State team will conduct forensic audit. Former business manager says there was no wrongdoing

The Kern County Superintendent of Schools has requested an outside investigation of the Taft Union High School into allegations of misappropriation of funds and fraud involving former TUHSD Business Manager Chuck Hagstrom.

The California Fiscal Crisis & Management Assistance Team will conduct an "extraordinary audit" into the allegations that include an unauthorized, out-of-state bank account.

The audit request came after the TUHSD reported an "anomaly in its fiscal reporting system," Superintendent of Schools management consultant Gary Bray told the TUHSD Board of trustees Monday night.

Hagstrom told the Taft Midway Driller that there was no wrongdoing on his part.

"There was no fraud, no misappropriation of funds, nothing," he said Tuesday morning
He said he did open an account in an out-of-state bank 13 or 14 years ago to invest district funds in a CD at a higher rate of return. He said the board would have received notification of it in their check register included in the agenda packet.

"I'm pretty sure we had discussions about it," he said. "I was just trying to maximize the District's return."

Hagstrom said he believes the issue was raised for political reasons.

His wife, Mary Ann, is one of three candidates for two contested seats on the TUHSD Board of Trustees in the Nov. 6 election.

"I think it's interesting that they raise this issue now," he said. "I think it's just a political move because she is running for the board."

He said the District is audited every year and there wasn't any issue with it at the time or in the years since.

Hagstrom resigned from the District effective September 19.

In his resignation letter, Hagstrom said he was resigning "for the purpose of retiring within CalPERS."

He said he just turned 55 and had planned to retire at that age.

His resignation was included in the consent agenda for Monday night's meeting and approved unanimously by the Board without comment.

Hagstrom had not been at work since early January when Cavazos placed him on administrative leave for unspecified reasons.

In a letter to Superintendent Blanca Cavazos and Board President John Kopp, KCSOS Supt. Mary C. Barlow said the investigation is based on information given to her office.

"Specifically, we are requesting that FCMAT review the opening of an alleged unauthorized bank account, activity of such account, and failure to report information related to the account by the former business manager," Barlow wrote.
The forensic audit will look determine if Hagstrom "opened an unauthorized district account using false documentation outside of the state of Ironical, conducted unauthorized activity on the account, concealed the account and related documentation and failed to report information related to the account" to the Board

It will also test the extent of any fraud or other illegal activity occurred.

The FCMAT team is being assembled and should be starting the audit soon, said Bray and the audit will cost "just under $30,000."

"Forensic audits are expensive," he said.
The FCMAT team is a contractor and independent of the Kern County Superintendent of Schools.