Former MACSA Teachers Still Suspicious

Lupe Nunez, a vice principal for two years at one of two charter schools formerly operated by the Mexican American Community Service Agency (MACSA)  school, says she’s not sure if Xavier Campos was involved in the disappearance of funds from the teachers’ retirement accounts, “but you kind of wonder.”

The question weighs on the minds of many teachers who worked for below-market wages at charter schools in Gilroy and San Jose, operated by MACSA, as executives raided $1 million from their pension accounts to pay other expenses, according to the Santa Clara County District Attorney’s office. Last week, the District Attorney’s Office indicted former MACSA CEO Olivia Soza-Mendiola and former CFO Benjamin Tan, but not the third member of the managerial troika: Campos. “Mere knowledge of criminal activity is not enough,” District Attorney Jeff Rosen said during a press conference.

While school employees lost their jobs and retirement contributions, Campos was elected to public office as San Jose’s District 5 councilmember. He worked at the nonprofit for two decades and served as MACSA’s chief operating officer (COO) when the illegal diversion came to light in early 2009.

Nunez contributed $230 from each paycheck to her retirement account, about $5,000 overall, and expected MACSA to match the amount. She remembers going to meetings, where Soza-Mendiola would give various explanations for the retirement account funding shortfalls.

“They were kind of beating around the bush, saying that because of the economy we are going to have to use your funds,” Nunez says. “So they kind of muddled it up.”

The financials were so muddled, in fact, that it took the DA’s office more than three years to complete its investigation. Michael Sterner, the case’s lead investigator, had his own suspicions about Campos in the report he wrote to support the charges against against Soza-Mendiola and Tan. Sterner commented that board meeting notes in 2004 and 2007—meetings that Campos almost assuredly attended—showed widespread awareness of the illegal diversion of retirement payments.

“The board meetings indicate that Mr. Campos took a lead role in the effort to sell real property owned by MACSA in part to satisfy past due pension obligations,” Sterner wrote. “Thus, Mr. Campos was almost certainly aware that MACSA had failed to make at least some pension payments.”

Nunez recalls that Campos “said he knew nothing about what was going on” with the pension funds. “He was always very vague.” After she was let go in March of 2009, “when they were running short on funds,” Nunez checked her pension balances and saw her money wasn’t there. A few months later, Campos offered Nunez a job managing his campaign for a San Jose City Council seat. She says she accepted the position not out of loyalty to Campos, but because she needed the work.

So did Campos, who conveniently forgot during his 2010 campaign to note in his League of Women’s Voters profile that he worked with MACSA for two decades.

Nunez wonders how Campos could not have known about the pension money diversion. “I cannot fathom how an operations officer cannot know where the funds are,” she says. “If he didn’t know… wow! If he did know, shame on him.”

Broken Trust

Gordon Smith grew up in downtown San Jose’s Naglee Park neighborhood. When his baby girl arrived five years ago, he moved four blocks to the other side of Coyote Creek to a neighborhood of small wooden homes that were part of East San Jose before it was annexed to San Jose in 1911.

“I want to give my daughter the same kind of upbringing I had,” he says.

The 35-year-old UC Santa Cruz grad says he’s worked as a substitute teacher in 50 different schools, teaching all subjects and all grades. He says he took a position with MACSA’s San Jose charter school, Academia Calmecac, even though it was “paying well under market,” in part because it had a pension plan that matched employee’s 8 percent of paycheck contributions. “You basically got 16 percent,” Smith says. “That was one of the big plus points of working for MACSA.”

Smith worked there four years, from 2005 to 2009. During that time, he directed about $4,000 a year from his paycheck to his retirement fund, and MACSA deducted the funds from his paycheck. With matching funds, it should reached been around $30,000, he estimates. A colleague from a sister school in Gilroy called and told him, “‘It’s really worth checking.’ I checked it. It was very low. It was way behind.”

According to the DA’s charges against Soza-Mendiola and Tan, MACSA stopped making nearly all employer payments to its pension plan provider (VALIC) in early 2004, began skipping payments to the provider for employee pension contributions in 2007 and stopped all payments completely in January 2008.

“We didn’t want to believe anything bad was happening,” Smith says, “and we didn’t want to risk our jobs by asking questions.”

He remembers the series of meetings when management tried to explain the shortfalls. “At first they said, ‘We don’t know what you are talking about. We were a little behind. Maybe some payments weren’t processed.’ We kept getting a variety of stories. The stories kept getting worse and worse. They’d never cop to anything other than what had been proven,” Smith recalls.

“I said to myself, ‘I don’t trust them, I’m out of here.’”

The DA’s decision to charge only two people for the wide-spread theft seems to have less to do with what people knew, but whether they had direct control over the expenditure of funds and how they handled their own pay deductions. Soza-Mendiola, who signed the checks, twice was awarded raises in 2007 and 2008, while contract employee Tan, who decided which checks went out, negotiated a contract that gave him higher pay instead of a pension.

Soza-Mendiola was the first MACSA employee to stop making bi-weekly payments into her own pension fund in mid-2007, suggestion she know the money was vanishing. That was almost a full year before Campos, whose contributions were small, and others opted out of the phantom retirement system.

Campos contributed $100 per pay period for a full year after Soza-Mendiola halted her payroll deductions, losing about $2,500 of his own money. His decision to continue making contributions to the pension fund—when he likely knew they were worthless—seems to have kept him out of the DA’s crosshairs. Was Campos dumb to lose the money or smart to avoid prosecution — or just not paying attention?

Sterner couldn’t say for certain in his report, because like Soza-Mendiola and Tan, Campos refused to give an account to investigators. (He also declined comment for this story.)

But while Campos continues to enjoy support from labor groups and District 5 voters loyal to his sister Nora, who preceded him in office before moving on to the California State Assembly, others say the councilmember is using his support bases as a shield.

Miguel Baldoni Olivencia, a former MACSA employee who now teaches in China, says Campos and others treated the nonprofit as a slush fund for development projects while using MACSA’s heritage to buffer criticism.

“The big picture is that Xavier Campos (and people like him) are using race baiting to stay in control of poor Mexicans and immigrants and make themselves rich in the process and steal money from the public trough in the process,” Olivencia wrote in a message.

Examples that Olivencia noted are MACSA’s affordable-housing projects, which are mainly funded by grants and public money. In 2001, MACSA’s board created the Ketzal Community Development Corporation. The people in charge of oversight for both organizations were one in the same. Within six years, MACSA transferred more than $800,000 to Ketzal to build Las Mariposas, a development that helps low-income, first-time homebuyers.

Former MACSA auditor Joe Chaidez—who along with Tan and Soza-Mendiola are defendants in a civil suit filed by MACSA last year—noted in 2008, three years after Las Mariposas was finished, that nearly $600,000 in Ketzal debt should be wiped off the books as uncollectable. (See page 18.)

How the money was lost so quickly by a MACSA-controlled entity has yet to be explained.

Josh Koehn is a former managing editor for San Jose Inside and Metro Silicon Valley.

10 Comments

  1. > Nunez wonders how Campos could not have known about the pension money diversion.

    Let’s put our thinking caps on, Lupe, and try to figure out how Xavier might not have known.

    A. He’s incompetent.

    B. He’s a moron.

    C. He’s a liar.

    D. He was busy worrying about global warming and just trying to save the community from rising sea levels.

  2. And we wonder how SJ got into it’s pension problems.  City was pulling out money for other projects and not letting it grow thru interest.  Now its all about greedy retirees.  Mayor goes on radio quoting 90% of salary.  With is total BS because majority of employees do not do 30 years to get to that point.  Retirees do not get free medical and dental as he claims.  Retirees do not get bonus checks.  They get a fixed monthly check based on years of service and pay deductibles for doctor visits and pay for meds and pay for denist appointments.  And if you only did 20 years that is not a whole lot.

    • I don’t disagree with you Mr Heller but I do wonder why in the world the unions would back someone and still even now stay behind Xavier Campos when he is so obviously incompetent.  Once he knew the funds were being diverted (and he had to know once he was put in charge of the sale of property to cover those shortages) he DID NOTHING TO ALERT AUTHORITIES, THE MACSA BOARD OR ANY OTHER INTERNAL TRIGGERS TO TAKE CARE OF IT.  He is useless so this is the guy the unions believe is best to work on THEIR union/pension issues for the city? 

      It shows their ignorance too.  The city unions would gain my respect and probably that of many other city residents if it took a definitive and clear stance against Campos and his incompetence. 

      Tell you what, let the unions lead the charge to recall Campos for incompetence and I will vote against the Mayor’s pension reform measures.  If not, if Campos is the type of shady character they support then I have no choice as a voter to side with the competent side that recognizes that Campos was NOT CLEARED OF WRONG DOING he was simply not charged.

      • Aware D5,

        I do not trust this person as well.  In fact, I do not trust all but a couple on this city council!  It is a sad day that we have to put up with the “I hate the unions, Mayors big supports on the council”.  Hard working employees and retirees are not the problem for the city finances!  This council and others before have abused city money in good times and it is time to repay, but they do not have the money. So now they blame it on retirees.  The mayor flat out lies about pension reform!

  3. I feel sorry for MASCA employees just as I feel pissed for SJ not paying into employee pensions. 

    This is how they treat dedicated employees!

    Contracting out city workers has failed and the residents of San Jose are suffering, Graffiti has increased in 7 out of 10 City Council Districts in San Jose and Gang graffiti has increased by 10% since the City Council majority contracted out the work.  Too make matters worse the LA based firm is over budget!  Rose Herrera, who voted to dismantle the Anti-Graffiti program and outsource it to a Los Angeles firm has seen GRAFFITI INCREASE BY 63% IN DISTRICT 8/EVERGREEN.  Failed leadership with grave consequences.

    I feel the toliet slowing flushing in this once great city!

  4. Aware D5,

    City employee unions are all but prevented by obligation from supporting any candidate that supports its agenda. Unions must put their members’ working conditions first, which is why it is so frequent that the candidates supported are unpopular with individual union members.

    But face it, if our unions only supported candidates who were good for the city at large they’d wind up supporting almost none of theses bought-and-sold crooks.

    • Finfan,

      It truly is shame if union workers are putting their scarce but hard earned money into paying dues that back candidates like Campos who do nothing but bring shame and ridicule to them and their cause. 

      I don’t blame the unions for the city’s financial woes, things were prosperous for everyone and the city negotiated great contracts with great benefits for its employees to share that prosperity.  However I don’t know how to solve the problem now that things aren’t so prosperous and we’re facing the reality of ballooning pensions, closed libraries & services and laying off police &  fire.  If the unions have the answer they should share it with the public more decidedly if the city officials are ignoring them because it is my inclination to want to back the workers, the little guys who are my neighbors and community members and make this city a better place to live.

      But when they (the collective “union”) seems so hellbent on defending the character of the DUI Kalra, the just barely escaped prosecution Campos I have no choice but to question their motives and their wisdom.

  5. Xavier is a buffoon. Rosen is not. Xavier sure sounds guilty as hell, but the evidence must not have been that strong, and the D.A.‘s office probably did not want to end up with egg all over their faces like the last time a local San Jose politician was led away in chains (Ahem! Gonzales) followed by the case fizzling out under the previous D.A.

%d bloggers like this: