Article Archives >> Lead Stories >> November 16-30, 2006

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Official Convicted of Misconduct
For Contract With Nonprofit
School Superintendent served on Board of group
with which he signed contracts for $500,000

A superintendent of schools in Michigan has been convicted of misconduct in office for entering into contracts between the School District and an educational nonprofit of which he was chairman of the Board. He was also convicted for failing to disclose that his son was employed by a for-profit companion company to the nonprofit. The Court of Appeals of Michigan has affirmed. (People v. Redmond, Ct. of App., MI., No. 261458, 11/14/06.)

Michigan law prohibits a public official from directly or indirectly soliciting any contract between the public entity of which he or she is an officer or employee and any private corporation of which he or she is a director, officer or employee.

The superintendent had met the founder of MINDS Institute in 1999. The founder was seeking an educational partner that understood the educational marketplace and believed the District would be a good partner because it was well-known and well-respected. The founder asked the superintendent to join the board to offer vision and guidance and help in validating the technology.

In 2000, the superintendent, while serving as chair of the board of the nonprofit, signed two three-year contracts with the Institute. “The evidence, the circumstantial evidence, and the reasonable inferences therefrom, establish that [the superintendent] solicited, either directly or indirectly,” the contracts, the Court said.

The Court also found that the superintendent was guilty for failing to disclose his son’s relationship with the companion for-profit. The superintendent objected to the prosecutor’s suggestion during the jury summation that he had used his position to benefit his family. But the Court noted that the founder of the institute had hired the son to fill “a newly created position” just a few months before one of the contracts was signed. The Court said the prosecutors comment was not improper because it was based “on the evidence and reasonable inferences from the evidence.”

YOU NEED TO KNOW

This is the second case we have reported recently involving public officials making deals with nonprofits with which they are affiliated. (See Nonprofit Issues®, October 1, 2006.) In the other case, the nonprofit was penalized. Here, although there is no indication that the nonprofit has suffered more than public relations damage, the official was sentenced to jail. Nonprofits should be sure to ask a lot of questions before entering into contracts with public agencies when they have an official on the board.

Article Archives >> Lead Stories >> November 16-30, 2006