Contact: Gina Balaya – (313) 226-9758
Stephen Hill, a former executive director of the Risk Management Department of
the Detroit Public Schools, was indicted by a federal grand jury in Detroit on charges of extortion, program fraud, conspiracy to commit those offenses, and money laundering conspiracy, United States Attorney Barbara L. McQuade announced today.
McQuade was joined in the announcement by Special Agent in Charge Andrew Arena, Federal Bureau of Investigation, and Special Agent in Charge, Erick Martinez, Internal Revenue Service, Criminal Investigation.
The nine-count superseding indictment names eight individuals and charges that
between 2005 and 2006, Hill, aged 59,demanded and accepted kickback payments on over $3.3 million in fraudulently inflated invoices submitted to DPS from a local contracting vendor during that time period. The superseding indictment further alleges that Hill accepted kickbacks from other vendors in the form of a brand new Mustang GT
convertible in 2005 and a brand new Dodge Durango SUV in 2006.
Also named in the conspiracy to commit program fraud count are Sherry
Washington (aged 54), her sister Gwendolyn Washington (aged 67), Marilyn White (56), and Sally Jo Bond (61), who were partners in an entity doing business as “Associates For Learning.” The superseding indictment alleges that Associates for Learning contracted with Hill at DPS to facilitate a wellness program for DPS employees, the original proposal for which totaled $150,000.
The superseding indictment charges that Associates For Learning thereafter in
2005 and 2006 submitted three inflated, fraudulent invoices to DPS, each for
approximately $1 million, which DPS paid. It is further alleged that Hill thereafter was paid five percent cash kickbacks by members of Associates For Learning. The superseding indictment charges Hill and Sherry Washington with a money laundering
conspiracy designed to conceal the kickbacks.
The original indictment, returned on April 18, 2010, had also named former DPS
Risk Management executive Christina Polk-Osumah, who died of natural causes on September 2, 2010. The superseding indictment also names Thomas Ray Taylor (56), and Polk-Osumah’s sister, Valerie Polk (53), and brother, Duane Polk (51), who are all
charged with conspiring to commit program fraud by submitting fraudulent invoices to DPS for services and thereafter participating in making kickbacks to Hill, including the
purchase of the new Mustang for Hill in 2005 and the new Dodge Durango for him in 2006.
Valerie Polk is also charged with paying for two private parties for her mother
with funds received fraudulently from DPS. Hill is charged with conspiring to use DPS funds to pay for his $40,000 retirement party when he temporarily left DPS in September 2005.
“These charges demonstrate the commitment of federal law enforcement to attacking public corruption,” McQuade said. “Public officials who abuse taxpayer funds for their personal benefit will be brought to justice.”
“Laundering public funds is a serious threat to our communities,” said Martinez. “IRS Criminal Investigation will use our financial expertise to expose any public official who thinks that the normal course of doing business involves false invoices and kickbacks.”
FBI Special Agent in Charge Andrew G. Arena stated “Detroit Public School
officials have been entrusted to act in the best interest of their students. The FBI
continues to vigorously investigate elected/appointed officials, as well as those who do business with the Detroit Public Schools, who abuse the public trust. We would like to thank the Detroit Public School Inspector General’s office for their assistance in this matter.”
The case was investigated by special agents of the FBI and IRS with the
assistance of Detroit Public Schools, Office of Inspector General. The case is being investigated and prosecuted by Assistant United States Attorneys J. Michael Buckley and Pamela Thompson of the Public Corruption Unit.