Former school district security director James Smith allegedly violated terms of his employment contract by creating a security company, misused school vehicles, and failed to adequately disclose his income sources on state financial disclosure forms, according to a district investigation report.
Smith vehemently denied the allegations contained in the 19-page investigation report that was presented to the school board on May 1. School officials released the report this week in response to a records request. He repeatedly described the investigation as “ridiculous” and packed with “false” information.
“A lot of it is just assumptions,” said Smith. “It’s so ridiculous.”
Smith, a former police captain, who conducted numerous investigations into district employees accused of misconduct over the years, rebutted every allegation in the report in a 45-minute interview.
The report alleges Smith may have violated his employment contract with the district by creating a company, Professional Security Services, Inc., to contract with other school district. His employment contract with the district bars him from providing “consulting or professional service” during the duration of the agreement to other entities that “interferes with his duties and responsibilities.”
Smith created the company on Sept. 30, 2016. His firm was awarded a contract for security services through the Educational Services Commission of Morris County on Nov. 2, 2016. Same contract was renewed on Nov. 1, 2017 and Sept. 12, 2018, says the report.
“Is it registered? Yes. Did I do any work for anybody? Of course not,” said Smith.
After forming the company, Smith and Robert H. Davis, now-deceased former executive county superintendent of schools for Passaic County, exchanged a series of text messages about securing business for the new company.
Both Smith and Davis met at a Passaic County office on Sept. 22, 2016 to discuss a school consulting request for proposal (RFP).
Smith and Davis called each other 14 times from Aug. 16 through Nov. 3, 2016. It’s not clear what the two men discussed during the phone calls which occurred before and after the meeting to discuss the RFP.
Smith often spoke to Davis from the district headquarters, according to the report. He used a district owned cellphone. His contract allowed him to use the phone for “limited, incidental personal use.”
“I told him, I couldn’t take any work until I retired because I didn’t want to have a conflict,” said Smith when asked about the meeting, texts, and calls with Davis. “I challenge them to produce anything that shows I worked for anybody.”
Financial disclosure forms
Smith did not list Professional Security Services in his state disclosure forms in 2016 and 2017, according to the report. Instead, he marked, “not applicable.” He also did not list his real estate referral agent income on the disclosure forms, says the report.
Smith was involved in the sale of a property in Pompton Plains for $253,500. He would have received $2,281 or $1,901 in commission for his referral, says the report. The investigation report is not certain which amount he received.
“It’s all assumptions,” said Smith referring to speculation in the report of his possible commission from the sale.
If Smith received $1,901, he did not have to report it in state disclosure form.
Smith also received annual Christmas gifts from co-workers, mostly retired Paterson police officers. The report states the gifts were $100 each. Counted together as a single source of income it would amount to $2,000 to $2,400, says report. Counted separately, Smith does not have to report in disclosure form.
“If anything reached the threshold, I reported it,” said Smith. The threshold is $2,000 or higher.
The investigation report states Smith used district vehicles for personal trips. His contract allows him 100 personal miles per week or 4,800 per year, according to the investigation report.
Smith racked up a large number of business miles, notes the report.
“For some months in 2017, Smith’s business mileage was so high it would have averaged approximately 100 business miles per day,” says the report.
Smith did not drive much for business besides traveling to Newark and Trenton for public safety committee meetings, hearings, and arbitrations, according to district witnesses cited in the report. His secretary stated he mostly stayed in office.
A former district fleet coordinator cited in the report stated Smith’s miles were “80% personal.” Smith switched vehicles due to accumulation of “so many miles.”
Smith said his division had four vehicles. “During the day, anybody would take whatever vehicle was available,” he said.
Borrowing from a subordinate
The report also says Smith borrowed money from a subordinate. The report cites two occasions.
“He’s been my friend for 35 years. He wasn’t just a subordinate. He was my friend. I didn’t ask him for the money, I asked him to co-sign,” said Smith. He said he grew up with the friend in Paterson and both worked at the police department.
Smith took the first loan in 2012-13 and second 1.5 years thereafter, says the report. The subordinate took the loan out through Prosper, a peer-to-peer lending service. Smith borrowed both times because he needed money for his daughters’ weddings, says the report.
The subordinate would not share the loan amounts, but told others it was $35,000. Smith paid the first loan back entirely and is making monthly payment on the second. The subordinate did not feel compelled to lend to Smith, but did it out of friendship, says the report.
“Wall of Shame”
Smith’s office had a wall with IDs of former district employees — business administrators Carol Fredericks, Daisy Ayala, Richard Kilpatrick; general counsel Lisa Pollak; and others.
“There was nothing that said wall of shame,” said Smith. “The superintendent was in my office a thousand times, she never said take it down. “
The report calls the area with the photo IDs the “Wall of Shame.”
Smith criticized the district’s outside investigator Susan Corrado of Passaic Valley Investigations for calling it the “Wall of Shame.” He said the wall served as a “constant reminder that no one is above the law.”
He also criticized Corrado for not interviewing him for the report.
“What investigator do you know that makes all these allegations and never interviews the suspect?” asked Smith. “She never even asked to talk to me. I could have explained these things to her if she had asked me. She had no interest in finding the truth.”
Smith pointed out he gave school board member Emanuel Capers a chance to explain his trip to Arizona. He had been ordered to investigate Capers for going on the trip paid for by a potential vendor.
“These accusations are very alarming,” said Capers of the report. “It’s all the reasons why our kids are not being provided a quality education.”
Superintendent Eileen Shafer suspended Smith on Dec. 12, 2018. Smith said he was never provided a reason for the suspension.
Smith had filed ethics charges against Capers over the trip. The case is still pending. The judge in the case scheduled a conference call to speak to Smith on Dec. 13, he said.
“On December 12, I was suspended. I’m sure it’s just a coincidence,” said Smith. He remains on the district payroll, but will be non-renewed on Jun. 30 from the $156,440 job.