Cesar Chavez Audit: Nepotism, Undocumented Spending, High Wages

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The long awaited financial and operational audit of the Cesar Chavez Schools Network was released Wednesday morning by the Colorado Department of Education.

Shocked by what he read in it, the State Commissioner of Education, Dwight Jones says that the married couple who founded the charter network clearly put their needs above those of the students. A brief summary of the nearly 200-page report was supplied by the CDE in addition to the full report itself. In the summary, dozens of findings list irregularities in nearly every aspect of the way the schools were financed and run.

School founder and former CEO, Lawrence Hernandez flatly refuted all the findings Wednesday.

"I had an opportunity to briefly review the so called audit and financial review, and I discovered the whole thing is an incredible sham," he told 11 News Wednesday night.

Chief among them the inability to account for a significant portion of credit card usage that totalled nearly $400,000 in just one year. School officials say this number is spread over five schools, in hopes of deflecting some of the seriousness of the findings. In reality, the cards were used by an unknown source and the business office for the network can not provide the auditors with documentation showing what the missing transactions were used for.

Another audit finding involves how much money the top executives at the school network were making. According to the audit, Hernandez and COO Annette Hernandez, were bringing in more than $500,000 in compensation for just one year. When presented with this, current CCA/DHPH Board President Donielle Gonzales says that it was because Lawrence Hernandez was overseeing five schools. The auditors weren't buying it, and say the pay exceeds the average salaries for comparable charter schools.

A third finding of the audit was severe nepotism. According to the report, the Hernandez's hired more than 20 family members over a six year period.

When given this information, parents and community members were livid. "I was really for the Hernandez's so this is really, I don't want to say disturbing, but really, really shocking," says Andrea Delvillar. Phyllis Mares says, she's angry about how her tax dollars were spent, "I don't agree with it. I think the taxpayer's money should be going to the kids." Other parents say, they're pulling their kids out of the school.

"The audit validates the concerns raised by the Board of Directors and assures us that we're moving in the right direction," said CCA/DHPH Board President Donielle Gonzales during a news conference Wednesday. "Our priority is to once again be among the strongest schools in our community."

Now that the audit results are known, District 60 is taking a hard stance and has already contacted the Pueblo County District Attorney's Office and is seeking out the IRS, to see if criminal charges are warranted. The DA says, his office is investigating.

Meanwhile, Gonzales is pleading for patience from the community, especially the parents of students. "We appreciate the support that they've given and we're committed to these schools, our kids, and our staff," says Gonzales.

She also says, the board has already begun making changes to solve these problems, and is moving forward. Still, the charter school network does not even have an intirm-CEO or COO. The CFO who was on responsible for the way the finances will remain on staff until June 20th when his resignation, tendered six months ago, becomes official.

As the pieces of the picture come together, Hernandez indicated he is the focus of a major conspiracy.

"The whole audit process was driven by the Commissioner, the CSI board, as well as the district jumping on the bandwagon because we exposed corruption," he said.

Some question if this is a wise choice, to allow someone responsible for so many poor decisions to remain in a position of trust. And some say, the damage is already done.