son #2 161.10 413.77 June 2017 Son #2 478.90 1,587.49 October 2018 Son #2 127.10 500.53 Total 767.10 2,501.79 Fiscal Crisis and Management Assistance Team Madera County Superintendent of Schools 17 Findings Nepotism Total fuel costs incurred on Son #2’s assigned gas card was $2,501.79. FCMAT could not determine the educational purpose of these charges. Son #2 - Criminal History The list below outlines several instances where Son #2 was charged with various criminal conduct. Interviews indicated that the board was unaware of these charges. • January 26, 2017: Possession of a controlled substance. • October 8, 2017: Driving under the influence with a blood alcohol level of 0.08% or more. • August 13, 2018: Vandalism. • April 25, 2019: m Assault: Deadly weapon other than a firearm. m Inflict corporal injury on spouse/cohabitant. • June 9, 2019: m Inflict corporal injury on spouse/cohabitant. m Commit offense while on bail. m Assault with a deadly weapon with great bodily injury. m False imprisonment. m Violate court order to prevent domestic violence. As with Son #1, although being charged with a crime does not necessarily jeopardize employment with an LEA, FCMAT has concerns about Son #2’s treatment. FCMAT did not attempt to contact Son #2, as he was incarcerated at the time of the audit. Daughter According to her employment agreements, the former executive director’s daughter was initially hired on July 1, 2013 as a school community relations/multimedia specialist, with an annual salary of $38,000. On August 7, 2014, she became the charter’s grants & media coordinator with an annual salary of $45,000, and on July 1, 2015, her position became the public relations coordinator with a salary of $58,000 annually. On July 1, 2016, she was hired as a teacher with an annual salary of $64,000, and finally, on July 1, 2018, she was retained as a teacher receiving $67,898 per year. She remained in this position until June 30, 2019. FCMAT noted that the positions of school community relations/multimedia specialist, grants & media coor- dinator, and public relations coordinator no longer exist at ETAA. Although hired into various positions at the charter school, staff interviews indicated the daughter was reg- ularly on leave or on vacation, and some staff suggested she was working on other employment options. ETAA did not keep attendance calendars for staff, so FCMAT could not determine the extent of reported leaves or vacations. During interviews with staff and a review of available documentation, FCMAT discovered that ETAA had issued the daughter a cell phone, paid her college tuition, issued her a gas card, and used charter funds to repair her vehicle, which was not owned by ETAA. After reviewing the daughter’s various employment con- tracts, FCMAT determined that none of these perks or benefits were included in her employment contracts. FCMAT reviewed a Verizon Wireless bill from ETAA dated September 29, 2018 and determined that an iPhone XS Max was sent to the daughter’s home residence (see the Cell Phones and Other Electronic Devices section of this report). Total charges for the phone were $1,249.99. An Apple Watch (Series 4 with Fiscal Crisis and Management Assistance Team Madera County Superintendent of Schools 18 Findings Nepotism GPS + cellular) was also sent to the same address. These charges totaled an additional $499.99. FCMAT determined that no other employees in similar classifications were issued an iPhone or an Apple Watch. FCMAT could not locate a policy on cell phones or other electronic devices issued to employees. ETAA provided FCMAT with a list of charges from various educational institutions. Interviews with charter staff indicated that these charges were for the daughter’s college education. No policy was provided to FCMAT for employee educational reimbursement or payment. According to the Commission on Teacher Credentialing, the daughter received her preliminary credential on September 1, 2017, a date that coincides with her first employment contract as a teacher at ETAA. The exhibit below outlines the dates of the tuition charges, the name of the vendor, and the amount, sorted by the vendor’s name. Date Vendor Cost ($) 7/7/16 Alliant Intl Univ 65.00 7/7/16 Alliant Intl Univ 850.00 8/24/16 Alliant Intl Univ 3,913.00 9/12/16 Alliant Intl Univ 1,919.00 10/24/16 Alliant Intl Univ 3,000.00 10/26/16 Alliant Intl Univ 444.00 12/15/16 Alliant Intl Univ 444.00 1/9/17 Alliant Intl Univ 1,944.00 2/3/17 Alliant Intl Univ 1,944.00 3/3/17 Alliant Intl Univ 3,888.00 4/10/17 Alliant Intl Univ 1,000.00 5/5/17 Alliant Intl Univ 2,888.00 7/6/17 Alliant Intl Univ 972.00 8/2/17 Alliant Intl Univ 972.00 8/30/17 Alliant Intl Univ 876.25 2/21/18 Alliant Intl Univ 225.50 8/14/18 Alliant Intl Univ 100.00 6/7/16 ASU NBS 49.59 7/5/16 ASU NBS 49.58 8/2/16 ASU NBS 110.79 1/19/17 ASU NBS 24.00 2/3/17 ASU NBS 50.06 6/7/16 ASU Student Account 2,066.40 7/5/16 ASU Student Account 2,066.00 8/2/16 ASU Student Account 4,616.40 1/19/17 ASU Student Account 1,000.00 2/3/17 ASU Student Account 2,086.00 Total 37,563.57 The total amount of charter funds used for the daughter’s college education was $37,563.57. During inter- views, FCMAT learned of another classified employee whose education was also paid using charter funds, although FCMAT could not determine the amount of funds that were provided for that particular employee. Fiscal Crisis and Management Assistance Team Madera County Superintendent of Schools 19 Findings Nepotism In addition to other potential benefits, the daughter was also assigned a gas card. FCMAT reviewed board meeting minutes around the date of the opening of the account but could not locate board approval for the new account. The following are monthly charges that were placed on the gas card assigned to the daughter. Month of Purchase Purchasing Party Total Gallons Cost ($) December 2016 Daughter 54.0 144.00 June 2017 Daughter 24.0 78.24 July 2017 Daughter 33.5 103.55 August 2017 Daughter 106.3 333.58 September 2017 Daughter 36.2 125.00 October 2017 Daughter 23.3 76.17 November 2017 Daughter 32.4 108.37 December 2017 Daughter 35.2 114.96 January 2018 Daughter 33.0 109.35 March 2019 Daughter 32.5 118.08 April 2019 Daughter 67.7 276.38 May 2019 Daughter 60.8 255.44 August 2019 Daughter 52.1 197.56 September 2019 Daughter 79.4 309.19 November 2019 Daughter 22.0 87.20 Totals 692.4 2,437.07 Based on bank statements provided to FCMAT, total fuel used by the aughter’s assigned gas card was 692.4 gallons of fuel, at a total cost of $2,437.07. FCMAT could not determine the educational purpose of these charges and no other employee in a similar classification was issued a gas card. As stated above, FCMAT also could not locate a policy on gas cards issued to employees. On June 6, 2016, the former executive director received an email from an insurance company indicating an auto insurance policy listing both himself and his daughter as the policyholders or insured drivers. The vehicle being insured was a 2011 Volkswagen Tiguan. This vehicle was never owned by the charter school, but charter funds were used for its maintenance and repairs. On December 8, 2017, FCMAT identified a check request for $4,310.11 for Madera Glass & Body digitally signed by the former executive director. On December 11, 2017, a check register report indicates that a check was issued to the same body shop for that amount. The check register is accompanied by a preliminary estimate of the repairs approved by the former executive director on December 7, 2017. On September 17, 2018, FCMAT also identified an invoice from a vendor called German Auto Repair for $287.83 for a Volkswagen Tiguan. This expense was charged using the former executive director’s charter credit card. FCMAT attempted to contact the daughter at the last known address and email; however there was no response. Therefore, FCMAT could not determine whether the expenses identified above were for a legiti- mate educational purpose. Fiscal Crisis and Management Assistance Team Madera County Superintendent of Schools 20 Findings Nepotism Former Spouse The former executive director’s ex-wife was also employed by the charter school as both a teacher, and later as an administrator. Emails indicated her positions were both co-founder / director of curriculum and instruction, as well as curriculum director. FCMAT determined that she retained a valid credential during the time of her employment, and that her salary appeared to be consistent with her positions. While some of her work appears to have been completed remotely, this happened at the start of the COVID-19 pandemic and is therefore not otherwise inconsistent with common practices during that time. Associate #1 During FCMAT’s interviews, several staff members reported that the former executive director had a social or romantic relationship with a former employee, Associate #1, and this was confirmed by electronic com- munications between these two individuals. At the time of the apparent relationship, ETAA did not have a policy on personal relationships between supervisors and subordinates in the workplace; however, ETAA’s current employee handbook prohibits these relationships. FCMAT discovered various retail charges from the former executive director’s charter school debit and credit cards originating in Los Banos, CA, approximately 47 miles from ETAA. Both the charter school and FCMAT are uncertain why the former executive director would drive this distance to purchase items from retail establishments that have locations in Madera, CA. Interviews with staff and additional research revealed that Associate #1 lives in Los Banos, CA. Staff also indicated they were unsure what the specific credit and debit card charges were for, and FCMAT could not determine the educational purpose of the expenditures. The following list outlines these charges, listed in chronological order. The debit and credit cards have been combined for the purpose of this schedule. Note that these charges are a subset of those included in the Miscellaneous Expenditures section of this report. Date Vendor Location Charge ($) 2/29/16 A. Wireless Los Banos, CA 53.99 10/17/16 A. Wireless Los Banos, CA 37.78 12/15/16 See's Candy Los Banos, CA 137.40 12/22/16 A. Wireless Los Banos, CA 102.57 1/3/17 A. Wireless Los Banos, CA 133.37 2/4/17 Home Depot Los Banos, CA 64.52 3/18/17 Hobby Lobby Los Banos, CA 127.22 9/21/17 McDonald's Los Banos, CA 7.98 12/17/17 Chase Los Banos, CA 48.78 6/25/18 McDonald's Los Banos, CA 9.07 7/26/18 Starbucks Los Banos, CA 20.90 8/11/18 Hobby Lobby Los Banos, CA 103.82 10/31/18 O'Reilly's Los Banos, CA 74.62 11/13/18 Home Depot Los Banos, CA 1,148.44 11/13/18 Home Depot Los Banos, CA 152.48 12/23/18 Tractor Supply Los Banos, CA 182.06 Fiscal Crisis and Management Assistance Team Madera County Superintendent of Schools 21 Findings Nepotism Date Vendor Location Charge ($) 2/11/19 Home Depot Los Banos, CA 27.97 2/28/19 AutoZone Los Banos, CA 67.41 3/3/19 Tractor Supply Los Banos, CA 71.39 4/14/19 Home Depot Los Banos, CA 240.09 4/14/19 True Value Los Banos, CA 26.72 4/16/19 Home Depot Los Banos, CA 648.75 4/18/19 O'Reilly's Los Banos, CA 58.14 4/19/19 Home Depot Los Banos, CA 420.31 4/19/19 Tractor Supply Los Banos, CA 140.43 4/20/19 True Value Los Banos, CA 93.09 4/22/19 Home Depot Los Banos, CA 239.63 4/22/19 Home Depot Los Banos, CA 53.55 4/23/19 Home Depot Los Banos, CA 1,075.22 4/26/19 Home Depot Los Banos, CA 590.27 4/28/19 Home Depot Los Banos, CA 519.25 4/29/19 Mister Car Wash Los Banos, CA 12.00 4/30/19 Mister Car Wash Los Banos, CA 15.00 5/3/19 Tractor Supply Los Banos, CA 61.75 5/8/19 Harbor Freight Los Banos, CA 46.74 5/16/19 Tractor Supply Los Banos, CA 298.59 5/18/19 Home Depot Los Banos, CA 752.17 5/20/19 Hobby Lobby Los Banos, CA 387.98 5/22/19 Hobby Lobby Los Banos, CA 374.77 8/5/19 Chase Los Banos, CA 63.78 Total 8,690.00 Based on documents reviewed by FCMAT, questioned debit and credit card charges occurring in Los Banos, CA, and for which no educational purpose is known, total $8,690.00. Fuel charges made by the former executive director while in Los Banos, CA are addressed in the Fuel section. FCMAT attempted to contact Associate #1 using the last known address and email, but received no response. Associate #2 According to ETAA board minutes, on September 26, 2019, the board approved an invoice to pay a consul- tant retained by the former executive director, Associate #2. Although no formal contract for service was located, the invoice described the following services to be provided: There will be a total of 6 one-hour long sessions with all 8th grade students, teaching them about life skills, success and happiness. Preparing the students for success in high school and beyond. Fiscal Crisis and Management Assistance Team Madera County Superintendent of Schools 22 Findings Nepotism The former executive director indicated during the interview that he located this individual through a search on Google for “life coach.” FCMAT could not duplicate this search, possibly because FCMAT could not iden- tify any life-coaching experience that Associate #2 may have provided to students in a K-12 environment. Life coaching sessions were scheduled to occur on the following dates: October 18, 2019, October 25, 2019, November 5, 2019, November 22, 2019, December 6, 2019, and December 20, 2019. FCMAT inter- views indicated the sessions happened in accordance with the above schedule. According to the invoice, ETAA paid a total of $12,000 for the life coaching services. Staff interviews indicated that Associate #2 may not have been appropriately qualified to provide life coach- ing sessions, and the relationship between the former executive director and Associate #2 may have been romantic. FCMAT was presented with concerns from staff and reviewed further details of Associate #2. Although FCMAT is unaware of any established industry qualifications for a life coach, it determined that Associate #2 publicly describes herself as a “former porn star” on her website. Associate #2 does not pos- sess any type of teaching or counseling credential in California, and no relevant educational qualifications or references could be identified. A review of the state of California’s Department of Consumer Affairs indi- cates that, at the time services were rendered to the charter school, Associate #2 did not possess a rele- vant Marriage & Family Therapist license and was not a Licensed Clinical Social Worker. In addition, FCMAT located Associate #2’s business website indicating that she provides the following services: Fiscal Crisis and Management Assistance Team Madera County Superintendent of Schools 23 Findings Nepotism Relationship coach. Sex & intimacy expert. The gold-standard mentor you need, to achieve the love life you want. Here to welcome you into the great-communication-and-hot-sex reality that's waiting for you just around the corner. Because Associate #2’s website does not indicate or mention any services related to life coaching for students, FCMAT attempted to interview Associate #2 to more definitively determine the actual services provided to both ETAA and the former executive director, as well as better understand the educational pur- pose for which charter funds were spent. FCMAT also intended to better understand whether other, similar services were rendered to other educational institutions, either within or outside of California. However, Associate #2 declined the requested interview. Fiscal Crisis and Management Assistance Team Madera County Superintendent of Schools 24 Findings Acquisition of Vehicles Acquisition of Vehicles When an LEA purchases vehicles or other major equipment, the purchase must be used primarily for edu- cational purposes and/or to conduct LEA business. The LEA’s executive leadership has a responsibility to ensure that all employees and other potential users of school-owned vehicles and equipment understand the appropriate uses and that any misuse may be cause for disciplinary action and/or loss of usage privi- leges. The governing board should approve all vehicle and major equipment purchases beforehand. LEAs should develop and follow effective board policies and administrative regulations that delineate how vehicles are purchased, positional staff that may use the vehicles, permissible and prohibited uses, and so on. With a lack of oversight, vehicles and other items can be purchased using public funds for reasons that deviate from appropriate educational purposes. During the scope of FCMAT’s audit, ETAA lacked these board policies and administrative regulations. FCMAT identified only one policy that mentioned vehicle usage. This was in the charter school’s 2019-20 Employee Handbook, which states that employees should not drive a school vehicle at any time while under the influence of alcohol or an illegal substance. However, this was in a section titled “Drug-Free Workplace Policy,” and the policy did not further elaborate on charter vehicle usage. Documents provided to FCMAT indicate that the former executive director may have used charter funds to purchase and/or repair over 10 different vehicles. Some vehicles were used for legitimate educational pur- poses for ETAA; however, FCMAT found where vehicle usage or related expenses for repairs, maintenance, fuel, etc. lacked a clear educational purpose. The former executive director’s most recent employment agreement included provisions on vehicle usage. FCMAT found that, for the employment agreement dated July 1, 2017 through June 30, 2020, under the section titled “Use of Vehicle’, the contract states, “The executive director shall have use of a Ford F-150.” A review of previous contracts dated July 1, 2012 through June 30, 2015 revealed no language regarding vehicle usage or acquisition by the charter school. An amendment on June 30, 2015 extended the former executive director’s contract to June 30, 2018. However, once again, the contract included no language regarding vehicle usage. FCMAT identified the following vehicles and related equipment that were either acquired, used, maintained, repaired, wrecked or sold during the scope of the study. Vehicle Summaries 1. 2009 Ford F-150. a. Vehicle Type: Pickup truck. i. VIN ending: 77614 b. Purchase Date: Unknown. c. Purchase Amount: Unknown. d. Funding Source Used for Purchase: Unknown. e. Board Approval Date: Unknown. f. Educational Purpose: May have been purchased for maintenance and groundwork purposes. g. Repair/Maintenance Costs Paid by Charter: Unknown. h. Disposition: ETAA still has this vehicle and uses it for educational purposes. Fiscal Crisis and Management Assistance Team Madera County Superintendent of Schools 25 Findings Acquisition of Vehicles 2. 2010 Ford F-150 Raptor a. Vehicle Type: Pickup truck. i. VIN ending: 44171. b. Purchase Date: Unknown. c. Purchase Amount: $40,062.73. Charter funds were used to register and insure the vehicle. Fiscal Crisis and Management Assistance Team Madera County Superintendent of Schools 26 Findings Acquisition of Vehicles d. Funding Source Used for Purchase: Unknown. e. Board Approval Date: FCMAT could not determine the board approval date, which likely oc- curred prior to the period of FCMAT’s audit. f. Educational Purpose: For use by Son #1 for night security. During the FCMAT interview, the former executive director stated that he purchased this vehicle, as well as the other Ford F-150 Raptor (see #4, below), to allow the charter school to qualify for a bank loan. He stated that, without assets such as a fleet of vehicles, the charter lacked any assets against which the charter could borrow. Two Raptors were purchased in part because they hold their value better than a regular F-150 pick-up truck. FCMAT could not determine how the purchase of depreciable assets increased the charter school’s ability to borrow from a bank. Further, two of the F-150 pick-up trucks were registered by the former executive director in his own name, rather than in the name of the charter school (see vehicles #5 & #6, below). This would not have contributed to the charter’s potential for obtaining a bank loan. Current charter school staff indicated they are unaware of any bank loan that was secured as a result of the acquisition of the vehicles. g. Repair/Maintenance and Other Related Costs Paid by Charter Date of Repair Vendor/Description Cost ($) 1/4/18 Valvoline Instant Oil Change 102.57 1/4/18 Schoettler Tire 1,483.43 1/24/18 Madera Ford 225.00 1/30/18 Lalo's Auto Repair * 4,241.80 3/29/18 Torres Body Shop * 3,623.68 5/31/18 Madera Ford 1,237.36 3/1/19 Smog Technology Center 58.00 3/1/19 Valvoline Instant Oil Change 110.15 6/3/19 Parking Citation in Oakland, CA 77.00 7/4/19 WeatherTech floor liners 245.21 8/6/19 Torres Body Shop 990.96 8/14/19 Lalo’s Auto Repair 339.03 Total 12,734.19 * Potentially used to repair vehicle due to an auto accident. h. Disposition: Sold to Carmax by ETAA. 3. 2014 Mazda 3. a. Vehicle Type: Car. i. VIN ending: 04359. Fiscal Crisis and Management Assistance Team Madera County Superintendent of Schools 27 Findings Acquisition of Vehicles b. Purchase Date: June 24, 2014. c. Purchase Amount: $27,808.95. d. Funding Source Used for Purchase: Unknown. e. Board Approval Date: Unknown. f. Educational Purpose: Purchased for use by Son #1. g. Repair/Maintenance Costs Paid by Charter: i. Service contract for $2,706.00. ii. New wheels and tires for $2,090.00. h. Disposition: Traded for a Ford F-150 Raptor pickup truck (VIN 10773) on February 8, 2016. 4. 2012 Ford F-150 Raptor. a. Vehicle Type: Pickup truck. i. VIN ending: 10773. b. Purchase Date: February 8, 2016. c. Purchase Amount: $39,373.40. d. Funding Source Used for Purchase: Unknown. On February 8, 2016, two withdrawals were made from the charter’s bank account for $20,010.00 and $19,373.40, respectively, approxi- mately totaling the purchase price of $39,373.40. e. Board Approval Date: Unknown. FCMAT reviewed board agendas around the time of pur- chase and could not locate any board approval. f. Educational Purpose: For use by Son #2 for night security. During the FCMAT interview, the former executive director stated that he purchased this vehicle, as well as the other Ford F-150 Raptor (see #2, above), to allow the charter school to qualify for a bank loan. He stated that, without assets such as a fleet of vehi- cles, the charter lacked any assets against which the charter could borrow. Two Raptors were purchased in part because they hold their value better than a regular F-150 pick-up truck. FCMAT could not determine how the purchase of depreciable assets increased the charter’s ability to borrow from a bank. Further, two of the F-150 pick-up trucks were registered by the former executive direc- tor in his own name, rather than in the name of the charter school (see vehicles #5 & #6, below). This would not have contributed to the charter’s potential for obtaining a bank loan. Current charter school staff indicated they are unaware of any bank loan that was secured as a result of the acquisition of the vehicles. Repair/Maintenance Costs Paid by Charter: Lalo’s Auto Repair for $368.96 on January 22, 2018. g. Disposition: The vehicle was in two accidents on August 23, 2016 and April 9, 2017. ETAA received an insurance payment for the accidents totaling $31,478.98. According to interviews, the insurance funds were used to repair the vehicle, which was subsequently sold by ETAA. 5. 2015 Ford F-150. a. Vehicle Type: Pickup truck. i. VIN ending: 37254 b. Purchase Date: July 11, 2015. Fiscal Crisis and Management Assistance Team Madera County Superintendent of Schools 28 Findings Acquisition of Vehicles c. Purchase Amount: $47,371.45. Charter funds were used to register and insure the vehicle. d. Funding Source Used for Purchase: Unknown. On July 13, 2015, there was a withdrawal for $47,371.45 from the charter’s bank account, which equals the purchase price of the vehicle. e. Board Approval Date: Unknown. FCMAT reviewed board agendas around the time of pur- chase and could not locate any board approval. f. Educational Purpose: Unknown. g. Repair/Maintenance Costs Paid by Charter: Date of Repair Vendor/Description Cost ($) 3/1/16 Valvoline Instant Oil Change 93.74 11/9/16 Valvoline Instant Oil Change 171.47 8/18/17 Valvoline Instant Oil Change 117.72 2/10/18 Safelite Auto Glass 463.97 7/17/19 Torres Body Shop, due to accident 4,132.41 7/24/19 Valvoline Instant Oil Change 180.76 7/30/19 Safelite Auto Glass 549.84 Total 5,709.91 Fiscal Crisis and Management Assistance Team Madera County Superintendent of Schools 29 Findings Acquisition of Vehicles h. Disposition: Sold by former executive director. According to interviews with staff, the former executive director registered the vehicle in his name at the Department of Motor Vehicles (DMV). He responded to a question from the governing board regarding this issue by stating it was easier to place the vehicle in his name, rather than in the charter school’s name. FCMAT confirmed that a 2019-20 DMV registration card shows the vehicle is registered to the former executive director; however, the address used is ETAA’s physical address. Interviews indicated this may have been a replacement vehicle for the wrecked Ford F-150 Raptor (VIN 10773). ETAA attempted to report the vehicle as stolen; but local authorities indicated it was not in the charter school’s name and ETAA was not the regis- tered owner. Staff indicated this vehicle was removed from the charter school’s premises by the former executive director at the time of his termination. During FCMAT’s interview, the former executive director confirmed to FCMAT that he took possession of the vehi- cle upon his termination and later sold the vehicle, retaining the proceeds for himself. FCMAT cannot accurately determine the value of the vehicle at the time of sale since the mileage, options, condition, etc. are unknown. A reasonable estimate is $25,000, based on current used vehicle prices The vehicle has not been reported as income on the former executive director’s annual Form W-2. The former executive director confirmed this during FCMAT’s interview. Unless the former executive director returns the vehicle to ETAA, the vehicle must be reported as income in accordance with IRS regulations at an estimated value at the time of his termination from ETAA. 6. 2016 Ford F-150. a. Vehicle Type: Pickup Truck. i. VIN ending: 89832. b. Purchase Date: June 13, 2018. c. Purchase Amount: $39,000. Charter funds were used to register and insure the vehicle. Fiscal Crisis and Management Assistance Team Madera County Superintendent of Schools 30 Findings Acquisition of Vehicles d. Funding Source Used for Purchase: Unknown. As shown above, the registration listed a lien- holder on the vehicle, however, FCMAT could not further determine the reason for this. e. Board Approval Date: Unknown; however, the use of a Ford F-150 is included in the former executive director’s employment agreement, which did receive board approval. f. Educational Purpose: Likely purchased for use by the former executive director who drove the vehicle. g. Repair/Maintenance Costs Paid by Charter: i. Torres Body Shop (October 12, 2018) for $520.00. ii. Valvoline Instant Oil Change (April 24, 2019) for $122.54. h. Disposition: Confirmed to be in the possession of the former executive director. During FCMAT’s interview, the former executive director stated he is currently using this vehicle. According to interviews with staff, the former executive director registered the vehicle in his name at the DMV. He responded to a question from the governing board regarding this issue by stating it was easier to place the vehicle in his name, rather than in charter school’s name. FCMAT confirmed that a 2019-20 DMV registration card shows the vehicle is registered to the former executive director, however the address used is ETAA’s physical address. ETAA attempted to report the vehicle as stolen, however local authorities informed ETAA that the vehicle was not in the name of the charter school and ETAA is not the registered owner. Interviews indicated the former executive director removed this vehicle from the charter school’s premises at the time of his termination. FCMAT cannot accurately determine the value of the vehicle at the time of his termination, as the mileage, options, condition, etc. are unknown. A reasonable estimate is $25,000, based on current used vehicle prices. The vehicle has not been reported as income on the former executive director’s annual Form W-2. The former executive director confirmed this during FCMAT’s interview. Unless the former executive director returns the vehicle to ETAA, the vehicle must be reported as income in accordance with IRS regulations at an estimated value at the time of his termination from ETAA. Fiscal Crisis and Management Assistance Team Madera County Superintendent of Schools 31 Findings Acquisition of Vehicles 7. 2006 Honda Accord. a. Vehicle Type: Car. i. VIN ending: 84723 b. Purchase Date: Unknown. c. Purchase Amount: Unknown. Charter funds were used to register and insure the vehicle. d. Funding Source Used for Purchase: Unknown. e. Board Approval Date: Unknown. FCMAT reviewed board agendas around the time of pur- chase and could not locate any board approval. f. Educational Purpose: FCMAT located an email from the former executive director dated 8/24/18 stating the following: This is the car I bought and had fixed for fiscal services…I don't want {charter school staff} using your own vehicles to run errands off campus… FCMAT confirmed that a 2019-20 DMV registration card shows the vehicle is registered to the former executive director; however, the address used is ETAA’s physical address. g. Repair/Maintenance Costs Paid by Charter: i. Lalo’s Auto Repair (January 30, 2018) for $310.04 ii. Madera Glass and Body (August 27, 2018) for $5,559.83 h. Disposition of Vehicle: Unknown. Fiscal Crisis and Management Assistance Team Madera County Superintendent of Schools 32 Findings Acquisition of Vehicles 8. 2011 Volkswagen Tiguan. a. Vehicle Type: Sport Utility Vehicle (SUV) i. VIN ending: 24495. b. Purchase Date: ETAA did not own this vehicle. Based on an insurance card reviewed by FC- MAT, the SUV appears to be a personal vehicle belonging to the former executive director or his daughter. The former executive director insured this vehicle under his insurance policy. (Names redacted by FCMAT.) c. Purchase Amount: N/A (Vehicle not owned by ETAA.) d. Funding Source Used for Repairs: Unknown. e. Board Approval Date: Unknown. FCMAT reviewed board agendas around the time of the repairs and could not locate any board approval. f. Educational Purpose Repairs: Unknown. g. Repair/Maintenance and Other Related Costs Paid by Charter: Date of Repair Vendor/Description Cost ($) 12/11/17 Madera Glass and Body Shop 4,310.11 4/12/18 Torres Body Shop 6,444.86 9/20/18 German Auto Repair 287.83 5/30/19 Parking ticket from Fresno State Univ. 94.00 Total 11,136.80 Based on body shop repairs of more than of $10,000, FCMAT assumes the personal vehicle was involved in one or more accidents for which public funds were used to repair. h. Disposition of Vehicle: N/A (Vehicle not owned by ETAA.) According to staff interviews, the car Fiscal Crisis and Management Assistance Team Madera County Superintendent of Schools 33 Findings Acquisition of Vehicles was retained by the former executive director following his termination since the vehicle was registered in his name. 9. 2012 Jeep Grand Cherokee. a. Vehicle Type: SUV. i. VIN ending: 99891. b. Purchase Date: ETAA did not own this vehicle. Based on an insurance card reviewed by FC- MAT, the SUV appears to be a personal vehicle belonging to the former executive director or his daughter. Vehicle was insured by the former executive director under his insurance policy. Vehicle was repaired using public charter school funds. c. Purchase Amount: N/A (Vehicle not owned by ETAA.) d. Funding Source Used for Repairs: Unknown. e. Board Approval Date: Unknown. FCMAT reviewed board agendas around the time of the repairs and could not locate any board approval. f. Educational Purpose for Repairs: Unknown. g. Repair/Maintenance Costs Paid by Charter Date of Repair Vendor/Description Cost ($) 10/4/18 eBay Purchase - Front Right Interior Door 256.95 10/5/18 Valvoline Instant Oil Change 88.76 10/8/18 Lalo's Auto Repair - ignition & running lights 330.39 1/3/19 Gill Auto Group 580.00 Total 1,256.10 Fiscal Crisis and Management Assistance Team Madera County Superintendent of Schools 34 Findings Acquisition of Vehicles h. Disposition: N/A (Vehicle not owned by ETAA.) 10. 2016 R Pod 179-Trailer/Camper. a. Vehicle Type: Travel Trailer i. VIN ending: 10080. b. Purchase Date: January 27, 2016. c. Purchase Amount: $19,500.00. d. Funding Source Used for Repairs: Unknown. e. Board Approval Date: Unknown. FCMAT reviewed board agendas around the time of the repairs and could not locate any board approval. f. Educational Purpose: Interviews with staff and board members indicated that the former executive director stated that the purpose of the travel trailer was to house a homeless family that attended ETAA. However, according to the California Department of Education’s DataQuest reporting system, the charter school did not report any homeless students in 2015-16 or 2016-17. Interviews confirmed that a family temporarily resided in the trailer for an unspecified amount of time. After a review of documents and information provided to FCMAT, the travel trailer was also used for trips by the former executive director to the following locations: • Casa De Fruta RV Park in Gilroy, CA. • Sun Outdoors Santa Barbara RV Park in Goleta, CA. • Pismo Coast Village RV Park in Pismo Beach, CA. Reservations, travel confirmations and other details were included in email communications from the former executive director. Any identified costs are included in the Trips section of this report. g. Repair/Maintenance Costs Paid by Charter: None identified. h. Disposition: Sold in 2020 by ETAA. Any supplies, equipment, buildings, vehicles or other property belonging to a public school, including a public charter school, must be disposed of or sold with governing board approval and in accordance with other local policies regarding surplus property, including the charter school’s bylaws. Any disposal of public property done unilaterally or without following a formal process can result in a gift of public funds and may constitute misappropriation of public assets. As a nonprofit entity, capital assets must be disposed of in accordance with Generally Accepted Accounting Principles (GAAP), meaning a gain or loss from the sale or disposal must be recognized in the charter’s financial statements. Accordingly, the charter school should ensure that all vehicles no longer belonging to the charter school are properly reflected as such in the charter’s financial reports. Fiscal Crisis and Management Assistance Team Madera County Superintendent of Schools 35 Findings Cell Phones and Other Electronic Devices Cell Phones and Other Electronic Devices All LEAs should have a local governing board policy outlining which employees and positions qualify for certain electronic devices, including cell phones, to be paid using public funds. Without such a policy, school districts and charter schools cannot effectively control the purchase and distribution of devices, and lack any consistency in how devices are allocated and used by employees. ETAA’s board policy titled “Financial Policies and Procedures,” adopted on December 10, 2012, stated the following regarding the reimbursement of cell phone expenditures, however no further information or policy could be located by FCMAT, including any policy related to electronic devices other than cellular phones: Employee Reimbursements: Business use of telephones or cell phones shall be reimbursed. Interviews with current and former governing board members indicated the board did not know how many devices were purchased using charter school funds and how many monthly service agreements or phone lines the charter paid. FCMAT identified 55 individual phone lines paid by the charter during the period of the audit. Five lines were allocated to employees who may have had a reasonable educational purpose for having a phone paid using charter school funds, such as the maintenance supervisor and fiscal staff. Another five were allocated to the former executive director, his two sons, his daughter and his former spouse. The former executive director was provided with a cell phone paid by the charter school in accordance with his final employment agreement, dated July 1, 2017 to June 30, 2020, which stated the following (emphasis added): Business Expenses: ETAA shall reimburse the executive director for reasonable and neces- sary business expenses incurred by the executive director in the continuing performance of his duties. ETAA will also provide the executive director with a cellular phone. The charter school staff and governing board did not know who owned the remaining 45 phone lines paid using public charter school funds. Testing by FCMAT determined that the lines were all established in the name of the former executive director, as indicated on the monthly statement of the cellular phone carrier. Some lines were tied to a smart phone, while others were connected to a smart watch or tablet. FCMAT could not locate any governing board approval for the 45 lines. The carrier for all devices was Verizon Wireless. Shortly before the termination of the former executive director, in December 2019, the governing board requested that the unknown phone lines be cancelled with the wireless carrier. The early cancellation for 34 of the lines that had a remaining contractual term cost the charter $22,364.03, as shown below. Fiscal Crisis and Management Assistance Team Madera County Superintendent of Schools 36 Findings Cell Phones and Other Electronic Devices Fiscal Crisis and Management Assistance Team Madera County Superintendent of Schools 37 Findings Cell Phones and Other Electronic Devices Additionally, FCMAT identified 11 electronic devices purchased by the former executive director using public charter school funds, most of which were shipped either to his home or to the residences of his family members. This excludes the phone he purchased for his own use, which was authorized in accordance with his employment agreement mentioned previously. A list of the devices is shown below in chronological order and totaling $9,504.74, including a purchase for premium device accessories. Order Date Item Description Possible Owner Shipping Address Cost ($) Cell phones: 9/29/18 iPhone XS Max Daughter Home of Daughter 1,249.99 iPads/Apple Watches: 10/20/17 Apple Watch - Series 3, GPS + Cellular Unknown ETAA 429.99 10/20/17 Apple Watch - Series 3, GPS + Cellular Unknown ETAA 429.99 9/27/18 Apple Watch - Series 4, GPS + Cellular former executive director Home of former executive director 529.99 9/29/18 Apple Watch - Series 4, GPS + Cellular Daughter Home of Daughter 499.99 10/18/18 Apple Watch - Series 4, GPS + Cellular former executive director Home of former executive director 529.99 12/24/18 Apple Watch - Series 4, GPS + Cellular former executive director ETAA 529.99 8/7/19 12" Apple iPad Pro Unknown Fresno, CA 1,299.99 10/16/19 11" Apple iPad Pro former executive director Home of former executive director 1,199.99 10/16/19 11" Apple iPad Pro former executive director Home of former executive director 1,199.99 10/16/19 Apple Watch - Series 5 former executive director Home of former executive director 799.99 Accessories: 10/16/19 Cases, AirPods, chargers, etc. Son #1 Home of former executive director 804.85 Total: 9,504.74 FCMAT recognizes that there could be a legitimate educational purpose for certain devices, especially electronic tablets that may be used by students or educators to supplement the classroom instruction. However, none of the tablets were shipped to the charter school, and staff interviews indicated none of the devices were used for a known educational purpose. Instead, two of the three tablets were shipped to the home of the former executive director, with a third shipped to an unknown address in Fresno, CA. A legitimate educational purpose is also less likely for items such as smart watches and ear pods (headphones), which are usually purchased for personal use. The charter school does not have any of these devices, and none were returned upon termination by the former executive director or any of his family members identified above. The former executive director stated that he intended to reimburse the charter for both the devices and the additional phone lines; how- ever the board would not permit such a reimbursement. Fiscal Crisis and Management Assistance Team Madera County Superintendent of Schools 38 Findings Cash Withdrawals Cash Withdrawals In December 2012, the governing board approved Financial Policies and Procedures. Under the “Credit and Debit Card Usage” section, the policy states the following: Unless otherwise specified by the Board, the use of School credit and debit cards shall not be allowed for any School purchase. No School credit and/or debit card may be used for cash advances or cash withdrawals at any time, even if the cash is to be used for a School- related purpose. In addition, under a policy titled “Petty Cash-Purpose and Usage”, adopted on December 5, 2012, the regu- lation states the following: 1. The purpose of the Petty Cash Checking Account is for payment of incidental expenses when there is insufficient time for processing through the General Checking Account. Examples of proper expenses include, but are not limited to, food/meals for teachers doing curriculum work and emergency plumbing repairs. Petty cash shall not be used for teacher reimbursements, employee expense reimbursements or independent contractor payments. 2. The executive director shall have access to petty cash not to exceed $3,000. Such funds shall be used at the discretion of the executive director, subject to Board oversight and consistent with the approved budget and School rules and regulations. The executive director and Office Manager must obtain each other’s authorization on petty cash checks made payable to their names. Use of petty cash shall require original receipts for all purchases. While outside the scope of FCMAT’s audit, FCMAT found during the investigation that for fiscal year 2012- 13, ETAA received an audit finding indicating a lack of board approval for reimbursements to the former executive director. FCMAT identified at least 24 cash withdrawals from ETAA’s bank account made by the former execu- tive director that lacked board approval and an educational purpose that could be identified by FCMAT. Interviews of charter school staff indicated that the former executive director did not provide an explana- tion to support each withdrawal. In one case, a cash withdrawal was made outside of California where the former executive director indicated to staff via email that he was vacationing. The chart below outlines instances identified by FCMAT where cash was withdrawn from the charter’s bank account by the former executive director, and for which the charter school could not provide an explanation or valid educational purpose. Fiscal Crisis and Management Assistance Team Madera County Superintendent of Schools 39 Findings Cash Withdrawals Date Bank Statement Description Amount ($) 4/6/16 Withdrawal Made In A Branch/Store 2,702.00 4/22/16 Withdrawal Made In A Branch/Store 6,875.00 7/28/16 Withdrawal Made In A Branch/Store 7,342.92 8/10/16 Withdrawal Made In A Branch/Store 2,700.00 12/19/16 Withdrawal Made In A Branch/Store 2,572.92 12/19/16 Withdrawal Made In A Branch/Store 523.00 4/21/17 Withdrawal Made In A Branch/Store 748.58 7/24/18 Withdrawal Made In A Branch/Store 600.00 8/21/18 Withdrawal Made In A Branch/Store 650.00 11/6/18 Withdrawal Made In A Branch/Store 100.00 11/30/18 Withdrawal Made In A Branch/Store 1,681.22 12/24/18 Withdrawal Made In A Branch/Store 456.75 12/24/18 Withdrawal Made In A Branch/Store 3,120.00 12/31/18 Withdrawal Made In A Branch/Store 1,681.18 1/2/19 Withdrawal Made In A Branch/Store 673.89 2/1/19 Withdrawal Made In A Branch/Store 1,685.66 5/31/19 Withdrawal Made In A Branch/Store 3,809.31 6/21/19 Withdrawal Made In A Branch/Store 360.00 7/1/19 Withdrawal Made In A Branch/Store 3,975.65 8/19/19 Withdrawal Made In A Branch/Store 2,000.00 9/9/19 Withdrawal Made In A Branch/Store 1,500.00 9/16/19 Withdrawal Made In A Branch/Store 2,000.00 10/7/19 Withdrawal Made In A Branch/Store 2,000.00 10/16/19 Withdrawal Made In A Branch/Store 1,500.00 Total: 51,258.08 FCMAT estimates that the former executive director may have withdrawn at least $51,258.08 from ETAA’s bank account. The withdrawals were made without board discussion or approval. Fiscal Crisis and Management Assistance Team Madera County Superintendent of Schools 40 Findings Payroll Advances Payroll Advances FCMAT identified at least six payroll advances by the former executive director, some of which were repaid, while others were not. Some advances received prior approval from the charter’s governing board, and other advances appear to have been done at the sole discretion, and to the benefit of, the former executive director. Unlike a loan, an advance is typically an early or premature payment of funds otherwise owed to an employee for regular monthly payroll obligations or other compensation, such as an annual bonus or sti- pend. While an uncommon practice, a payroll advance benefits employees by allowing them to receive a compensation payment before other employees, or before an established payment date, such as the last day of the month or a predetermined date set forth in an employment contract or agreement. EC 35160 gives a board great latitude stating, “The governing board of any school district may initiate and carry on any program, activity, or may otherwise act in any manner which is not in conflict with or inconsis- tent with, or preempted by, any law and which is not in conflict with the purposes for which school districts are established.” Advances may be allowable if approved in advance by a governing board. According to FCMAT’s Charter School and Accounting and Best Practice Manual: Like all cash transactions, cash advances attract more fraudulent activity than noncash advances (e.g., advances by check). Cash advances should occur only if charter school policy allows them. It is best practice for cash advances not to occur. In December 2012, ETAA’s legal counsel provided guidance on the bonus provided to the former executive director in his employment contract. The guidance stated the following: An optional and automatic bonus at the sole discretion of the executive director, rather than the ETAA Board, is unlawful and this provision has been removed. (See Government Code section 3511.2.) If the Board wishes to award a performance bonus, it may do so at the Board’s discretion, but this must be documented and approved by the Board each time the bonus is awarded. Additionally, this decision must be made at a regular (not special) meeting of the ETAA Board. This advice is consistent with recent changes to the laws applicable to public entities (such as charter schools) and also recent FCMAT findings requiring that any bonuses paid to a charter school administrator are approved by the charter school board of directors. On January 11, 2018, in an email to Ed Tec, a third-party service provider that handles the charter’s payroll and other compensation, the former executive director stated that he would be the only signature required on payroll checks. This action circumvents any internal controls within ETAA since the former executive director could issue checks without board approval. Documents provided to FCMAT indicate that payroll and other compensation advances were issued to the former executive director without board approval. Documentation provided by the charter school indicated that advances had become common for the former executive director and a repayment schedule was created by the charter school to track his repay- ments. FCMAT extracted the payroll advances from other advances (such as bonuses) and compiled the following schedule. The two final advances, totaling $8,000, were unrepaid at the time of the former execu- tive director’s termination in January 2020. During FCMAT’s interview with the former executive director, he stated that he had requested advances on his payroll and that he had not repaid all advances at the time of his termination. Fiscal Crisis and Management Assistance Team Madera County Superintendent of Schools 41 Findings Payroll Advances Date of Advance Amount ($) Repaid? Net ($) 9/19/16 14,000.00 Y - 2/14/17 4,000.00 Y - 4/10/17 2,000.00 Y - 7/8/19 4,000.00 Y - 7/22/19 5,000.00 N 5,000.00 8/5/19 3,000.00 N 3,000.00 Totals 32,000.00 8,000.00 Below is a sample email request from the former executive director to ETAA fiscal staff requesting a pay- roll advance (address redacted by FCMAT): Below is a sample Payroll Manual Check Request from the former executive director to Ed Tec. The request for a payroll advance was completed and signed by the former executive director. No board approval was included. Fiscal Crisis and Management Assistance Team Madera County Superintendent of Schools 42 Findings Payroll Advances Fiscal Crisis and Management Assistance Team Madera County Superintendent of Schools 43 Findings Bonuses Bonuses The former executive director was paid in accordance with an employment agreement, dated July 1, 2017 to June 30, 2020, which outlines his compensation as follows: The Employee will receive a gross base salary of $175,000 per year, to be paid monthly, sub- ject to all regular withholdings. Based upon the annual performance of the Employee doc- umented in the performance evaluation, as well as the financial stability of the School, the Employee may be eligible, on an annual basis, to receive additional compensation in the form of a bonus, not to exceed 10% of the annual gross salary from the Board. This bonus will be distributed on or after July 1, of the fiscal year. (sic) The Employee’s compensation may be prorated depending on whether the Employee remains employed, or in active work status, for all scheduled work days of the position. For the scope of the audit, FCMAT could not locate any evaluations of the former executive director con- ducted by the governing board that were used for the basis of an annual bonus. Unless evaluations were conducted that were otherwise unavailable to FCMAT, the former executive director may have simply requested to receive the maximum bonus annually. Prior to the employment agreement dated July 1, 2017, the former executive director was paid in accor- dance with an addendum to a previous contract dated July 1, 2012 to June 30, 2015, and extended by an addendum dated June 30, 2015 to June 30, 2018 (overlapping with the final agreement by one year). The previous agreement outlined the compensation for the former executive director as follows: Base Compensation: The executive director will receive a gross base taxable salary of $150,000 (One hundred and fifty thousand dollars] (sic) per year, to be paid in twelve equal monthly installments, subject to all regular withholdings. Subject to budgetary constraints, it is anticipated each year under this contract, the Board will provide a base salary increase equal to COLA (as defined in the California Consumer Price Index for Urban Wage Earners and Clerical Earners as calculated by the Department of Industrial Relations). However, such a decision is subject to final Board approval on a case-by-case basis. Bonus: Additionally, based upon the results of measurable achievements such as, but not limited to, the executive director’s annual performance evaluation, successful charter renewal, favorable standardized student test results, and other factors at the discretion of the Board, the executive director may receive an additional bonus not to exceed 10% of the annual gross salary, subject to Board approval at a regular meeting of the Board. FCMAT determined that the former executive director received a bonus of $18,375.00 on June 5, 2017. Based on the salary increases outlined in the above agreement, the charter school indicated to FCMAT that the former executive director received an adjusted annual salary of $183,750 in June 2017. This was partly based on a payroll processing error by the charter school that was later repaid by the former executive director; however regardless of the error, the maximum bonus was paid in 2016-17 in accordance with his salary at that time. No board approval could be found for this payment. On June 28, 2018, the former executive director received the maximum annual bonus of $17,500, which was based on an adjusted salary of $175,000 as outlined in the above agreement dated July 1, 2017 to June 30, 2020. In 2019, the former executive director requested that his annual bonus be paid early. No board approval was located for this request, and an early payment violated the terms of his employment agreement at the time, which stated that the bonus must be distributed on, or after July 1 of each fiscal year. The former Fiscal Crisis and Management Assistance Team Madera County Superintendent of Schools 44 Findings Bonuses executive director requested and received $5,000 of his annual bonus on February 5, 2019, approximately five months early. An additional $3,000 was requested and paid on March 12, 2019, and the balance of the $17,500 maximum allowable bonus was paid on April 8, 2019. The final advanced bonus payment was therefore $9,500. No explanation was provided that justified the early payments. The charter school’s Payroll Manual Check Request form is shown below, completed and signed by the former executive director. This sample represents the final advance requested by the former executive director in April 2019. No board approval was included. Fiscal Crisis and Management Assistance Team Madera County Superintendent of Schools 45 Findings Bonuses Below is a sample email in 2019 requesting a partial advance of the former executive director’s annual bonus. In 2016, 2017 and 2018, FCMAT also found that the former executive director was paid “Christmas Bonuses” of $1,000, $1,000, and $3,000, respectively. This additional compensation was not included in his employment agreement. For 2016 and 2017, FCMAT could not locate any board approval for the bonuses. However, on December 13, 2018, the bonuses were included on the consent agenda for board approval. Christmas bonuses were also paid to most charter staff members, in varying amounts based on each position, with the former executive director receiving the largest bonus each year. According to the charter school, the former executive director determined the schedule of bonuses, including the amounts for each position. The following schedule outlined the bonuses received by the former executive director during the period of FCMAT’s audit: Date Description Gross ($) 6/20/16 Contractual bonus for 2016-17 18,375.00 12/16/16 "Christmas" bonus - 2016 1,000.00 6/5/17 Contractual bonus for 2017-18 18,375.00 12/15/17 "Christmas" bonus - 2017 1,000.00 6/28/18 Contractual bonus for 2018-19 17,500.00 12/24/18 "Christmas" bonus - 2018 3,000.00 2/5/19 Partial advance for contractual bonus for 2019-20 (1/3) 5,000.00 3/12/19 Partial advance for contractual bonus for 2019-20 (2/3) 3,000.00 4/8/19 Partial advance for contractual bonus for 2019-20 (3/3) 9,500.00 Total 76,750.00 No further bonuses were identified by FCMAT since the former executive director was terminated in January 2020, prior to requesting any further bonuses or advances. Fiscal Crisis and Management Assistance Team Madera County Superintendent of Schools 46 Findings Fuel Purchases Fuel Purchases School district and charter school staff may occasionally incur travel expenses while performing their duties. These expenses often include gas or fuel for traveling via an assigned charter or personal vehicle. Ideally, the governing board of an LEA should establish policies and procedures for travel and the subse- quent submission and verification of any travel claims, including the consumption of fuel. FCMAT identified six fuel cards that were issued through a Valero Fleet Services account. FCMAT was not provided with any ETAA board policy or procedures regarding fuel or gas purchases for legitimate edu- cational purposes, and the charter also lacked a policy for issuing fuel cards. This includes identifying the positions that have a reasonable need for such a card. According to internal ETAA emails, it appears that the fleet account was already in existence by January 2016. FCMAT could not determine when the account was opened, although it occurred prior to the scope of the audit. FCMAT could not identify any board approval for the issuance of the cards. FCMAT requested Valero Fleet Services statements from fiscal year 2015-2016 through 2019-2020. Most of the statements were provided;, however 18 months were missing, including January 2016 through November 2016, January 2017 through May 2017, April 2018, and November 2018. FCMAT determined from staff interviews that the Valero Fleet Services fuel cards were not used for student transportation via ETAA’s buses. Staff stated that ETAA uses the Madera Unified School District’s fueling station to fill all buses. None of the purchases using the Valero cards were for diesel fuel, which is required by the charter’s buses. Through a review of the Valero Fleet Services account statements, FCMAT determined that Valero Fuel cards were issued to the following staff or individuals: • Former executive director. • Son #1. • Son #2. • Daughter. • Maintenance supervisor. • One additional employee. Interviews with the maintenance staff indicate that staff were issued and used the fuel cards for legitimate educational purposes for charter owned vehicles. However, FCMAT could not determine the educational purpose of purchases made on the fuel cards issued to the former executive director, Son #1, Son #2, and Daughter. With the fuel card statements provided by the charter school, FCMAT found that over 600 gallons of fuel were purchased in each of nine separate months. The schedule below shows months when fuel purchases exceeded 600 gallons. The former executive director purchased more than 600 gallons in all but one month, sometimes totaling between 700 and 800 gallons. For context, the average passenger car holds 12-16 gallons of fuel. To consume 700 gallons in one month, the average passenger vehicle would need to be refueled between 43 and 58 times. A vehicle, such as a Ford F-150, with a potential fuel capacity of 23 gallons and an average mpg rating of 22 could travel approximately 506 miles per tank. To consume 700 gallons of fuel in one month, the vehicle would need to travel in excess of 15,000 miles. Fiscal Crisis and Management Assistance Team Madera County Superintendent of Schools 47 Findings Fuel Purchases Month of Purchase Purchasing Party Total Gallons Cost ($) June 2017 Son #1 853.10 2,727.59 September 2017 Former executive director 607.50 2,029.27 October 2017 Former executive director 679.30 2,216.35 November 2017 Former executive director 689.80 2,311.53 February 2018 Former executive director 794.20 2,765.93 May 2018 Former executive director 712.80 2,787.91 June 2018 Former executive director 624.00 2,489.25 July 2018 Former executive director 779.20 3,059.65 November 2018 Former executive director 655.40 2,535.18 Totals 6,395.30 22,922.66 Periodic travel can occur throughout the day for legitimate educational purposes. However, given the amount of fuel purchased monthly, and considering the location of the fuel purchases, staff expressed concerns to FCMAT about the excessive fuel usage. Most of the fuel locations were in Madera, CA, where ETAA is located. However, some of the fuel charges occurred in Los Banos, CA, where Associate #1 resides. The former executive director stated that the fuel purchases appear high because he loaned the card to other individuals for fuel purchases; however he also stated that employees were able to claim mile- age reimbursements for any miles driven for educational purposes. FCMAT is uncertain why fuel purchases would also be provided as mileage reimbursements include the cost of fuel. In addition to the amount of fuel purchased, FCMAT found that the former executive director sometimes purchased fuel multiple times in one day. In accordance with the former executive director’s employment contract, he was regularly using a Ford F-150, as outlined in the Acquisition of Vehicles section of this report. For context, depending on the model year, most Ford F-150s have a fuel tank capacity of either 23.0 or 26.0 gallons. Below is a sample of dates and times where fuel purchases in one day exceeded the vehicle’s fuel tank capacity. • December 10, 2016 The former executive director purchased 22.9 gallons at 8:42 a.m., then another 6.7 gallons at 8:59 a.m. Both of these fuel purchases were from the same fuel station in Madera, CA. • June 9, 2017 The former executive director purchased 14.7 gallons at 8:23 a.m. and. 29.8 gallons at 12:02 p.m. The first purchase was in Los Banos, CA and the second d in Madera, CA. • June 23, 2017 The former executive director purchased 29.1 gallons at 7:20 a.m. and 32.2 gallons at 3:40 p.m., both in Madera, CA. • June 28, 2017 The former executive director purchased 23.8 gallons at 9:41 a.m., and another 23.4 gallons at 1:19 p.m., the first purchase in Madera, CA and the second in Los Banos, CA. Fiscal Crisis and Management Assistance Team Madera County Superintendent of Schools 48 Findings Fuel Purchases • September 5, 2017 The former executive director purchased 35.2 gallons at 1:39 p.m. At 1:40 p.m., he pur- chased another 25.7 gallons. Both purchases occurred in Fresno, CA, approximately 25 miles from ETAA. Based on the available fuel statements provided to FCMAT, the chart below outlines the fuel usage of the former executive director during the scope of the audit: Month of Purchase Total Gallons Cost ($) June 2016 262.8 777.24 December 2016 260.2 705.18 June 2017 368.4 1,201.66 July 2017 449.9 1,425.93 August 2017 350.7 1,093.99 September 2017 607.5 2,029.27 October 2017 679.3 2,216.35 November 2017 689.8 2,311.53 December 2017 541.1 1,801.97 January 2018 500.3 1,657.50 February 2018 794.2 2,765.93 May 2018 712.8 2,787.91 June 2018 624.0 2,489.25 July 2018 779.2 3,059.65 August 2018 444.8 1,747.32 September 2018 483.7 1,931.19 October 2018 320.6 1,283.97 November 2018 655.4 2,535.18 December 2018 549.7 2,055.92 January 2019 466.6 1,593.76 February 2019 403.4 1,361.10 March 2019 473.9 1,685.63 April 2019 442.5 1,789.28 May 2019 307.5 1,315.60 August 2019 188.4 735.78 September 2019 306.1 1,199.64 November 2019 190.6 807.57 Totals 12,853.4 46,365.30 From the statements provided to FCMAT, the total amount of fuel purchased by the card assigned to the former executive director was 12,853.4 gallons at a cost of $46,365.30. Fiscal Crisis and Management Assistance Team Madera County Superintendent of Schools 49 Findings Fuel Purchases In addition, FCMAT reviewed other charges made at gas stations or convenience stores using the former executive director’s assigned credit and debit cards. FCMAT identified these charges from ETAA’s bank and credit account statements. The educational purpose of these charges is unknown, as itemized receipts were either not provided for the purchase or were unavailable to FCMAT. Questionable credit and debit card charges: Purchase Date Location Cost ($) 12/31/17 Handi Stop Market 51.93 12/26/17 Handi Stop Market 98.44 1/5/17 Handi Stop Market 82.43 1/6/18 7 Eleven Visalia 87.56 2/13/18 Handi Stop Market 51.65 4/11/18 Handi Stop Market 40.28 6/25/18 Shell Oil Austin, TX 23.99 7/22/18 Shell Oil Anaheim, CA 61.52 2/18/16 Valero 29.56 3/30/16 Harry's Liquor 6.14 4/13/16 Corner Store 53.31 5/23/16 Corner Store 8.34 5/25/16 Corner Store 40.62 6/27/16 Corner Store 38.78 7/12/16 Corner Store 35.02 7/12/16 Corner Store 29.01 8/22/16 Handi Shop 62.00 12/24/18 Handi Stop Market 92.20 4/5/19 Circle K El Paso, TX 17.56 6/24/19 Circle K El Paso, TX 13.95 10/14/19 Circle K El Paso, TX 29.77 Total 954.06 Fiscal Crisis and Management Assistance Team Madera County Superintendent of Schools 50 Findings Trips Trips Travel can be required for certain positions at any LEA in California. EC 44032 states that a “..Board shall authorize payment for actual and necessary travel expenses incurred by any employee performing autho- rized services for the district, whether within or outside district boundaries.” As a best practice, an exec- utive director or a similar position, in consultation with the governing board, should establish procedures for approving travel requests and submitting and verifying expense claims. Having a policy ensures that all staff are aware of board expectations. An LEA should never reimburse personal travel expenses such as alcohol, entertainment, laundry, personal use of an automobile, traffic violation fees incurred while conducting charter business, or for any expenses of family members who accompany an employee on LEA business. The executive director or similar designee shall approve expense claims only upon verifying that all necessary documentation is provided and that all expenses are appropriate and related to LEA business. If an expense claim is disallowed due to lack of docu- mentation or an inappropriate expense, the employee may be personally responsible for any improper costs. ETAA had no such policies, and interviews with current and former ETAA board members indicated they were unaware of the amount of travel taken by the former executive director. While ETAA had no estab- lished travel policy, a related policy was identified that addresses the use of public or school funds for personal expenditures, stating the following: Personal Use of School Funds: Use of school funds for personal use is prohibited. Violation of this policy shall result in discipline up to and including dismissal or removal, including from the Board. Staff interviews with FCMAT indicated that the former executive director traveled extensively. However, staff members did not typically question the reason or purpose for any travel and reported that they feared a negative or adverse response from the former executive director. Documents provided to FCMAT revealed that the former executive director scheduled and took at least 49 separate trips in four years. FCMAT determined that, of the 49 trips, two were cancelled and three had a legitimate educational purpose. , FCMAT could not determine the educational purpose for the remaining 44 trips. In FCMAT’s experience, it is highly unusual for an executive director of a charter school to travel this extensively, especially to out-of-state locations, using public charter school funds. By comparison, the current executive director of the charter school stated he has taken no trips since beginning his tenure in 2020. In a letter to the ETAA board in response to their questions about the purpose of his travel, the former executive director did attempt to substantiate two trips where he used the charter’s R-Pod travel trailer, stating that he was reviewing certain locations as potential sites for future charter retreats. However, inter- views with current and former board members indicate that the former executive director never discussed or received permission to visit or scout potential sites for this purpose. The exhibit below includes the dates and locations of travel of the former executive director. These trips were identified using credit and debit card statements, email communications and reservation confirma- tions, and through other related documentation. The trips were paid using the former executive director’s charter school credit and debit cards, or via other charter funds as identified by FCMAT. In some instances, only partial trip costs could be located in FCMAT’s sample, and any potential additional costs may have occurred by other means, such as through a cash payment, use of personal funds, or through another payment method. Unless otherwise indicated, all travel was for one individual, presumed to be the former executive director. Fiscal Crisis and Management Assistance Team Madera County Superintendent of Schools 51 Findings Trips Date Trip Location Vendor Cost ($) 1/19/16 Madera, CA Holiday Inn Express Madera, CA 117.72 1/21/16 Holiday Inn Express Madera, CA 117.72 2/16/16 Pismo Beach, CA Walmart Gilroy 78.97 2/18/16 Pismo Coast Village RV Park 221.76 3/14/16 Santa Clara, CA Hyatt Santa Clara 327.56 3/23/16 San Luis Obispo, CA Target San Luis Obispo 46.40 4/11/16 Luminarias Monterey Park 70.57 4/12/16 Anaheim, CA Ayers Hotel Anaheim, CA 443.12 5/19/16 Sacramento, CA Holiday Inn Sacramento, CA 915.12 5/23/16 San Antonio, TX Enterprise Rent a Car TX 123.36 5/23/16 Pancake Joe's TX 107.41 5/23/16 Texas News Stand TX 38.07 5/24/16 Dallas DFW TX 23.80 5/24/16 Friday's Bar DFW Airport 17.23 7/21/16 Suisin City, CA Popeye's Suisun City 24.86 7/27/16 Palo Alto, CA IKEA Palo Alto 294.25 8/16/16 Anaheim, CA Holiday Inn Anaheim 215.28 9/19/16 Oakland, CA Extended Stay Oakland, CA 306.52 9/19/16 Panera Bread Emeryville, CA 15.40 9/19/16 Tuk Tuk Thai Café Berkeley, CA 30.20 9/20/16 Rudy's Can't Fail Emeryville, CA 62.02 10/11/16 San Antonio, TX Enterprise Rent A Car TX 647.19 10/11/16 Ruth's Chris Steak TX 100.04 10/12/16 American Airlines 25.00 10/12/16 Holiday Inn San Antonio TX 127.12 10/12/16 Hyatt San Antonio TX 1,260.37 10/13/16 Madera, CA Holiday Inn Madera, CA 137.80 12/12/16 Madera, CA Holiday Inn Madera, CA 540.64 12/12/16 Carmel, CA Little Napoli Carmel, CA 117.11 3/23/17 Sacramento, CA Hilton Sacramento Arden 171.06 4/13/17 Emeryville, CA Fuddruckers Emeryville, CA 22.29 4/14/17 Hyatt Emeryville, CA 221.02 4/14/17 Sinaloa Café Morgan Hill, CA 48.95 4/21/17 Arcadia, CA Margarita's Mexi Pasadena, CA 32.81 4/22/17 Hampton Inn Arcadia, CA 169.70 4/23/17 Hampton Inn Arcadia, CA 169.70 4/23/17 Las Cruces, NM All that Music and Video El Paso, TX 446.91 4/25/17 Enterprise Rent A Car El Paso, TX 342.92 4/25/17 UPS Las Cruces, NM 196.69 4/26/17 Hampton Inn NM 371.58 4/26/17 Hampton Inn NM 371.58 7/15/17 San Jose, CA Castillos Rest San Jose, CA 37.45 Fiscal Crisis and Management Assistance Team Madera County Superintendent of Schools 52 Findings Trips Date Trip Location Vendor Cost ($) 9/22/17 Las Cruces, NM Del Sol M2 Las Cruces, NM 215.20 9/22/17 Ranchway LLC Las Cruces, NM 46.03 9/23/17 Andale Mexican Res El Paso, TX 137.15 9/24/17 ARM Parking, San Jose, CA 90.00 9/24/17 Enterprise Rent A Car El Paso, TX 264.05 9/25/17 Hilton Garden Inn El Paso, TX 541.59 10/9/17 Clovis, CA Fairfield Inn Clovis, CA 159.74 12/4/17 Visalia, CA Marriott Hotels Visalia, CA 160.85 1/29/18 Anaheim, CA Denny's Commerce, CA 14.25 1/30/18 Marriott Anaheim, CA 49.32 5/4/18 Salida, CA Fairfield Inn Salida, CA 182.55 Camino Real Street Albuquerque, 6/15/18 Albuquerque, NM NM 114.97 Enchantment Eater Albuquerque, 6/15/18 NM 23.44 6/16/18 La Boca Santa Fe, NM 79.84 6/16/18 Monica's El Portal Albuquerque, NM 27.32 6/16/18 The UPS Store Albuquerque, NM 65.21 6/16/18 Todd Winters Santa Fe, NM 184.28 6/16/18 Tom Davis Santa Fe, NM 126.71 6/17/18 Home Depot NM 39.55 Old Town Bskt and Rug 6/17/18 Albuquerque, NM 33.23 Enterprise Rent A Car Albuquerque, 6/18/18 NM 198.32 6/18/18 Hotel At Old Town, Albuquerque, NM 985.95 6/18/18 LGO Market Place, Phoenix, AZ 11.35 6/25/18 Austin, TX Alamo Rent A Car Austin, TX 74.84 6/25/18 Austin Artic Austin, TX 45.14 6/25/18 Hampton Inn San Marcos, TX 471.21 6/25/18 Shell Oil Austin, TX 23.99 7/22/18 Anaheim, CA Shell Oil Anaheim, CA 61.52 7/23/18 Four Points Anaheim, CA 222.09 8/3/18 Monterey, CA The Fish Hopper Monterey, CA 93.45 8/4/18 Denny's Monterey, CA 30.88 Monterey Downtown Days Inn 8/4/18 Monterey, CA 243.65 Novo Restaurant San Luis obispo, 2/23/19 San Luis Obispo, CA CA 99.89 Best Western Royal Oak, San Luis 2/25/19 obispo 228.01 3/17/19 Fresno, CA Springhill Suites Fresno, CA 193.28 4/5/19 El Paso, TX Circle K El Paso, TX 17.56 4/5/19 City of Fresno Airport 24.55 Fiscal Crisis and Management Assistance Team Madera County Superintendent of Schools 53 Findings Trips Date Trip Location Vendor Cost ($) La Nueva Casita Café Las Cruces, 4/5/19 NM 25.74 4/6/19 Budget Rent a Car El Paso, TX 346.17 4/11/19 Hotel Res, TX 1,056.83 4/17/19 Santa Clara, CA Siam Taste Thai Sunnyvale, CA 71.49 4/17/19 Sizzler Santa Clara, CA 39.84 4/21/19 Embassy Suites Santa Clara, CA 104.85 5/12/19 Arcadia, CA Hampton Inn Arcadia, CA 139.24 Barelas Coffee House, Albuquerque, 6/17/19 Albuquerque, NM NM 17.47 6/19/19 Cocina Mountain Albuquerque, NM 36.10 El Modelo Mexican Food 6/19/19 Albuquerque, NM 6.80 Santa Fe Sterling Gift Albuquerque, 6/19/19 NM 11.72 Barelas Coffee House, Albuquerque, 6/20/19 NM 120.65 6/20/19 Starbucks Albuquerque, NM 6.89 6/21/19 Arby's Socorro, NM 9.65 6/21/19 Camino 66, Albuquerque, NM 258.14 6/21/19 El Patio Albuquerque, NM 32.00 Galeria On the Plaza Las Cruces, 6/21/19 NM 76.65 6/21/19 Hotel At Old Town, Albuquerque, NM 132.07 6/21/19 La Zia M4 Albuquerque, NM 75.47 6/21/19 Speedway Albuquerque, NM 14.76 6/22/19 Leos West El Paso, TX 99.85 6/22/19 Marshalls Las Cruces, NM 17.31 6/22/19 UPS Las Cruces, NM 342.76 6/24/19 Avis Rent a Car, Albuquerque, NM 696.60 6/24/19 Circle K El Paso, TX 13.95 6/24/19 El Paso El Paso, TX 24.62 6/24/19 Lyft 34.05 7/16/19 San Jose, CA Jade Cathay, San Jose 51.57 7/17/19 Double Tree San Jose, CA 256.91 8/3/19 Pasadena, CA Cheesecake Factory Pasadena, CA 46.03 8/3/19 Spaghetti Eddie Glendora, CA 85.04 8/5/19 Courtyard Marriott, Pasadena, CA 621.55 8/5/19 Courtyard Marriott, Pasadena, CA 9.00 9/22/19 Visalia, CA Best Western Visalia, CA 195.99 10/11/19 El Paso, TX Chihua Tacos El Paso, TX 324.59 10/12/19 IHOP El Paso, TX 81.53 10/12/19 Walmart Las Cruces, NM 21.60 10/13/19 Las Cruces Inn Las Cruces, NM 87.48 Fiscal Crisis and Management Assistance Team Madera County Superintendent of Schools 54 Findings Trips Date Trip Location Vendor Cost ($) 10/14/19 Circle K El Paso, TX 29.77 10/14/19 City of Fresno Airport 49.10 10/14/19 LAX Natural Break, LA 15.42 10/14/19 Thrifty Car Rental 241.98 10/16/19 Sacramento, CA Hilton Sacramento, CA 436.00 10/26/19 Pismo Beach, CA Pismo's Coastal Grill 312.11 11/7/19 Madera, CA Hampton Inn Madera, CA 275.60 11/11/19 Albuquerque, NM Hotel Chaco Albuquerque, NM 64.73 11/12/19 Sacramento, CA Hyatt Regency Sacramento 954.87 Total: 22,708.77 Seven trips and the associated lodging occurred within a 50-mile radius of both the charter school and the former executive director’s home. FCMAT is uncertain about the educational purpose of these trips or the reason travel was necessary so close to Madera. Interviews with charter school staff suggested that the former execu- tive director indicated he occasionally needed to stay nearby due to difficulties driving home after dark. However, the former executive director lived approximately four miles from the charter school when he was terminated. Within the sample, FCMAT identified travel expenses totaling $22,708.77 that lacked a clear educational purpose. FCMAT discussed the trips with the former executive director to better understand the purpose of each trip listed above. The former executive director explained that he traveled throughout California to determine potential educational opportunities for the students and to investigate potential destinations for school field trips. In one instance, to explain his travel to El Paso, TX, the former executive director stated that he traveled to El Paso to look at buildings. He did so to gain inspiration and ideas for potential future buildings at the charter’s location in Madera, CA. Fiscal Crisis and Management Assistance Team Madera County Superintendent of Schools 55 Findings Miscellaneous Expenditures Miscellaneous Expenditures Public schools must spend funds in accordance with a valid educational purpose. Expenditures that lack an educational purpose, such as funds diverted or to enrich an individual, represent a misuse of public funds and erode the public’s trust. Accordingly, it is imperative that all public institutions maintain accurate records of all expenditures of public funds to demonstrate and support the educational purpose for their expenditure. FCMAT reviewed the expenditures at ETAA during the period of the audit based on information and documen- tation available from the charter school. The former executive director primarily used an ETAA Wells Fargo Mastercard and a Wells Fargo debit card tied to the charter school’s business checking account. Statements were provided for these cards for many of the months included in FCMAT’s scope. The charter was able to provide receipts or other supporting documentation for some charges on the statements, while other charges lacked any additional information or documentation beyond what is shown on the bank statements. The former executive director’s final employment agreement, from July 1, 2017 to June 30, 2020, contained the following clauses regarding expense reimbursements: Expense Reimbursement: ETAA shall reimburse the Employee for all documented actual and necessary expenses personally incurred within the scope of employment in accordance with applicable ETAA policy and authorization. Business Expenses: ETAA shall reimburse the executive director for reasonable and neces- sary business expenses incurred by the executive director in the continuing performance of his duties. ETAA will also provide the executive director with a cellular phone. Some charges reviewed by FCMAT either had sufficient documentation to support a valid, or potentially valid, educational purpose, or were charges that were otherwise identifiable from the bank statement as a common or reasonable educational expense. These included recurring operational expenses such as utili- ties or storage facility expenses, payroll and benefit transactions, instructional materials and others. The charges shown in the table below represent expenditures incurred by the former executive director using one of the two charge cards mentioned above for which an educational purpose could not be identi- fied by FCMAT. Some charges occurred at an unknown vendor or location, while other charges more clearly appear to lack an educational purpose, such as dining expenditures for a single individual or incidental expenditures at a location or through a vendor. Some expenditures may have a legitimate educational purpose that could not be determined by FCMAT after discussions with the charter school and a review of available documentation. Some expenditures did receive approval from the governing board, although again, this was accomplished in a routine or cursory manner, without supporting documentation or questions from board members on the purpose of each expense. Payment registers were simply approved as part of each meeting’s regular business, which occurred quickly and without discussion. Some charges include items for a dog, such as dog bones or dog food. In interviews with charter school staff, FCMAT determined that the school had no dog or other pet, further suggesting these may be per- sonal expenses. Staff indicated that the former executive director had a dog. The former executive director indicated the dog food purchases were donated to a local animal shelter he was hoping to work with for educational purposes. FCMAT is uncertain why such a donation using public charter funds was necessary to work with a local animal shelter, and no explanation for this was provided by the former executive direc- tor, nor was a contact at the animal shelter provided. FCMAT asked the former executive director if he owns a dog. He replied that he does. Fiscal Crisis and Management Assistance Team Madera County Superintendent of Schools 56 Findings Miscellaneous Expenditures FCMAT also identified four televisions, with related expenses for wall mounts and a streaming device. FCMAT requested to see these televisions at the charter school; however, none could be located. An interview with the charter school’s technology staff determined that none of the televisions had ever been installed at the school, nor had staff ever seen them. The current location and disposition of the televisions was unknown to both FCMAT and the charter school. However during FCMAT’s interview of the former executive director, he stated that he purchased the five televisions for several new buildings that were planned for the charter. The buildings were not completed when he was terminated. He stated he subse- quently sold the five televisions and retained the proceeds. FCMAT noted that some expenditures on the former executive director’s debit and credit cards, such as those from Home Depot, Tractor Supply, or Lowe’s, could have an educational purpose if purchased for charter school operations. However, the charter’s maintenance supervisor also had a unique charter school credit card that was used for charter purchases at these retailers. It is therefore less likely that charges for hardware and other related items had a legitimate educational purpose. FCMAT also determined that two tickets to the Monterey Bay Aquarium were purchased in July 2019. During FCMAT’s interview, the former executive director stated that this was necessary to discuss the use of the aquarium as a possible site for a future school field trip. FCMAT is uncertain why two tickets had to be purchased to discuss a potential field trip with aquarium staff. FCMAT noted that the aquarium is a fre- quent destination for educational programming and information on school field trips is readily available on its website. All expenditures were coded to the unrestricted general fund and were not spent using federal or state restricted dollars (such as Title I, etc.). Items included in other sections, such a legal expenses that may have been paid using the same charter school charge cards, are excluded from this list and included else- where in this report. Charges are shown alphabetically to illustrate the number of transactions for each vendor. Descriptions were added by FCMAT using the information included on available receipts. Items without a description lack supporting documentation. Fiscal Crisis and Management Assistance Team Madera County Superintendent of Schools 57 Findings Miscellaneous Expenditures Date Vendor Cost ($) Description, if known 1/6/18 7 Eleven Visalia 87.56 1/4/18 99 Cents Store 2.17 8/26/16 A&R Towing 456.00 2/29/16 A. Wireless Los Banos 53.99 10/17/16 A. Wireless Los Banos 37.78 12/22/16 A. Wireless Los Banos 102.57 1/3/17 A. Wireless Los Banos 133.37 10/21/16 AAA Membership 247.00 4/28/17 AAA Membership 588.00 7/28/17 AAA Membership 446.00 11/6/17 AAA Membership 247.00 1/31/18 AAA Membership 231.00 1/31/18 AAA Membership 574.00 7/30/18 AAA Membership 518.00 11/13/18 AAA Membership 247.00 1/29/19 AAA Membership 319.00 11/12/19 AAA Membership 247.00 7/31/18 Ace Auto Wreckers Modesto, CA 861.00 6/14/19 Alg Air 126.00 7/11/16 Amazon Market Place 30.98 7/11/16 Amazon Market Place 549.00 7/19/16 Amazon Market Place 959.97 7/19/16 Amazon Market Place 1,599.95 7/15/16 Amazon.com 214.97 5/12/16 American Airlines 679.20 8/22/16 American Airlines 439.20 10/28/16 American Airlines 161.60 11/9/18 American Airlines 276.80 3/31/19 American Airlines 140.59 3/31/19 American Airlines 694.01 4/2/19 American Airlines 17.20 4/4/19 American Airlines 19.82 6/25/19 American Airlines 50.21 7/5/19 American Airlines 848.00 9/23/19 American Airlines 475.01 10/11/19 American Airlines 48.70 11/6/19 American Airlines 528.00 11/7/19 American Airlines 330.00 2/18/18 Annex Kitchen, Fresno, CA 63.07 4/14/18 Apple Online Store 107.17 4/14/18 Apple Online Store 501.87 11/22/16 AsurionWireless 199.00 Fiscal Crisis and Management Assistance Team Madera County Superintendent of Schools 58 Findings Miscellaneous Expenditures Date Vendor Cost ($) Description, if known 2/28/19 AutoZone, Los Banos, CA 67.41 6/12/19 Avis 554.71 12/26/18 Barnes and Noble 109.57 Doll, Star Wars item, membership renewal 9/21/19 Barnes and Noble 9.32 Spanish art 9/21/19 Barnes and Noble 126.29 "Icons of Rock", New York Times 7/15/19 Berkeley Net Und 11,677.00 1/20/18 Best Buy 2,303.89 4/9/18 Best Buy 682.78 4/13/18 Best Buy 1,644.72 5/23/18 Best Buy 1,655.87 6/3/18 Best Buy 64.77 6/3/18 Best Buy 1,241.70 11/10/18 Best Buy 18.67 3/8/19 Best Buy 870.79 5/9/19 Best Buy 1,206.72 TV 6/12/19 Best Buy, Fresno, CA 1,182.83 3/31/19 Big 5 30.29 Umbrella, bike tube 4/9/19 Big 5 256.17 Camping chair, air mattress, lantern 7/5/19 Big 5 86.58 Helmet, binoculars 2/11/16 Big 5 Sporting Goods 75.56 1/26/18 BJ's Restaurant 53.24 2/11/16 Black Bear Diner 40.96 2/11/16 Black Bear Diner 43.70 2/12/16 Black Bear Diner 35.92 2/16/16 Black Bear Diner 47.04 1/30/18 Black Bear Diner 23.25 8/25/19 Black Bear Diner 18.80 5/23/16 Blackbeard Family Fresno 11.00 12/24/17 Bull Dog Fresno 83.88 10/5/18 CA DMV Los Banos 1,787.00 11/6/17 Cal Eye Inst 244.80 5/23/16 Cal Valley Printing 237.61 10/17/16 Carhartt 2,342.29 1/11/16 Carniceria Mi Pueblo 82.73 11/30/16 Carniceria Mi Pueblo 92.21 12/8/16 Castillos Mexican 27.89 6/16/17 Cell Fix Fresno 107.96 9/11/17 Cell Fix Fresno 176.00 9/26/17 Cell Fix Fresno 170.60 11/9/17 Cell Fix Fresno 226.75 2/7/18 Cell Fix Fresno 245.10 2/18/18 Cell Fix Fresno 188.96 Fiscal Crisis and Management Assistance Team Madera County Superintendent of Schools 59 Findings Miscellaneous Expenditures Date Vendor Cost ($) Description, if known 3/2/18 Cell Fix Fresno 118.77 7/17/18 Cell Fix Fresno 134.97 8/28/17 Cell Phone Fix Fresno, CA 149.01 12/17/17 Chase Los Banos 48.78 8/5/19 Chase Los Banos 63.78 6/13/19 CheapHotels 1,102.37 10/27/16 Cheapoair.com 5.00 10/28/16 Cheapoair.com 7.95 10/23/17 Cheesecake Factory 40.71 4/11/16 Cheesecake Factory Anaheim 158.60 3/4/19 Chevron 45.26 Gas 1/30/17 Chik-fil-A 36.04 1/19/18 Chili's 28.30 8/22/16 Chili's Los Banos 58.66 8/6/18 China's Kitchen, Madera, CA 27.71 8/27/17 Chipotle 12.91 2/4/16 City of Clovis Police 206.00 9/8/16 City of Fresno 0.12 9/8/16 City of Fresno 5.00 10/12/16 City of Fresno Air 49.12 11/28/17 City of Fresno Airport 4.09 11/11/19 City of Fresno Airport 36.83 3/9/17 Cool Hand Lukes, Madera 28.11 4/13/16 Corner Store 53.31 5/25/16 Corner Store 40.62 6/27/16 Corner Store 38.78 7/12/16 Corner Store 29.01 7/12/16 Corner Store 35.02 5/23/16 Corner Store 8.34 3/1/16 Costco 32.86 9/17/18 CSU Fresno 1,934.00 5/27/18 Cuca's Mexican Rest 27.89 2/23/16 Dairyland Auto 70.54 3/22/16 Dairyland Auto 70.54 4/21/16 Dairyland Auto 70.54 5/23/16 Dairyland Auto 70.54 6/21/16 Dairyland Auto 70.54 7/21/16 Dairyland Auto 70.55 8/23/16 Dairyland Auto 70.55 9/21/16 Dairyland Auto 70.55 10/21/16 Dairyland Auto 66.90 11/23/16 Dairyland Auto 66.90 Fiscal Crisis and Management Assistance Team Madera County Superintendent of Schools 60 Findings Miscellaneous Expenditures Date Vendor Cost ($) Description, if known 12/21/16 Dairyland Auto 66.90 1/23/17 Dairyland Auto 66.90 2/21/17 Dairyland Auto 66.90 3/21/17 Dairyland Auto 66.90 4/21/17 Dairyland Auto 66.90 5/23/17 Dairyland Auto 66.90 6/21/17 Dairyland Auto 66.90 7/21/17 Dairyland Auto 66.90 2/4/16 DC Towing 262.00 11/9/18 Delta Airlines 166.80 5/13/17 Diciccos Italian Rest, Madera, CA 442.96 6/21/17 Diciccos Italian Rest, Madera, CA 128.51 9/14/17 Donut Basket 72.00 2/16/16 Donuts 39.96 11/29/17 Double Tree Fresno, CA 172.96 3/29/19 Double Tree Fresno, CA 19.75 10/4/18 eBay, San Jose, CA 256.95 12/12/16 Eddies Famous Café Los Banos 49.84 5/24/16 El Mixhoacano Rest Los Banos 55.91 6/13/16 El Mixhoacano Rest Los Banos 275.61 5/31/16 Emporium Anaheim 10.79 12/7/16 Enterprise Rent A Car 389.68 4/21/17 Enterprise Rent A Car 117.55 10/27/17 Enterprise Rent A Car 1,670.52 6/21/18 Enterprise Rent A Car Madera, CA 653.27 7/6/18 Enterprise Rent A Car Madera, CA 378.39 4/11/18 Esaleglobal 11.11 5/18/17 Espanas Southwest Los Banos, CA 100.49 10/5/16 Etsy.com 9.82 2/2/17 Expedia 525.78 11/5/19 Expedia 1,169.87 6/22/16 Eyecare Madera 132.80 1/23/19 EZ Mart Valero 60.03 Groceries 3/24/16 F. McLintocks (Steak House) 203.20 6/22/18 FedEx Memphis, TN 119.31 3/14/16 Fine Donuts 49.95 3/8/17 Fine Donuts 87.92 3/14/19 Flights Campbell, CA 67.08 2/24/17 Fogg, Maxwell, Lanier (Eye Care) 192.00 5/5/16 FredPryor Career 450.25 1/23/19 Fresh Fill Ward Los Banos, CA 43.98 Gas 9/7/16 Fresno Chaffee Zoo 6.00 Fiscal Crisis and Management Assistance Team Madera County Superintendent of Schools 61 Findings Miscellaneous Expenditures Date Vendor Cost ($) Description, if known 9/7/16 Fresno Chaffee Zoo 130.50 2/27/18 Frontier Airlines 399.60 5/25/17 G Wireless Fresno, CA 140.00 7/14/16 Gander Publishing 833.02 11/30/17 Gem of Thailand 50.03 6/20/17 Gem of Thailand Fresno, CA 58.49 9/20/18 German Auto Repair Fresno, CA 287.83 7/13/19 Gill Auto Group 580.00 Jeep dealer 3/14/19 Gilroy Gas 44.07 Gas 2/12/16 Good Sam 25.00 11/17/16 Grocery Outlet 34.76 9/18/17 Hampton Inn 240.00 9/18/17 Hampton Inn 346.62 9/18/17 Hampton Inn 584.24 9/18/17 Hampton Inn 584.24 9/20/17 Hampton Inn 330.00 4/6/18 Hampton Inn 291.22 4/6/18 Hampton Inn 291.22 8/22/16 Handi Shop 62.00 1/5/17 Handi Stop Market 82.43 12/13/17 Handi Stop Market 51.93 12/26/17 Handi Stop Market 98.44 2/13/18 Handi Stop Market 51.65 4/11/18 Handi Stop Market 40.28 12/24/18 Handi Stop Market 92.20 3/6/19 Harbor Freight Los Banos, CA 238.14 Mechanic's box 5/8/19 Harbor Freight Los Banos, CA 46.74 3/30/16 Harry's Liquor 6.14 10/9/17 Herndon Towing 325.00 4/25/18 Hertz Rent a Car 1,882.72 5/2/18 Hertz Rent a Car 317.47 11/10/19 Hertz Rent A Car 82.72 11/11/19 Hertz Rent A Car 228.38 1/23/17 Hobby Lobby Los Banos 188.72 7/15/19 Hobby Lobby, Fresno 250.85 Toys/hobbies, crafts 7/15/19 Hobby Lobby, Fresno 454.93 Toys/hobbies, home décor 3/18/17 Hobby Lobby, Los Banos 127.22 8/11/18 Hobby Lobby, Los Banos 103.82 9/30/18 Hobby Lobby, Los Banos 146.65 Furniture, wearable art, home décor 5/20/19 Hobby Lobby, Los Banos 387.98 5/22/19 Hobby Lobby, Los Banos 374.77 7/11/16 Home Depot 206.46 Fiscal Crisis and Management Assistance Team Madera County Superintendent of Schools 62 Findings Miscellaneous Expenditures Date Vendor Cost ($) Description, if known 7/12/16 Home Depot 177.38 7/12/16 Home Depot 3,148.78 7/13/16 Home Depot 14.02 7/13/16 Home Depot 133.05 7/14/16 Home Depot 76.89 7/15/16 Home Depot 18.01 7/18/16 Home Depot 50.77 7/18/16 Home Depot 262.60 7/19/16 Home Depot 35.29 2/4/17 Home Depot Los Banos 64.52 11/13/18 Home Depot Los Banos 152.48 11/13/18 Home Depot Los Banos 1,148.44 2/11/19 Home Depot Los Banos 27.97 4/14/19 Home Depot Los Banos 240.09 4/16/19 Home Depot Los Banos 648.75 4/19/19 Home Depot Los Banos 420.31 4/22/19 Home Depot Los Banos 53.55 4/22/19 Home Depot Los Banos 239.63 4/23/19 Home Depot Los Banos 1,075.22 4/26/19 Home Depot Los Banos 590.27 4/28/19 Home Depot Los Banos 519.25 5/18/19 Home Depot Los Banos 752.17 3/12/01 Home Depot Madera, CA 90.30 Batteries, linens 7/6/18 Home Depot Madera, CA 54.64 Shelf unit 7/8/18 Home Depot Madera, CA 397.72 7/13/18 Home Depot Madera, CA 86.55 7/14/18 Home Depot Madera, CA 59.32 Candy, shelf, screws 7/20/18 Home Depot Madera, CA 342.13 7/23/18 Home Depot Madera, CA 472.02 7/29/18 Home Depot Madera, CA 414.20 8/6/18 Home Depot Madera, CA 771.98 Lamp, lock, duster, video doorbell 8/10/18 Home Depot Madera, CA 193.77 Lava lamp, broom, cleaner, soda, paint, bulbs, knife Potting mix, mulch, laundry detergent, tire cleaner, 8/12/18 Home Depot Madera, CA 198.30 "Beware of Dog" sign 8/14/18 Home Depot Madera, CA 526.56 Pet tray, wood, light bulbs, padlock Hose, bakeware, towels, wheel cleaner, car wash 8/19/18 Home Depot Madera, CA 336.84 soap, bathroom fan 9/2/18 Home Depot Madera, CA 24.16 Bed bug cleaner 9/5/18 Home Depot Madera, CA 416.86 Ring doorbell camera, spotlight camera Halloween décor & doorbell, sunglasses, area rug, 9/5/18 Home Depot Madera, CA 545.76 garage door opener 9/8/18 Home Depot Madera, CA 196.98 Blower, wiring tool Fiscal Crisis and Management Assistance Team Madera County Superintendent of Schools 63 Findings Miscellaneous Expenditures Date Vendor Cost ($) Description, if known 9/15/18 Home Depot Madera, CA 43.28 Table Halloween doorbell, candles, candy, fogger, paint, 9/15/18 Home Depot Madera, CA 372.31 tape, batteries 9/17/18 Home Depot Madera, CA 156.38 Fog machine, ghost lightshow, trash cans, tool set 9/17/18 Home Depot Madera, CA 237.07 Drill 9/21/18 Home Depot Madera, CA 249.25 Candy, soda, wood, power tool 9/25/18 Home Depot Madera, CA 205.06 Hedge trimmer, blower Candy, soda, wipes, electrical tape, tool pouch, 9/25/18 Home Depot Madera, CA 598.10 insecticide 9/27/18 Home Depot Madera, CA 266.81 Candle, candy, paint, screws, duct tape, fogger 10/15/18 Home Depot Madera, CA 653.86 Candles, glue, air freshener, gloves, paint 10/27/18 Home Depot Madera, CA 257.81 Nightlight, torch, lock Knife, soda, candle, air freshener, towels, candy, 10/27/18 Home Depot Madera, CA 556.54 chips, batteries 10/30/18 Home Depot Madera, CA 279.50 Batteries, TV wall mount, nightlight 11/3/18 Home Depot Madera, CA 110.87 Hand mixer, tool set Rat trap, paint, wood burning kit, knife, soda, candy, 11/16/18 Home Depot Madera, CA 323.01 chips 12/4/18 Home Depot Madera, CA 172.25 Tape measure, tool set, DeWalt stapler 12/14/18 Home Depot Madera, CA 268.32 Mat, pet bed, heater Laundry detergent, waterproof speaker, Sawzall, 12/23/18 Home Depot Madera, CA 576.77 paint 1/3/19 Home Depot Madera, CA 142.59 Heater, batteries, mini LED, toilet paper Bath cleaner, towels, candy, soda, glue, ring chime, 1/3/19 Home Depot Madera, CA 503.32 candle Knife, paint, trigger clamps, LED light, trash can, 1/3/19 Home Depot Madera, CA 686.23 paint, gloves Knife, candy, soda, speakers, audio cables, stapler, 1/7/19 Home Depot Madera, CA 131.14 peanuts 1/8/19 Home Depot Madera, CA 432.35 Fencing materials 1/9/19 Home Depot Madera, CA 197.05 Wood, ABS pipe, sprinkler supplies 1/10/19 Home Depot Madera, CA 228.96 Glue gun, work belt 1/14/19 Home Depot Madera, CA 741.36 Dog food Car wash soap, leather conditioner, batteries, power 1/24/19 Home Depot Madera, CA 558.97 drill 1/31/19 Home Depot Madera, CA 101.83 1/31/19 Home Depot Madera, CA 1,448.57 3/10/19 Home Depot Madera, CA 731.15 Knife, torch, towel, lumber, batteries 3/15/19 Home Depot Madera, CA 194.76 Curtain, door step spring, bug remover 3/21/19 Home Depot Madera, CA 189.63 Step can, shower rod, shower liner 3/24/19 Home Depot Madera, CA 253.73 Sander, baking soda, storage box, batteries Socket set, gloves, batteries, knife, storage box, bug 3/25/19 Home Depot Madera, CA 443.81 spray 3/27/19 Home Depot Madera, CA 29.37 Latching box, bottle of water, sandpaper 3/30/19 Home Depot Madera, CA 55.35 Hose, play sand Fiscal Crisis and Management Assistance Team Madera County Superintendent of Schools 64 Findings Miscellaneous Expenditures Date Vendor Cost ($) Description, if known "Beware of Dog" sign, video surveillance sign, torch, 4/3/19 Home Depot Madera, CA 772.26 lumber 4/13/19 Home Depot Madera, CA 213.26 Knife, fertilizer, batteries, rebar, sod 4/23/19 Home Depot Madera, CA 519.11 Torch, candle, dish soap 5/6/19 Home Depot Madera, CA 816.12 Sandpaper, bucket, lock 5/25/19 Home Depot Madera, CA 179.57 Cleaning wipes, floor cleaner 5/25/19 Home Depot Madera, CA 400.60 Gloves, wood, wood finish, soda 5/27/19 Home Depot Madera, CA 68.02 Water, latching box 5/31/19 Home Depot Madera, CA 259.41 Stove knob covers, kitchen bags, towels 6/7/19 Home Depot Madera, CA 39.09 Swiffer, door lock, paint brush 6/8/19 Home Depot Madera, CA 153.93 Candle, TV mount 6/14/19 Home Depot Madera, CA 64.94 Speaker 6/15/19 Home Depot Madera, CA 6.03 Bolt 6/29/19 Home Depot Madera, CA 35.36 Candy, wood 6/30/19 Home Depot Madera, CA 162.79 Welcome mat, nightlight 7/4/19 Home Depot Madera, CA 538.20 Ring spotlight, black skull, lumber 7/17/19 Home Depot Madera, CA 80.62 Wood 7/21/19 Home Depot Madera, CA 273.14 7/25/19 Home Depot Madera, CA 74.69 Toolbox 7/26/19 Home Depot Madera, CA 58.81 Aqua Seal, candy, pegboard 7/26/19 Home Depot Madera, CA 103.48 Soda, screw hole repair 9/5/19 Home Depot Madera, CA 787.56 Soda, skeleton eyes, batteries, LED skeleton 9/29/19 Home Depot Madera, CA 139.64 Pumpkin Reaper Halloween décor 9/29/19 Home Depot Madera, CA 729.02 LED spring lights, key rack 10/26/19 Home Depot Madera, CA 182.65 Tree topper, Christmas tree 5/5/17 Home Depot Selma, CA 111.97 7/5/16 Home Depot, Madera, CA 28.50 7/5/16 Home Depot, Madera, CA 126.93 7/6/16 Home Depot, Madera, CA 3.21 7/6/16 Home Depot, Madera, CA 43.32 7/7/16 Home Depot, Madera, CA 144.01 7/7/16 Home Depot, Madera, CA 144.97 7/8/16 Home Depot, Madera, CA 35.72 4/9/19 Home Depot, Madera, Ca 347.35 Wood, knee pads 4/9/19 Home Depot, Madera, Ca 1,539.00 Steel hook 3/28/19 Hotel Res, TX 225.41 4/18/16 Hotels.com 212.72 1/28/18 Hotels.com 141.19 3/4/18 Hotels.com 97.76 3/22/19 Hotels.com 177.93 9/23/19 Hotwire 188.59 10/18/19 House of Kebob 34.04 Fiscal Crisis and Management Assistance Team Madera County Superintendent of Schools 65 Findings Miscellaneous Expenditures Date Vendor Cost ($) Description, if known 7/20/18 Hunan Chinese Rest, Fresno, CA 41.60 1/28/16 IHOP 25.04 9/21/19 IHOP 35.80 6/30/16 IHOP Fresno, CA 33.50 10/11/19 J Muirs Tavern Fresno, CA 22.85 11/10/16 J&E Restaurant Fresno, CA 3,503.37 11/15/16 J&E Restaurant Fresno, CA 3,176.64 2/12/18 Jack and Charlies Visalia, CA 118.74 5/18/16 Jimmy John's 25.50 5/16/16 John's Incredible Pizza 311.96 8/7/19 Kebab Grill Madera 290.24 1/11/16 KFC 41.00 6/17/16 KFC 14.12 2/23/18 KFC 24.02 2/16/16 Ladera Grill Rest 139.19 7/11/16 Lalo's Auto Repair 393.00 8/11/16 Lalo's Auto Repair 661.60 12/1/16 Lalo's Auto Repair 217.50 12/1/16 Lalo's Auto Repair 325.20 8/28/17 Lalo's Auto Repair 1,160.10 8/30/17 Lalo's Auto Repair 191.80 9/12/17 Lalo's Auto Repair 443.80 9/29/17 Lalo's Auto Repair 739.36 10/4/17 Lalo's Auto Repair 330.08 11/21/17 Lalo's Auto Repair 473.96 12/27/17 Lalo's Auto Repair 463.87 1/22/18 Lalo's Auto Repair 368.96 1/30/18 Lalo's Auto Repair 310.04 1/30/18 Lalo's Auto Repair 3,000.00 2/6/18 Lalo's Auto Repair 241.00 2/9/18 Lalo's Auto Repair 1,241.80 7/17/18 Lalo's Auto Repair 118.35 8/21/18 Lalo's Auto Repair 883.06 9/5/18 Lalo's Auto Repair 1,244.45 for Honda Accord 10/8/18 Lalo's Auto Repair 330.39 for Jeep Cherokee 10/16/18 Lalo's Auto Repair 1,484.24 10/19/18 Lalo's Auto Repair 605.79 11/2/18 Lalo's Auto Repair 773.91 11/19/18 Lalo's Auto Repair 550.27 3/28/19 Lalo's Auto Repair 466.49 5/7/19 Lalo's Auto Repair 564.65 6/5/19 Lalo's Auto Repair 180.00 Fiscal Crisis and Management Assistance Team Madera County Superintendent of Schools 66 Findings Miscellaneous Expenditures Date Vendor Cost ($) Description, if known 7/8/19 Lalo's Auto Repair 247.32 8/14/19 Lalo's Auto Repair 339.03 3/30/18 LawDepot 33.00 4/30/18 LawDepot 33.00 5/30/18 LawDepot 33.00 7/2/18 LawDepot 33.00 7/30/18 LawDepot 33.00 8/30/18 LawDepot 33.00 10/1/18 LawDepot 33.00 10/31/18 LawDepot 33.00 12/3/18 LawDepot 33.00 9/4/19 Lazy Dog Restaurant 186.48 7/20/19 Legacybox 85.35 Bumper trim repair 2/3/16 Little Caesars 21.60 10/27/16 Little Caesars 91.80 1/17/17 Little Caesars 43.10 1/23/17 Little Caesars 43.10 6/7/18 Little Caesars 27.06 10/5/17 Los Cazadores Bar and Grill 83.51 9/22/19 Los Cazadores Bar and Grill 85.24 8/2/19 Loves Country Tulare, CA 52.54 9/3/18 Lowe's 368.76 BBQ, laundry detergent, fabric cleaner, Propane tank 10/19/18 Lowe's 313.13 Duster, BBQ starter pack, appliance cleaner, pliers 6/6/19 Lowe's 70.34 Mechanic's vice 10/27/19 Lowe's 138.82 Laundry detergent, mop 7/19/16 Lowe's 118.74 7/5/16 Lowe's Madera, CA 181.70 8/10/19 Lucca Sacramento, CA 90.10 10/26/16 Lumitact.com 14.95 10/26/16 Lumitact.com 54.00 12/28/17 Luna Pizzeria and Ital Clovis, CA 25.60 10/30/19 Madera Clubhouse Rest. 500.00 1/17/19 Madera Family Market 70.45 Gas 1/19/19 Madera Family Market 67.63 Gas 1/14/16 Madera Family Mart 29.32 12/10/18 Madera Family Mart 50.00 1/25/16 Madera Food 4 Less 53.94 2/12/16 Madera Food 4 Less 44.94 3/9/16 Madera Food 4 Less 126.34 3/31/16 Madera Food 4 Less 10.45 4/8/16 Madera Food 4 Less 51.84 4/19/16 Madera Food 4 Less 131.96 Fiscal Crisis and Management Assistance Team Madera County Superintendent of Schools 67 Findings Miscellaneous Expenditures Date Vendor Cost ($) Description, if known 4/28/16 Madera Food 4 Less 21.58 10/21/17 Marie Callender's 74.53 6/20/18 Marie Callender's 49.75 11/29/17 Mariscos Las Islitas 69.25 9/28/19 Mariscos Las Islitas 78.22 5/31/16 Market House Anaheim 7.65 1/29/16 Marshalls 89.54 8/16/16 Marshalls 59.38 9/8/16 Marshalls 64.78 9/28/16 Marshalls 59.38 11/16/16 Marshalls 43.19 11/16/16 Marshalls 86.38 10/28/19 Marshalls 180.66 9/24/19 McDonald's 25.89 6/15/16 McDonald's 25.82 8/30/17 McDonald's Bakersfield, CA 20.53 8/30/17 McDonald's Lebec, CA 25.98 9/21/17 McDonald's Los Banos, Ca 7.98 6/25/18 McDonald's Los Banos, CA 9.07 1/21/18 McDonald's Madera, CA 43.73 5/29/18 McDonald's Visalia, CA 15.62 3/4/16 Michael Automotive 608.04 3/8/16 Michael Automotive 130.00 11/14/16 Michael Automotive 1,541.07 11/18/16 Michael Automotive 487.48 7/28/19 Michael's 67.75 Diorama, mini BBQ 7/5/16 Michael's Fresno, CA 111.10 7/30/18 Mimi's Café Fresno, CA 39.52 5/22/19 Mimi's Café Fresno, CA 42.34 4/29/19 Mister Car Wash Los Banos, CA 12.00 4/30/19 Mister Car Wash Los Banos, CA 15.00 4/28/16 MoneyGram Payment 539.99 7/14/19 Monterey Bay Aquarium 99.90 2 adult tickets 7/5/16 Mountain Mike's Pizza 20.35 11/29/16 Mountain Mike's Pizza 33.92 8/3/19 Mylife.com 1.00 8/3/19 Mylife.com 167.40 8/11/19 Mylife.com 18.95 9/11/19 Mylife.com 18.95 7/6/19 Next Kam Inc 207.39 4/29/19 Nick's Towing Madera, CA 415.00 1/10/18 Olive Garden 59.57 Fiscal Crisis and Management Assistance Team Madera County Superintendent of Schools 68 Findings Miscellaneous Expenditures Date Vendor Cost ($) Description, if known 12/7/18 Online Advance 6,000.00 7/20/18 O'Reilly Auto Parts 43.78 8/20/18 O'Reilly Auto Parts 7.57 10/31/18 O'Reilly's Los Banos, CA 74.62 4/18/19 O'Reilly's Los Banos, CA 58.14 10/18/18 O'Reilly's Madera, CA 292.24 Tools, gloves 5/29/19 O'Reilly's Madera, CA 135.27 Ball mount, towing mirror 2/17/16 Pak N Save 152.99 5/3/16 Pak N Save 79.98 8/6/19 Pak N Save 179.61 Groceries 3/31/16 Panda Express 26.16 5/16/16 Panda Express 10.64 5/31/16 Panda Express 25.22 7/19/16 Panda Express 22.79 10/23/17 Panda Express 15.80 1/21/19 Parkwood Mart 90.43 Gas 7/21/18 Patch Fruit Stand Bakersfield, CA 38.31 7/4/19 PayPal * Auto Seats 239.94 4/11/18 PayPal * Bangbob 34.69 4/11/18 PayPal * DanyAuclair 37.53 9/7/17 PayPal * Digidavejer 8.99 9/29/17 PayPal * eBay Seller 24.53 7/4/19 PayPal * Ekus Parts 25.43 4/11/18 PayPal * Gharra123 225.97 4/11/18 PayPal * Mallrat LLC 9.99 7/10/19 PayPal * Rarevinyl4u 11.95 4/11/18 PayPal * Silicon Ele 37.05 10/5/18 PayPal * Srubbins 67.94 7/4/19 PayPal * Vette Candy 21.08 4/11/18 PayPal * Wanjulei 35.98 1/19/18 PayPal * Yogaoldmast 82.06 5/13/16 PayPal *Jackiesmit 95.99 8/30/16 PayPal *JGStorm3 90.00 11/3/17 Pedros Place Mex Chowchilla, CA 24.50 8/12/17 Perko's Café & Grill Madera, CA 52.59 2/14/18 Perko's Café & Grill Madera, CA 37.61 1/12/19 Perko's Café & Grill Madera, CA 45.63 3/8/19 Perko's Café & Grill Madera, CA 16.72 7/14/19 Perko's Café & Grill Madera, CA 33.11 9/16/19 Perko's Café & Grill Madera, CA 24.09 10/18/19 Perko's Café & Grill Madera, CA 37.77 7/31/18 Perko's Café Turlock, CA 39.52 Fiscal Crisis and Management Assistance Team Madera County Superintendent of Schools 69 Findings Miscellaneous Expenditures Date Vendor Cost ($) Description, if known 4/1/19 Petco 43.27 7/18/16 Peter's Brothers Nursery 321.60 2/10/17 PF Chang's Fresno, CA 125.44 1/14/16 Pizza Hut 98.01 1/19/16 Pizza Hut 108.89 4/18/16 Pizza Hut 76.11 1/4/18 Pizza Hut 39.91 7/18/19 PP *Hotels 1,230.45 7/14/16 PP*2594 (PayPal) 1.95 11/15/18 Precision Heat 350.00 6/24/16 Priceline 192.92 1/9/17 Prime Fresh Member 16.15 2/9/17 Prime Fresh Member 16.15 3/9/17 Prime Fresh Member 16.15 4/10/17 Prime Fresh Member 16.15 7/7/19 Pticket CSU Fresno, CA 97.00 7/30/18 Rafi Rastro 74 Corporation 2,750.00 11/15/17 Restaurant Maranatha 69.90 8/8/18 Ristorant Gabriela Madera, CA 62.05 9/15/17 Ristorante Gabriel Madera, CA 116.02 2/25/17 Ristorante Gabriella 94.31 5/28/17 Ristorante Gabriella 59.26 7/16/19 Ristorante Gabriella 80.44 6/20/18 Rite Aide Visalia, CA 38.60 9/27/17 Ron's Towing and Road Service 55.00 10/23/19 Ron's Towing and Road Service 305.00 9/21/19 Round Table Pizza 27.66 9/21/19 Round Table Pizza 35.66 1/21/16 Rustorante Gabriel 88.17 6/14/17 S & L Towing Madera, CA 360.00 10/16/17 Sal's Mexican Rest 29.94 9/9/19 Sal's Mexican Rest 36.28 10/20/19 Sal's Mexican Rest 63.03 11/5/19 Sal's Mexican Rest 31.81 2/11/16 Sal's Mexican Restaurant 19.38 1/22/16 SaveMart 28.70 3/4/16 SaveMart 61.69 5/31/16 SaveMart 22.14 3/29/18 SaveMart 180.99 Groceries 1/23/19 SaveMart 67.19 2/6/19 SaveMart 73.96 Groceries 4/15/19 SaveMart 164.50 Groceries Fiscal Crisis and Management Assistance Team Madera County Superintendent of Schools 70 Findings Miscellaneous Expenditures Date Vendor Cost ($) Description, if known 6/5/19 SaveMart 129.58 Groceries 8/24/19 SaveMart 70.20 Groceries 8/24/19 SaveMart 118.35 Groceries 9/5/19 SaveMart 74.34 Groceries 9/10/19 SaveMart 139.52 Groceries 9/21/19 SaveMart 26.25 Groceries 10/15/19 SaveMart 195.57 Groceries 10/28/19 SaveMart 182.57 Groceries 10/10/19 Seasons 52 67.46 6/25/18 Second Bar Austin, TX 13.20 12/15/16 See's Candy Los Banos, CA 137.40 3/23/19 Shell 63.21 Gas 7/9/19 Shell 51.39 Gas 4/12/18 Shop.com Marketplace 149.98 8/15/16 Shoppe at Bravo Farms Traver, CA 43.07 1/30/17 Sierra Valley Pizza 59.04 7/5/16 Silva Ford 219.50 1/23/17 Silva Ford Madera 396.39 6/21/18 Silva Ford Madera, CA 2,415.81 1/26/17 SiriusXM Radio 218.55 2/13/17 SiriusXM Radio 17.10 12/28/17 SiriusXM Radio 187.81 2/9/18 SiriusXM Radio 275.10 9/13/18 SiriusXM Radio 61.26 10/7/18 SiriusXM Radio 59.54 1/25/19 SiriusXM Radio 305.78 4/6/19 SiriusXM Radio 12.30 4/25/19 SiriusXM Radio 19.41 5/25/19 SiriusXM Radio 19.41 6/25/19 SiriusXM Radio 19.41 7/25/19 SiriusXM Radio 19.41 8/25/19 SiriusXM Radio 19.41 9/13/19 SiriusXM Radio 220.84 9/25/19 SiriusXM Radio 19.41 1/20/16 Smart & Final 36.79 2/16/16 Smart & Final 264.47 12/8/16 Sol Castillos Fresno, CA 40.61 11/23/16 Sonic Drive-In 25.96 4/18/17 Southwest Airlines 241.98 4/18/17 Southwest Airlines 306.96 8/25/17 Southwest Airlines 321.96 1/3/18 Southwest Airlines 107.96 Fiscal Crisis and Management Assistance Team Madera County Superintendent of Schools 71 Findings Miscellaneous Expenditures Date Vendor Cost ($) Description, if known 3/3/18 Southwest Airlines 186.00 6/3/18 Southwest Airlines 420.60 6/12/18 Southwest Airlines 15.00 Possibly Early or Preferred Check-In 6/12/18 Southwest Airlines 15.00 Possibly Early or Preferred Check-In 6/15/18 Southwest Airlines 15.00 Possibly Early or Preferred Check-In 6/15/18 Southwest Airlines 15.00 Possibly Early or Preferred Check-In 6/15/18 Southwest Airlines 15.00 Possibly Early or Preferred Check-In 6/15/18 Southwest Airlines 15.00 Possibly Early or Preferred Check-In 6/15/18 Southwest Airlines 513.10 6/15/18 Southwest Airlines 513.10 2/24/19 Southwest Airlines 137.96 6/12/19 Southwest Airlines 114.02 6/12/19 Southwest Airlines 257.30 3/4/18 SP * Mister SFC 48.66 5/3/16 Starbucks 1,000.00 5/4/16 Starbucks 50.00 6/24/19 Starbucks El Paso, TX 7.14 7/26/18 Starbucks Los Banos, CA 20.90 4/5/19 Staybridge Suites, Las Cruces, NM 382.33 8/24/19 Sugar Pine Smoke House 75.77 8/28/19 Sunnyside Pizza 27.75 1/31/18 Tacos Tijuana 35.77 6/20/16 Tahoe Rock N Slide 118.80 9/22/19 Target 159.99 Dog treats, bookshelf 4/8/17 Target Fresno, CA 259.91 3/25/17 Texas Roadhouse Fresno, CA 77.02 3/18/16 Thai Fusion 62.20 6/16/19 The Tint Shop 360.00 9/30/19 The Tint Shop 380.00 10/7/19 The Tint Shop Madera, CA 500.00 2/17/17 The Vineyard Rest 92.27 3/13/17 The Vineyard Rest 154.69 4/3/18 The Vineyard Rest 122.71 6/5/19 The Vineyard Rest 60.50 7/31/19 The Vineyard Rest 56.01 8/26/19 The Vineyard Rest 74.41 9/10/19 The Vineyard Rest 54.28 9/13/19 The Vineyard Rest 225.93 9/16/19 The Vineyard Rest 100.92 9/19/19 The Vineyard Rest 59.69 9/23/19 The Vineyard Rest 57.25 9/30/19 The Vineyard Rest 55.09 Fiscal Crisis and Management Assistance Team Madera County Superintendent of Schools 72 Findings Miscellaneous Expenditures Date Vendor Cost ($) Description, if known 11/4/19 The Vineyard Rest 42.62 1/22/16 The Vineyard Resta, Madera 143.12 9/14/17 The Vineyard Resta, Madera 96.46 9/14/19 The Vintage Press 109.48 6/18/18 Tia Juanitas Albuquerque, NM 19.99 4/12/18 Torres Body Shop 6,444.86 9/14/18 Torres Body Shop 97.76 8/12/19 Torres Body Shop 990.96 8/23/19 Torres Body Shop 86.47 10/5/18 Torres Body Shop, Madera, CA 1,383.20 10/12/18 Torres Body Shop, Madera, CA 520.00 1/25/16 Toscano RV Center 500.00 1/28/16 Toscano RV Center 88.43 2/16/16 Toscano RV Center 879.75 4/28/16 Toscano RV Center 406.40 5/5/16 Toscano RV Center 54.00 10/19/18 Toscano RV Center 1,274.20 9/16/18 Tractor Supply 450.49 Shoes, shirts, clothes 10/31/18 Tractor Supply 483.35 Shirts, socks, pants 12/23/18 Tractor Supply Los Banos, CA 182.08 3/3/19 Tractor Supply Los Banos, CA 71.39 4/19/19 Tractor Supply Los Banos, CA 140.43 5/3/19 Tractor Supply Los Banos, CA 61.75 5/16/19 Tractor Supply Los Banos, CA 298.59 Dog food 9/10/18 Tractor Supply Madera, CA 246.77 Jeans, shirts 12/28/18 Tractor Supply Madera, CA 372.51 Dog leash, candy, clothes, harness 1/9/19 Tractor Supply Madera, CA 283.54 Boots, clothes, pants, dog food 1/14/19 Tractor Supply Madera, CA 64.93 Shirt, pants, shoes 1/15/19 Tractor Supply Madera, CA 107.15 Gas 1/31/19 Tractor Supply Madera, CA 136.23 Clothes, dog food, chips, water 2/8/19 Tractor Supply Madera, CA 137.37 Dog food, dog bowl, candy 3/15/19 Tractor Supply Madera, CA 95.23 Dog food 4/2/19 Tractor Supply Madera, CA 82.77 Dog food 6/3/19 Tractor Supply Madera, CA 85.04 Clothes 6/14/19 Tractor Supply Madera, CA 212.07 Candy, clothes, dog food 7/19/19 Tractor Supply Madera, CA 214.13 Dog food 9/5/19 Tractor Supply Madera, CA 280.39 Dog food, dog shampoo 10/20/19 Tractor Supply Madera, CA 136.35 Dog food/bones 7/6/19 Travel Insurance 57.24 1/13/17 Travelocity 840.83 6/25/19 Trevino's Rest Merced, CA 36.31 3/20/19 True Value 39.78 Glue gun/stick, glue, tarp Fiscal Crisis and Management Assistance Team Madera County Superintendent of Schools 73 Findings Miscellaneous Expenditures Date Vendor Cost ($) Description, if known 4/14/19 True Value Los Banos, CA 26.72 4/20/19 True Value Los Banos, CA 93.09 7/21/18 Tulare Foodmart Tulare, CA 28.90 4/9/18 Uber Eats 50.69 4/11/18 Uber Eats 32.89 4/12/18 Uber Eats 27.50 6/17/19 United 30.00 10/28/16 United Airlines 161.60 6/14/19 United Airlines 17.00 6/14/19 United Airlines 417.00 7/19/16 United Rentals 700.00 2/21/19 UPS Store Madera, CA 1,529.92 3/7/19 UPS Store Madera, CA 46.62 5/16/19 UPS Store Madera, CA 135.47 7/5/18 U-Tec Madera, CA 194.83 8/14/18 U-Tec Madera, CA 64.94 8/22/18 U-Tec Madera, CA 97.39 2/22/17 U-Turn Audio 399.00 4/15/17 U-Turn Audio 549.00 2/18/16 Valero 29.56 7/7/16 Valero 52.15 7/13/16 Valero 31.20 7/13/16 Valero 47.66 6/4/18 Valero 100.00 5/20/19 Valero 85.57 Gas 1/15/18 Valero Energy Corp Amarillo TX 1,030.00 7/5/16 Valley Feed Madera, CA 112.10 7/15/16 Valley Pistachio 22.99 7/15/16 Valley Pistachio 63.94 7/5/16 Valvoline Instant 93.74 7/5/16 Valvoline Instant 126.12 10/5/18 Valvoline Oil Change 88.76 for Jeep Cherokee 8/18/17 Veni Vidi Vici Fresno, CA 27.00 1/27/16 Verizon Wireless 1,986.36 2/8/16 Verizon Wireless 1,820.37 3/4/16 Verizon Wireless 2,631.36 6/22/16 Verizon Wireless 1,999.99 6/22/16 Verizon Wireless 2,000.00 7/18/16 Verizon Wireless 4,500.00 8/15/16 Verizon Wireless 1,233.96 8/15/16 Verizon Wireless 1,275.38 8/22/16 Verizon Wireless 67.99 Fiscal Crisis and Management Assistance Team Madera County Superintendent of Schools 74 Findings Miscellaneous Expenditures Date Vendor Cost ($) Description, if known 9/12/16 Verizon Wireless 2,924.50 10/3/16 Verizon Wireless 1,320.05 10/20/16 Verizon Wireless 586.37 11/14/16 Verizon Wireless 2,000.00 11/14/16 Verizon Wireless 2,742.58 12/29/16 Verizon Wireless 1,663.09 12/29/16 Verizon Wireless 2,155.74 8/29/17 Verizon Wireless 460.33 9/4/17 Verizon Wireless 339.66 9/25/17 Verizon Wireless 896.99 9/25/17 Verizon Wireless 896.99 12/23/17 Verizon Wireless 779.02 1/13/18 Verizon Wireless 849.99 6/6/18 Verizon Wireless 114.72 6/6/18 Verizon Wireless 1,438.90 8/1/18 Verizon Wireless 3,433.71 6/24/19 Verizon Wireless 3,729.41 6/23/19 Village Pancake House El Paso, TX 67.69 2/22/16 VTS Nellis Taxi 27.09 8/9/16 Walgreens 59.80 8/10/16 Walgreens 18.89 10/10/17 Walgreens 10.38 1/25/16 Walmart 51.58 2/10/16 Walmart 96.12 3/11/16 Walmart 88.47 4/6/16 Walmart 92.34 4/8/16 Walmart 13.87 10/14/16 Walmart 20.70 11/4/16 Walmart 48.80 11/8/16 Walmart 10.00 1/20/18 Walmart 359.77 7/14/18 Walmart 62.79 Sony Blu-Ray 7/29/18 Walmart 29.89 Air freshener, candy, drinks 8/1/18 Walmart 38.89 8/4/18 Walmart 654.34 60' LED UHD TV 8/20/18 Walmart 364.98 Groceries 3/11/19 Walmart 149.39 Roku TV streaming device 5/31/19 Walmart 546.09 Hisense TV 6/3/19 Walmart 275.46 TV 5/5/17 Walmart Delano 65.67 9/23/16 Walmart Fresno, CA 16.56 5/18/16 Wendy's 15.67 Fiscal Crisis and Management Assistance Team Madera County Superintendent of Schools 75 Findings Miscellaneous Expenditures Date Vendor Cost ($) Description, if known 5/26/17 West Coast Towing Fresno, CA 255.00 3/5/19 XY Find IT 128.67 4/20/17 Yard House Fresno, CA 113.98 6/2/18 Yard House Fresno, CA 48.47 11/4/19 Yard House Fresno, CA 72.70 12/29/16 Yard House, Fresno, CA 16.88 1/17/17 Yard House, Fresno, CA 38.00 5/28/18 Zeen Asian Diner Visalia, CA 36.03 Total 246,002.26 FCMAT also determined that, in October 2017, the former executive director authorized public charter school funds to be used to pay for the funeral reception costs of the property owner’s daughter. He stated the property owner requested assistance from the charter school in this regard, and that he authorized the funding of the reception for benevolent purposes. This included charges for catering, custodial staff, and equipment rentals. Board approval could not be located by FCMAT, however even if board approval had been obtained, such an expense lacks an educational purpose and represents a potential misappropriation of public funds. The funeral reception occurred on October 14, 2017. The costs incurred by the charter school using public funds are summarized below. Date Description Amount ($) 10/10/17 Equipment Rental (chairs, tables, etc.) 2,125.00 10/14/17 Catering/Food 2,336.86 10/14/17 Staffing Wages - Kitchen/Food Prep 1,347.87 Total 5,809.73 Fiscal Crisis and Management Assistance Team Madera County Superintendent of Schools 76 Findings Legal Expenditures Legal Expenditures FCMAT identified several instances where public charter school funds were used to pay the personal legal expenses of the former executive director’s son, previously identified as Son #1. These expenditures to the charter school were incurred by the former executive director, either directly or at his direction. The charges were paid either using the former executive director’s charter school credit or debit card, or by using an ETAA check, signed by the former executive director. The legal expenses paid using public charter funds included bail, legal representation, traffic citations and other related expenses following the arrest and/or incarceration of Son #1. FCMAT did not find any evi- dence that the governing board approved these expenditures or transactions, nor would such approval constitute a legal obligation of the charter As stated in the Gift of Public Funds section of this report, personal expenditures do not contribute to the educational process of the charter school’s students and represent an expenditure that should not be paid using public funds. Additional legal expenses, such as parking citations, are included elsewhere in this report (see Acquisition of Vehicles section). During FCMAT’s interview, the former executive director stated that he does not recall using public charter school funds for bail. Date Vendor Purpose/Charges Cost ($) 1/31/15 Aladdin Bail Bonds Bail 1,015.00 2/8/16 Wapner-Jones (defense attorney) Legal Counsel - DUI 4,500.00 Legal Counsel - Assault/Battery; 4/11/16 Alaina N. Ybarra, Esq. Robbery 1,500.00 5/2/16 Fresno County Superior Court Traffic Citation 284.00 5/2/16 Fresno County Superior Court Traffic Citation 356.00 5/2/16 Fresno County Superior Court Traffic Citation 401.00 5/2/16 Fresno County Superior Court Traffic Citation 401.00 5/2/16 Fresno County Superior Court Traffic Citation/Failure to Appear 940.00 5/2/16 Albert Ramirez Bail Bonds Bail 2,500.00 Total 11,897.00 Fiscal Crisis and Management Assistance Team Madera County Superintendent of Schools 77 Findings Legal Expenditures Sample receipt: (Names redacted by FCMAT.) Sample charge on ETAA credit card statement: Fiscal Crisis and Management Assistance Team Madera County Superintendent of Schools 78 Findings Donation of Portable Buildings Donation of Portable Buildings As mentioned in the Acquisition of Vehicles section of this report, any supplies, equipment, buildings or other property belonging to a public school, including a public charter school, must be disposed of or sold with governing board approval and in accordance with other local policies regarding surplus property, including the charter school’s bylaws. Any disposal of public property done unilaterally or without following a formal process can result in a gift of public funds and may constitute misappropriation of public assets. As a nonprofit entity, capital assets must be disposed of in accordance with Generally Accepted Accounting Principles (GAAP), meaning a gain or loss from the sale or disposal must be recognized in the charter’s financial statements. ETAA’s charter school bylaws state the following in Article V, Section 1 regarding assets: DEDICATION OF ASSETS. The Corporation’s assets are irrevocably dedicated to public benefit purposes as set forth in the charter governing the charter schools operated as or by the Corporation. No part of the net earnings, properties, or assets of the Corporation, on dissolution or otherwise, shall inure to the benefit of any private person or individual, or to any trustee or officer of the Corporation. On liquidation or dissolution, all properties and assets remaining after payment or provision for payment, of all debts and liabilities of the Corporation shall be distributed to a nonprofit fund, foundation or corporation which is organized and operated exclusively for charitable purposes and which has established its tax exempt status under Section 501(c)(3) of the Internal Revenue Code, or the corresponding section of any future federal tax code, or shall be distributed to the federal government, or to a state or local government, for a public purpose. In August 2018, eight of the charter school’s portable buildings were donated to the church that shares the charter school’s property, Building for Christ Ministry. Building for Christ Ministry and its primary principals are also the property owners. In a letter thanking the charter school for the donation, the church indicated it was selling and removing the portables, and the proceeds of the sale will be used to support the Building for Christ Ministry. The letter cited “new construction” as the reason for the need to remove the portable buildings from the property. A large multipurpose building has now been built on the portable’s former location. The charter school now leases space from the church in the new building, including classrooms, a cafeteria, space for specialty classes such as music, and the charter’s new front office. Interviews indicated that the former executive director acted alone and did not seek board approval or input for the donation. The portables were not sold at auction or otherwise put out to bid. FCMAT could not deter- mine why the portable buildings were not sold by the charter school in lieu of donating the buildings to an outside, noneducational organization. Following the sale of the portables by the church, no cash or in-kind consideration was provided by the church to the charter school, and any other arrangements, if any, between the former executive director and the property owner related to the donation are unknown to FCMAT. Fiscal Crisis and Management Assistance Team Madera County Superintendent of Schools 79 Findings Donation of Portable Buildings The portable buildings’ condition at the time of the donation is unknown to FCMAT. The charter indicated the portables were in good working condition and would continue to be used if the buildings were still on site. Current charter staff stated that one portable that was purchased at the same time as those that were donated remained in use at the charter during FCMAT’s fieldwork. However, in a brief discussion with the principle of Building for Christ Ministry, FCMAT was informed that the portable buildings would have required considerable renovations for continued use by the school. The former executive director also stated that the portables were in poor condition and were otherwise unus- able without renovation. Again, FCMAT could not determine the condition of the portable buildings at the time of the donation. FCMAT received a quote from a modular supplier for similar buildings in use by the charter. The value of the used, donated portables is estimated to be $45,270.00 per unit, totaling $362,160.00 for eight units. Due to the donation by the former executive director, neither the portable buildings nor the proceeds from the sale were available for use by the charter school to further the educational process. Disposal of the portable buildings was not included in the charter’s audit report for 2018-19, which includes the charter school’s assets and associated depreciation. FCMAT contacted the charter’s audit firm and con- firmed that no such disclosure was made by ETAA, and that the audit firm was unaware of the donation of the portable buildings in 2018-19. As such, the charter’s financial reporting and statements were materially inaccurate. Fiscal Crisis and Management Assistance Team Madera County Superintendent of Schools 80 Findings Cafeteria Snack Bar Cafeteria Snack Bar According to FCMAT’s Charter School Accounting and Best Practices Manual, every effort should be made to issue a prenumbered cash receipt from a receipt book whenever an LEA receives cash, whether at the business office, a school site, fundraising event, or other school activity. The individual who issues a cash receipt should always verify that all necessary documentation is provided to support each transaction. A charter school should be committed to establishing and maintaining strong internal controls around the cash receipts process to prevent the mishandling of funds and ensure all collected funds are safeguarded. Each transaction should be supported by an accurate record of the inventory in question. Inventory records should identify the items and quantities purchased for sale, as well as the inventory eventually sold or designated as surplus. Physical inventory counts should be taken periodically and reconciled with inventory records. Inventoried items particularly susceptible to misappropriation or theft include computer equip- ment, warehouse supplies, food service commodities, maintenance and transportation parts and student store goods. Individuals who collect cash for fundraisers and activities for which a cash box is issued should safeguard the cash properly. Once all cash has been collected, it should be recorded on a cash count form. Two indi- viduals should count the cash together, and both should sign and date the cash count form and remit the funds to the school principal or business office. The cash should be stored in a tamper-proof bank bag and secured in a safe until a bank deposit can be made. When cash collected exceeds $500, a bank deposit should ideally be made the same day. Otherwise, all bank deposits should be made by the last business day of the week. ETAA’s policy regarding petty cash states the following: The executive director shall have access to petty cash not to exceed $3,000. Such funds shall be used at the discretion of the executive director, subject to Board oversight and consistent with the approved budget and School rules and regulations. The executive director and Office Manager must obtain each other’s authorization on petty cash checks made payable to their names. Use of petty cash shall require original receipts for all purchases. Staff interviews indicated that some but not all the best practices outlined above were followed. At the direction of the former executive director, staff were directed to purchase items for a snack bar the char- ter maintained to sell various snack items to students during lunch. The items purchased and sold were not associated with the charter’s food service program. These items included soda, candy, chips, cookies, and other related items, such as hot chocolate. These items were sold daily in the outdoor lunch area in exchange for cash payments from students. The transactions related to the purchase of items to be sold at the snack bar were documented through bank and financial statements, and provided via warrant reports to the ETAA board. A sample of the pur- chase of snack items for sale to students is shown below: Date Vendor Cost ($) Items Purchased (Abbreviated) 11/10/19 Smart & Final 723.45 Soda, chips, hot chocolate, candy, cookies 11/17/19 Smart & Final 487.57 Juice, soda, nuts, chips, candy, cookies 12/1/19 Smart & Final 690.62 Juice, soda, nuts, chips, candy, cookies 6/9/19 Smart & Final 262.96 Soda, chips Fiscal Crisis and Management Assistance Team Madera County Superintendent of Schools 81 Findings Cafeteria Snack Bar Staff indicated an inventory control system was not in place during the period of FCMAT’s audit. Rather, staff were simply directed to purchase additional snacks when inventory was depleted. Once the snack bar was closed at the end of each lunch period, staff stated two employees would gather the cash to count in the former executive director’s office. Once the total was calculated, staff would place the cash on the desk of the former executive director, and he would subsequently relocate the cash to a safe in his office. During FCMAT’s interview, the former executive director stated that he was the only individual who had access to the safe. Fiscal staff stated they were never asked to deposit the cash in the bank. FCMAT could not locate any deposits from snack bar sales in the charter school’s bank statements, nor was any of the cash collected from the students located by FCMAT. The location and disposition of the cash collected during the audit period is unknown to both FCMAT and the charter school. Staff indicated that the former executive director repeatedly told them that the funds received from the snack bar should be spent on school field trips. However, staff stated that all field trips were funded instead from the charter’s general fund, rather than from any snack bar sales. Interviews also determined that the former executive director indicated to charter school staff that he intended to borrow $20,000 to potentially pay for his son’s rehabilitation, but later determined he did not need the funds and returned the cash to the safe. FCMAT believes the cash in the safe was revenue from the snack bar sales and confirmed from email communications that one of the former executive director’s sons attended a rehabilitation facility. The dis- position of the $20,000, as well as any other cash collected through snack bar sales, is unknown. Staff stated that the daily total of cash received from snack bar sales was $200-$300. Based on this state- ment, FCMAT estimates that yearly totals from cash received from snack bar sales were $36,000 - $54,000. During the four-year period of FCMAT’s audit, FCMAT estimates cash received to be $144,000-$261,000, with a median potential revenue of approximately $202,500. The former executive director stated that the snack bar had daily sales of $100 - $200, however based on current sales, FCMAT believes the total may have been slightly higher as indicated above. FCMAT asked the former executive director why no deposits were made for the snack bar proceeds over the four years reviewed by FCMAT. He stated that all cash received through the snack bar was given away to those in need, such as to a parent or family that may have needed a tank of gas. FCMAT was unable to confirm this statement; however even if accurate, such a use would likely constitute a gift of public funds. Fiscal Crisis and Management Assistance Team Madera County Superintendent of Schools 82 Findings Book Publication Book Publication In 2019, the former executive director published a poetic book he had written about the struggles and heritage of Mexican immigrants in America. According to interviews with former board members, the former executive director wanted the book to be used as part of the charter’s curriculum and planned to distribute a copy of each book to students in certain grades. Email communications indicated he also intended to distribute copies of the book to all superintendents within the charter’s Special Education Local Plan Area, a group of LEAs that oversee special education services provided to students in Madera County. The former executive director attended a writer’s retreat at the National Hispanic Cultural Center in Albuquerque, New Mexico in June 2019. He committed public funds to pay the expenses of the book pub- lication, including $400.00 for registration to the writer’s conference. The costs of the trip to Albuquerque were paid using the former executive director’s charter school credit card. (These charges are included in the Trips section of this report.) A banner advertisement promoting the book was purchased at a local printing company for $221.91, and the former executive director purchased 130 copies of the book using charter funds, totaling $2,808.00. Interviews and documentation indicated that the governing board did not approve the use of charter funds for any costs related to the book publishing, effectively permitting public funds to be used for a personal endeavor. The book was published through Amazon Kindle Direct Publishing, Amazon.com's e-book self-publishing platform, although the amount of any royalty proceeds earned by the former executive director is unknown to the charter school and FCMAT. FCMAT visited the charter school’s library and, after discussions with library staff, could not locate any copies of the book. The location and disposition of the copies purchased using charter school funds is unknown to both the charter school and FCMAT. The former executive director stated that he gave signed copies of the books to all middle school students. FCMAT was unable to confirm this statement. The former executive director’s final employment agreement, dated July 1, 2017 to June 30, 2020, stated the following regarding the reimbursement of professional development and other related activities: Outside Professional Activities: Upon obtaining prior written approval of the Board, the Employee may undertake for consideration outside professional activities, including consult- ing, speaking, and writing. The outside activities shall not occur during regular work hours. ETAA shall in no way be responsible for any expenses attendant to the performance of such outside activities. FCMAT could not locate any written approval from the governing board for the writing of the book, and interviews with current and former governing board members indicated they did not know the expenses associated with the book publication, writer’s retreat, and other related costs. Fiscal Crisis and Management Assistance Team Madera County Superintendent of Schools 83 Findings Book Publication Below is a receipt for the registration to the writer’s retreat in New Mexico, paid using the former executive director’s charter school credit card. Below is the Amazon order for 130 copies of the former executive director’s book, placed by the former executive director using his charter school credit card. Fiscal Crisis and Management Assistance Team Madera County Superintendent of Schools 84 Findings Book Publication Below is the former executive director’s charter school credit card statement, demonstrating the purchase of the books from Amazon using charter school funds. Below is the invoice for the purchase of a promotional banner advertisement for the former executive director’s book. A summary of the items related to the publication of the former executive director’s book is shown below. Date Description Amount ($) 4/1/19 Registration for Writer's Retreat 400.00 10/16/19 Amazon book order (130 copies) 2,808.00 10/25/19 Promotional banner 221.91 Total 3,429.91 Fiscal Crisis and Management Assistance Team Madera County Superintendent of Schools 85 Findings Conclusion Conclusion Income Tax Implications All compensation provided to the former executive director and his family members is subject to state and federal income tax withholdings. Such compensation provided to an employee either through salary, bonuses, equip- ment, vehicles, or other qualifying means must be reported by the employer on IRS Form W-2. This also includes the transfer of any charter school assets for which one or more employees may have received a financial gain. Any compensation not reported by an employer at the time of receipt by an employee, such as the questionable items included in this report, must be subsequently reported by the employer on an amended Form W-2. 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. FCMAT has summarized expenditures outlined in this report that most notably represent potentially fraudu- lent activity and a potentially inappropriate use of public charter school funds. These expenditures were either incurred by the former executive director or were directly authorized by him. Some items have been omitted from this list, such as the $3,000 Christmas bonus in 2018, as board approval may have occurred, despite the absence of the compensation in the former executive director’s employment agreement. While some expenditures listed below and elsewhere in this report may indeed have a legitimate educational purpose, that purpose could not be determined by FCMAT, lending to the appearance of potential fraud and misuse of public charter school funds. Questioned expenditures below are listed in order of appearance in this report. In all cases, the expenditures appear to have been paid using the charter school’s unrestricted general fund revenue, rather than from any federal or state funding sources specifically intended for certain programmatic purposes (such as Title I). Description Amount ($) Basis for Potential Misuse of Public Funds Daughter's Tuition 37,563.57 Singular employee receiving full tuition Gas for Daughter 2,437.07 Issued gas card for personal vehicle 2015 & 2016 Ford F-150 pickups 50,000.00 Charter vehicles not authorized as compensation Electronic Devices 9,504.74 Issued to family members only Unknown Withdrawals 51,258.08 Potential misappropriation of public funds Payroll Advances Outstanding 8,000.00 Unauthorized additional compensation Unapproved Christmas Bonuses 2,000.00 Unauthorized additional compensation Fuel Purchases 46,365.30 Excessive use of fuel card Gas Station Purchases 954.06 Potential misappropriation of public funds Trips 22,708.77 Unauthorized/lacking apparent educational purpose Miscellaneous Expenditures 246,002.26 Potential misappropriation of public funds Funeral Reception 5,809.73 Inappropriate use of public funds Legal Expenses 11,897.00 Use of public funds for personal/family expenses Donation of Portables 362,160.00 Unauthorized disposal of public assets Snack Bar Sales 202,500.00 Potential misappropriation of public funds Book Publication 3,429.91 Personal expenses paid using public funds Total 1,062,590.49 Fiscal Crisis and Management Assistance Team Madera County Superintendent of Schools 86 Findings Conclusion Deficiencies and exceptions noted during FCMAT’s review of ETAA’s financial transactions during the audit period, including internal control deficiencies and a lack of governing board oversight of expenditures initiated by the former executive director, increase the probability of fraud, mismanagement and/or mis- appropriation of the charter school’s public funds. These findings should be of great concern to the char- ter school, Madera Unified School District, and the Madera County Superintendent of Schools, as well as all charter school educational partners and the community at large. Immediate steps should be taken by the charter school and sponsoring district to ensure all public funds are used strictly for appropriate and approved educational purposes in the future. Judgments Regarding Guilt or Innocence The existence of fraud, misappropriation of funds and/or assets, or other illegal fiscal activities is solely the purview of the courts and juries. FCMAT is not making statements that could be construed as a conclusion that fraud, misappropriation of funds and/or assets, or other illegal fiscal activities have occurred. These terms are a broad legal concept, and auditors do not make legal determinations regarding whether illegal activity has occurred. In accordance with EC 42638(b), action by the county superintendent shall include the following: If the county superintendent determines that there is evidence that fraud or misappropria- tion of funds has occurred, the county superintendent shall notify the governing board of the school district, the State Controller, the Superintendent of Public Instruction, and the local district attorney. In accordance with EC 1241.5(b), the county superintendent is required to report the findings and recom- mendations to the district’s governing board at a regularly scheduled board meeting within 45 days of completing the audit. Within 15 days of receipt of the report, the governing board is required to notify the county superintendent of its proposed actions regarding the county superintendent’s recommendations. Fiscal Crisis and Management Assistance Team Madera County Superintendent of Schools 87 Findings Recommendations Recommendations The county superintendent should: 1. Notify the governing boards of the Ezequiel Tafoya Alvarado Academy and the Madera Unified School District, as well as the state controller, the state superintendent of public instruction, and the local district attorney that fraud or misappropriation of public charter school funds and/or assets, or other illegal fiscal activities may have occurred. 2. Notify the state attorney general and the United States Department of Education’s Office of the Inspector General that sufficient evidence exists to indicate that fraud, misappropriation of public school funds, or other illegal fiscal practices may have occurred involving funds apportioned by state and/or federal agencies. 3. Notify the Internal Revenue Service and California Franchise Tax Board that additional, unreported compensation may have been provided to the former executive director of the charter school, as well as to his family members (including Son #1, Son #2, daughter, and former spouse) from which income tax withholdings should have occurred. 4. Notify the California Commission on Teacher Credentialing that the credential for the daughter of the former executive director may have been earned through the inappropriate use of public charter school funds. Fiscal Crisis and Management Assistance Team Madera County Superintendent of Schools 88 Appendix Appendix Fiscal Crisis and Management Assistance Team Madera County Superintendent of Schools 89 Appendix Appendix A: Study Agreement Fiscal Crisis and Management Assistance Team Madera County Superintendent of Schools 90 Appendix Fiscal Crisis and Management Assistance Team Madera County Superintendent of Schools 91 Appendix Fiscal Crisis and Management Assistance Team Madera County Superintendent of Schools 92 Appendix Fiscal Crisis and Management Assistance Team Madera County Superintendent of Schools 93 Appendix 10/7/21 Fiscal Crisis and Management Assistance Team Madera County Superintendent of Schools 94