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FBI Investigates Failed iPad Program in L.A. Schools

Fallout over the Los Angeles school district's $1.3-billion plan to provide iPads to every student intensified Tuesday with the revelation that the FBI is conducting a criminal investigation into the failed effort.

By Howard Blume, Victoria Kim and James Rainey

Fallout over the Los Angeles school district's $1.3-billion plan to provide iPads to every student intensified Tuesday with the revelation that the FBI is conducting a criminal investigation into the failed effort.

FBI agents seized 20 boxes of records related to the iPad program Monday, and court documents reviewed by The Times show a federal grand jury is examining the matter.

Federal investigators declined to name the target of the probe. But the FBI's actions have brought a renewed focus on the program nine months after the Los Angeles County district attorney's office closed its own review without filing charges.

The subpoena demanded that the district produce a wide array of documents related to deals with Apple, maker of the iPad, and curriculuum provider Pearson, the companies that won a lucrative, multiyear contract.

The iPads-for-all project was a signature initiative of former Supt. John Deasy, who resigned under pressure in October. Deasy said he had no knowledge of the FBI investigation and had not been contacted by any law enforcement agency.

"No one has spoken to me," he said. "I have no comment as I do not know anything about this."

Supt. Ramon C. Cortines said Tuesday that he would suspend any additional purchases under the contract for iPads, which was approved in June 2013.

The bidding process for that contract had been plagued by "too many innuendoes [and] rumors," Cortines said, adding that he had reached that conclusion before the FBI took the documents.

Cortines' action echoed an August announcement by Deasy, who also said he had suspended further purchases under the iPad contract. But later, other senior officials said the contract would be used to buy additional iPads.

The iPad effort dates from at least 2012, when Deasy said in a speech that he wanted to provide a tablet to all 600,000 L.A. Unified students. Teachers and campus administrators also were to receive the devices. Deasy said technology was key to closing the learning gap between the district's mostly poor and urban students and their peers in wealthier communities.

But the iPad rollout quickly foundered, amid claims of inadequate training and security breaches by high school students who deleted security filters so they could freely browse the Internet. Critics also raised concerns about a close relationship that Deasy and a top assistant had with executives from Apple and Pearson.

Improprieties in the bidding process could rise to the level of a federal crime if federal funds were involved, or if the actions amounted to "honest services fraud" of taxpayers by public officials, said Marc Harris, a white-collar defense attorney and former deputy chief of the public corruption and government fraud unit at the U.S. attorney's office in Los Angeles.

But the line between an ethical violation and a crime isn't always clear-cut, making it a challenging call for prosecutors to determine what constitutes a criminal act, Harris said. "Prosecutors should tread carefully in converting any ethical violations into alleged criminal violations," he said.

Harris cited the 2009 trial of Matthias Vheru, an L.A. Unified administrator who faced federal charges of wire fraud and misappropriation of federal funds. He had allegedly arranged for the district to purchase copies of an algebra textbook he wrote, earning him nearly $1 million. The case ended in a mistrial after the jury hung 11 to 1 in favor of acquittal.

Based on the subpoena they served on the district Nov. 21, the federal officials appeared to be taking a broad look at the school district's June 2013 technology contract. The subpoena said the documents were part of "an official criminal investigation."

The subpoena demanded documents related to other projects, including some that predated the bidding process. It called for records related to both Apple and Pearson and other bidders. It did not name any school district employees.

The documents sought included all "score sheets; complete notepads, notebooks and binders; reports; contracts; agreements; consent forms; files; notices; agenda; meetings notes and minutes; instructions; accounting records" and much more.

Patricia A. Donahue, an assistant U.S. attorney in the Public Corruption and Civil Rights Section, signed the subpoena. L.A. Unified General Counsel David Holmquist said the district was "fully cooperating."

Deasy's bold technology initiative had problems from nearly the start, beginning with the high cost. Along with Pearson's software and modifications to make campuses Internet-ready, school officials said the project would cost $1.3 billion.

Deasy wanted to use voter-approved school construction bonds, which prompted objections from members of an advisory committee. It was concerned about using long-term financing for devices that would last just a few years, among other issues.

Within months of last year's troubled rollout, the Board of Education decided to move more slowly, while also trying out other devices and curricula.

Critics of the expensive initiative argued that Deasy and then-Deputy Supt. Jaime Aquino had been early champions of the Apple devices and software from the British company Pearson, without fully exploring alternatives.

Records showed that Deasy had meetings with top Apple and Pearson executives before the bidding process. The draft of a five-year district technology plan mentioned only those companies and no other vendors. Similarly, a pilot program at 13 campuses was designed to include only the iPad.

Aquino worked for a Pearson affiliate before joining the district, but he has insisted that he obtained clearance from district legal staff before participating in discussions with his former employer.

The school district's inspector general previously investigated the bidding process -- and turned his findings over to the D.A.'s office -- but opened a second, broader review after disclosures of the Deasy/Aquino contacts. That inquiry is continuing.

Deasy and Aquino have denied any wrongdoing. They said that the contacts with the corporate executives were legal and appropriate, that they happened before the bidding process and that they had no influence over the evaluation of bidders.

Aquino left the district at the end of 2013, citing a hostile work environment and micromanagement from the Board of Education. When Deasy resigned, the school board issued a statement asserting that it "does not believe that the Superintendent engaged in any ethical violations or unlawful acts." The statement added that "the Board anticipates that the Inspector General's report will confirm" that Deasy acted appropriately.

Aquino could not be reached Tuesday. Apple did not respond to inquiries. A Pearson representative said the company had no comment on the federal investigation.

The district's inspector general also conducted an unrelated audit into a different technology project that marred Deasy's final months. That review looked at a malfunctioning student records system and found widespread and serious mistakes by senior management.

The published audit, however, makes no mention of Deasy's role and the auditors never interviewed him. Some board members, however, criticized Deasy for not taking a more aggressive role in resolving problems for students, who had difficulties getting courses required for graduation and college eligibility.

(c)2014 the Los Angeles Times

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