Federal Investigators Says School Officials Misled Investors About Management Problems

Senior officials in the Montebello Unified School District misled investors about serious financial and management problems in the district when they marketed $100 million in school construction bonds, federal investigators alleged September 19.

“The actions could have led to more favorable interest rates, and lower costs, than the Montebello Unified School District would have otherwise received for its construction projects,” the Los Angeles Times reported, citing an official with knowledge of the investigation.

District Superintendent Anthony J. Martinez agreed to pay a $10,000 fine as a result of the Securities and Exchange Commission investigation.

The district’s former chief business officer, Ruben James Rojas, has been charged in federal court with falsifying a number of bond documents supplied to investors, the SEC said.

The Times wrote: “In the legal filing, the SEC laid out a pattern of alleged misconduct, especially by Rojas, whom investigators singled out as the individual most responsible. The filing accuses Rojas of thwarting oversight of district finances and personal allegations of wrongdoing and then painting a falsely rosy picture of district operations to investors. Rojas played a central role in managing a $300-million school construction bond that voters passed in June 2016. So far, the district has sold $100 million of those bonds.”

In 2016, media reports questioned Rojas’ handling of tax dollars and unveiled allegations that he had falsified his resume.

“The firm that conducted the district’s annual financial audit told district officials and the school board that it had a duty to examine these allegations – and that it would need more time and an additional payment to do so, according to the SEC filing,” the Times reported. “Instead, the district fired the auditing firm.”

The superintendent agreed to the fine as part of a settlement that also included the school system. Under the settlement, neither the district nor Martinez admitted wrongdoing.

“But the district agreed to establish proper procedures, provide appropriate training for its employees and hire an independent consultant to review district policies and procedures,” the Times reported. (Source: Los Angeles Times, September 20.)

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