April 15, 2008

Construction Company And District Official Indicted For Diverting $3.6 Million From Schools

SANTA BARBARA--California Attorney General Edmund G. Brown Jr. today announced a 74-count felony indictment against a former Santa Maria-Bonita School District official and three executives from TurnKey, a Temecula-based company, for misappropriating $3.6 million in public money for schools.

"TurnKey squandered public money that was designated for construction costs at sixteen schools in Santa Barbara County," Attorney General Brown said. "When TurnKey ran into financial problems, it began taking money from the school district--with knowledge by the assistant superintendent--in violation of state law."

Between 2000 and 2002, TurnKey signed $62 million in construction management contracts with the Santa Maria-Bonita School District, promising to complete sixteen school projects. Financial records show that TurnKey executives instead used District money to pay for expensive cars, artwork, and to pay cash bonuses to themselves. TurnKey maintained very high overhead costs and began making late payments to its subcontractors.

As early as 2003, TurnKey fell behind in its payments to subcontractors who were building the schools. To service their rising debt, the company began submitting false invoices for services to the District funds, with knowledge from Assistant Superintendent Cynthia Lynn Clark. After the assistant superintendent took a leave of absence in 2004, the District discovered TurnKey's serious financial trouble and refused to continue advancing money to the company.

Only one TurnKey school project, Taylor Elementary, was completed by the time the company went bankrupt in February 2005.

A Santa Barbara grand jury returned the indictment on March 14, 2008 against former company executives Harold Leo Clark III, 46, Michael Patrick Bannan, 43, David Irwin, 39, and former Assistant Superintendent Cynthia Lynn Clark, 54, on 74 counts of Misappropriation of Public Monies, Embezzlement of Public Funds, Diversion of Construction Funds, and Grand Theft of over $3.6 million between June 2004 and September 2004.

The Santa Maria-Bonita School District applied for school construction funding for the state as a hardship district and depended upon funding from the California Office of Public School Construction to pay the costs of the school construction projects. The proposed school projects included: Taylor Elementary, Arellanes Elementary, Arellanes Jr. High, El Camino Jr. High, Fesler Jr. High, Liberty Elementary, Sanchez Elementary, Kunst Jr. High, Adam Elementary, Bruce Elementary, Oakley Elementary, Ontiveros Elementary and Rice Elementary.

The felony indictment, unsealed today, follows a three-year investigation into TurnKey by the Special Crimes Unit of the California Department of Justice with assistance from the Santa Barbara District Attorney's Office. The case will be prosecuted by Deputy Attorney General Patricia M. Fusco in the California Department of Justice Special Crimes Unit. Defendants could serve 38 years in prison if convicted on all counts.

Information about the individuals named in the indictment, unsealed today, includes the following:

Harold Leo Clark III, former TurnKey Chief Executive Officer, age 46, of Temecula
Michael Patrick Bannan, former TurnKey Chief Operating Officer, age 43, of Vista
David Irwin, former TurnKey Vice President, age 39, of Temecula
Cynthia Lynn Clark, former Assistant Superintendent for Business Services for the Santa Maria-Bonita School District, age 54, of Cape Canaveral, Florida.

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For more information on federal criminal defense law, contact the Law Offices of Joseph Shemaria of Los Angeles, California.