The former superintendent of a suburban Chicago school district has been indicted by a federal grand jury for allegedly misappropriating district funds.
Lawrence Wyllie, who retired in 2013 as superintendent of the Lincoln-Way district, based in New Lenox, Ill., has been under investigation for questionable spending practices in the district. In 2016, after the district's financial troubles came to light, Lincoln-Way was forced to close one of its four high schools.
The U.S. Attorney's Office in the Northern District of Illinois alleges that Wyllie fraudulently used at least $50,000 in district funds to build and operate Superdog, a dog obedience training school that provided no benefit to the schools in the district. The indictment also alleges that Wyllie misappropriated at least $16,500 of district funds by paying himself a retirement stipend that was not in his employment contract, and fraudulently pocketed another $14,000 of district funds by falsely describing it as compensation for unused vacation days.
Wyllie also fraudulently inflated the district’s financial health by using bond funds to pay the district’s general operating expenses, causing the district to assume at least $7 million in additional debt.
Wyllie, 79, faces five counts of wire fraud and one count of embezzlement.
Lincoln-Way operated four high schools that drew students from New Lenox, Frankfort, Mokena, Manhattan, Tinley Park and Orland Park.
According to the indictment, one of the factors the school board considered in renewing Wyllie’s employment contract was the financial performance of the district. In 2009, at the request of Wyllie and with approval of the board, the district issued $29 million in bonds. Wyllie told the board and bond purchasers that $10 million of the bond proceeds would be used for capital expenditures, including construction or renovation of the high schools, when he was actually planning to spend the money on the district’s general operating expenses and payroll.
Wyllie transferred millions of dollars from a bank account where the district maintained its bond funds to a separate account that the district used for paying general operating expenses.
As a result, the district’s net operating expenditures and cost-per-pupil calculation appeared lower than they actually were and fraudulently inflated the district’s financial health, the charges state. Wyllie’s fraud scheme caused the district to assume at least $7 million in additional debt from the bond issuance, on which Lincoln-Way continues to pay interest.
The Chicago Tribune reports that prosecutors in the U.S. attorney's office have been investigating various financial issues at Lincoln-Way since early 2016.
At an April 2016 board meeting, Lincoln-Way officials acknowledged depositing millions of bond dollars into the wrong account, using bond funds for "temporary loans" to cover payroll and other operating expenses, and spending funds earmarked for capital projects on items such as school supplies.
During that meeting, Lincoln-Way attorney John Izzo read a resolution stating that from March 2010 to October 2012, $4.3 million in bond money was used to fund non-capital expenditures. The district also spent $300,000 to pay for non-capital expenditures that were originally presented to the board as being from the transportation fund, Izzo said.
"How did this happen?" Izzo asked. "The superintendent at the time, without the board's knowledge or approval, directed the bookkeeping department to record fund journal entries reclassifying the original expenditures as capital expenditures."