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Palo Alto Online

Knight's loans improper, DA says

by Jennifer Deitz Berry

Ravenswood schools superintendent Charlie Mae Knight had final say in emergency employee loan approvals, which violates state conflict-of-interest laws, a prosecutor said.

Knight, wearing a royal blue two-piece suit, faced jurors Monday in the opening arguments of her trial. She is charged with 19 felony counts of conflict of interest, which carry a maximum penalty of 15 years in prison and a $1,000 fine for each count.

Superior Court Judge Joseph Bergeron's courtroom was packed with Knight supporters, many African American, in addition to Ravenswood school board members who took front row seats.

They listened as Deputy District Attorney Peter Lynch gave opening arguments alleging that Knight broke conflict-of-interest laws in authorizing loans from a district emergency fund to employees who rented property from her or owed her money.

Lynch said although the loan decisions were supposed to be made by a committee, they were not, and proper records were not kept. He went on to say Knight made a personal request to a foundation to increase the loan fund, saying she needed more money to recruit new employees. In fact, the money was spent on existing employees.

Defense attorney Bill Osterhoudt, in his opening, countered that Knight's only involvement in the loan fund was administrative. While she may have signed off on the loans, she was not involved in deciding which district employees would receive loans, nor did she use threats of eviction or other means to pressure employees into using loan fund money to repay her.

Osterhoudt also emphasized Knight's standing as a leading African-American educator "known for her commitment poor children." He pointed out that in the 10 years before Knight came to Ravenswood, the district had seen 11 superintendents come and go. By contrast, he said, Knight established herself in Ravenswood, and along with her husband, chose to "invest in the community" by purchasing seven properties.

Knight has faced a challenge finding qualified staff in this poor neighborhood where many are chronically unemployed, have criminal records or are struggling to make ends meet, he said. The loan fund and her attempt to rent housing to school staff were just a few of the ways she tried to lure workers into the district and help keep them afloat.

"She'll be shown to be one of the most generous public officials you can imagine," Osterhoudt said of Knight. "This fund is consistent with that pattern of generosity."

A $15,000 emergency loan fund was established in the early 1990s by Bill Somerville, president of Philanthropic Ventures Foundation of Oakland, at Knight's request. A four-person district committee was given oversight of the fund, and a log detailing loans and their uses was to be kept by the district and submitted periodically to the foundation.

The prosecution will argue that, in fact, loan decisions were not made by committee and record-keeping was at times inaccurate.

"We believe testimony will show that she (Knight) did in fact approve the loans," Lynch said. Prosecution witnesses will show that "Dr. Knight gave final approval on all loans."

Osterhoudt acknowledged that more informal procedures slipped into place for approving loans, but suggests it was justifiable since the process was generally administrative, with nearly all requests approved. In the fund's five-year history, 297 loans were approved and only 30 were rejected, almost always because of insufficient funds in the budget, he said.

The prosecution sees a shadier side to loan fund operations, however. For instance, Lynch pointed out, Knight wrote a letter in 1996 asking Somerville to increase the loan fund by $5,000. In the letter, Knight argued that expanding the fund would help ease difficulties the district would face recruiting more teachers in the wake of Gov. Pete Wilson's statewide class size reduction plan.

But the money never went to new teachers, Lynch said. "Each of the loan recipients for the remainder of 1996 was already an employee of the school district."

Lynch also said former school board member Donna Rutherford would testify that district administration denied her access to information she requested about the loan fund, despite the fact that as a board member she had oversight authority.

Knight's confidential secretary, Diniece Maiden, is also expected to be called to testify that she had signed Dr. Knight's signature before and will be able to give comparisons on which signatures are hers and which are the superintendent's.

But Osterhoudt said the fund has been a great success, noting that despite the surrounding controversy, it still exists today.

Ultimately decisions about the appropriateness of the fund, and of Knight's actions, will rest with the ethnically diverse jury, which includes two African Americans.

E-mail Jennifer Berry at jberry@paweekly.com