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Criminal Fraud Alleged After Sweetwater High School District State Audit

by Jeff Powers, published

San Diego, Calif.- Sweetwater High School District officials knowingly covered up the district's financial crisis, so say state officials after a damning audit of the Sweetwater School District's finances.

The state’s Fiscal Crisis and Management Assistance Team (FCMAT) has even suggested some district employees may have committed criminal fraud.

FCMAT’s chief executive officer Michael Fine said the district’s accounting system was doctored to create the impression the district had more money than it really did.

Sweetwater’s superintendent Karen Janney refused to comment to those allegations but did say, "We have a lot of work to do.”

District Taken Over By The State

The damage to the district could be in the tens of millions, and is likely in jeopardy of being taken over by the state if it cannot make payroll.

Michael Fine FCMAT's chief executive officer said the crisis is years in the making and due to decades of mismanagement and poor leadership. The lone person in the room he had confidence in is the district's chief financial officer Jenny Salkeld, who took over just days before the budget crisis was discovered.

At a meeting Monday Fine chastised the board. “You are 100 percent responsible. The fiduciary and moral responsibility for this district is your sole role as a trustee.”

In its report, the Fiscal Crisis and Management Assistance Team noted:

"During the year-end closure of 2017-18 unaudited actuals, the district discovered over 300 budget reduction entries in the 2018-19 adopted budget in the cumulative amount of ($66,555,425), with negative budget balances not in the 5700-5799 or 7300-7399 object code ranges, or 1400 resource."

What Happens Next

It's likely state officials will move to take away the boards power.

County officials said in a statement they will begin a fraud audit of the district as soon as possible.

Topping the list of concerns: Sweetwater filed erroneous financial documents with the federal government in April when it sold $28 million worth of bonds. If investigators find that it was done intentionally, jail time would likely be on the table for those who make the decision.

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