It seems logical that if Orange County Public Schools discovered that a contractor was bilking them for thousands of dollars, maybe more, they’d do something about it immediately. But that apparently didn’t happen. In fact, sources inside the school district say OCPS officials knew that contractor CPM Technologies had overbilled the school board on at least three separate occasions over the course of almost a year, but did nothing until February when they reported the suspected fraud to the state attorney’s office. Then school officials apparently tried to whitewash evidence of the fraud, stonewalling this newspaper’s investigation for months and denying the existence of a widely circulated e-mail confirming that high-ranking school officials were aware of what was going on.
It’s a perplexing, uncertain situation, made worse by the fact that school board officials’ actions have been anything but transparent.
On Aug. 16, Chris Rider-Cate, a senior auditor with the Florida Auditor General’s office, sent a letter to OCPS officials questioning three of CPM’s day-labor projects at Mid Florida Tech, Jones High and Englewood Elementary schools. Rider-Cate asked the district for a response to his query by Aug. 22.
But according to a high-ranking OCPS source who spoke to Orlando Weekly on condition of anonymity, the district didn’t respond until November, and only then when an auditor showed up at district offices. After that visit, school board officials turned over documents the Auditor General’s office had requested months earlier. Moreover, the source says that OCPS staffers were told not to respond to the letter from Rider-Cate.
An OCPS source says the invoices inflated labor charges and materials fees, and that CPM created subcontractor invoices in the names of nonexistent companies to overbill the school district.
According to the Auditor General’s report, which was released March 27, there were three occasions in which the subcontractor payment applications didn’t match CPM’s invoices. In one of these, the district provided the state with a vendor invoice from DeLand-based CPM totaling $14,759, supposedly to buy lumber for construction at Englewood Elementary. But the original invoice from CPM requested a payment of $18,415, which the district paid. The Auditor General’s office suggested the district hone its process of doling out construction money to contractors.
CPM owner Andy Porch denies any wrongdoing. “I can assure you there was no impropriety on our part,” he says. “I did a lot of good work for those folks … .”
He declined to discuss details with Orlando Weekly other than to paint the discrepancies as administrative errors. Porch says that the invoice in question was part of a larger job on which the company lost money. In fact, he says, the district owes his company money. “I don’t want to sue them, but I can’t just walk away from my money.”
Not surprisingly, OCPS has a different take. On Jan. 30 Mike Smith, OCPS’s internal audit director, e-mailed senior facilities director Bob Proie: “[W]e noted that the vendor provided no explanation for the exhibits shown him. … As you may well know, this matter is considered a crime if he cannot provide an explanation. [We] will now go back and look at all invoicing involving this vendor to determine if this was an isolated act or if there may have been previous fraudulent actions.”
Here’s where things get odd: Orlando Weekly obtained a copy of the e-mail from an OCPS source, but the district did not turn it over to this newspaper following a public records request for documents related to this audit, as it is required to do under state law.
For nearly four months, this newspaper repeatedly requested this information. Pressed about the discrepancy, school board officials claimed the e-mail didn’t exist, then suggested that the copy provided to Orlando Weekly by a high-ranking OCPS official was a forgery.
That’s not the only indication that school officials wanted to keep this alleged fraud under wraps.
Following the release of the Auditor General’s preliminary findings in early February, Smith sent staffers an e-mail informing them that there would be no further payments or jobs awarded to CPM “until notified otherwise,” per school board attorney Frank Kruppenbacher’s instructions. But Smith also gave this instruction: “This matter is not to be discussed with anyone other than the individuals being e-mailed.”
In February Kruppenbacher reported the suspected theft to the state attorney’s office. When the state attorney’s office declined to pursue it, Kruppenbacher reported the alleged fraud to the Orlando Police Department on Feb. 22. OPD told him the cops wouldn’t get involved until the district completed an internal review. The police department declined to comment on the investigation.
Kruppenbacher stops short of calling the mishaps fraud or theft, but sources tell Orlando Weekly a preliminary investigation by the school district already has revealed that CPM Technologies overbilled the district. These sources also say that high-ranking school board officials were aware of the alleged fraud as much as a year before it was reported and did nothing about it.
The school board says the matter has been resolved. “We paid what they asked from a fiscal side and there were some issues,” says OCPS chief financial officer Rick Collins. “It has since been rectified and [CPM has been] paid the correct amount.” It’s unclear how the school district recouped its money.
“There’s so much politics flying around over there,” says CPM owner Porch. “OCPS has been sitting on [the audit] for months.”
CPM still is completing renovations at some schools to complete contracts, but Kruppenbacher says OCPS is now paying CPM’s subcontractors directly. In the meantime, Kruppenbacher says the district is “doing as much legwork as possible” before OPD begins any investigation.
According to Porch, the district still owes CPM about $400,000 for other jobs. CPM has bid on jobs since the audit, but it has not been awarded any contracts despite being the low bidder.
An insider, however, says the three overpayments to CPM that the state knows about are just the tip of the iceberg. The source says inconsistencies have been discovered with invoices from at least two other district contractors, and estimates that the district has been scammed for as much as $3.5 million since June 2006.
As of press time, Kruppenbacher says he doesn’t know how much the school board has lost to fraudulent email@example.com