Douglas County School District doesn't know how many of its tax-free Sam's Club cards exist

CASTLE ROCK, Colo. - An investigation is underway into employees of the Douglas County School District who may have used the district's tax-exempt status for personal purchases.

The district's action follows a report from CALL7 Investigator John Ferrugia, who found the district's Sam's Club card was used for thousands of dollars of personal purchases.

Now, Ferrugia reports the district has no idea how many membership cards might be involved. He found the Transportation Department had 19 people, including non-employees and the director's wife, listed on that card.

All of the memberships were paid for with taxpayer money and approved by transportation department director Paul Balon.

Ferrugia asked him during a previous interview, "Do you think that's ethical?"

"No," Balon responded.

Ferrugia asked for documentation of all the membership cards in the school district, but the records were not available. Afterward, Ferrugia obtained a letter showing the district's lawyer asked the legal department at Sam's Club to provide information about all membership cards listed under the district's tax-exempt ID number.

"We are requesting a detailed record for each of the primary cardholders that are associated with our tax exempt number and all memberships associated under the primary cardholder," the letter says.

It continues, "In the course of an investigation into the possible misuse of the district's tax exempt status for personal use, we have requested a detailed item summary for purchases made by each member, and if possible, to demonstrate whether sales tax was paid on the items purchased."

The letter mirrors the public records request Ferrugia made to the district.

With more than 80 schools in the district and several other departments, sources tell Ferrugia that the number of primary memberships could be over 100.

Balon, the transportation director, has been put on administrative leave.

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