Columbus – Nearly $4.2 million was stolen from the Cuyahoga Heights School District by a former IT director according to a special audit of the district released today by Auditor of State Dave Yost.  In a press conference today, Auditor Yost and Superintendent Dr. Edwin Holland outlined the findings.

“What the Palazzo brothers did stuns the conscience – money for nothing,” Auditor Yost said.  “We are sending this to the prosecutor for consideration of criminal charges.”

This special audit focused on payments made to vendors for IT equipment by former district IT Director Joseph Palazzo.  Auditors reviewed records for the period of July 1, 2007 through February 22, 2011.

According to audit findings, Palazzo authorized 436 payments for a total of $3,844,155 to seven companies for which the district received no goods or services.  These payments were made to seven vendors, all of which were owned or operated by family members or friends of Palazzo.  Ten findings for recovery were issued against various vendors and individuals for the total amount of $3,844,155.

Another 179 transactions totaling $336,495 were found to be made for goods or services that cannot be located by the district.  For example, certain individuals not employed by the district received equipment, cellular phones, accessories and service plans, all paid for by the district.  A finding for recovery was issued against Joseph Palazzo in the amount of $336,495, with additional individuals held jointly and severally liable for portions of the amount.

Additionally, a review of bank records revealed payments totaling $1,308,194 were made directly to Joseph Palazzo from four of the seven vendors after they received their payments from the District.

The findings in this special audit have been forwarded to the Cuyahoga County Prosecutor’s office.

In February 2011, a Cuyahoga Heights School Board member contacted the Auditor of State’s office to express concerns over district IT purchases.  Auditor of State staff also met with the district’s treasurer, who expressed similar concerns.  A preliminary examination of records was conducted and reviewed by the Auditor of State’s Special Audit Task Force.  The special audit was launched on March 1, 2011.

A full copy of this special audit may be accessed online.

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The Auditor of State’s office, one of five independently elected statewide offices in Ohio, is responsible for auditing more than 5,600 state and local government agencies.  Under the direction of Auditor Dave Yost, the office also provides financial services to local governments, investigates and prevents fraud in public agencies and promotes transparency in government.

Contact:
Carrie Bartunek
Press Secretary
614-644-1111