Knight denies any wrongdoing

Publication Date: Wednesday Jun 14, 2000

COURTS: Knight denies any wrongdoing

19-count indictment alleges conflict-of-interest violations against Ravenswood superintendent

by Jennifer Kavanaugh and Charlie Breitrose

To Ravenswood City School District Superintendent Charlie Mae Knight, she was lending a helping hand. To the San Mateo County District Attorney's office, her loans to district employees and her willingness to let them live in her properties violated the law. Friday, the day after the school board renewed her contract through 2004, Knight staunchly defended her personal financial dealings after being hit with a 19-count felony indictment. The court document alleges she broke state conflict-of-interest laws by drawing money from a special fund to aid district employees who owed money to the superintendent.

Knight appeared in San Mateo County Superior Court with her attorney and a throng of supporters, and did not enter a plea.

At a news conference at the Ravenswood district offices, Knight maintained she had done nothing inappropriate.

"I am deeply saddened that the District Attorney's Office sought to indict me on a technicality, based on my efforts to help those in need," Knight said, reading from prepared statement.

The grand-jury indictment alleges that Knight broke state conflict-of-interest laws by helping give emergency public loans ranging from a few hundred dollars to more than $12,000 to district employees who owed her money or who rented housing from her--such that she could have appeared to personally benefit from the loans.

The three-year county investigation came to a head last week when the 19-member grand jury handed down the charges. The indictment was unsealed Friday in the courtroom of Superior Court Judge Robert D. Foiles before Knight and a group of her supporters. Knight has been allowed to remain free without bail and is due back in court on June 30.

If convicted, Knight faces up to 15 years in prison and a $1,000 fine for each felony charge. It's not clear at this point whether a conviction would bar Knight from working in an official public capacity.

After the brief hearing in Redwood City, Deputy District Attorney Steve Wagstaffe said the case was worth the cost of three years of investigation and two grand jury reviews.

"Any time a government official deals with money or has any involvement with the public trust, it's exceedingly important that they do so without the slightest appearance or actuality of a conflict of interest," Wagstaffe said. "It's about public trust."

The allegations surrounding Knight go back to a $15,000 fund established in the early 1990s by Bill Somerville, president of Philanthropic Ventures Foundation of Oakland, to help needy teachers make rent payments or pay bills if needed. A district committee was set up to decide which teachers would receive the funds. Several of Knight's tenants and district staff who owed Knight money got the emergency loans.

In a telephone interview, Somerville said Knight has always served East Palo Alto and east Menlo Park very well. He remembers that in her first year in Ravenswood, when Somerville was head of Peninsula Community Foundation, Knight came in, unsolicited, with a $19,000 check and said, "This is for the children of East Palo Alto."

Somerville says he cannot see anything wrong with what Knight has done.

"I'm the one who gave the grant, and I can't see any crime," Somerville said. "At worst, its a case of sloppy bookkeeping."

San Mateo County District Attorney Jim Fox sees it differently. "What the law says is you cannot participate in any contract," he said. Signing checks, which Knight did, amounts to contracts, Fox said. "They owe her money. In effect, she's guaranteeing a steady cash flow."

Fox said his office is not alleging that Knight stole any money.

Instead of simply filing criminal charges and allowing the case to proceed to a preliminary hearing before a judge, Fox chose to go before a grand jury. He says this was because he wanted to protect Knight's privacy.

"We felt that it was important to have the public hear and evaluate the evidence. If we were to have gone ahead and filed a complaint before a judge, all of that would have been public." He noted that if the grand jury had found no basis for the charges, "it would all have been in private."

Knight, along with her attorneys and supporters, showed up a few minutes late to a press conference because she had been attending graduation at Flood School in Menlo Park.

Knight's attorney, Bill Osterhoudt, said at the news conference that the district attorney has no case because the state conflict-of-interest statute only applies to contracts entered into by a public official. Osterhoudt said Knight was never a member of the committee that passed the loan applications and that she only signed the checks as a formality in the district's process.

"The District Attorney has looked under every textbook in the building and has come up with a technical argument that will not stand up to the light of day," Osterhoudt said.

Knight stopped signing the checks about two years ago, Osterhoudt said.

Knight did not answer any questions at the news conference, on advice of her attorney. But most of the members of the Ravenswood school board turned out to show their support for Knight.

"It is clear to us that, despite three years of intense scrutiny, the District Attorney has presented absolutely nothing that has not been dissected at length regarding Dr. Knight's administration, specifically with regard to the Employee Emergency Loan Fund," said board chairwoman Donna Rutherford.

Throughout the three-year investigation, Knight has insisted that she had no part in deciding who got the money.

"The only thing I do is sign the (loan) checks," Knight told the Weekly in 1997. "Half the time I don't know who they (the recipients) are."

But Wagstaffe said state law requires public officials to stay out of any public decision-making in which they might appear to benefit privately. In this case, he said, Knight would appear to be receiving some of the public money in the form of rent and loan payments made by the employees. State law does not require proof that Knight actually profited from the transactions to create a conflict of interest, Wagstaffe said.

"Her duty was to totally eliminate any public involvement," Wagstaffe said of Knight. "If she signs a check, she's involved."

Wagstaffe also told reporters that the charges applied even if Knight didn't knowingly try to break the law. The fact that Knight consulted the San Mateo County Counsel's office about the situation also isn't a defense, he said.

In a prepared statement, Knight said she was doing what was needed for people in a community with high poverty rates and which has no banks or other financial institutions.

"In my efforts to help employees and families of the Ravenswood City School District ... I worked with private funders to provide a means to meet their basic needs," Knight said. "I realize that as an institution whose primary role is to provide quality education for children, we must also address the everyday needs of staff, students and families."

In 1999, a separate, civil grand jury--the first jury to review the case--questioned Knight's involvement in the emergency fund. The grand jury's report, along with an independent audit of the school district, also found that some of the loans made through the fund--such as a $500 loan for a Mexican vacation and $875 to buy a car for an administrator's son--were also questionable.

This is the second time in two months that an East Palo Alto official has faced charges of criminal wrongdoing. Last month, federal agents arrested City Councilman R.B. Jones on charges he accepted $12,000 in bribes from potential city contractors. His trial is set to begin in September.

Wagstaffe dismissed suggestions that he and District Attorney Jim Fox, whose office also assisted in the federal government's investigation of Jones, were out to "get" the often-troubled city of East Palo Alto.

"It really saddens us to see this about a city that's working hard to make it," Wagstaffe said. "But that doesn't keep us from doing our duty." 

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