Tim Hanretty, who served time in prison for embezzlement and misappropriation of public funds from local school districts, has asserted in a document filed recently in the California Court of Appeal that his former boss, now deceased, was complicit in some of the illegal deeds. The legal action challenges the amount of restitution he was ordered to pay the Woodside Elementary School District.
The legal brief was submitted to the First Appellate District on May 21, and asks that the $2.67 million restitution order issued by a San Mateo County Superior Court judge last year be overturned and a new restitution hearing be held.
Mr. Hanretty in 2012 pleaded guilty to stealing nearly $101,000 from the Portola Valley School District while he was superintendent there -- from mid-2010 to early 2012 -- and to misappropriating funds in the Woodside district by forging paperwork to take out a much larger loan for construction projects at Woodside Elementary School than was authorized by the school board in 2007.
In the brief, Mr. Hanretty asserts that he and the late Dan Vinson, who was superintendent of the Woodside district when Mr. Hanretty served as its financial officer, "felt that the 'dysfunctional' school board pressured them to complete a modernization project that the board had undertaken. When the board only approved a $632,000 loan over ten years for the project, (Hanretty) and Vinson falsified documents to obtain a ($2.6 million) loan payable over 21 years."
An investigation of the crime by the San Mateo County District Attorney's Office concluded that the money was spent entirely on the school project, unlike the money taken from the Portola Valley district, which Mr. Hanretty used to remodel his home.
Mr. Hanretty is not challenging the restitution he has been ordered to pay to the Portola Valley district.
Basis for the challenge
Mr. Hanretty's attorney, J. Wilder Lee of San Francisco, argues in the brief that the trial court failed to account for the "time value" of money in ordering restitution of $856,553 in loan interest in addition to the amount of the loan principal.
In ordering that the restitution be paid immediately, he asserts, the court should have considered that, "were the (principal) paid off today, then years of interest payments would not be due." Therefore, the interest calculation was excessive and would result in "the district receiving a windfall."
Mr. Lee declined to comment for this story.
Deputy District Attorney Kimberly Perrotti, who prosecuted the case in Superior Court, said the "time value" argument wasn't raised at the trial court level.
Because attorney Michael Markowitz of Danville, who represented Mr. Hanretty in Superior Court, didn't make that argument, he "rendered ineffective assistance," the Appeals Court brief asserts.
Mr. Markowitz could not be reached for comment for this article.
The Appeals Court brief also argues that restitution to the school district must be based on "the monetary loss on the unauthorized portion of the loan offset by the value to the district of the improvements acquired through the modernization project." That offset wasn't factored in, which "resulted in the District getting a double benefit from the use of the upgraded facilities and by having Hanretty pay for the entire amount of the unauthorized loan used to pay for those upgrades," the brief asserts.
Ms. Perrotti said that argument was raised in Superior Court, and she continues to refute it. "Simply put, the district has no choice but to live with the consequences" of the construction project. "You can't undo the work and recoup the costs," she said, because the school can't be sold to get the district out of its unwanted and unauthorized debt.
A responding brief by the state attorney general's office is due June 20.