DA's Office investigates Knight

Publication Date: Wednesday Aug 27, 1997

EAST PALO ALTO: DA's Office investigates Knight

Potential conflict of interest by superintendent is focus of case

by Elizabeth Darling

Ravenswood City School District Superintendent Charlie Mae Knight is being investigated by the San Mateo County District Attorney's Office for a possible financial conflict of interest related to the renting of homes she owns to school district employees. Knight owns six properties in East Palo Alto and acknowledges that she has rented some of the homes and condominiums to people who receive income from the school district. But Knight denies any wrongdoing, saying she was only trying to help employees commuting from long distances, or assist those with financial difficulties.

"I have invested in several pieces of property in East Palo Alto, but I didn't invest with the purpose of renting to employees," she said. "It was a good business deal."

Knight also is being investigated for her connection with the Emergency Housing Fund, which helps Ravenswood teachers and staff in need. Four of the teachers who benefited from the fund paid rent to Knight at one point or another.

On July 1, Knight received a detailed memo from San Mateo County District Attorney Jim Fox requesting documents related to real estate she owns, as well as personal financial information.

The investigation is still "preliminary," said Deputy District Attorney Peter Lynch, and involves collecting financial documents from the school district. He would not disclose who made the allegations to the district attorney.

"Conflict of interest law says if you're in a position of authority for awarding contracts, you have to be at arm's length" from those who benefit from the contracts, Lynch said.

The investigation involves the "spending of Ravenswood school district money and whether or not the people who received the money were at arm's length," Lynch said.

Conflict of interest law deals exclusively with financial dealings, he said, and any allegations against a public agency must be taken seriously by the District Attorney's Office, Lynch said.

Knight theorized that "the genesis of the DA investigation" is a letter written by a community resident that was circulated throughout the community in early July. She contends that the letter may be politically motivated.

Lynch said he wasn't familiar with the letter, but that "various sources" either called or wrote to the District Attorney's Office with complaints.

The District Attorney's Office is seeking an array of documents, from school board meeting minutes for the past eight years, to Knight's personal tax forms and property ownership records.

"Because conflict of interest laws are so broad, they can include not only your own financial dealings but the entity you're connected with," Lunch said. "It's an exhaustive list because the law is written in such a way that it's very expansive."

Knight and her husband own six properties in East Palo Alto--three homes and three condominiums. They reside in one of the condos.

The Knights own three condominiums in the Mission Palo Alto development on Mission Drive, and sold a fourth to Jackie Hodges, executive director of the Boys and Girls' Club. Knight also owns three homes--3 Bell Court, 1670 Purdue, and 2505 Baylor.

About seven years ago, she said, she discovered a family with six children living in a two-bedroom home. She offered to rent one of her three-bedroom homes to the family "below scale," she said, to help the parents get back on sound financial footing. The mother was a school district employee, and the father worked at Raychem. Knight said she personally helped the couple consolidate their bills by working with her own bank, so that the husband's company wouldn't garnish his wages.

"When (former Ravenswood School Board member) Keisha Williams got on the board (in 1992), she complained about the fact that there was a conflict of interest," Knight said. Concerning her tenants who worked for the school district, "I said I'd be willing to evict them all," Knight said.

At that time, the school board turned to the San Mateo County Counsel's office for advice.

In August 1994, the County Counsel's Office wrote a letter to Knight responding to a question about the promotion of two district employees who lived in Knight's properties. "You have a 'remote' interest in the appointment of the two employees by virtue of the fact that you are their landlord," wrote Deputy County Counsel Mary Raftery. "This means that the governing board may approve the employees' appointments, but you need to advise the board of your interest," make sure it is noted in the official record, and abstain from participating in the approval of the contract. Under the Political Reform Act, Raftery wrote, Knight would have a financial interest and be disqualified from participating in the employees' appointments if the decision will affect the employee's income by $1,000 or more.

She is currently renting to three district employees, she said. She sold one condominium last October to a woman who later married a district employee. "It was on the market," she said. "Taylor Properties sold it."

The District Attorney's Office also is looking into Knight's involvement with the Emergency Housing Fund. The fund was created in 1993, when the school district found itself with a number of employees who struggled each month to make ends meet.

Knight led the creation of the emergency fund for teachers, she said. "A lot of them don't have checking accounts because they have bad credit," she said. "They get a month behind and their lights are off."

Knight said she went to Bill Somerville, a venture capitalist who runs a nonprofit organization. Somerville agreed to donate $15,000 to set up the fund, to make loans to needy teachers. A committee (which does not include Knight) decides who is worthy of a loan. "For the most part, they paid it back," Knight said. "It was really done like an advance on salary."

Eventually, Somerville agreed to expand the program to all Ravenswood employees.

"The only thing I do is sign the (loan) checks," she said. "Half the time I don't know who they are."

After the District Attorney's review began, Knight said the board began working on "redesigning" the emergency fund to call it a salary advancement fund.

"I don't understand the District Attorney's contention if the money was given for that purpose, why it's a conflict," she said. "I don't think I've done anything wrong. I don't think that having an emergency fund . . . out of 300 people, four of them (lived in Knight's properties).

"The kind of money that I have spent on employees and on the district doesn't speak to somebody who has tried to make a dollar on somebody."

But, Deputy District Attorney Peter Lynch said "the intent of the person is largely irrelevant. If you have a certain economic interest in X, and you belong to a governmental entity . . . that's illegal. Conflict exists whether or not you're aware of it.

"Any money given to the school district is public funds. The outside donor of that money does not get to decide how that money is spent."

In a letter to Knight dated July 1, 1997, District Attorney Fox outlined a four-page list of documents the district and Knight herself must turn over to them.

The list includes all school board meeting minutes since 1989; W-2 forms for Knight, and all employees who have rented from her; documents from various district accounts; grant paperwork; documents related to loans to employees; paperwork on district contracts with businesses outside California; travel expense reimbursement claims for all employees and board members; credit card statements from 1989 to the present for any credit cards held by the school district, and various other financial and employee-related documents.

Knight was asked for personal financial information including a list of all of the property she or her husband own, income tax returns from 1988 to the present, bank account information, investment documents, and all loan paperwork.

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