Former Detroit Public Schools Official Sentenced on $3.32 million dollars in fraud

DETROIT, MI - A former high-level Detroit Public Schools (DPS) official who accepted cash kickbacks for authorizing DPS wire transfer payments to a vendor who submitted $3.32 million dollars in fraudulent invoices was sentenced today to 60 months’ imprisonment, and ordered to pay restitution to the Detroit Public Schools, United States Attorney Barbara L. McQuade announced today. Ms. McQuade was joined in the announcement by Special Agent in Charge Andrew G. Arena, Federal Bureau of Investigation and Special Agent in Charge Erick Martinez, Internal Revenue Service, Criminal Investigations.

Stephen A. Hill, 60, of Detroit, former Executive Director of the DPS Risk Management Department, was sentenced by United States District Judge Paul D. Borman. Judge Borman also ordered that Hill pay DPS $3.32 million in restitution. Hill pleaded guilty on May 2, 2011 to one count of Hobbs Act Extortion Under Color of Official Right, and one count of Conspiracy to Commit Program Fraud. The offenses arose from Hill’s involvement in a scheme to honor fraudulent million dollar invoices submitted by a group called Associates for Learning ("A4L") for implementation of a wellness plan for DPS employees; Hill accepted a five percent cash kickback from A4L members for approving wire transfer payments to A4L upon receipt of the fraudulent invoices.

Hill cooperated with authorities after pleading guilty, and testified at the trial of A4L member Sherry Washington, who was convicted as charged of program fraud conspiracy and money laundering conspiracy after a two-week jury trial in June, 2011.

Hill testified that he awarded the DPS wellness plan to A4L with no competitive bidding and with no written contract. Hill also testified that Sherry Washington proposed the cash kickback to him and later delivered bags of cash to him in private locations, including the parking structure of the Detroit Athletic Club.

Following an investigation by the Internal Revenue Service, Criminal Investigation Division, and the FBI, an Indictment charging nine people was returned. One defendant, DPS employee Christina Polk- Osumah, died of natural causes after indictment. All of the other seven defendants in the case were convicted as well; six pleaded guilty and local art gallery owner Sherry Washington, a member of A4L, was convicted after a jury trial and will be sentenced October 20, 2011. Co-defendant Gwendolyn Washington will be sentenced on October 5, 2011. Co-defendants Marilyn White received a sentence of 21 months in prison and ordered to pay restitution to DPS
in the amount of $3.322 million; Valerie Polk received a sentence of 18 months in prison and ordered to pay restitution to DPS in the amount of $347,746; Thomas Taylor received a sentence of one year and one day in prison and ordered to pay restitution in the amount of $440,928; Sally Jo Bond received a sentence of 18 months in prison and
ordered to pay restitution to DPS in the amount of $3.322 million, and Duane Polk received a sentence of 27 months in prison and ordered to pay restitution to DPS in the
amount of $788,674.

United States Attorney Barbara L. McQuade said “We are committed to rooting out public corruption wherever it occurs, but a breach of trust in our schools is particularly offensive. These defendants stole funds intended to benefit school children.”

FBI Special Agent in Charge Andrew Arena stated, "Public schools are one of the largest recipients of federal funding. The FBI continues to aggressively investigate individuals who steal funds originally designated for the Detroit Public Schools and the children of the City of Detroit."

IRS Special Agent in Charge Martinez stated, “This sentence sends a clear message that the penalty is high when overwhelming greed grips those who watch and control our public funds.”

The case was prosecuted by Assistant United States Attorney J. Michael Buckley.