FBI narrows probe in St. Joseph stipend scandal
July 28, 2014
By Sam Zeff
A second grand jury subpoena for documents shows the scope and depth of the investigations underway by the Federal Bureau of Investigation and the U.S. Attorney in Kansas City. The first subpoena demanded personnel records, contracts and financial data for 25 district employees going back to 2000, according to a source who has copies of the subpoenas. The grand jury also wanted board minutes, agendas and other information.
The second subpoena has narrowed the focus to 14 district employees, all top administrators. The second subpoena seeks additional financial information, including expense reports, and does not go as far back in time.
Former St. Joseph Board of Education president Dr. Dan Colgan has retained a top criminal lawyer. Sources in the district say Colgan, who led the district for 14 years as superintendent, has hired Brian Gaddy from Kansas City.
Gaddy is the second high-powered criminal lawyer to be retained in the ongoing federal investigation. Ballotpedia.org has also learned that Todd Graves, former U.S. Attorney for the Western District of Missouri, has been retained by someone outside the district who is caught up in the FBI probe.
Candy Man stipends
The FBI launched its investigation into the St. Joseph School District in April when it was revealed at a school board meeting that Superintendent Dr. Fred Czerwonka used a $270,000 insurance rebate to give $5,000 stipends to 54 administrators without the knowledge or approval of the board. Soon after the stipends were handed out, Dr. Czerwonka was being called "The Candy Man" by many in the district. Revelation of The Candy Man stipends led to the discovery of many other unapproved pay boosts given to administrators, principals and some teachers.
Also in question are promotions and raises given to Czerwonka’s wife, the wife of Human Resources Director Doug Flowers and the son of former board president Dan Colgan.
Something to talk about
How is all this playing in a city of 77,000 in Northwest Missouri?
"This is the topic of the town," says local business owner John Hickman. Two years ago, he helped spearhead a campaign to pass a bond issue to build two new elementary schools. "It’s kind of like the Twilight Zone. In what world are they living that they thought this would ever be okay?"
Whether you’re getting coffee at a local place near I-29, gas in North St. Joseph or having lunch at the Hi Ho Bar & Grill not far from downtown, most residents seem to know about the scandal. When any story about the district appears on the St. Joseph News-Press website, negative and bitter comments follow. Some comments are snarky, like these lyrics twisted from the 1972 Sammy Davis Jr. hit song, The Candy Man Can:
At stake: $6.5 million
The potential fallout to a school district with 11,000 students is far more serious than nasty Internet comments. It could cost the district millions of dollars of tax revenue. Next year, a portion of the district’s property tax mill levy will sunset unless voters renew it. At stake is $6.5 million.
Passage is in serious trouble.
"I would vote no on the levy until further notice," says John McCarthy, a father of two teenagers in the district. "I wouldn’t have been that way 12 months ago. It’s a definite black eye."
McCarthy is the general manager of RitePack, a major employer in the area. Two years ago he went door-to-door campaigning for the bond issue. Currently, he volunteers on an ad hoc committee studying the district’s salary structure. Now, he says, he won’t pull the lever so the district can keep its current mill levy.
"I would have been out there supporting the levy and telling my friends to vote for it," he says. "Now, I’m not voting for it until there’s a change in the administration and there’s a change in the board."
Board president Brad Haggard would only respond to questions via email.
"I am upset and concerned over these issues our district is experiencing," writes Haggard. "I'd ask anyone abandoning the district to please allow these audits and investigations to unfold. If an individual or individuals have done wrong, they will be held accountable for their actions."
Local businessman John Hickman doesn’t need to wait for audits or investigations to be completed. Hickman grew up on a farm not far from St. Joseph. He was the controller for a company in Kansas City when, he says, he and his wife decided St. Joseph was the place they wanted to raise a family. His son will be in first grade this year.
"This community values education and is willing to support education," he says. "What they don’t value is the lack of transparency and they don’t trust the leadership of the board or the administration. And, it turns out, with good reason."
Blame placed on former district leader
Hickman places the blame for most of the district’s troubles not with the current superintendent, but with former superintendent, former school board president and current school board member Dan Colgan.
"Dan Colgan has done more to harm the children of this school district than any other human being in St. Joe," Hickman says.
Colgan spent his entire career in the St. Joseph School District, including 14 years as superintendent. In 2010, he was elected to the St. Joseph Board of Education. Many insiders say he kept a hand in the district’s day-to-day operations.
As Ballotpedia.org first reported, multiple sources in the district say Colgan would approve The Candy Man stipends when he was board president if, and only if, his son Mark was given a promotion and raise. Mark Colgan, who supervises the district’s warehouse, received a $15,527 salary bump earlier this year.
Dan Colgan denies he approved The Candy Man stipends in return for more money for his son.
Colgan doesn’t give many interviews. Right after his term as board president ended in May, he sat for a long interview with KNPN, the Fox television station in St. Joseph. The station posted the entire 41-minute interview on its website.
During the interview Colgan was emotional and frank, admitting that investigators will no doubt find problems.
"This school district is not perfect," he says. "And the people who run and have run this school district, board members and administrators, and teachers and custodians, and so on, were not all perfect. And we don’t always do all the right things at the right time in the right way. And I really believe, when all this is sorted out, we’re gonna find that the St. Joseph School District is made up of human beings. People who make mistakes. But, really, criminal? No, come on. Vicious? Absolutely not."
Education in jeopardy
Most agree that the troubles within the St. Joseph School District are not impacting the delivery of education, but that the potential is there.
"I am very concerned that we are just on the cusp of that beginning to happen," says Hickman.
The district has a reputation for having a rocky relationship with its teachers. And the revelation of thousands of dollars in extra pay for administrators has made it even worse.
"The administrators acted like their needs were [more important than] the needs of the teachers, their staff and the students," says Lacy Hochenauer, a first grade teacher at Lindbergh Elementary School, on the city’s north side. "It baffled me. I didn’t understand and I felt it was like a slap in the face."
Hochenauer is 26 years old and in her fourth year of teaching. It was the revelation of The Candy Man stipends, she says, that drove her to join the local National Education Association chapter. She understands administrators should make more money and, she says, they work hard. Still, she was angry when she learned some administrators were making an extra $4,900 a year for night duty and most principals were getting $2,900 for working some nights.
"If there’s some event at night, a carnival or violin concert, there’s always 20 teachers there," she says. None make extra money doing it.
Hochenauer grew up in the St. Joseph public schools and teaching, she says, was always her plan.
"I would ask for chalkboards for Christmas and teach my stuffed animals and teach my little sister," she says. "When it came time for me to go to school I always knew I was going to be a teacher."
So far, Hochenauer says, this mess hasn’t reached down into the classroom. The education of students hasn’t been damaged. But she’s worried that the FBI and State Auditor investigations will prevent voters from renewing the mill levy.
"What more have they found out now?" she asked with some lament in her voice. "How much more crooked is it really? How much dirtier can it get?"
If the mill levy gets cut and the district is out $6.5 million, students will absolutely pay a price, says high school history and government teacher Jeff Leake.
"It’s going to affect what’s available for students, what’s available for teachers," he said. "It’s going to affect my kids personally, with class sizes. It’s going to have just a huge effect if that happens."
Leake has been teaching in St. Joseph for 15 years and he, too, graduated from the school district. He is moderate in his feelings about the district. Asked his opinion of Superintendent Czerwonka, Leake seems quite sincere. "You know, I like him," says Leake. "I like a lot of moves that he’s made. Some of the changes he’s made are better for the district."
Asking for change
Leake is part of the growing chorus that predicts the mill levy will fail big at the ballot box.
"I think people are waiting to see if somebody did something wrong or if everything is okay," says Leake. "I just can’t see the FBI spending this much time and resources without indicting somebody. Chances are something wrong was done somewhere." Others also believe the board and the administration won't act before an FBI indictment or a scathing report from the Missouri State Auditor.
"I think it’s irresponsible," says McCarthy. "I question whether they think if they ignore it, it will just go away." The school board president, in his email response, says district officials are neither blind nor passive. "Believe me, we are taking these audits and investigations seriously and we are continuing to cooperate with all agencies," says Haggard. "Any weaknesses discovered through the audit and investigations will be addressed with improved processes and policies."
Hickman is among those ready for faster change. "The way we fix it is we get effective leadership in the administration that we can trust and that will embrace transparency," he says. "And we have a school board that insists on an administration that behaves in that way."
Sam Zeff is a freelance journalist in Kansas City, Missouri. He's won a National News Emmy for investigative reporting, four National Headliner Awards and four Edward R. Murrow awards. Zeff has managed newsrooms in Minneapolis, St. Louis and Kansas City. He was educated at the University of Kansas.