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Originally published February 23, 2011 at 10:02 PM | Page modified April 24, 2012 at 2:22 PM

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Vendors named by auditors say they did no wrong

Some prominent figures caught up in the Seattle Public Schools financial scandal — including former state Democratic Party Chairman Charles Rolland and former Urban League of Metropolitan Seattle President James Kelly — denied wrongdoing Wednesday, after they were identified by state auditors as vendors involved in "questionable uses" of public funds.

Seattle Times staff reporters

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Some prominent figures caught up in the Seattle Public Schools financial scandal denied wrongdoing Wednesday, after they were identified by state auditors as vendors involved in "questionable uses" of public funds.

Former state Democratic Party Chairman Charles Rolland and former Urban League of Metropolitan Seattle President James Kelly, who both worked on school contracts highlighted by auditors, disputed the audit's characterization of their work.

"I stand by the work," Rolland said about one of the contracts he had with the school district. "Do I think I cheated the district or public out of money? No."

The state did not audit the vendors, and no one is accusing them of wrongdoing, emphasized state Auditor Brian Sonntag's spokeswoman, Mindy Chambers.

The audit found that Seattle Public Schools spent up to $1.8 million on contract work that was never done or didn't benefit the school system. The irregularities, according to the audit, center on a school-district program that helped small businesses, primarily female- and minority-owned companies, compete for contracts with the district and other government agencies.

According to the audit, the school district's program, which started several years ago and operated until it was shut down last fall, became a loosely run operation in which outside contractors sometimes were paid for services that weren't provided and, as the district scaled back the program, its manager diverted district funds into a privately run organization offering similar services, according to the audit.

Sonntag's report said the district paid $25,000 to the Urban League for a software subscription fee to a database designed to match small-business owners with general contractors. But the Urban League reported that the database didn't work and district employees said they never used it, instead preferring another system, auditors said.

In an interview Wednesday, Kelly, who resigned from the Urban League last month, emphasized that any official Urban League response should come from acting director Tony Benjamin, who did not return a message.

But, Kelly said he didn't know why the district didn't use the software. He said it could have been helpful, though it was still "in development."

Kelly stressed the audit had nothing to do with his departure from the league, where he still does consulting work. "Not at all," he said. "I needed to refocus. I had a stroke and a divorce."

According to the auditor, Rolland, who has worked as an advocate for minority businesses, was involved with three contracts that were questionable.

Under one contract, Sonntag said vendors, including Rolland, billed for two to three hours of work for meetings that lasted just 1.5 hours. Rolland said he probably did that, because he performed related work before the meetings and afterward.

The district paid Rolland $6,000 in another contract, Sonntag says, to create a database for the small-business program's hiring and apprenticeship efforts.

School-district staff members said the database wasn't working when they received it, according to Sonntag. Auditors contend the database contained only a list of student names and identifying information.

"I have no comment," Rolland said to that assertion.

In a third contract, auditors reported, Rolland and several other vendors were paid for meetings with state legislators and for testifying on legislation. It turns out, though, that program manager Silas Potter had not been authorized to contract for such services, the audit said.

Rolland on Wednesday denied being one of the vendors involved in such work. "I didn't testify or lobby," he said, adding he didn't recall meeting with any legislators on school-district business.

Rolland said he believed the program had been successful in spending more contracting dollars on minority and small businesses and had saved public money by increasing competition for school contracts. "The part that's not being told is that this was a highly successful program," Rolland said.

Rolland said he had not seen Potter — whom auditors have been unable to locate — for more than a year. "I don't believe Silas was doing anything to benefit himself personally. I think his objective was to help small businesses. If he violated school-district policies, I don't think it was malicious."

Two other vendors known for their work advocating minority-contracting opportunities, Eddie Rye Jr. and Ralph Ibarra, insisted they did nothing wrong.

Rye, like Rolland, was cited as billing the district for more hours than spent at meetings. And like Rolland, he said he worked with officials before and after the actual meetings.

"I welcome any inquiry about my participation or performance," Rye said.

Ibarra was identified in the audit for a lack of precision in how his work was billed. He maintains that he never overbilled the schools and that he sometimes did more work than he charged for.

In another case, the vendor flatly challenged the audit.

The audit reported that the district paid $163,175 to Grace of Mercy, a Tacoma nonprofit, "for instructional services on dates when no classes were taught."

David Johnson, head of the agency, said he received $2,500 to $3,500 for his work and that the classes did take place.

Johnson said he was hired by Potter about two years ago to find small, independent business owners — janitors, framers and other construction workers — who wanted to work for Seattle Public Schools.

Johnson said he found about 15 to 20 workers, and they attended a two-hour class twice a week for three months to learn procedures they needed to know to get jobs in the Seattle district.

Johnson said Potter gave him a check for about $2,500 to $3,500 for his work, but later asked for about half the money back in cash, telling him, "I will make it up to you." Johnson said he gave the money back.

Potter told Johnson that he was going to move to Portland to set up a similar operation, and that Johnson could earn $300,000 or more as a teacher. But a few months ago, Potter disappeared, his phone number disconnected.

"I have done a lot of work for the school district, for Silas Potter," Johnson said. "He still owes me some money."

Another vendor, former Port of Seattle official Elaine Ko, said she fully cooperated with auditors and declined further comment.

The Seattle Times did not reach some of the other vendors identified in the audit, including Tony Orange, former state legislator Velma Veloria and Leon "Skip" Rowland.

Staff reporter Jim Brunner and news researcher Miyoko Wolf contributed to this report.

Bob Young: 206-464-2174 or byoung@seattletimes.com

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