DENVER - Parents in the Douglas County School District pay extra fees because the district says it is short on money, but CALL7 Investigator John Ferrugia found thousands of dollars in questionable spending.
Watch more on this exclusive investigation Monday on 7NEWS at 10 p.m.
District funds were spent on Walmart gift cards, some of which has not yet been accounted for, 19 memberships to Sam's Club for employees and non-employees and tens of thousands of dollars in contract work with an outside printing company despite an in-house print shop for the district.
Records CALL7 obtained from the district show that Paul Balon, Director of the Douglas County Public Schools' Transportation Department, is the principal cardholder of the Sam's Club membership. An additional 18 people were added to the tax-exempt membership purchased by the district, including two who were not employees.
Jane Balon and Mark Welle are among the spouses of district employees who have memberships, neither of whom can purchase goods or services for the school district.
Instead, CALL7 Investigator John Ferrugia found all of their purchases were personal.
The investigation also found that most purchases by school district employees whose memberships were purchased by the district were also personal, like salmon steaks, rib steaks, clothes and computers were purchased because they had school district memberships.
The district did not pay for all the personal items purchased using the Sam's Club membership. However, in addition to the impropriety of taxpayer funded memberships, it is unclear whether those individuals used their tax-exempt memberships for purchases to get out of paying taxes.
Ferrugia probed, "Do you have any idea whether these employees paid taxes or didn't?"
"It’s the honor system," says Balon who also admits that he did not monitor the use of the card.
CALL7 obtained a rundown of all purchases under the district's Sam's Club membership for approximately the past two years. Paul Balon had never seen it, because he and the district never monitored the memberships.
When asked whether either Jane Balon or Mark Welle were justified being on the membership Paul Balon said, "no… in hindsight, they shouldn’t be there."
The CALL7 investigation found that while taxpayers have footed the bill for Sam's Clubs memberships for Balon, his staff, and non-district employees, none of them could actually use their district credit card to shop at Sam's Club for the district because Sam's club does not accept the district's purchase card.
If the district wanted to shop at Sam's Club, it had to first go to Walmart -- where the district's credit card was accepted -- to purchase a gift card. That gift card would then be used at Sam's Club like cash.
When Ferrugia asked the Douglas County School District to see all the receipts for those gift card purchases and the justification for each, the district was not able to produce them in total.
"There was (sic) gaps in those. There was (sic) receipts missing," said transportation director Paul Balon.
"As we started working through that process," he said, "I'm going to be the first one to tell you that there was plenty of room for process improvement."
-- District pays for outside printing company --
In another significant ethical and financial issue, CALL7 discovered the transportation department has paid almost $23,000 to an outside printing company, Quality Print, despite having its own print shop.
When confronted with the facts, Paul Balon agreed it was a problem.
"At the time it seemed justified," he said. "Looking at the process, looking at it from the outside or how the taxpayer would look at it I would say, 'No.'"
In an apparent conflict of interest, the registered agent for Quality Print is Bernadette Welle, an employee who works in the payroll department and was formerly Balon's secretary. She and her husband, Mark Welle, who is not a district employee, are on the district's Sam's Club membership and own Quality Print.
CALL7 spoke with Bill Moffitt, Paul Balon's boss and Chief Operations Officer for Douglas County schools, who admitted "the information that has come to us is troublesome and we are going to take measures to correct it."
Actions to remediate the problems in the transportation department have already started. As of Nov. 21, the Sam's Club cards were collected and are no longer available for employee use. Moffitt says Quality Print will no longer be a vendor for the district because hiring the company violated the district's policy on conflict of interest.
Moffitt said, "The general public should demand accountability and transparency and good business practices….The information that we have is that they were not. And we are going to fix it."