L.A. Unified says PUC Schools should have unearthed Rodriguez’s alleged conflict three years ago

The leaders of a local charter-school network are under fire from the Los Angeles Unified School District for not uncovering and reporting conflict-of-interest allegations against school board member Ref Rodriguez three years ago.

The district sent Partnerships to Uplift Communities, or PUC Schools, a sternly worded Notice to Cure, with a Nov. 1 deadline, demanding that school administrators explain why it took so long to report that Rodriguez, its co-founder, allegedly authorized and signed $265,000 in checks in 2014 to a nonprofit under his control. That nonprofit, Partners for Developing Futures, was involved in leadership training for minority educators.

L.A. Unified administrators also question the time lag in reporting a separate possible conflict, also in 2014, related to checks for about $20,000 that Rodriguez allegedly signed to pay Better 4 You Fundraising, a private company that organized school fundraisers. Later that same year, Rodriguez disclosed that he owned an interest in this company, though it’s unclear whether he did so at the time the payments were made.

The district’s action raises the level of scrutiny for PUC, which on Oct. 13 confronted the difficult task of turning in to the state’s Fair Political Practices Commission a conflict-of-interest complaint against Rodriguez, a beloved figure at the schools he helped start.

PUC board President Manuel Ponce Jr. and network co-founder Jacqueline Elliot have denied any wrongdoing on the part of the organization. Elliot signed the FPPC complaint as a witness and also alerted L.A. Unified of the money transfers “as soon as they were uncovered,” according to a PUC statement.

“PUC Schools was shocked to discover the possible misspending of school funds and conflicts of interest” and “took immediate, appropriate action,” Ponce wrote in the school network’s official response to L.A. Unified, which was provided to The Times by PUC.

The charter network provided the district with some key documents before L.A. Unified requested them and has pledged to cooperate with any investigations.

L.A. Unified authorizes and oversees most local charter schools, including all 17 that PUC operates in Southern California. The school system released its warning notice, dated Oct. 23, to The Times and radio station KPCC on Monday in response to Public Records Act requests.

The conflict allegations are just one part of Rodriguez’s troubles.

In an apparently unrelated case, Rodriguez faces three felony and 25 misdemeanor counts, alleging campaign money laundering when he ran for his board seat. Rodriguez pleaded not guilty to those charges in court last week and, through his attorney, denies all wrongdoing related to his campaign and any actions involving PUC Schools. Rodriguez left PUC in July 2015, when he joined the L.A. Board of Education.

The conflicts PUC recently alleged “underlie the very concerns” previously raised by the school district’s charter school division, according to the notice from L.A. Unified. “This FPPC complaint was filed three years after PUC had been placed on notice by the [charter school division] regarding related concerns,” the district’s letter said.

The district cited correspondence from 2015, including a letter to PUC seeking information about Partners for Developing Futures and Better 4 You Fundraising as well as any ties between these entities and PUC.

“For PUC to assert in the FPPC complaint that it was not aware that Dr. Rodriguez had an interest in Better 4 You Fundraising is confounding since they were on notice of a potential conflict-of-interest issue,” L.A. Unified stated.

The district applied the same logic to the recent discovery of the checks to Partners for Developing Futures.

“These issues show a pattern of disregard and ineffective adherence to conflict-of-interest laws,” said the district letter, which was signed by specialist Aida Tatiossian and Fiscal Services Manager Sandra Melendez.

PUC counters that L.A. Unified had reviewed or had access to most of the checks in question during audits of PUC finances that took place in 2014 and 2015, and neither the district nor PUC grasped the potential problem. PUC administrators say they recognized it only recently, in response to questions and requests for documents from The Times.

The payments escaped PUC’s immediate attention, Ponce wrote, in part because Rodriguez had extraordinary control over the network’s finances in 2014 and 2015.

“LAUSD did not catch this and neither did PUC Schools. Yet we are both committed to transparency and integrity,” he wrote, adding that it is now up to Rodriguez to explain the transactions.

The latest L.A. Unified notice restates a sore spot between the district and PUC. L.A. Unified has long contended that PUC has refused to provide documents about PUC National, an affiliated organization that contracts with individual PUC schools to provide financial services and personnel management.

“PUC has consistently refused to provide information about PUC National indicating that PUC National is a private organization,” L.A. Unified stated.

PUC defended that position but said PUC National would provide documents relevant to current investigations.

“PUC has always responded to all of Los Angeles Unified’s requests for information and has voluntarily made substantial changes in responses to its recommendations,” the group said. “PUC strengthened its governance structure and fiscal controls after LAUSD’s notices in 2015. PUC’s leadership will continue to act with transparency and integrity.”

Similar issues have come up with other local charter networks that have created regional or national affiliates.

Charter critics have accused these networks of hiding their business operations behind affiliated corporations. To date, charter groups and their critics have battled over provisions in proposed state legislation that would bind these affiliated groups to the Public Records Act and open meeting laws.

PUC’s charters could be shut down if the L.A. school board finds the network has failed to address serious violations. A less severe penalty would be to require a change in leadership, although both actions are rare.

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@howardblume

UPDATES:

7:30 p.m.: This article was updated throughout with added detail from PUC’s responses to the warning notice from L.A. Unified.

This article was originally published at 8:55 p.m. on Oct. 30.