Patterson school district lacked controls to stop embezzlement, superintendent says

Two Patterson Joint Unified School District officials were able to steal more than $1 million because the district did not have controls in place to prevent the fraud, Superintendent Reyes Gauna said in an interview.

“There were no checks and balances,” he said. “Call it what it was.”

Former Assistant Superintendent Jeffrey Menge and former Information Technology Director Eric Drabert pleaded guilty Feb. 1 in Sacramento federal court to theft concerning programs receiving federal funds.

They are not in custody and are scheduled to be sentenced May 30.

They each face as many as 10 years in prison and $250,000 fines. Menge admitted embezzling $1 million to $1.5 million from 2019 to 2022 and Drabert admitted stealing $250,000 to $300,000 from 2020 to 2022, according to court documents.

The school district’s Board of Trustees will hold a special meeting Monday to share with the public the findings of the investigation into the thefts. The meeting starts at 6 p.m. at the district, 530 Keystone Blvd.

Gauna said the district has put in place checks and balances and other measures to protect itself from this kind of wrongdoing. He said it worked closely with the Stanislaus County Office of Education in this effort. “We’ve learned from this experience,” Gauna said, “and put systems in place.”

For instance, he said, Menge was in charge of the district’s finances, purchasing, construction and the oversight of its federal and state funding. Placing all of those responsibilities with one person made the district vulnerable to fraud. Gauna said the district now has separate executive directors for fiscal services and facilities, as well as a construction manager.

Gauna, who became Patterson’s superintendent in July 2022, said two employees came to him in confidence about a couple of months later to share their concerns that district computers were being used for a cryptocurrency mining farm.

Gauna said he brought in a forensics company to conduct a confidential investigation. It confirmed that cryptocurrency mining was taking place. Gauna said that discovery led to the unraveling of the rest of the fraud.

Gauna said Menge and Drabert were placed on leave and soon resigned.

A Sacramento Bee story citing court records said the two men used school district money to buy high-end laptop computers and graphics cards for a cryptocurrency mining farm and transferred the proceeds to themselves.

Court documents say the fraud also involved Menge creating a fake company to carry out the embezzlement, according to the Sacramento Bee story. Menge also hired Drabert as the district’s IT director to help with the scheme, according to the story.

The money the pair stole was used to remodel homes and purchase cryptocurrency, computers and vehicles, including a Ferrari sports car, according to the story. The pair agreed to forfeit assets they acquired from the theft, according to their plea bargain agreements. The FBI seized assets from the homes of both men in May 2023, including vehicles, cash and computers.

The district’s letter to parents announcing Monday’s meeting states there were “many occasions where our board (had) suspicions of the actions and integrity of at least one of these employees. Unfortunately, however, these suspicions and questions were dismissed, or were manipulatively rationalized by the individual himself.”

The letter states that board members would learn employees also had suspicions but that board members never could have “imagined our suspicions would be confirmed to such magnitude.”

Menge, 43, is a Copperopolis resident and Drabert, 44, lives in Modesto, according to a news release from the U.S. Attorney’s Office in Sacramento.

The Patterson district has 6,300 students and its campuses include five elementary schools, a middle school and a high school. Gauna said that the district is working to recover the money the two men stole and that he will speak at their May 30 sentencing.

Menge and Drabert agreed to make restitution to the school district, according to their plea agreements. Menge agreed to $550,000 to $1.5 million, and Drabert agreed to $200,000 to $300,000.