School Board President in District Salary Scandal

By - June 13, 2016
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After more than two years of federal investigation, a former school district superintendent and school board president in St. Joseph MO  will soon be charged with a federal crime involving inflating his salary and retirement benefits.

Former St. Joseph School District Superintendent Dan Colgan has two court dates this week in Kansas City federal court. Colgan will stand before a magistrate and then later a district court judge. The exact nature of the federal charges have not yet been disclosed, but a plea deal could be imminent.

According to media reports, Colgan agreed to pay back $660,000 last month to the MO Public School Retirement System. A media outlet in the St. Joseph area investigated Colgan last year and showed how he improperly increased his compensation, which then increased his retirement pay by 22% per month.

Colgan’s entire career was spent in that school district; he set up the first HR department and was HR director before he was later made superintendent. That means he was very familiar with school district contracts and how to manipulate the payroll system.

For example, Colgan was able to use his knowledge of the payroll system to increase his 2002 school year base salary from $108,000 to $185,000. He received a $25,000 stipend that year, a tax sheltered annuity worth $11,000 and a car allowance of $14,500. He also inflated his contract in 2001 and 2003 in similar ways.

According to St. Joseph NEA President Todd Brokett, it was discouraging that Colgan always stated his work was about the children in the district, when in fact he was quietly padding his retirement account. Brokett added that he let down the entire district as well as the students that he purported to serve.

It is believed that Colgan will plead guilty in federal court and will waive the right to be heard by a grand jury. It is not certain what criminal punishment he could face, but the plea deal may include a short stint in prison of a year or so.

Apparently, Colgan was not the only top former district official to play games with the pension system. Two other top district officials have also repaid pension benefits in the last year. However, neither of those men were being investigated by the FBI as Colgan is.

This scandal would never have become public if it were not for another scandal that broke out in the school district in 2014. At that time, it was shown that another former superintendent gave out $5000 payments to dozens of administrators without approval of the school board.

Since that scandal, the Missouri school district also has settled another lawsuit with its former CEO for $450,000; that suit involved slander.

About Embezzlement Charges

While the federal charges the former superintendent is facing have not been made public, his alleged crimes sound similar to embezzlement. This is a form of property theft where a person who is managing the assets of another person or entity steals some or all of those assets. The key legal argument in embezzlement is that the person had access to the funds but did not have legal ownership of it. When stealing is combined with a person being in a position of trust, that is the definition of embezzlement.

Federal embezzlement laws are defined by what type of property is stolen or how much money. For example, anyone who embezzles money, records or property that is worth over $1000 can be fined up to $250,000 and spend 10 years in prison.

If the embezzlement involves the stealing of public money, the fine can be as much as $250,000 if the money stolen is over $1000, and prison time can be up to 10 years.

About Corruption Charges

It also is likely that the accused in this case could be charged with corruption, which is defined as a violation of public trust or abuse of power by a public official at the federal, state or local level.

Federal corruption laws, as well as most state corruption laws, prevent government officials from agreeing to receive anything of value in return for changing the performance of their official duties. Corruption sometimes is closely associated with bribery. That is the federal charge that is used when someone offers a public official anything of value in order to get an advantage in public affairs.

In some states, alleged criminal activity such as suspected in this case also could be referred to as graft. This is where a person in a position of trust illegally gains access to public funds by any means and uses them for himself. Corruption charges can also be compounded by graft charges, if the accused tried to get access to public funds in the course of his or her alleged corrupt activities.

About Wire Fraud Charges

Wire fraud has to do with fraud that uses telecommunications including Internet, wire, TV and radio. Any criminal activity that has to do with electronic or digital communications is called wire fraud. Wire fraud usually involves activities that cross state lines, so almost all forms of wire fraud are prosecuted by the federal government.

The federal government deals harshly with wire fraud, and the convicted can be fined up to $1 million and sent to federal prison for as much as 20 years. In the above case, the suspect may have used electronic communications to commit his alleged illegal activities, so he could theoretically be charged with wire fraud.
Another variant of this type of fraud is mail fraud, where the suspect uses the US postal system to commit various types of financial fraud.