Detroit district files lawsuit over risk-management scandal

July 2, 2008
District wants businesses, former employees to prove they performed work

The financially troubled Detroit Public Schools has filed a lawsuit to try to get 13 businesspeople, businesses and former employees to prove that they actually produced work for the district during a five-year period in which $46.2 million in wire transfers were paid out from the risk management department. A school district lawyer says there is evidence that documents were destroyed and kickback payments were made. The FBI launched an investigation into the risk management scandal last year, but no criminal charges have been filed.
To read The Detroit Free Press article, click here.

FROM AUGUST 2007: The Detroit school board has approved the second contract in a week from a company under scrutiny for millions of dollars in questionable wire transfers from the district's Risk Management Office. The contract gives the district the authority to hire 16 employees who reportedly are being laid off today from Long Insurance Services, Inc., one of the companies that is part of an internal investigation into $46 million wire transfers that investigators say may have involved conflicts of interest between vendors and district employees. More than two dozen Long Insurance workers, including the 16, had been working in the district's risk management department, an office that oversees the system's insurance and assesses financial liability and costs. Superintendent Connie Calloway says the district decided to the employees because it has no other in-house staff with workers' compensation claims training. (Detroit News)

Earlier: The Detroit school district's investigation into $46 million in wire transfers has found questionable payments to vendors and apparent conflicts of interest by a former district official. A five-page summary of the probe focuses in large part on the actions of Stephen Hill, the district's Risk Management Office executive director from 2001-05 and acting director in 2006-07. The office oversees the district's insurance and assesses financial liability and costs. (Detroit News)

The Detroit Public Schools board plans to pursue criminal and civil charges as a result of an independent investigation into its Risk Management Office. Board members have been briefed concerning allegations of millions of dollars in inappropriate wire transfers from that department. (Detroit News)

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