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Editor’s note: This story was updated on Sept. 2 with a comment from Laurel Lower School Principal Linda Creighton
Laurel School staff filed an appeal to a 2021 lawsuit that alleged that the school’s parent teacher organization (PTO) and principal used illegal means to boost its fundraising.
Parent Jaclyn Foroughi filed the suit in March 2021, claiming that when she raised her concerns, the PTO and principal of the school, which has campuses in Menlo Park and Atherton, retaliated against her and her family.
Principal Linda Creighton filed for an appeal of the case in the First District Court of Appeal in San Francisco on July 26.
In late May, San Mateo County Superior Court Judge Nancy L. Fineman dismissed some of Foroughi’s claims based on an Anti-Strategic Lawsuits Against Public Participation (SLAPP) motion. SLAPP suits are intended to silence free speech through “expensive, baseless legal proceedings,” according to the Reporters Committee for Freedom of the Press.
However, the judge ruled that alleged quid pro quo payments could jeopardize the PTO’s tax-exempt status. The district argued that the anti-SLAPP motion exempted it from that claim.
Foroughi’s complaint alleges that while serving for four months as financial secretary for the nonprofit volunteer-led Laurel PTO starting in August 2019, she discovered parents paid field trip fees as “donations,” or through quid pro quo payments, to the school so that their employers could match the funds.
These fees should have been ineligible for corporate matching funds since they were not actually donations — paying for a field trip does not meet the IRS definition because the donor receives a tangible benefit — like a field trip to Outdoor Ed camp, according to the suit.
A quid pro quo contribution is a payment made to a charity partly as a donation and partly for goods or services, according to the IRS. For example, if a donor gives a charity $100 and receives a concert ticket worth $40, the $40 value of the ticket is not tax-deductible.
Judge Fineman agreed with school officials that they didn’t breach their fiduciary duties by “bullying” and/or “intimidating” Foroughi and other PTO members and for failing to investigate those claims, according to the May 27 order.
“The district unequivocally supports Laurel’s principal, Linda Creighton, and Laurel’s volunteer parent leaders,” said Menlo Park City School District (MPCSD) spokesperson Parke Treadway in an email. “MPCSD believes that the claims being made by a former Laurel parent in this suit are not supported by the evidence. The legal system exists to resolve disputes and to add reasonability when emotions are high. We trust the legal system to do what it is designed to do — to recognize which controversies are valid and which are not.”
Creighton said in an email that she’s “overall quite disappointed that time, energy and resources are being spent on alleged issues that were resolved before the lawsuit was even filed, as well as allegations that were already dismissed because of anti-SLAPP law.”
In a June 2021 filing, Creighton explained that subcommittees were formed to review the matching in December 2019 and January 2020. A tax attorney was also consulted, she said.
“Ultimately, the investigation showed that over a two-year period, approximately seven families were involved in the corporate matching and that $9,404.12 was collected through this practice,” she said. “The Laurel School PTO returned all the monies to the families and corporations that made these payments, often over the donor’s protest as many of them did not want to accept the refunds or wanted the PTO to keep the funds as a donation. Despite those protestations, the funds were returned, and the practice was discontinued.”
Foroughi is the mother of five children, three of whom have attended Laurel School, and is a lecturer at Stanford’s Graduate School of Business.
“When I raised these inappropriate financial practices and attempted to reform them, I was retaliated against and ostracized and that, in my view, was part of an effort to cover up the wrongdoing,” said Foroughi in an email. “I believe the appeal is a delay tactic to avoid the investigations that should have been conducted properly, and I believe the appeals court will deny the defendants’ appeal.”
She said it was “unfortunate” that a settlement could not be reached to have an independent investigation conducted, adding that she repeatedly offered to pay for the investigation.
This is a ridiculous lawsuit and one that sounds like it was filed out of spite. I have worked with many 503 non-profits and many of them offer benefits for donations.
for example the breast cancer 3 day walk, you raise donations and they give you a shirt, support along the route, food, etc. Does that come off of the amount you donated? It never did. Same with a lot of fundraising campaigns. With Team in Training (Leukemia and Lymphoma Society) if you donate the full amount yourself should you deduct the expense of travel, accommodations, food and race entry that that the LLS provides? Not that I have ever heard.
Personally what I think is the worst part of this is that the district is flush with funds (Property tax revenue increases every year, Parcel taxes, requested donations of $2,000 per child, etc..) and parents are asked to donate more money for field trips…
I was contacted at 11:30am and asked for a comment, which I provided by 2pm. Due to space constraints, I’m providing a summary below:
We prevailed against the defendants’ SLAPP Motion in which Judge Fineman permitted 99% of the allegations to proceed and the lawsuit on behalf of the PTO to move forward. As Treasurer at Laurel’s PTO, I discovered what was, based on my experience, inappropriate accounting and a lack of transparency originating from some members of the PTO leadership, and that I believed was to the detriment of our community. When I raised these inappropriate financial practices and attempted to reform them, I was retaliated against and ostracized and that, in my view, was part of an effort to cover up the wrongdoing.
I thought very highly of my childrens’ teachers at Laurel and I think these educators are some of the most caring, loving people in the world but we can’t support them if the PTO is not running correctly. The case that I brought is not for me personally–it is brought on behalf of the PTO–and it is about transparency and accountability. It’s unfortunate that the defendants would not reach a settlement to conduct independent investigations–that I have repeatedly offered to pay for–and that would ultimately benefit the PTO and provide the parents and teachers with a stronger organization.
I believe the appeal is a delay tactic to avoid the investigations that should have been conducted properly, and I believe the Appeals Court will deny the defendants’ appeal. All of the recent changes at the District and at the Laurel School are interesting with Mr. Burmeister resigning from the District, Ms. Creighton getting a new “co-principal,” and Ms. Kraska working at a different school. I have no idea whether any of that is related to the factual allegations in the complaint but I intend to find out. When the case returns the trial court, the discovery process should reveal whether any of those changes are related.
We trust that the PTO does the right thing–with our donations and for our kids. Maybe this time they didn’t. Or maybe they just made a mistake. Either way, good for this woman for getting to the bottom of it. It’s odd the PTO didn’t trust someone who teaches finance at Stanford B school. When you see something, say something. That’s exactly what happened here.
I wonder if this case is actually tied to Burmeister’s resignation and all the other changes taking place in the district. I wish we knew more about what was going on behind all of those closed door district meetings. They had the new Superintendent lined up even before they asked for the community’s feedback. Was that all for show? I think parents voices should absolutely be heard in the new Superintendent. Especially with all these lawsuits that raise questions and concerns about finances.
On the surface, this seems like a woman going up against a group of bored and angry parents, but she may have uncovered much more than even she thought she would. Forced resignations, nepotism, horrible adult behavior–pass the popcorn!
I wouldn’t be surprised if the District and Foundation were invovled in the funny accounting at the school. Even our well-off District is strapped for cash and always asking us for money because of pension issues. Seems to me the Foundation, the Defendants, and parents are the puppets and Burmeister controls the strings.
@Brian, District pays for all day field trips but not the annual Outdoor Ed for 5th graders. $500 per 5th grader every year would be a hefty bill. There are scholarships, if needed. Hope that clears it up for you.
If she cared so much about the school she would not be forcing the district to spend more time and funds on this stupid lawsuit. She got the attention she wanted, I am sure it is being rectified if there was an issue-now move on. Isn’t working at a school hard enough with the pandemic and low teacher recruits? To quote mean girls (which is what she is being) “she doesn’t even go here!” Her kids aren’t even at Laurel anymore.
Thank you, Jaclyn, for bringing this suit.
The district has long had the mindset that “if it benefits the schools/district, it’s all good.” I understand it, but I don’t agree with it, and when I was asked to circumvent the system — for very slight financial benefit to the school — I refused to do it.
I have seen other parents ostracized by the district for filing formal complaints. Anyone who thinks that retaliation doesn’t occur is not paying attention.
“This is a ridiculous lawsuit and one that sounds like it was filed out of spite.” Brian, I disagree that the lawsuit was filed out of spite. If anyone is the victim of spite, it is Mrs. Foroughi, who I do not know. From all publicly available information I have read, Mrs. Foroughi, who is clearly an expert in her field (she is a credentialed financial advisor) attempted to educate not only the PTO but also the school district that they were running afoul of the law. The PTO, and the district, and the parents who sought “matching” donations from their employers may have hearts of gold, but that alone does not allow them to skirt the legal requirements.
Mrs. Foroughi attempted to tell the parties in power, in essence, “what you are doing is illegal. It is in your best interest to discontinue this practice”. In my view, this was a friendly gesture. For her good deed, she was ostensibly punished via the non-action of the Principal, and ostracized by certain parents. Why Mrs. Foroughi’s ethical behavior was not applauded is beyond me.
Personally, I listen to experts. I do not argue with electricians, plumbers, and financial advisors. I know enough to know that they are the expert, I am the amateur.
While it may be difficult to prove Mrs. Foroughi was damaged by the Principal’s behavior, the quid pro quo portion of the lawsuit seems to be fairly easy for an accountant to analyze. It seems to me the children wanted to attend a camp, there was some sort of fee/tuition associated with that camp, and certain parents and/or the PTO decided that using the word “donation” would be a coy way of getting matching donations and perhaps an income tax deduction.
Mrs. Foroughi blew the whistle, good for her. It appears some egos were damaged and she was rebuked. All of this could have been avoided had the Principal and the PTO simply said “tell us more, if we are making a mistake we would like to fix it.”.
Isn’t this what we teach our children? To learn through failure?
“I wonder if this case is actually tied to Burmeister’s resignation and all the other changes taking place in the district.”
Sandra, as the lawsuit moves forward some of your questions may be answered.
I’m not an attorney but I believe Mrs. Foroughi’s legal representatives will be able to submit interrogatories to a wide variety of folks, and this may uncover other issues yet to be examined.
I think we are all familiar with the saying about “choosing battles”. In my opinion the PTO, and Principal, and certain parents should have avoided this battle. Mrs. Foroughi is A.) credentialed B.) accomplished and C.) determined to right a wrong.
When one’s opponent has these aforementioned characteristics, the first course of action should be the waiving of a white flag. Sadly, had the PTO and others took Mrs. Foroughi’s suggestions to heart, all parties would have benefitted!
At this stage, I see nothing but downside for the PTO, and the Principal, and the District. I assume in the end they will plead ignorance of the law. It’s ironic, because Mrs. Foroughi was trying to steer them away from their ignorance. And for that she paid a price.
Thank you Parent and Mrs. Foroghi. My kids are grown and went through the Menlo Park schools and I volunteered and served on the PTO. I can’t believe this has gone this far and continues to go on. This seems like a poor use of time and money of the District and PTO to continue to appeal and fight what seems fairly clear cut. I hope for the kids and teachers sake that the PTO ends this.
Continuing this lawsuit is punitive and vindictive. The error has been remedied, amounts returned, tax filings amended. Why continue to pursue volunteers and school staff? Please let’s move on!
You are absolutely right @MenloPark continuing this lawsuit is “punitive and vindictive”. Why didn’t the PTO just settle. Especially after they lost the the case and now need to appeal and Jacylyn offered to pay for a investigation. Why not settle?
“Continuing this lawsuit is punitive and vindictive”.
I disagree, I see this lawsuit as constructive. If Mrs. Foroughi prevails, not only will it forever change how the PTO and District operates (it may have already, but this remains to be determined), it also sets a legal precedent should any other non-profit organization violate the quid pro quo laws.
I have nothing against non-profits, but they do need to play by the rules.
And although it’s not a legal issue, perhaps a public apology is due to Mrs. Foroughi. She apparently went to great lengths to avoid having to file a suit.
I don’t understand why are we wasting time and resources on this matter? The issue was raised, monies were returned and school PTO will likely not do it.
Concerned Parent:
probably because the PTO acted like ass hats before they did.