Former North Chicago School Board Member Sentenced to 10 Years in Federal Prison for Bus Contracts Fraud Scheme
|U.S. Attorney’s Office July 16, 2014|
CHICAGO—A former North Chicago school board member was sentenced today to 10 years in federal prison for receiving at least $566,000 in kickbacks from three co-defendants who controlled several different transportation companies that received more than $21 million in student bus contracts over nearly a decade.
The defendant, GLORIA HARPER, 63, formerly of North Chicago, pleaded guilty last October to one count each of wire fraud and filing a false federal income tax return. Harper admitted that between 2001 and 2010 she schemed to deprive the approximately 4,000-student North Chicago Community Unit School District 187 (NCSD) of her honest services. Harper instigated and orchestrated the fraud scheme with four co-defendants, including Alice Sherrod, the district’s former transportation director. The three co-defendants funneled kickbacks totaling at least $800,000 to Harper and Sherrod and made more than $9.6 million in profits.
“This was a serious, serious offense that took advantage of an impoverished school district and the ultimate victims were the school children of North Chicago,” U.S. District Judge Sharon Johnson Coleman said in imposing the sentence today after a hearing that began last week. Judge Coleman ordered Harper to serve her sentence consecutive to a 30-month federal sentence that Harper received in 2012 in Louisiana for defrauding the federal E-Rate program that funds education technology. The judge also ordered Harper to pay approximately $7.2 million in restitution.
“The North Chicago School District has one of the highest low-income populations in the state. But rather than looking out for the interests of the district’s taxpayers and the children who depended on the schools for education, Harper selfishly used her position to enrich herself, and then filed false tax returns,” Assistant U.S. Attorney Matthew Getter argued at sentencing.
Sherrod, 62, of Berwyn and formerly of Gurnee; Tommie Boddie, 69, of Harvest, Ala., and formerly of Wadsworth; Derrick Eubanks, 50, of Lake Villa; and Barrett White, 55, of Matteson, have also pleaded guilty and are awaiting sentencing.
Harper, who was a member of the NCSD board from 1999 to May 2009, and Sherrod, who was District 187’s transportation director from 2001 to July 2010, used their positions to enrich themselves secretly by soliciting and accepting gifts and cash from their three codefendants in exchange for favorable official action regarding student transportation contracts. Initially, Harper and Sherrod received kickbacks of approximately $4,000 to $5,000 a month but, by 2003, they were collecting approximately $20,000 a month.
From the late 1990s until mid-2003, the NCSD contracted with various companies to provide student transportation, including T&M Transportation, which was owned in part and controlled by Boddie, and Eubanks Transportation, which was owned in part and controlled by Eubanks. In 2001, Harper and Sherrod met with Boddie and agreed they would arrange for the NCSD to increase the number of students that T&M transported in exchange for kickback payments.
In May 2003, Harper suggested to Boddie and Eubanks that they join together to form one company ― Safety First Transportation, Inc., which won the NCSD’s transportation contract in 2003, and Harper, Sherrod, Boddie, and Eubanks agreed that they would split the profits from the contract. After an IRS audit of Safety First in 2006-2007, White, who had been acting as the “bagman” for the kickbacks, began receiving funds from Safety First as both an employee and a contractor, even though he provided little service other than being the bagman.
In April 2008, the defendants agreed to set up a new company, Quality Trans, LLC, to replace Safety First and to assume its contracts with the school district. All five agreed to continue splitting profits from Quality Trans, and Boddie, Eubanks and White continued making cash payments to Harper and Sherrod.
The sentence was announced by Zachary T. Fardon, United States Attorney for the Northern District of Illinois; Robert J. Holley, Special Agent-in-Charge of the Chicago Office of the Federal Bureau of Investigation; and James C. Lee, Special Agent-in-Charge of the Internal Revenue Service Criminal Investigation Division in Chicago. The North Chicago School District cooperated with the investigation.