Former official pleads guilty to embezzling nearly $16 million from O.C. school district

A former Orange County public school official has pleaded guilty to embezzling nearly $16 million from a district where most students are classified as economically disadvantaged.

Jorge Armando Contreras used the money he stole from the Magnolia School District to finance a lavish lifestyle, including a $1.5-million house in Yorba Linda, a $127,000 BMW and $190,000 in cosmetic surgery, according to federal prosecutors.

Contreras, 53, of Yorba Linda, pleaded guilty on Thursday to a single felony charge of embezzlement, theft, and intentional misapplication of federal funds, which could bring up to 10 years in prison.

Authorities have seized $7.7 million in assets from him, including the Yorba Linda home, the BMW, dozens of Louis Vuitton designer bags and bottles of the luxury tequila Clase Azul Ultra.

A photo obtained from court records shows former Orange County school official Jorge Armando Contreras, who is accused of embezzling millions over seven years from the district that employed him.

(U.S. District Court)

In 2006, Contreras was hired by the Magnolia School District, which serves 5,300 preschool-to-sixth-grade students in Anaheim and Stanton, 81% of whom are classified as socioeconomically disadvantaged.

He began to run the district’s fiscal operations in 2013, and from 2016-23 deposited more than 250 checks into his personal account, authorities said. As the senior director of fiscal services, Contreras was earning $220,000 annually.

From August 2022 to July 2023 alone, prosecutors allege, Contreras stole $4.1 million from the district.

According to the charges, during that period, he paid $1.9 million to American Express, withdrew $325,000 from ATMs, and transferred more than $130,000 to the person who would become his marriage partner in August 2023.

In his plea agreement, Contreras, who is free on $450,000 bond, admitted to having school funds deposited in his personal bank account.

Using his access to school district bank accounts and the student body bank account, Contreras wrote checks in small amounts, got them signed and then increased the dollar amounts and inserted fictitious names, the plea agreement said.

California

Former O.C. school official arrested in $14-million embezzlement case

Prosecutors said Jorge Armando Contreras, 52, used stolen money to buy a $1.5-million house and a $127,000 BMW, and cosmetic surgery and luxury items.

Oct. 20, 2023

The school district put him on administrative leave in August 2023, and he was arrested in October. He is scheduled for sentencing before U.S. District Judge Fred W. Slaughter on July 25.

Contreras’ attorney, listed on court documents as Ronald Hedding, did not immediately respond to a request for comment.

As a front for the embezzlement scheme, the FBI believes, Contreras used a music production company called JC Productions, whose Instagram page boasted of “the best musical productions and live events.”

According to a district official whose name was redacted from the charging documents, “Contreras appeared to live a lifestyle beyond the means of someone in his position at the School District,” and the official assumed he made extra money from his music production company. Once, Contreras gave out $25 Starbucks gift cards to district employees, saying the money came from the company.

Bank cameras captured Contreras depositing money into his Wells Fargo account under the phony names “Maria Socorro Dominguez” and “Magnia Socorro Dominguez,” the FBI said. According to the plea agreement, he originally wrote M.S.D. — the same initials as Magnolia School District — on the checks, with the letters spaced out.

The school district has filed a lawsuit against Contreras.

“We are continuing to go after other assets, and possibly other people that knew about this, or were in on this,” Superintendent Frank Donavan said in a statement. “While we are thankful for the FBI’s prompt and thorough response, we find it hard to believe that he is only facing a maximum of 10 years. We also find it hard to believe that he is released on bail until July, when he is definitely a flight risk. The money he stole was mostly targeted for students with special needs.”