October 29, 2006
Tribune Investigation - Part 2 of 4
The director of Scottsdale Community College’s premier performing arts institute kept his program afloat for years by faking enrollment and misappropriating scholarship money to pay its bills.
At the same time, director Steven Meredith used the program to provide his business, family, friends and church access to publicly owned equipment.
SCC also allowed Meredith to draw more than $268,000 in extra pay, sometimes for work that he already was doing as part of his regular job and sometimes for work he never did.
In 2005, after operating seven years, the Maricopa Institute for Art and Entertainment Technology folded when an internal auditor uncovered the malfeasance.
But Meredith remained with the college’s music department. He received only a written reprimand and no cut in salary. In fact, he soon was given new responsibilities working with the Maricopa County Community College District’s instructional advancement program, which paid him an additional $11,000 during his final two years in Scottsdale. He left in June to take over the choral program at Snow College in Ephraim, Utah.
Wrongdoing within the Scottsdale performing arts programs was just one serious problem within MCCCD discovered by auditors over the past few years.
A Tribune review of numerous auditors’ reports along with interviews with college officials, faculty and staff showed that auditors frequently found fraud, mismanagement and other substantial concerns at community colleges. But officials, including the district’s elected governing board, paid little attention to the auditors’ findings and recommendations.
Employees discovered to have falsified records, misused taxpayer money or hired relatives were routinely shifted to different jobs or permitted to resign quietly. In multiple cases, college officials did not inform law enforcement when employees were suspected of committing crimes, nor did they require reimbursement when taxpayer dollars were misappropriated.
At SCC, the art and entertainment institute was created by Meredith in 1998 and it almost immediately suffered from a lack of students. In 2002, SCC officials asked auditors to investigate the institute, but that review was put on hold for a year while the auditors — there are only three for the entire district — were working on what seemed like more pressing concerns at other colleges.
When an auditor began reviewing the institute’s operations in 2004, he discovered:
• To pay the cost of running the program, Meredith siphoned off scholarship money intended for students throughout the district.
• Meredith frequently used the college’s equipment and employees for projects benefiting his private production company and those close to him.
• Encouraged by Meredith, professors and other employees enrolled in classes they didn’t need to take to keep the classes from being canceled and to make the institute appear healthy.
The institute spent $2.5 million on equipment, performances and salaries in the six years it received regular funding. During most of that time it could not attract enough students to justify its existence, enrollment records show.
In all, 17 professors, technicians and clerical employees signed up for classes to deceive college officials. The institute’s secretary, who uses a wheelchair, told the auditor that at Meredith’s request she enrolled in a dance class. So did a sound technician whose spine is fused.
Meredith did not respond to multiple calls for comment. The Tribune provided his attorney, Alan Hyde of Mesa, a list of questions, which Hyde says the former institute director declined to answer.
Last year, in a written response to the audit, Meredith called the inquiry a “witch hunt.” He hired Hyde to represent him, and officials ultimately wrote a letter reprimanding Meredith only for his misuse of equipment and some questionable travel.
The letter did not mention any concerns over fraud.
SCC President Art DeCabooter acknowledged that issues raised by the auditor, including the misuse of thousands of dollars of scholarship money, were major problems and that he and other college officials did little about them.
DeCabooter says he wanted to fire Meredith, but the college’s attorneys overruled him, arguing that the risk of Meredith suing was too great.
“They had questions whether or not we would prevail legally because of the complicated, convoluted or intertwined things,” DeCabooter says. “That doesn’t make you happy, but that’s what happened.”
The institute was designed to be a two-year program providing topperforming art students with onstage experience and industry connections.
The institute planned to accept only the top 5 percent of students from the district’s art programs, offering internships in their chosen industry and collaboration on large-scale performances. Students would have to apply and compete for spots.
Classes would be far from traditional.
While the institute based some course work on lectures, much of the instruction focused on developing the multimedia productions that intermingled music, graphic arts, dance and documentary filmmaking. Whole courses would be devoted to setting up sound and lights for a show.
Paul Elsner, then chancellor of the junior college district, gave Meredith, a music professor and choir director at the time, the seed money to launch the institute. SCC housed the institute, but it was open to students throughout the district.
The institute began offering classes in 1998. The faculty and students all came from SCC.
Bryan Hollar was accepted into the institute in its first year to study show management and says the instruction he would later receive at Arizona State University was boring by comparison — at ASU, students received lectures; at the Scottsdale college they helped create art.
“I credit the job I have now on what I learned there,” says Hollar, who works for a Santa Fe, N.M., company that engineers technology for opera houses around the world.
But turf wars developed after the first year, says Joe Ortiz, an SCC communications professor who was chairman of the fine arts division during the institute’s existence.
Artistic talent is hard to come by at junior colleges because the best students graduating from high school often go straight to universities. Few professors at SCC, let alone those at the district’s nine other campuses, were willing to let their brightest students go, says Carley Conder, an SCC dance professor.
The institute formed a dance company called Instinct to perform in all of its shows. A few calls were made to other dance departments in the district in search of students interested in auditioning, but none responded, she says. “People didn’t want their best dancers going to this other group.”
As a result, Instinct struggled to find more than six students skilled enough for the challenging choreography, though it was envisioned to include 15 dancers.
So instructors joined the company and enrolled in classes, as well, Conder says.
Conder says Meredith convinced her to enroll as a student to avoid creating a “conflict of interest between me as directorchoreographer and me as a dancer.”
Patricia Bodell, Meredith’s wife and the college’s dance director, was another accomplished dancer who enrolled in lower-level classes. She declined to comment for this article.
In fact, Bodell’s name was on the rosters of three beginning dance classes in the same semester, the Tribune found. Tuition waiver requests, which employees must complete for the college to pay their tuition, show Bodell was allowed to join two sections of modern dance and a ballet course.
Christine Hoeffler, then a secretary for the fine arts division, says she spotted Bodell’s name on a beginning dance class roster and went to her boss, Ortiz, then the fine arts chairman, with the information.
There was no legitimate reason for Bodell to be there, Hoeffler says. “It was the one person that should not have been enrolled in that class.”
Ortiz says he cannot remember Hoeffler’s warning, but recalls that about that time he was informed that an institute class was filled with instructors’ children.
The class was canceled, but no other action was taken against the institute or Meredith for the enrollment fraud.
“That was a problem,” Ortiz says. “That was huge.”
DeCabooter, the SCC president, says the institute did not have enrollment quotas like other classes and programs.
However, in interviews with the district auditor and the Tribune, several of the institute’s employees say Meredith specifically asked them to sign up for classes because there were too few real students.
“I went through (the program) twice,” Randall Huot, a sound technician and instructor at the institute, says. “I never did get my certificate or my sheepskin or anything from that.”
Huot says he was enrolled in numerous classes, including a dance class that he says he never showed up for. He couldn’t dance anyway — his spine is fused and upper-body movement is difficult.
For an electronic music class, Huot was the instructor as well as a student. He says he gave himself an A.
Within two years of its launch, the institute began to disintegrate. Instructors were protesting their compensation, and students were complaining that instruction was not as rigorous as promised.
The college’s arts and motion picture departments withdrew from participation in the institute.
Still, Meredith kept the institute alive another five years, and it grew substantially — at least on paper.
The institute collected about $200,000 to operate its first year; that figure doubled the second year and had tripled by the fourth year.
In 2000, with only the music and dance departments still involved, the number of students entering the institute began dropping, says James O’Brien, then a technical director for the institute.
The institute began accepting any student it could, silently dropping all pretenses about being an elite program, O’Brien says. “It wasn’t a waiting list of qualified people who wanted to participate. It was these minimums that just satisfied what was being asked of the enrollment side.”
The district’s internal auditor, Jody LaBenz, found that a third of all the institute’s students had never even submitted an application.
Even though the institute was struggling to attract students, the district continued to pump money into it. In its fourth year, it received $600,000 from the district.
Meredith found other sources of income, too, as he worked to keep the institute functioning. College officials now say they believe he was wrongfully spending tens of thousands of dollars without approval and then telling them later he did not know the rules.
In July 2002, SCC accountants discovered that the college’s scholarship fund was short more than $26,000. They traced the discrepancy to Meredith, says Carl Couch, business services director.
The institute did not have the authority to tap these scholarships because it was a district program, separate from the rest of the campus.
Nevertheless, at the beginning of the 2001 school year, Meredith directed a financial aid employee to grant scholarships to all institute students through the music department’s account.
Covering that cost kept students in the program — and money flowing in — that he might have lost if the institute charged tuition. Some of those scholarship recipients were employees, budget records show.
Meredith was a well-known music professor, and the financial aid employee had little reason to question his instructions, says Virginia Stahl, the college’s vice president for student affairs.
“The faculty were able to tell financial aid people, ‘This is what’s going on,’ ” Stahl said.
Once the college confirmed Meredith was responsible for the scholarship shortage, SCC responded by pulling $26,000 out of the institute’s budget, triggering a financial crisis, budget records show.
Couch says the reimbursement closed the matter.
Again, Meredith was not punished.
Asked by the Tribune why the scholarship misappropriation was not taken more seriously, DeCabooter responded: “I can’t answer that.”
Though SCC officials stopped the scholarship fund transactions within their own college, Meredith continued to draw tens of thousands of dollars out of a scholarship account with the Maricopa College Foundation, an independent fundraising organization that provides scholarships separately from the college.
He withdrew thousands of dollars more than the institute had deposited in its account.
Rather than freeze the institute’s account, the foundation continued to provide Meredith with all the scholarship money he requested. Foundation officials now say they were not aware Meredith granted scholarships to all institute students.
“It’s a trust system we had with them,” says Alma Padilla, the foundation’s operations director.
When the institute closed, it owed the foundation $13,000. That money would otherwise have gone to students in other parts of the junior college system.
Meredith began teaching music at SCC in 1989 and took over the student choir his first year. To direct the choir, he was paid $1,482 on top of his salary under a “special service” contract, a standard reimbursement for work that falls outside of an instructor’s regular work hours or duties.
By the time Meredith retired from SCC in June, he had received 112 of the contracts, totaling $268,185 in extra pay, records show.
“I’m floored by that amount,” says Ortiz, the former fine arts division chairman, who reviewed the newspaper’s finding.
Most of the contracts were processed through Ortiz’s office before being approved by one of the college’s vice presidents.
A number of the contracts appear legitimate, including the $24,152 he was paid to lead the student choir for several years and the $78,962 he earned for directing MCTV.
But other contracts involved payments for work he never performed.
Starting in 1991, Meredith regularly received contracts to direct operas at the campus. Records indicate he was paid to produce 11 operas, netting him $27,351.
The Tribune could find no record of any opera being cast, let alone performed at SCC. None of the more than two dozen past and present employees interviewed could recall an opera being produced on campus.
In addition, Meredith was paid $8,724 in 2003 to direct two shows for the institute. Those shows were developed as part of courses Meredith was teaching and that his salary already covered.
That year, Meredith received 10 special service contracts, adding $32,050 to his roughly $80,000 salary.
Before he received payment, the contracts had to be approved by three SCC administrators. In many cases, records show, Meredith’s requests were first reviewed by Stephen Green, then head of the music department and a close friend of his.
The district’s governing board fired Green in July for purchasing expensive microphones from his son, attempting to cover up the transaction and failing to teach his electronic music class beyond the first lecture. The auditor discovered Green’s activity as part of the investigation into Meredith and the institute.
Green declined comment through his attorney, Janet Feltz of Phoenix.
After Green signed off on the contracts, they were passed up to Ortiz at the fine arts division. Ortiz says he did not review the requests before forwarding them for final approval to a vice president, often Stahl, head of student services.
“Not having an art background, I have no way of . . . making a judgment as to whether or not what they have chosen is truly of sound academic” value, Ortiz says.
Stahl says she assumed that, once the contract requests made it to her office, the division chair, Ortiz, had determined the requests had merit and signed them. Her signature approved 18 of Meredith’s contracts, worth $46,000, including six to direct operas.
Meredith also used SCC’s equipment to perform work outside the college, jobs that benefited Meredith, his friends and his family, auditors found.
On multiple occasions in 2004, Meredith packed up recording equipment, hauled it off campus and spent several hours recording the Arizona Mormon Choir — which he directed.
When confronted by the auditor, Meredith argued that the choir recording was part of a scholarship drive, not a favor for his church.
Ralph Horlacher, a Valley developer involved with the Mormon choir, donated $10,000 to the institute in exchange for recording work, Meredith explained in a written response to the auditor’s report.
But the auditor contends that the contribution was actually payment for other work Meredith did, producing marketing materials for one of Horlacher’s businesses, Space-X-Doors, a firm that sold doors disguised as bookcases.
Horlacher says the institute was working on his marketing project as part of a student internship, but that the donation was purely philanthropic.
According to the audit report, Meredith also produced the Romance Writers of America’s annual award show, using institute employees and its film-editing equipment.
Meredith also allowed his stepson’s band to record a demo CD and a member of his church to record an entire album in the campus studio, the report shows.
DeCabooter, the SCC president, says that by 2004 he had become concerned about Meredith and assigned Sharon Blanton, then dean of technology services, to watch the institute closely. Blanton, now a vice chancellor with the Pima County Community College District, did not return calls for comment.
About that same time, MCCCD Chancellor Rufus Glasper received an anonymous letter alleging Meredith was orchestrating a massive fraud at the institute. He sent the letter to DeCabooter and the auditor.
That finally got the auditor back on the investigation of the institute, the same review DeCabooter had requested two years earlier but that had been put on hold.
It didn’t take long for the auditor, Jody LaBenz, to confirm the anonymous allegations and DeCabooter’s suspicions.
“The continuing pattern of questionable activity, nepotism and ethical lapses does not illustrate a pattern that indicates errors in judgment,” LaBenz wrote after his first interview with Meredith. “Instead, this continuing pattern shows an attempt to pursue activities that benefit you individually, above the MIAET program or the music program.”
In his report, LaBenz placed a share of the blame with SCC’s top administrators for their faulty oversight of Meredith and the institute.
DeCabooter contends he was helpless until the auditor’s investigation was finished, regardless of what he knew.
“Had the audit been completed in a timely fashion,” DeCabooter says, “we wouldn’t have had all this.”