A state appellate court ruled on Thursday, Nov. 5, that former Woodside and Portola Valley school districts official Tim Hanretty must repay the Woodside Elementary School District nearly $2.7 million.
Mr. Hanretty, the former Portola Valley School District superintendent and Woodside Elementary School District finance officer, pleaded no contest in July 2012 to six felony charges of embezzlement and misappropriating public funds in both school districts and was sentenced to two years in prison the following October.
In Woodside he was accused of forging documents that allowed a loan of up to $3 million to be made to the district, despite the fact that the school board had approved borrowing only $632,000. He eventually obtained a loan of $2.6 million, which district officials say was spent on school projects. He changed the loan terms from a 10-year payback to a 21-year payback.
In Portola Valley investigators found Mr. Hanretty had turned in $100,926 in invoices for work on his own home, to be paid by the district's solar panel fund.
Mr. Hanretty was ordered to repay the Woodside district about $2.67 million to reimburse the cost of the loan he had fraudulently obtained, plus interest costs and the costs involved with uncovering the crime.
He had also been ordered to repay the Portola Valley district close to $182,000 -- the amount embezzled from the district and the costs of the investigation.
According to district officials, Mr. Hanretty still owes the Portola Valley district $58,946.87, last making a restitution payment on March 11, 2015.
After he was released from prison in October 2013, where he had served close to one year of his two-year sentence, Mr. Hanretty appealed the restitution order, claiming that the school district had benefited from the loan proceeds so he should not have to pay it back.
The ruling from the state's First District Court of Appeal did not agree with that argument. "Although the District received more improvements than it had sought, they did not "benefit" the District, because," the ruling says, "the improvements could not be liquidated. Despite defendant's suggestion that the District could have sold some picnic tables and playground equipment, there was no evidence before the court that these improvements could be separated from the property and disposed of in any way that would provide remuneration for the District."
The ruling goes even further. "Indeed, the unwanted improvements were a detriment to the District," it says. "The District was forced to retain the improvements, and was obligated to pay for them by repaying the higher, unauthorized loan amount. And the District was forced to forego other expenditures approved by the Board in order to service the debt on the unauthorized loan amount. Rather than a windfall to the District, the improvements paid for with the unauthorized loan proceeds were a millstone."
A source of the repayment may be Mr. Hanretty's state retirement. Mr. Hanretty retired in February 2012, about five months before he pleaded "no contest." In December 2013 a spokesperson for the California Public Employees Retirement System (CalPERS) said Mr. Hanretty was receiving a monthly pension of $3,456, or more than $41,000 a year. He received the pension even while in prison.
A state law passed in September 2012 would have denied Mr. Hanretty at least part of his pension if he had been convicted after January 2013, when the law went into effect. However, by pleading "no contest" to charges of embezzlement and misappropriation of public funds in July 2012, he was able to secure the higher pension, which he will receive for the rest of his life.
Woodside Superintendent Beth Polito said the district "looks forward to the collection of the criminal restitution that it is entitled to." She said the district's legal counsel is working with the California State Franchise Board to set up a payment program.
See an earlier Almanac story here.