Community leaders on Monday demanded an explanation for why criminal charges won’t be filed against a contractor accused of mismanaging millions of dollars and violating the law while under contract with the Alum Rock Union School District.
Santa Clara County District Attorney Jeff Rosen announced last week he wouldn’t pursue legal action against Del Terra Real Estate Services, a Southern California-based company, after probing into three years of confirmed wrongdoing by contractors and school administrators. Two state audits confirmed the company misspent millions on school construction projects and violated the law by overseeing its own contract.
Now, dozens of parents, school board trustees and Alum Rock community members are claiming this failure to prosecute is an example of institutional racism, saying this “type of behavior would not happen in Willow Glen, Los Altos or other privileged neighborhoods.”
San Jose Councilmember Magdalena Carrasco, who represents Alum Rock, said some mothers have told her the schools’ failing infrastructure — due to a lack of repairs and shoddy work by Del Terra — negatively impacts their children’s health, forcing them to wear gloves in classrooms during the winter and stay home to avoid intensified asthma in the summer heat.
“Is it any wonder that our kids are still dealing with the educational gap?” Carrasco told San José Spotlight. “It’s amazing to me that in the one of the poorest areas of San Jose, people are still willing to tax themselves because they get the bigger picture that if we invest in our kids, their kids will have the better education they deserve.”
Carrasco said she supports criminal prosecution, saying that Del Terra’s failure to follow through on taxpayer-funded projects brazenly robbed students of their better educational outcomes.
Alum Rock’s relationship with Del Terra and its CEO, Luis Rojas, began with a 2013 contract for managing construction, which was funded through $265 million in voter-approved facility bond measures. Del Terra was paid $3.25 million.
However, corruption and oversight scandals were revealed through a handful of state audits, which first stemmed from an anonymous complaint.
Ultimately, Del Terra stopped receiving payments in Dec. 2017 and all business was terminated the following year. The district filed a civil suit against the company in Aug. 2019, which is still underway.
Corina Herrera-Loera, ARUSD board vice president, said the current Alum Rock leadership will not allow this alleged corruption to slide, hoping Rosen reverses his position and does the same.
“Let the judge determine (the outcome), don’t stop it in the beginning,” Herrera-Loera told San José Spotlight outside of Rosen’s office at the 70 W. Hedding St. “Let it go through the process, and let it go through the justice it deserves. If it happened in Southern California, why not here?”
Community leaders are demanding Rosen host a town hall in the next month to explain his rationale.
Additionally, the group insists that State Attorney General Xavier Becerra explore criminal charges, and Santa Clara County politicians neither endorse nor accept support from former ARUSD board members Esau Herrera, Khanh Tran and Dolores Marquez, dubbed by some as the #AlumRockThree.
Rosen’s investigation focused on whether Del Terra was involved in conflicts of interest in securing a $2 million contract, as well as defrauding the district into overpaying $600,000 through contract amendments and $200,000 in pre-construction charges.
While civil conflict of interest crimes were identified in 2014 – when Del Terra accepted $2 million in district construction work while it served as a financial consultant for facility bond projects – these findings were after its four-year statute of limitations expired, according to the District Attorney’s office.
Despite the lack of charges, Rosen said his office’s investigation into the corruption scandal held the company accountable.
“Our school districts deserve rigorous, competent and ethical oversight over their finances,” Rosen said in a memo. “These are not just dollars and cents or obscure line items in a contract, they are our hard-earned tax dollars and they are meant to bolster the minds and well-being of our children.”
Regarding the district’s ongoing civil suit, Rojas said in a statement to this publication that “we look forward to our day in court to resolve these matters,” and that they have “moved on” from the lack of criminal charges.
“We are pleased that the investigation has come to a conclusion and that the exhaustive investigation turned up no evidence to support any legal actions,” Rojas wrote in a statement.
The District Attorney’s office opened its investigation after California’s Fiscal Crisis and Management Assistance Team reported in 2017 that malfeasance occurred during contract procedures, and Rojas took advantage of district staff and board members.
A 2018 Civil Grand Jury report found that the school board failed to meet standards of governance and fiduciary responsibility, calling for the resignation of trustees Herrera, Tran and Marquez and termination of Del Terra contracts.
A scathing May 2019 audit from California State Auditor Elaine Howle – requested by Assemblyman Ash Kalra and state Sen. Jim Beall – revealed the district lacked financial management, oversight, disclosure and voting policies, which may have prevented issues such as Del Terra’s from arising.
Kalra said he sent a letter to Attorney General Becerra’s office Monday morning to investigate these claims, hoping that the state has more power to pull at the thread of these allegations to reveal a bigger hole of misconduct.
“There could be a pattern of conduct of this typical company,” Kalra told San José Spotlight. “I think at the state level, they may be able to connect the dots more easily in working with the Santa Clara County DA, the Los Angeles County DA and (others) that this particular company has contracts with, but there’s something there.”