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ERUSD Corruption Part II: Widespread Conflicts of Interest, Cover-Up Inside El Rancho Education Foundation

16th December 2019

BY BRIAN HEWS

Last week, a Hews Media Group-Community News investigation uncovered a wide-ranging scheme involving over $212 million in school bond funds perpetrated by El Rancho Unified School District (ERUSD) Board Members engaging in pay-to-play politics, financial cover-up and willful violations of California’s Education Code.

The long-running plot has involved ERUSD President Jose Lara and Vice-President Gabriel Orosco since 2015, with newly elected Board member Leanne Ibarra joining the two controversial board members immediately after she was elected.

The recipient of Lara, Orosco, and Ibarra’s actions is Jaime Ortiz, a good friend of Lara and Orosco’s, and owner of High Performance Learning Environments, Inc.

Now, the ongoing investigation has uncovered additional acts of malfeasance related to the El Rancho Education Foundation involving blatant conflicts of interests, tax evasion, and violations of the state law related to alcohol on public school grounds.

Jaime Ortiz and HPLE

Like many of Lara’s friends, Ortiz has an extremely checkered past, including a stint as senior program manager at the Seville Group (SGI), a construction company that managed school bond programs.

SGI was involved in the Sweetwater Unified High School District (Sweetwater) corruption and bribery scandal related to the district’s massive $600 million bond, the largest corruption scheme in San Diego history.

According to reports by the San Diego Union-Tribune, Ortiz was given protection from prosecution under a plea deal involving his boss, SGI owner Rene Flores.

Five Sweetwater Board members plead guilty to bribery charges in the pay-to-play scheme, Sweetwater Superintendent Jesus Gandara was charged with eight felony counts.

During his time at SGI, Ortiz learned the value of using an education foundation as a conduit for targeting donations to curry favors, specifically using the Sweetwater Education Foundation.

Ortiz was reportedly caught working back channels and demanding campaign donations from his subcontractors to fund Sweetwater officials’ campaign coffers, so SGI would be selected for the Sweetwater bond.

Hector Romero, President of HAR Construction, reported he was pressured by Ortiz to donate to the Sweetwater Educational Foundation.

In addition, the San Diego D.A. included in its evidence that, “Romero reported being with Superintendent Gandara in Mexico when Gandara contacted SGI Program Manager Jaime Ortiz and solicited a $20,000 contribution.”

It was that experience that Ortiz would apply later to ERUSD after the $200 million Measure ER bond was passed.

El Rancho Education Foundation

According to online documents on the California Secretary of State’s website, the El Rancho Education Foundation (EREF) was chartered as a non-profit 501(c)(3) public benefit corporation in April 2017, approving its by-laws in July 2017.

Using his experience from Sweetwater, Ortiz structured the EREF to reap the maximum amount of money and benefits, registering himself as the Chief Executive Officer.

He later installed his cronies as officers, creating a massive financial conflict of interest given his company was the Program Manager for the ERUSD bond.

Registered as the agent for service was Dr. Roxanne Fuentes, who at the time was Interim Superintendent of ERUSD.

Appointed Secretary was Christine Saavedra, a crony of Lara and Orosco, and by extension Pico Rivera Councilman Brent Tercero.

Saavedra was an integral part of Lara and Orosco’s re-election campaigns and would eventually join the ER oversight “do-nothing” committee.

The group passed the by-laws of the corporation including mandating the filing of the corporation with the State, registering the non-profit and filing with the IRS to obtain an employee identification number, EIN.

See corporate documents, click here.

Pay to Play 2.0?

Within a few weeks, the EREF set up their website, a Facebook page, and a Twitter account; soon after, the donations from interested parties started rolling in.

It was the same cast of contractors that donated to the PAC that helped pass Measure ER, the Committee for Transforming El Rancho Schools, and the same cast of contractors that received business from Ortiz after ER was passed.

BPI Inspection, CF Environmental (CFE) , and Dougherty & Dougherty Architects were on the list as well as a few other companies that worked with Ortiz before, including Saifco construction, who received $370,000 for construction work in July 2018 and LPA, who received $2.5 million in 2018.

 

Contractors donations to the PAC.

 

To mask the pay-to-play scheme, the foundation came up with the idea, admittedly concocted by Ortiz, to hold an “Inaugural Gala” celebration on Oct 13, 2017.

Documents obtained by HMG-LCCN show that over $55,000 was donated specifically for the gala by contractors who have previously worked for Ortiz.

And the donations came in just months before Ortiz would start handing out large Measure ER construction contracts.

 

List of donors to the gala, those companies underlined received business from Ortiz.

 

 

Alcohol on Middle School Campus

The promotional materials found on social media pages indicated the gala would be held on the campus of ERUSD’s North Park Academy of the Arts Middle School on Durfee Rd. in Pico Rivera.

The event was boldly billed as “a 21 and over event” with a cocktail reception, dinner, and face painting; tickets were a pricey $150 per person.

And that statement might have the Office of the General Counsel of the Los Angeles County Office of Education launching an investigation; State law prohibits alcohol on public school campuses under the Business and Professions Code 25608, everyone who was at the gala and drank or sold alcohol is guilty.

Sources who attended the gala confirmed alcohol was at the event. “Lara, Orosco and Ortiz said it was ok to have booze because it was in the evening and there would not be any children. Ortiz made all the arrangements, hired the entertainment, and the catering business. Lara and Orosco resented anyone else’s involvement…they kept saying it was their baby.”

 

The promotional flyer for the gala showing a cocktail reception and dinner.

 

HMG-LCCN obtained documents indicating that expenses for the gala totaled nearly $18,000; with $55,000 in donations that meant a sizable profit of $37,000, unheard of for a first year foundation event.

According to the expenses obtained by HMG-LCCN, over $6,400 was paid to a caterer who’s name cannot be found using an internet search, $3,400 for party rentals, $2,000 was paid for the band, $1,100 for “signs,” $1,000 for a logo design, $750 for the event program, and $115 for the bartender.

But no one would know where the money went because the EREF had not filed the proper financial documents with the state or with the IRS.

 

Expenses related to the gala.

 

EREF is a Shadow Organization

501(c)(3) companies are required to file statements of revenues, expenses, and operations with the IRS, in a non-profit’s case, the statement is called Form 990.

A public records request to the ERUSD indicated that the EREF had not given the district a copy of their 2017 990 filed with the IRS, which was due in early 2018.

More troubling, checking online using ERI indicated that the EREF did not have an EIN. An EIN is a unique identification number that is assigned to a business entity so that it can be identified by the IRS.

A listing on the California Department of Justice’s website showed the EREF was not registered.

Lastly, the state Attorney General’s website confirmed that the EREF did not complete its non-profit registration, firing off a “Notice to Register” letter two weeks ago on April 25.

HMG-LCCN asked Ortiz for the EIN, but he never responded.

So not only did the EREF not register with the state or the IRS as required by law, the foundation did not file its IRS tax paperwork, this while profiting $37,000.

Altered EREF Website in Desparate Attempt to Hide Fraud

At the end of last week’s article, HMG-LCCN indicated that the investigation was a multi-story series ending the story with the sentence, “Next week: The El Rancho Education Foundation.”

That line apparently alarmed people involved in the ERUSD scheme, as only a day later the EREF website was materially altered.

Fortunately, after the first article published, HMG-LCCN took pictures, otherwise known as screen shots, of all pages on the EREF website at elranchoef.org.

The website at the time contained four pages: Home, About, Giving, and Contact Us.

Under About was a page that listed Board Members of the EREF, and the list read like a who’s who of Ortiz cronies.

Listed was current ERUSD Superintendent Karling Aguilera-Fort, Jose Lara, Gabriel Orosco, Jaime Ortiz and Christine Saavedra.

 

EREF Board members at the gala from (l-r) Christine Saaverdra, ERUSD Board President Jose Lara, Superintendent Karling Aguilera-Fort, HPLE owner Jaime Ortiz, and ERUSD Board VP Gabriel Orosco.

 

But one day after the first article published, in a blatant move to hide the corruption and conflicts of interest, an administrator pulled the About page off the site, removing the list of the board members.

The administrator also pulled the Contact Us page, leaving only the Home and Giving pages.

 

 

 

Emails sent to Lara, Orosco, Ibarra, Aguilera-Fort went unreturned.

Ortiz was asked several questions, but, similar to the Sweetwater scandal, he threw everyone under the bus. “I served as president in an event planning-focused role and resigned my position more than a year ago. The school district’s then-Assistant Superintendent for Business Services was responsible for all the foundation’s administrative and compliance obligations. For more information regarding the foundation’s compliance status, contact the District.”

HMG-LCCN asked Ortiz for the board resolution accepting his resignation along with Ortiz’ resignation letter, which is required by law to be placed in the minutes of corporate meetings, as of time of publication, Ortiz had not provided the documents.

Next up: Measure ER and the PAC for Transforming El Rancho Schools.

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Steve Smith

Sounds like Noguez and the Oldtimers foundation, once the USDOJ, FBI, and IRS are politically compromised any activity is possible in DC or nationwide, every treasury is “fair game” from the US treasury to the School district to private foundations.

Private foundations can fund services for illegal aliens that the state cant as well as activities the state cant.