Mislabeled invoice sparked Stapleton investigation - Albuquerque Journal

Mislabeled invoice sparked Stapleton investigation

A mislabeled invoice more than three years ago followed by persistent inquiries from the Albuquerque Public Schools business office raised questions about former Rep. Sheryl Williams Stapleton’s relationship with Robotics Management Learning System LLC – eventually triggering an investigation into fraud, racketeering, illegal kickbacks and money laundering.

Sheryl Williams Stapleton

No charges have been filed, but investigators have laid out allegations that Stapleton not only helped Robotics get and keep a contract with APS but also used her legislative position to secure funding that went to Robotics and ultimately to four entities she controlled or had a direct interest in. The FBI and IRS Criminal Division also are investigating and have served federal grand jury subpoenas on APS.

Documents in the case say that Robotics was paid more than $5 million dating back to 2006 and that more than $950,000 of that was funneled to the two businesses and two nonprofits with ties to Stapleton – A Taste of the Caribbean Restaurant, the S. Williams Associates, the Ujima Foundation and the Charlie Morrisey Foundation.

Stapleton, director of APS Career and Technical Education, has been placed on administrative leave by Superintendent Scott Elder pending the criminal investigation. APS has placed another 11 employees on administrative leave while it conducts its own internal review.

Stapleton, who held the No. 2 leadership position in the House as floor majority leader, resigned from the Legislature on Friday. In her resignation letter, she “unequivocally” denied the allegations. Her attorney, Ahmad Assed, said in a statement that she is “eager to cooperate in the investigation to clear her name of any wrongdoing.”

‘Purchase order’

Documents in the case show that the alleged scheme began to slowly unravel when the New Mexico Public Education Department notified the APS business office in early 2018 that it was refusing to pay a “purchase order” submitted by Robotics because it should have been submitted as an invoice. The “purchase order” had gone to PED because it involved grant money.

Rennette Apodaca, who heads APS’ business systems and procurement department, began looking into the mislabeled invoice after it was rejected by PED, asking her staff to investigate the problem and have the company fix the invoice.

New Mexico no stranger to scandal

What she found – and didn’t find – led to more and more questions about the company and its relationship with Stapleton.

What APS discovered was that the problematic purchase order originated with Stapleton. The purchase order was for something called “Cyber Quest,” which was listed on other records as Cyberquest.

Apodaca told her staff to contact Robotics and have it submit a proper invoice.

Contacting Robotics proved difficult.

The company didn’t respond to telephone messages or emails. The address Robotics listed on its paperwork was an apartment building, and the company had an Albuquerque post office box where APS sent the company checks.

An accounts payable manager at APS tried to check the two websites listed on Robotics’ paperwork but found that neither of them worked. There is some question about whether either website ever existed. The lack of a website for a company involved in computer software raised more questions at the APS business office.

Based on prior invoices, Robotics supplied software that was supposed to provide students with multiple choice online quizzes and develop teacher training materials integrating math and science into the Career and Training Education programs that Stapleton oversaw.

Apodaca’s staff began asking questions about Cyber Quest, and a teacher in the program was asked whether it was even being used. Fifteen minutes later, Stapleton called the procurement office asking why it was looking into Robotics. She was told the office was doing due diligence.

Apodaca continued to try to find out who owned Robotics or Cyber Quest.

After finding the person who originally owned the company and getting referred to another person, Apodaca received a telephone call from Joseph F. Johnson, who said he had taken over the company after the prior owner had a stroke.

Apodaca explained the problem with the paperwork and the lack of information in APS’ files about the company. She never heard back from Johnson. Instead, Stapleton and her staff provided corrected invoices and documents about the company.

Those documents raised more questions. Among them:

• Did Robotics have a New Mexico tax identification number?

• Did Robotics have an Albuquerque business license?

• Why did the Washington, D.C.-based firm receive its checks at an Albuquerque post office box?

• Why did the firm deposit checks into New Mexico banks?

• Why was APS paying $40,000 for a licensing fee for each school using the software, instead of one fee for the entire school system?

• Why did Robotics have a sole source, no-bid contract with APS?

APS officials could answer only the last question, and they didn’t like the answers.

The company claimed that it held a copyright on the software used in the program and that no other companies offered it. But APS procurement officials were concerned about the sole-source nature of the contract as far back as 2013. Attorneys for the school district said at the time that there was an exemption for copyright material and that the company would not have to go through a competitive bidding process.

When the question was raised again in 2016, it was Stapleton who defended the sole-source contract because Robotics software was “unique.”

After the investigation into the mislabeled Robotics purchase order began, APS’ purchasing department found that other companies offered similar services and software.

In 2019, APS put the contract out to bid through a request for information. Five firms, including Robotics, responded. Robotics came in second in the evaluation scoring, but procurement staffers were concerned that three of the evaluators were teachers who were paid by Robotics to attend past training sessions in using Robotics’ software.

Robotics was awarded the contract – which was allowed by its second-place finish – but procurement officials continued to raise questions, partly because the three evaluators who had received payments from Robotics were also involved in issuing change orders that increased the amount of money Robotics received.

Staff in the purchasing department continued to dig into Robotics. Among other things, they found:

• The Albuquerque post office box receiving checks from APS appeared to be owned by Stapleton’s son.

• The owner of Robotics was president of two charities of which Stapleton was an officer and registered agent.

• Much of the work attributed to Robotics in the past two years may have been done by another company.

• A review of Robotics software by APS information technology specialists found it to be “antiquated,” raising concerns that change orders from APS employees were paying for Robotics’ software updates.

‘Some ugly evidence’

The attorney general’s investigation was triggered by an April 19 letter from Elder, who told Attorney General Hector Balderas that APS suspected violations of the procurement code and Governmental Conduct Act by Stapleton.

The investigation burst onto the public stage when investigators from the AG’s Office and New Mexico State Police served search warrants Wednesday on Stapleton’s Albuquerque home, APS offices and the state Legislature.

Those warrants were based on other information collected in earlier warrants by investigators working behind the scenes, gathering bank records and other evidence.

In his letter to Balderas, Elder said the frequency of the training was questionable and the “quality of the software is suspect.”

Elder also commissioned an investigation by attorney Luis Robles, the results of which were forwarded to the attorney general.

The superintendent, who had only been named on a permanent basis on a 4-3 vote a month before he wrote to Balderas, pulled no punches in a letter to APS employees.

“Our previous system did not establish adequate controls over this employee,” he wrote. “The internal processes failed to stop this fraud. I apologize to you and the public.”

He also said there will be a high priority on deterring procurement fraud. “In this particular case, we let in the sunshine and discovered some ugly evidence,” he said. “We didn’t look away. We will not become complacent.”

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