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Investigative Report

PRESS RELEASE:
March 2, 2007

U.S. Department of Justice
Office of the United States Attorney
Central District of California

Contact:
Thom Mrozek, Public Affairs Officer
(213) 894-6947
thom.mrozek@usdoj.gov
www.usdoj.gov/usao/cac

Former Official with LAUSD Arrested in Fraud Scheme in Which He Authorized Large Purchase of Book He Wrote

A High Desert man who wrote an Algebra book while he was an official with the Los Angeles Unified School District has been arrested on federal fraud charges for allegedly causing the District to pay nearly $4 million for his textbook, netting him nearly $1 million in royalties and fees.

Matthias Charles Vheru, 51, of California City, was arrested late yesterday afternoon after leaving his job as math teacher at Knight High School in Palmdale. Vheru is expected to make his initial appearance this afternoon in United States District Court in Los Angeles.

According to an indictment returned under seal Wednesday afternoon by a federal grand jury in Los Angeles, Vheru struck a deal in 2002 with an English publishing company to write an Algebra I textbook. Once the contract was amended the following year, Vheru was entitled to 20 percent of all revenues generated by sales of the textbook and related materials.

In early 2004, LAUSD gave Vheru a temporary position as supervisor of Central Office Mathematics Department, which gave him the authority to issue book purchase orders without any oversight. Several months later, LAUSD notified Vheru that it intended to replace him as the supervisor of the Mathematics Department with another individual.

The indictment alleges that before he was replaced as the supervisor, Vheru executed a scheme that caused the district to issue $3.7 million worth of purchase orders for his Algebra book in violation of California conflict of interest laws and the district's code of ethics. He subsequently caused the District to pay for the book and related materials with federal funds that were specifically provided to the district under Title III of the No Child Left Behind Act for programs for students with limited English proficiency.

The federal government provides Title III educational funds to the State of California, which transmits some of the money to the school district. The district is required to spend the money on programs that are designed to increase the academic performance and English proficiency of pupils who have difficulty reading or writing English.

The indictment alleges that Vheru attempted to conceal his scheme by, among other things, having the purchase orders for the algebra books describe the items being purchased as materials that were intended to help students prepare for the California High School Exit Exam, and taking other steps to prevent the publisher from disclosing to the district the true nature of the course materials that were being purchased and Vheru's financial interest in the deal.

In July 2004, the school district paid nearly $4 million to the publisher for Vheru's textbook and related materials, and for a small amount of exit exam materials. Soon after, the publisher paid Vheru approximately $676,000 in royalties and a $255,000 consulting fee.

Vheru worked for LAUSD in several roles from 1982 until he resigned approximately two years ago during the course of the District's dismissal process.

Vheru is specifically charged with 11 counts of "honest services" wire fraud for allegedly depriving the school district of his honest services and misuse of the funds that were used to finance the purchase. The indictment also contains one count of misapplication of funds that were under the control of a federally funded government agency. If convicted of these 12 felony charges, Vheru faces a maximum possible penalty of 230 years in federal prison.

An indictment contains allegations that a defendant has committed a crime. Every defendant is presumed innocent until and unless proven guilty in court.

The case against Vheru is the result of an investigation by the United States Department of Education, Office of Inspector General; the Los Angeles School District, Office of Inspector General; the Los Angeles Unified School District, Office of the General Counsel; and the United States Postal Inspection Service.

Release No. 07-034


 
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Last Modified: 03/06/2007