DAN REYNOLDS, senior editor of Risk & Insurance®
The Detroit Public School District is moving ahead with efforts to recover millions it says may have been mismanaged by its former risk manager Stephen Hill.
Phyllis Hurks-Hill, the general counsel for the school district, told Risk & Insurance® on Oct. 29 that the district planned to move forward in a matter of days with facilitation meetings with Hill and eight other defendants in a lawsuit the district filed in June of 2008.
Hurks-Hill said she was unable to say what the goal of those meetings was.
"We'll see what happens and we'll go from there," said Hurks-Hill, who became the district's general counsel in January.
In June of 2008, the district filed a lawsuit in Wayne County court against Hill and 12 other individual and business entities in connection with allegations that Hill had turned his risk management office into his own fiefdom, awarding contracts without district oversight and possibly receiving kickbacks in the process.
According to reports in the Detroit Free Press and the Detroit News, the district alleges that Hill sidestepped accounting policies to issue more than $45 million in unauthorized contracts between 2001 and 2007.
Besides the fact that a public risk manager stands accused of malfeasance, there are other ironies at work here. Hill received the risk manager of the year award from the Public Risk Manager's Association in 2005.
As for criminal charges, or the possibility of them, Gina Balya, a spokeswoman for the U.S. Attorney's office for the Eastern District of Michigan and Maria Miller, a spokeswoman for the Wayne County Prosecutor's office both said they could not provide any updates.
According to a report in the Detroit News, the district's lawsuit alleges that under Hill, the district's risk management office created its own computer network that was separate from the school district's. Hill was also allegedly able to manipulate a shortcut in the district's accounting process that allowed him to wire workers' compensation and other insurance payments directly to district staff members.
Working with his chief assistant, Christina Polk-Osumah, who is also named as a defendant in the lawsuit, Hill is alleged to have set up three offices, two of them secret to top district officials, while nearly tripling his department's staff of 10 by allegedly illegally contracting for workers with Long Insurance Services, an agency run by a friend.
In one example of alleged questionable activity, Hill's office wired more than $14 million to the offices of Long Insurance Services.
Lawrence Long, CEO, could not be reached for comment.
Before coming to work at the district, Hill became the first risk manager for the Detroit Public Schools in 1993 and then director of risk management for Cook County, Ill. before returning to the district in 2001.
December 1, 2009
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