School fraud prompts state takeover

ALBUQUERQUE (KRQE) - The state Public Education Department seized financial control of the Jemez Mountain School District Friday after an audit blamed a former business manager for embezzling more than $3 million.

"It is an unbelievable amount of money," Secretary of the Public Education Department Dr. Veronica Garcia told KRQE News 13. The PED took control of all spending in the small district to help figure out what went wrong and prevent it from happening again, she said.

However Garcia also said some issues seem clear.

"I think it's too much control in one place," she said. "Secondly not having timely audits."

The state requires all districts to submit an annual audit, and this year for the first time imposed penalties on those who don't.

The audit results released by State Auditor Hector Balderas Friday showed the theft of $3.3 million from the rural Rio Arriba County district between January 2002 and June 2009.

"I'm disgusted and angered that public funds geared towards school kids went into personal accounts," State Auditor Hector Balderas said.

With fewer than 400 students in the district the embezzlement amounts to more than $1,100 per student per year over the seven years audited.

Jemez Mountain Superintendent Adan Delgado said he was working on the audit in June when he discovered the theft.

"I found obvious evidence of it from the start, and I went straight to the authorities," he told News 13. The alleged embezzlement went unnoticed for so long, in part, because Borrego was the only employee involved.

It's "much more difficult to keep something contained when there are other people involved," he said.

And there was more to the crime than that, according to the state auditor.

"This was a very sophisticated and elaborate scheme," Balderas said. The special audit showed Borrego removed more than 500 blank checks from many different school accounts, he said.

The checks were made payable to Borrego and others, and with forged signatures they were cashed and deposited in various personal bank accounts, he added.

Borrego worked for the district for 10 years before she was fired in June. She has not yet been charged with a crime although local and federal agencies are conducting criminal investigations.