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LAUSD was asking about Rodriguez-linked charter school deals in 2015. Did they say 'stop'?

L.A. Unified School Board member Refugio "Ref" Rodriguez listens to discussion during the board's meeting on Sept. 19, 2017.

UPDATED, 6:35 p.m. — Los Angeles Unified School District officials have released documents shedding new light on how close they came to — or, perhaps, how far they were from — sniffing out the disbursements of public funds that have landed school board member Ref Rodriguez in even more hot water.

In 2015, district officials asked the network of charter schools Rodriguez co-founded — Partnerships to Uplift Communities, or "PUC" — about a wide range of potential conflicts of interest, according to documents obtained by both KPCC and the L.A. Times.

The documents also show L.A. Unified asked general questions about PUC's relationship with two outside entities: a non-profit Rodriguez led called Partners for Developing Futures, and a corporation called Better 4 You Fundraising that Rodriguez had at least once listed as an investment.

Leaders of the charter network have launched an internal investigation into more than $285,000 in payments Rodriguez allegedly made in 2014 from PUC schools to these two outside entities. PUC leaders are investigating whether their schools received any services in return for those payments.

Rodriguez, through his attorney, has denied any wrongdoing in the matter. Rodriguez also faces criminal campaign finance charges, to which he's pled not guilty.

But Rodriguez has yet to offer a public response to any of the specific points of evidence against him, and as L.A. Unified ramped up pressure Tuesday on PUC, leaders of the charter school network in turn urged Rodriguez and his attorneys to break their silence.

"Now, more than ever, [Rodriguez] needs to explain these transactions, where the payments went and how they could have possibly benefitted the schools," PUC officials wrote in a letter to L.A. Unified. "Only Dr. Rodriguez can shed light on the documentation PUC Schools has uncovered."

According to a "Notice to Cure" letter to the charter network dated Oct. 23, L.A. Unified asked PUC officials in July 2015 for a thorough description of the relationship between the charter network, Partners for Developing Futures and Better 4 You Fundraising. In August 2015, officials at the charter network replied in part by sending L.A. Unified a copy of a 2012 service agreement between PUC and Partners for Developing Futures — an agreement bearing Rodriguez's signature.

L.A. Unified officials now say PUC leaders should have identified this as a conflict-of-interest at the time the contract was green-lit. School district officials are now demanding formal answers of PUC, contending L.A. Unified's 2015 inquiries put leaders of the charter network "on notice of a potential conflict of interest issue" involving Rodriguez, Partners for Developing Futures and Better 4 You Fundraising.

"These issues show a pattern of disregard for and ineffective adherence to conflict of interest laws," district officials wrote in the Oct. 23 letter.

Yet L.A. Unified officials had broader concerns with the charter school network back then. At the time, PUC schools were still reeling in the wake of a conflict of interest scandal involving a top charter network employee and a food service vendor.

In a series of three formal "Notices of Concern" in 2015, district officials outlined their issues — with the makeup of the charter network's various governing boards, with the schools' fiscal oversight policies, even with other contracts.

For their part, PUC officials said those initial questions did prompt changes. In a statement Tuesday, spokeswoman Naush Boghossian said the charter network "strengthened its governance structure and fiscal controls after LAUSD's notices in 2015."

But — at least in these three 2015 notices — L.A. Unified officials also did not explicitly object to the charter network's relationships with either Partners for Developing Futures or Better 4 You Fundraising.

Nor did district officials mention those two entities by name six months later, in Feb. 2016, when asking L.A. Unified's school board to deny two PUC schools' requests for charter authorization. District officials cited overall concerns about possible conflicts of interest in the charter network.

"LAUSD did not catch this and neither did PUC Schools," the charter network's leaders contended in their letter Tuesday, which was issued as a formal response to the district's "Notice to Cure."

District officials do claim, however, that they had flagged several of the checks sent from PUC to Partners for Developing Futures as being problematic, and noted their findings ahead of the school board's Feb. 2016 charter authorization vote.

When asked whether L.A. Unified officials had raised specific concerns about the charter network’s dealings with Partners for Developing Futures of Better 4 You Fundraising at the time, José Cole-Gutiérrez, head of the district’s charter school division, said his office did have concerns about the relationship and subsequently referred the matter to the district’s internal investigative arm.

Boghossian said PUC leaders alerted district officials as soon as it uncovered Rodriguez's payments from PUC accounts to the two outside entities. In their Oct. 23 letter, L.A. Unified officials wrote that they had only learned of PUC's formal complaint against Rodriguez through news reports.

"PUC has always responded to all of Los Angeles Unified’s requests for information and has voluntarily made substantial changes in responses to its recommendations," Boghossian's statement read. "PUC’s leadership will continue to act with transparency and integrity."

L.A. Unified's Oct. 23 letter underscores how the widening Rodriguez scandal now poses a threat to the future of the charter network he helped launch in 2004. In the letter, L.A. Unified officials quoted the provision of state law that allows them to shut down a charter school for mismanagement — a fairly straightforward threat.

But the back-and-forth with PUC officials also highlights the challenges L.A. Unified's officials face in overseeing 224 charter schools — the largest portfolio of any single school district in the nation — each of which has the potential to enter into its own complex web of financial transactions that can sometimes seem impossible for to track.

"It can be very challenging to identify payments being made by one charter school to another organization," said Gail Greely, president of California Charter Authorizing Professionals, a professional organization for officials in school districts and county offices who oversee charter schools.

"The standard reporting that is done by charter schools," she noted, "doesn't include individual disbursements to individual organizations … As a financial expert that’s looking at these documents, you’re not necessarily going to see that a big payment has been made to an outside organization."

Even if these contracts between charter schools and other organizations were disclosed, Greely said vetting each one would be "an awful lot of work for what are undoubtedly, 99 percent of the time, perfectly ordinary transactions" — for anything from nursing services to training, books or IT services.

This post was updated first at 4 p.m. to include further comment from L.A. Unified officials. It was updated again at 6:35 p.m. to include PUC's formal response to the district's allegations, which you can read in full below.

L.A. Unified's Oct. 23 "Notice to Cure" letter to the Partnerships to Uplift Communities (PUC) charter school network:

https://www.documentcloud.org/documents/4164267-LAUSD-Letter-to-PUC-Charter-Schools-10-23-17.html

PUC's response to L.A. Unified's "Notice to Cure," sent to KPCC on Tuesday:

https://www.documentcloud.org/documents/4165019-PUC-Response-to-LAUSD-Notice-to-Cure-10-31-17.html