DALLAS — The Dallas Independent School District’s chief auditor who resigned after finding potential contractor overpayments – but had his credibility questioned – has called for two state agencies to review his findings for accuracy and possible criminal violations, according to a letter and email obtained by WFAA.
Steven Martin called for the Texas State Auditor to review two recently completed audits that showed the Dallas school district potentially overpaid more than $330,000 for $1.2 million in two construction contracts, in a letter obtained by WFAA.
The district's chief internal auditor also sent a letter to the Texas Education Agency, which can investigate possible fraud and abuse, according to an email sent to WFAA.
“The problem the District finds itself in is that any company that the District contracts with to review the audits will be suspect as not being independent of the District,” Martin wrote in his Feb. 14 letter to the Texas State Auditor.
“Accordingly, because trust is so important as the District heads into the bond election, could your office kindly review the enclosed audits for accuracy, making public your report?” said Martin, who enclosed his two most recent audits.
The controversy surrounding Martin and his resignation comes when the school district has asked taxpayers for the largest single bond in state history, from a total of $2.7 billion to $3.7 billion.
“I do not know if either agency will act on these reports, but I made myself available to them should they so request,” Martin said in his Feb. 15 email.
In his email, Martin, hired only a year ago, also told WFAA he resigned because “an auditor cannot work without the support of those who employ him or her.”
Though Martin planned to resign effective Feb. 28, he was escorted from his DISD office within hours after announcing his decision.
Martin’s office was scheduled to release up to 15 more audits at a board meeting next week, with findings of potential overpayments totaling $1.7 million, sources said.
The audits found the district and vendors failed to follow pre-pricing guidelines. More than 400 similar construction contracts from 2015 to 2018 also may have been subject for review.
The status of those audits and Martin's alleged findings are now up in the air.
School district officials said in a public Feb. 13 statement challenged the validity of Martin’s audit findings.
“The Board has since received serious allegations regarding the validity of the Internal Auditor’s methodology and the accuracy of the calculations,” the statement said.
“To clarify, Mr. Martin did not discover the overpayment issues with these contracts and was not being prevented from investigating them,” the statement added.
The DISD statement said potential overpayments were discovered more than two years ago, and findings turned over to federal law enforcement. DISD officials have been working “to review and implement significant changes to the District’s purchasing policies and procedures.” the statement added.
“The (DISD) Board requested that Mr. Martin investigate and calculate the amount of any potential overpayments on the relevant contracts, in part to determine the viability of recovering those funds through negotiations or other means,’ the statement said.
Martin’s resignation was triggered after the DISD Audit Committee scheduled a sudden peer review last week of the auditor’s performance.
He took the unprecedented step of speaking publicly prior to committee trustees heading behind closed doors to discuss the review, which ended in no action.
“What concerns me is the reason for an early peer-review and who will do it,” Martin told those in attendance at the committee hearing last week. “As a federal investigator for 24 years, I understand when a case against a defendant is airtight, defense attorneys investigate the investigator. I feel this is happening now.”
Martin has been an accountant for 35 years, including 19 years as a supervisor for the Drug Enforcement Administration. He declined to go on-camera for an interview.
One of his recent audits called for DISD to refer the potential overpayments to the Dallas District Attorney’s Office for criminal prosecution. His audits said many of the alleged violations would have been state violations, not federal.
In his letter to the Texas State Auditor, Martin said one of the contractors “acknowledged the overpayment and offered to immediately return it.” Another contractor “agreed to settle with the District for any overpayments but wanted to do so in one settlement.”
Last month, Martin raised concerns about a Dallas ISD proposal to limit the ability of his office to review smaller construction contracts, according to an email obtained by WFAA.
Martin's resignation comes after WFAA aired stories highlighting possible building contract irregularities by two other DISD employees, Zach Manning and a current investigator with the district named Andrea Whelan.
Both employees told WFAA they believed DISD retaliated against them for reporting possible bid splitting that led to higher costs for taxpayers.