PUSD hires forensic accountant to review bonds
By Emily Sorensen
The Poway Unified School District has hired a forensic accountant to review the details of last year’s controversial $105 million capital appreciation bond (CAB) that will cost district taxpayers nearly $1 billion by the time it is paid off in 40 years.
A “highly qualified, independent forensic accountant and former FBI official,” has been hired, Supt. John Collins said in a statement read at Monday night’s school board meeting. The accountant is with the firm ESI International, which is a private investigative company that works with the FBI internationally, as well as in San Diego and Los Angeles.
It was unknown Tuesday how the firm was selected, how long the investigation will take, how much it will cost or how it will be financed.
In his statement Monday night, Collins said, “the district is not seeking validation of its actions; it’s seeking answers to key questions that have been asked:
• Did the district act responsibly upon the market information it was given at the time?
• Was the district given advice and counsel based on the highest industry standards?
• Are there any issues of integrity with any parties involved in the transaction?
• Were the fees paid to the parties involved at or below industry standards?
• Were the processes that were followed acceptable industry standards?
District voters (living outside of Mello Roos districts) in February 2008 approved the issuance of $179 million in bonds to finance the completion of upgrades at 24 older PUSD schools. The specific type of bonds to be used and the conditions under which they would be sold were not specified in the measure’s wording. Last year the board authorized proceeding with the sale of CABs, a long-term financing measure, without a “call” feature that would have permitted refinancing of the bonds at some later date. Interest on the Proposition C bonds will compound and the first payment on them will not be made until Proposition U bonds, approved in 2002, are paid off in about 20 years.
District officials have said they had little choice but to proceed with the CABs as the district was facing the need to pay for a construction bridge loan due at the end of last year.
At the August school board meeting, district taxpayers voiced their anger and concerns over the Proposition C bond and the impact the long-term debt will have on future homeowners and their property taxes. One resident called on the school board to investigate, and it seems the school board has listened.
According to their website, ESI International, Inc., was founded in 1986 by former special agents of the Federal Bureau of Investigation, and provides private investigation and consulting services to the legal, financial, and business communities. They are licensed by the state of California and have their offices in San Diego. The website states, “ESI International’s principals and investigators are members of the Association of Certified Fraud Examiners, Society of Former Special Agents of the FBI, and various local and national investigation and trade organizations.”
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