Feds: Arizona School Officials Misspent $426,451 of Tech-Ed Funds

Valley Academy for Career and Technical Education
Valley Academy for Career and Technical Education Facebook / VACTE

A grand jury late last month indicted an administrator of a central Arizona technical school district on multiple charges related to fraud.

Celestia Ziemkowski, business manager for the Valley Academy for Career and Technical Education (VACTE), was charged with misuse of public money, fraudulent schemes, forgery, and computer tampering for unsanctioned charges in 2015 and 2016 totaling more than $30,000.

But Ziemkowski’s alleged crimes appear to just scratch the surface of alleged misspending related to the technical school district in Yavapai County.

Over the past two years, the Arizona Department of Education has been forced to repay more than $425,000 in federal grant funds in connection with misspending at VACTE by public education officials, according to federal documents obtained by Phoenix New Times through a public records request.

That's all that could be recovered because of statutes of limitations, the documents note. The actual sum of misspent federal dollars could be much more.

Over a span of five years, Arizona school officials likely misspent somewhere in the ballpark of $1 million of federal grant funds intended for career and technical education students, according to two former state Education Department staffers who handled federal grant money. Rather than the money going to teachers and students, it was used instead to pay for state employee salaries, travel, and other unsanctioned expenses, according to auditors.

The misspending involved former Arizona Department of Education employee Dennis Fiscus, according to federal authorities.

Fiscus got expenses paid from federal funds he awarded to VACTE without disclosing the inherent conflict of interest involved in benefiting from grant money he allocated, auditors found. Former VACTE superintendents Marvin Lamer and Lois Lamer both would have had to approve Fiscus' improper allocations, according to the two former staffers who spoke with New Times.

Both former staffers requested not to be named for fear of retaliation. They said they have reported the misspending to state and federal authorities. Over several years, they said, they have been interviewed by the Arizona Auditor General's office, the federal Office of the Inspector General, and the Federal Bureau of Investigation.

While the charges against Ziemkowski have made it to the courts, nobody else has been charged in relation to the alleged misspending at VACTE.

A spokesperson for the Auditor General's office, which investigated Ziemkowski, said her case was "separate and apart" from concerns the office had about misspending during the period when Fiscus and the Lamers occupied management positions at VACTE and in the Arizona Department of Education.

The spokesperson, Deputy Auditor General Melanie Chesney, said she is "not able to confirm nor deny" the existence of an ongoing criminal investigation by education officials higher up than Ziemkowski.

Conflict of Interest

The alleged scheme to misuse federal grant funds on unapproved expenses may have begun as early as 2011.

At the time, Lois Lamer had recently replaced her husband, Marvin, as Chief Executive Officer of VACTE. Marvin Lamer, meanwhile, accepted a position at the Arizona Department of Education as associate superintendent under Superintendent for Public Education John Huppenthal. And the statewide agency had just promoted Dennis Fiscus to a new position, director of operations, overseeing federal career and technical education grant money.

In 2015, the Auditor General's office found that Fiscus appeared to give special treatment to VACTE when it came to federal grants. In previous years, Fiscus awarded VACTE $217,038 without going through proper procedure with tech prep funds that were awaiting allocation. VACTE had already been awarded $250,000 from the tech prep grant program, which was discontinued in 2011.

The additional award meant that VACTE received far more tech prep funds than any other technical education school district, including districts with much larger student populations.

click to enlarge Arizona's allocations of tech prep funds in 2011. - NEW TIMES SOURCE
Arizona's allocations of tech prep funds in 2011.
New Times source
"The Department had no documentation supporting that the award was made based on competitive considerations, and there was no documentation justifying why it was awarded solely to" VACTE, the auditors wrote.

After Fiscus awarded a large chunk of money to VACTE, he then benefited from those grant dollars, according to auditors. They identified several instances of VACTE using money from the federal tech prep education program to pay Fiscus and three other education department employees under his supervision from 2011 through 2013.

Just one example: During that period, $8,462 of federal tech prep funds paid for travel expenses for Fiscus rather than being spent on its intended purpose — helping high school students take community college courses for credit.

That included "travel beyond what was considered necessary, excessive meal charges, and airline upgrades," the audit stated. Another $33,528 of the tech prep money paid Arizona Education Department employees for services provided to VACTE; the expenses were not properly disclosed. Auditors wrote that Fiscus lacked adequate documentation for charges totaling more than $260,000 and that such charges "appeared abusive."

The payments represented a conflict of interest because Fiscus played the dominant role in allocating federal funds to technical education districts while benefiting from VACTE's share of grant dollars, the audit found. Another potential conflict went unmentioned in the audit: Marvin Lamer supervised Fiscus while Lamer's wife was CEO of VACTE.

In a follow-up 2016 audit, state officials found that Fiscus continued to personally spend federal dollars he awarded to VACTE "including excessive meal charges and travel beyond what was considered necessary, such as a rental car upgrade."

Fiscus, who was fired in November 2015 according to a letter in his personnel file, did not return a voicemail seeking comment.

According to the two staffers with knowledge of the inner workings of the Arizona Education Department's career and technical education grant-awarding processes, Marvin Lamer would also have to approve grant awards, including payments to VACTE, where his wife was CEO.

Neither of the Lamers could be reached for comment. Marvin Lamer in 2014 took a job at the Arizona School for Deaf and Blind. Lois Lamer abruptly resigned as CEO of VACTE in 2016.

The 2015 audit was cited by the United States Department of Education in a February 2018 letter to the Arizona Department of Education demanding repayment of $369,792 of misspent federal funds.

On August 21, 2019, the federal Department of Education sent another letter to its Arizona counterpart based on the 2016 audit demanding repayment of $56,659. The letter criticized Arizona school leaders during Marvin Lamer's tenure for "allowing [Fiscus] to have unfettered control over awarding federal monies and monitoring subrecipients."

As of September 26, Arizona school officials have repaid all of the misspent funds outlined in the letters, according to Richie Taylor, spokesperson for the state Department of Education.

The department has since taken several actions to ensure compliance with state and federal conflict-of-interest laws, including establishing an Ethics Committee, requiring managers to sign disclosure forms, and moving its Grants Unit from the department's program side to its business and finance office.
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Steven Hsieh was a staff writer for Phoenix New Times from August 2018 to April 2020.
Contact: Steven Hsieh