By Renee Batti
Former Portola Valley School District Superintendent Tim Hanretty pleaded not guilty on April 6 to three felony counts that include misappropriation of public funds — allegations of misdeeds that stem from his earlier employment with the Woodside School District.
Mr. Hanretty, who resigned Jan. 31 from his position in the Portola Valley district during an investigation requested by the Woodside district, was arraigned in San Mateo County Superior Court the day after charges against him were announced by the county District Attorney's Office.
Despite the seriousness of the charges, Woodside school officials believe at this point that the misappropriation of funds wasn't for Mr. Hanretty's personal gain, according to a statement issued April 5 by Woodside district Superintendent Beth Polito.
The preliminary hearing on the charges against Mr. Hanretty was set for 9 a.m. May 24.
Mr. Hanretty is out of custody on bail of $30,000.
The charges stem from a loan that allegedly was fraudulently acquired by Mr. Hanretty when he served as finance officer for both the Woodside and Portola Valley school districts, but they involve the Woodside district only. School officials said earlier that there has been no indication of such irregularities in the Portola Valley district.
New details of the alleged misdeeds emerged April 6 in a report from county District Attorney Steve Wagstaffe, who said Mr. Hanretty presented fraudulent paperwork to obtain a far larger loan than was authorized by the school board for the purpose of updating an athletic field. The board had approved a loan not to exceed $632,000.
Mr. Hanretty obtained a $2.6 million loan instead, and agreed to a repayment schedule that pushed the amount to more than $4.33 million with interest, the report said.
"The field work cost approximately $600,000; (Mr. Hanretty) used the other monies (without board approval) for other school projects," the report said. Over the following months, Mr. Hanretty regularly told the school board that the project was on time and on budget, it said.
The alleged fraud was discovered when school district officials conducted an investigation "to determine why their debt was unusually high," the report said.
The DA's office launched an investigation in December after Woodside district officials brought to its attention the alleged financial irregularities.
Mr. Wagstaffe, who announced the charges on April 5, said that Mr. Hanretty and his attorney, Michael Markowitz of Gagen McCoy of Danville, "have been cooperative in working with us in all this."
The charge of public funds misappropriation carries an allegation of "excessive taking," which means that it involves more than $1 million, Mr. Wagstaffe said.
"That doesn't mean that ... Mr. Hanretty got personal benefit of over a million dollars," Mr. Wagstaffe noted. "It just means the funds that he was maneuvering inappropriately, misappropriating, was over a million dollars."
In her written statement, Superintendent Polito said:
"During the 2005-2008 Woodside School Modernization project a loan was acquired fraudulently. The Woodside School Board approved a loan resolution for $632,000 to complete a field project as part of the modernization project. Altered loan documentation allowed for a loan up to 3 million dollars. Ultimately a loan for 2.6 million dollars was issued.
"It is our current belief the money acquired through the fraudulent loan ... was spent on the 2005-2008 Woodside School Modernization Project."
In addition to misappropriation of public funds by a public officer, Mr. Hanretty is charged with fraudulently passing a forged or altered document, and filing "a false or forged instrument."
Attempts to reach Mr. Hanretty have been unsuccessful, and Mr. Markowitz has not returned the Almanac's phone call seeking comment.
Woodside district Superintendent Polito said in early February that the district first discovered the irregularities last October. The questionable accounting dated back to the building modernization project that was completed in the 2007-08 school year, she said.
In her February statement, Ms. Polito said that, after the discovery, the district "immediately contacted legal counsel and through counsel, hired independent forensic auditors." The information gleaned from that audit led to the district's contacting the district attorney's office.
The Woodside School District, she said, "has retained independent accountants to further investigate these irregularities. We do not believe there will be any immediate negative impact on the ... district's budget."
Portola Valley school district officials have "absolutely no indication that any fiscal wrongdoing has taken place during Mr. Hanretty's tenure at this district," the district's school board president, Scott Parker, wrote in a letter announcing Mr. Hanretty's resignation in January.
"Nevertheless, in an abundance of caution, the board is working closely with the Office of the County Superintendent of Schools to retain an independent auditor to evaluate our district's finances," he wrote. "The district is not able to provide any further comment or details until the completion of the investigation."
Mr. Hanretty worked many years for both the Portola Valley and the Woodside elementary school districts, first as business manager, and beginning in 2004, as assistant superintendent.
He was appointed superintendent of the Portola Valley district in 2010, replacing Anne Campbell when she moved on to serve as San Mateo County superintendent of schools.
Ms. Campbell said in February that her office is overseeing the audit of certain areas of the Portola Valley district's finances. "We want to be absolutely, positively sure that everything is OK," she said. "We owe that to the public."
Carol Piraino, who had been the Portola Valley district's assistant superintendent, has been serving as acting superintendent since Jan. 31. She could not be reached for comment.