Stockton Unified School District could sue to recoup millions from 2021 air filter deal

The Stockton Unified School District may soon sue the recipient of a multi-million-dollar deal that an audit report concluded could be fraudulent.

The Stockton Unified Board of Trustees authorized administrators to file a lawsuit against IAQ Distribution, Inc., a subsidiary of Alliance Building Solutions, Inc., to recoup the $6.6 million the district paid the company for air filter disinfectant technology during the pandemic.

Several government watchdog groups have scrutinized the July 2021 deal as potentially fraudulent. It culminated with San Joaquin County Superintendent of Schools Troy Brown’s statement in February that Stockton Unified had a “disregard for the law” and a “troubling culture of leadership.”

The San Joaquin District Attorney’s Office, FBI and U.S. Attorney’s Office, are investigating Stockton Unified, District Attorney Ron Freitas said in April.

Stockton Unified Board President AngelAnn Flores told The Record greenlighting the lawsuit is another step toward accountability at the school district.

“It’s important that we continue to press forward with holding those accountable that thought it was OK to come into our district and take money that was not duly theirs,” Flores said.

At a June 20 school board meeting, Stockton Unified Director of Fiscal Services Willie Gutierrez said if the district’s procurement process is not followed, leaders have initiated an illegal contract, which voids the contract by law.

What we know about the IAQ deal

The most detailed public account of Stockton Unified’s deal with IAQ comes from a February report by the state’s Fiscal Crisis and Management Assistance Team. The state auditor spent nearly a year on an AB 139 Extraordinary Audit — at the request of Brown from a specific concern that fraud may have occurred — of Stockton Unified centered around the IAQ contract and the district’s policies and procedures.

The centerpiece of Stockton Unified’s potentially illegal business transactions began at a private holiday party hosted by former Stockton Mayor Anthony Silva, according to the report. “Multiple” board members and Zachary Avelar, who would be appointed July 30, 2021 on the board, attended the party.

The report does not state the day the party took place. All that is known is that it had to have taken place before the Jan. 12, 2021 board meeting at which former Trustee Scot McBrian gave a similar presentation to the one at Silva’s party, a perceived conflict of interest and a potential violation of the Brown Act.

Silva was convicted of a felony in 2019 stemming from a conflict-of-interest charge that followed a three-year financial-malfeasance case during his time as mayor of Stockton. His felony conviction has since been reduced to a misdemeanor and expunged from his record.

As the school district began bypassing its policies in the months that followed to award Alliance/IAQ a contract for disinfectant air filter technology, several members of the district’s administration began expressing concerns about the appearance of manipulating the request for proposals process.

Two high-ranking staff members resigned rather than follow former superintendent John Ramirez Jr.’s direction to continue with the IAQ contract, including what the report described as a “hostile and threatening” letter from Ramirez.

More: New Stockton Unified superintendent talks priorities, plan for first 100 days

Tabatha Hoak, the former mechanical division manager responsible for leading the team to score the bid proposals for the disinfectant technology, told The Record her position at Stockton Unified was eliminated three days after her team scored IAQ the lowest out of several vendors and was not recommended to advance to the board.

The report states the board justified awarding the contract to IAQ because it included “mobile technology” approved by the FDA to kill COVID-19. But the district ultimately opted not to purchase the mobile technology and instead purchased the product listed in the vendor’s original proposal.

The contract was only completed in part, and many of the air filters remain unused in storage at Stockton Unified.

“The district and board ignored their own policies, procedures and past practice in order to award the contract to their preferred vendor,” the report reads. “In awarding the contract to IAQ, the governing board’s and superintendent’s disregard for the law is of great concern.”

This article originally appeared on The Record: Stockton Unified schools may sue over air filter deal worth millions