Former Portola Valley supe arrested for embezzlement

Tim Hanretty accused of seeking district reimbursement of costs for his home remodeling project

Tim Hanretty, the former superintendent of the Portola Valley School District, has been arrested and charged with felony embezzlement of public funds from the district, acting superintendent Carol Piraino announced late Friday night, June 15.

The charges relate to Hanretty seeking reimbursement from district funds for $100,926 in work done by a contractor on his personal home remodeling project, Piraino said in a statement.

District Attorney Steve Wagstaffe said Hanretty, who was arrested Friday night on a $60,000 arrest warrant, has posted a bail bond and been released. He is due to appear in court at 9 a.m. Tuesday, June 19, in Redwood City.

The new charges -- in addition to misappropriation charges he faces in connection with work he did in the Woodside Elementary School District -- are six counts of felony embezzlement of public funds and one count of general felony embezzlement, Wagstaffe said.

Hanretty's attorney, Michael Markowitz, said in an email: "We have no comment at this time."

Only Hanretty is charged with these offenses, Wagstaffe said. "We believe that the contractor on defendant Hanretty's home committed no crime," he said.

The embezzlement from the Portola Valley district allegedly began in December 2010 just after Hanretty became superintendent and chief business officer of the district, Piraino said.

Earlier this year the district hired an outside accounting firm to conduct "an in-depth forensic audit following Mr. Hanretty's arrest for misappropriation of public funds and other crimes that allegedly occurred during his tenure as the Chief Business Official at the Woodside Elementary School District," she said in the statement.

The audit revealed that Hanretty submitted six invoices totaling $100,926 for reimbursement from the district's solar panel escrow account at Deutsche Bank, she said. The invoices describe work allegedly done at the district, but "the contractor never actually performed any work for the District. Rather, he performed work on Mr. Hanretty's personal home remodel project. The amounts on the contractor's invoices to Mr. Hanretty exactly mirror the amounts that Mr. Hanretty submitted to Deutsche Bank for reimbursement out of the District's funds," she said in the statement.

"It appears that Mr. Hanretty created the six dummy invoices ... to use District funds to pay for work performed on his home remodel project," she said.

The forensic auditors will make a public presentation of their findings at the June 20 school board meeting.

The forensic audit report identifies the contractor as Ron Perez Construction. In an executive summary, the report makes these points about the district's solar project:

• "Allegedly, Ron Perez Construction was paid $100,926 from the escrowed funds for work performed on Mr. Hanretty's personal residence rather than on the District's Solar Project."

• "Although some of the expenses paid from the escrowed funds appear to be for the benefit of Mr. Hanretty, the other expenses appear to be for the benefit of the District."

• "Approximately $415,000 of the escrowed funds was used for non-qualified purposes."

• "The use of the escrowed funds for non-qualified purposes could jeopardize the $1.509 million federal subsidy amount the district is entitled to receive as part of the Solar Project."

In April, Woodside school officials said they believed misappropriated funds in that district were spent on district projects, not for Hanretty's personal gain.

Related story:

Portola Valley schools superintendent resigns under cloud of investigation

— Almanac staff


Like this comment
Posted by blank checkbook
a resident of Portola Valley
on Jun 18, 2012 at 6:03 pm

Did the school district just give a blank checkbook to a new employee? Yes, confiscate this thief's house and use it to pay back the debt, then throw him in jail for some serious time. But school district officials are also guilty of serious incompetence. I hope they are taking responsibility for part of this crime.

Like this comment
Posted by Wayne Martin
a resident of Fairmeadow
on Jun 19, 2012 at 7:23 am

The Portola Valley school district seems to be comprised of only two schools, serving perhaps 700-750 students. Most small organizations, like this one, end up placing a lot of trust in their key officials, and often fail to insure that the necessary check-and-balances are in place in the organization, believing that the key people will “do the right thing”, being “honest people”.

From reading the Forensic Audit of the financials of the Portola Valley School District, it is clear that some reasonable checks-and-balances were not in place, such as having a loan committee formed to oversee the use of funds to provide employee loans. There were also several clerical/procedural errors found in the audit, which should have been found in a yearly financial audit, if the yearly audits were being performed by a credible audit team. There also was no mention about the use of any specific software to help manage finances in this district.

In this case, the construction fund was very small, so the use of $100,000 became a significant portion of the fund. But given that there seemed to be few/no internal checks about the validity of the invoices being submitted, one can only wonder how often this sort of fraud goes on in large school construction projects?

Googling “school” “business manager” “indicted” generates a number of on-going cases around the country of school business managers who are, or have been, caught mismanaging funds. With 16,000 school districts nationally, and most of them small, one can only wonder how much fraud/mismanagement of funds goes on undetected, because of the failure of the local school governing bodies to set up adequate financial controls in their districts? The US Public Education System consumes almost $1T/year. Situations like this one at Portola Valley gives one pause to wonder just much of this $1T is going up in smoke due to questionable, or non-management, in all of the school districts around the country?

As to Portola Valley situation, this situation calls into question the capability of the five-person governing board. It’s a shame that this sort of situation doesn’t initiate a complete audit by the State Superintendent of Schools.

Like this comment
Posted by local gurl
a resident of Greenmeadow
on Jun 19, 2012 at 11:36 am

What causes someone like this to take these kinds of actions and jeopardize so much for seemingly so little? Very very sad.

Like this comment
Posted by Interested onlooker
a resident of Portola Valley
on Jun 19, 2012 at 11:48 am

Interested onlooker is a registered user.

No blank checkbook was given to a new employee. Hanretty was the chief business official for both Woodside and Portola Valley school districts from 1999-2010, and assistant superintendent in Portola Valley before being promoted to replace the outgoing superintendent, who is now the San Mateo County superintendent of schools.

It's easy to accuse others of incompetence in hindsight. So that the rest of us might learn from your wisdom, what were the telltale signs missed by the boards? It's a popular misconception that "an audit" verifies every financial transaction.

Sorry, but further commenting on this topic has been closed.

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