FBI Joins Probe of Alleged Employee Fraud in Dallas

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Reports of millions of dollars in overtime fraud by employees of the Dallas public schools have drawn federal agents into an investigation begun by the district's new superintendent.

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Superintendent Yvonne Gonzalez confirmed last week that internal auditors had found "dozens" of noninstructional employees who reported excessive overtime. Unnamed sources quoted in The Dallas Morning News said the auditors reviewed a random sample of 50 timecards in several divisions, and uncovered inflated work hours running into millions of dollars.

The news spurred the FBI to announce an investigation into the alleged abuses involving federal money. Dallas, the nation's 10th-largest school system, has an annual budget of roughly $1 billion and receives about $60 million in federal aid.

"Anytime a budget includes federal money and you steal that money, it's within the jurisdiction of the FBI," said Special Agent Marjorie Poch‚ of the bureau's Dallas office. Ms. Poch‚ said that agents there had been in contact with school officials before the audit findings became public, and that the district was cooperating with her agency.

In the wake of the FBI's announcement, Paul Coggins, the U.S. attorney in Dallas, assigned a lawyer to work with the bureau on the case. Mr. Coggins could not be reached for comment last week.

Cleaning House

Ms. Gonzalez told the Morning News that she welcomed the help of the outside agencies. District officials set up a hot line last week to encourage those with knowledge of fraud or mismanagement to come forward.

When she took office three months ago, Ms. Gonzalez called for a thorough internal audit of the school system's spending, said Jon Dahlander, a district spokesman. "She's wanting to just get our own house in order," he said.

Before the news of the possible fraud broke, Ms. Gonzalez held some private meetings with community leaders to alert them to the auditors' preliminary findings, Mr. Dahlander said. Early this month, she also met with the district's 208 principals and told them they needed to keep closer watch on staff members and themselves.

As part of the district's investigation, auditors will conduct a broader review of timecards.

According to the newspaper, principals in some cases authorized employees to work a specific number of hours on timecards, but some of the cards had been altered by the time they arrived at the central office.

Many of the timecards indicating abuse belonged to custodial, maintenance and central-services staff members, the newspaper reported.

The articles also linked the alleged fraud to widespread nepotism in certain divisions. The district relaxed its nepotism rules about four years ago.

Ms. Gonzalez, who could not be reached for comment last week, has said she is reviewing the district's employment policies. Racial tension has long figured in Dallas school politics, and any move by the superintendent is likely to be examined as a potential power shift. ("Dallas Board Is Buffeted by Racial Unrest," Feb. 26, 1997.)

About 44 percent of the district's 17,500 employees are black, 41 percent are white, and 14 percent are Hispanic. Last year, Hispanics overtook blacks as the largest ethnic group among the system's 155,000 students.

Some African-American leaders in the district have expressed concern that Ms. Gonzalez, the first Hispanic to be appointed superintendent, will find reasons to move or demote key black administrators.

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