Taxpayer Rip-Off Continues

There are two primary issues before you, the voters, in this upcoming November 6, 2007, East Liverpool Board of Education election.

1. Accurate and Honest School Finances
2. Attempted Trombetta Takeover of our School System

As an East Liverpool Board of Education Member for the past two years, now from the inside looking out, I believe there needs to be a close evaluation of two candidates which have proven and disastrous track records as East Liverpool Board of Education Members - Denise Taylor (four years of chaos) and Steve Beadnell (six of eight years of chaos). In my opinion, both of these Board Members have been deceptive, unethical and in collusion with both the East Liverpool School District Treasurer Dan Telzrow and the Nick Trombetta organization.

Our school district has been subjected to two disastrous events affecting finances and test scores. In 2003, our district experienced over a $1 million loss that paid for the Flip Flippen Program. Not only was there a financial loss, but in 2005, our State Report Card's rating which reflects mainly test scores went from a 10 to a 5, the lowest to date. Taylor and Beadnell were staunch supporters of the Flip Flippen Program. The most recently released audit is the worst audit in our school history with an unheard of 18 Findings for Recovery, 15 of which are listed as illegal. During 2004-2005 (the time of the audit), Beadnell, a Certified Public Accountant, was President and Taylor was a Board Member. The second disastrous event is the attempted takeover by Trombetta which has affected our student enrollment and caused the loss of approximately $1.3 million which in turn caused the building project to be downsized. You will read in this statement and in the supporting documentation about many other abuses of our finances.

After the numerous events that transpired during the Superintendent Doug Hiscox-Treasurer Telzrow era, we entered into the educational prostitution of the Trombetta era. In my opinion, this new era was underscored by multiple conflicts of interest. Taylor's appointment as President of the Board was influenced by Trombetta. Trombetta met with me after the November 2005 election and, with two other individuals present, stated that Denise Taylor would be the next President of the Board. I asked him who he thought he was and if he was an elected official. He answered with a laugh that he had sealed the deal by hiring her husband. On two occasions at his home, Trombetta met with the upcoming Board Members before we took office in 2006. At these meetings, he again stated that Taylor was going to be the new President of the Board.

Steve Beadnell's stepson was hired by the Trombetta group and it is alleged that Beadnell and possibly his wife will be employed by Trombetta after the election. It should be noted that Beadnell, for whatever reason, is no longer employed as CFO and Vice-President of the First National Community Bank. He is currently working part-time as an instructor at the Ohio Valley College of Technology. It also has been alleged that Board Member Larry Walton and his daughter, Heather, may be going to work for Trombetta. It should be noted Trombetta is currently under a Pennsylvania Grand Jury Investigation that has lasted 13 months thus far. He has had to pay $450,000 in a court settlement to Western Beaver School District in Pennsylvania for the students who were contractually supposed to attend East Liverpool City Schools. To my knowledge, Trombetta has in excess of seven pending lawsuits against his organizations.

Former State Representative Charles Blasdell has added to the Trombetta takeover of the East Liverpool School District. Blasdell was one of the cosponsors of HB 66 that cost our district $498,000 per year with the elimination of the tangible corporate property tax. That tax will be borne by you, the local property owner, without a vote. Blasdell also was a great supporter of Trombetta and the charter school movement in Ohio that has been disastrous to public education and the students that have been educated in the charter schools. Out of over 200 charter schools sponsored two years ago by the Lucas County Educational Service Center (BOSS was one of them), only 73 exist today. The others were closed due to failure to meet academic standards and /or the failure to legally and properly manage finances. Blasdell now works for none other than Trombetta as a consultant, a.k.a. lobbyist, assisting him in the takeover of our district.

1. Accurate and Honest School Finances

Taxpayers, students, and employees continue to be victims of taxpayer rip-offs by three members of the East Liverpool Board of Education - Denise Taylor, Steve Beadnell, and Larry Walton. Over $41 million of your annual tax dollars go to the operation of our schools. That equates to 85% of your property taxes. No verification has been made by either the Financial Planning and Supervision Commission or the State Auditor's Office confirming the discrepancy between a $6 million deficit and a $6 million surplus ($12 million swing of General Fund money) reported by Treasurer Telzrow within a ten month period. From October 2006 to July 2007, Telzrow issued four five-year forecasts reflecting the $12 million swing. Five-year forecasts are the financial tools to properly make the Board of Education, administrators, and taxpayers aware of the true financial condition of our district. The inaccurate five-year forecast of previous Treasurer Dave Karas was the primary reason that led us into Fiscal Emergency in January 2004. What is alarming is that we continue to see the same inaccurate and questionable five-year forecasts with Telzrow. His job performance was not only condoned by Taylor, Beadnell and Walton, but was recently rewarded with a pay raise, and he was given numerous accolades. East Liverpool City School District currently remains in Fiscal Emergency.

As you know from several news articles, Superintendent Halbert was contemplating leaving the district because of Treasurer Telzrow's conduct. What you do not know is that we had a federal programs coordinator, Dan Ferrari, who resigned because he could not get any cooperation from Telzrow. The next federal coordinator who was hired free of charge to this district through a federal grant walked out due to lack of cooperation from Telzrow. This situation was brushed under the rug by Taylor, Beadnell and Walton. In my opinion, this was ignored to anger Superintendent Halbert into leaving the district and hiring a Trombetta surrogate.

This district was issued the worst state audit (2004-2005) in recorded school history totaling 18 Findings for Recovery involving illegal or improper use of approximately $1.5 million and abuses in legal fees in excess of $150,000. It should be noted that I made numerous requests, which were well publicized, for line-itemization of legal fees that cost us $225 per hour. My requests, until this past year, were ignored by my fellow Board Members. On page 5 of the May 31, 2007 Management Letter that accompanied the 2004-2005 State Audit, the following was stated, "(2. Payment of Legal Counsel) A review of the expenses for legal services revealed that the school district had utilized outside counsel throughout the fiscal year. The total expended for outside counsel for the fiscal year July 1, 2004 and June 30, 2005 was $150,689. A review of the Board of Education's minutes showed no evidence the Board had taken any formal action regarding the hiring of outside counsel, however counsel's bills were presented to the Board of Education for approval indicating the Board of Education was aware counsel had been obtained."

The above act was committed in direct violation of the law (Ohio Revised Code). During 2004-2005, Beadnell, a C.P.A., was President of the Board and Taylor was a Member. I was told in an interview with Laurie Trotter, former federal coordinator, that she, in fact, went to Steve Beadnell regarding these illegal stipends. According to her, Beadnell stated that he supported Hiscox's issuance of the stipends. Subsequently, Beadnell confirmed not only to me but in a published newspaper article that he was indeed approached by Laurie Trotter about these stipends. To my knowledge and after questioning Board Members, there is no evidence that Beadnell questioned Hiscox, Telzrow or brought this information to his fellow Board Members. Furthermore, Taylor, Beadnell and Walton voted to reimburse 15 of 18 illegal stipends which both Hiscox and Telzrow were legally responsible to repay, not the 9 named individuals. The approval of the illegal stipends cost you, the taxpayer, $50,745.31 ($42,745.31 in stipends and an $8,000 grievance settlement) and most likely will cost another $42,745.31(another pending grievance) totaling $93,490.62.

Also, no cash register tape was used at the high school cafeteria accounting for money that allegedly went through the register in 2004-2005. After the audit, it was discovered that school maintenance and custodial personnel were receiving (large portions) free breakfasts and lunches daily which accounted for approximately $1,000 per year for each employee. No authorization was given by the Board to Nutrition, Inc. to distribute free meals. Nutrition, Inc. has been in the red for three previous years with the General Fund having to cover their expenditures. Another $7,000 by Nutrition, Inc. is currently unaccounted for, allegedly because of equipment failure! It should be noted that Superintendent Hiscox, Treasurer Michael Anderson and Board Member Steve Beadnell along with the other Board Members illegally hired Nutrition, Inc. on August 1, 2003 by violating the bid procedure. They allowed Nutrition, Inc., after the bids were open, to change their bid. In January 2007, President Taylor and Board Members Beadnell and Walton voted to eliminate the Food Service and Athletic Committees. This is especially troublesome when Walton was illegally doing business with Nutrition, Inc. printing their brochures. This was done in direct violation of Ohio Ethics Law. I also find it strange that under Taylor's leadership, the Community Resource Center owes a Common Pleas Court Judgment to Valley Foods for $7,460.28.

There is a disturbing trend involving the three Board Members' performances and voting records. Beadnell, a C.P.A., voted in favor of the $60 million bond project. He disregarded my pleas to research enrollment figures which were found to be falsified by 1,000 students equating to a taxpayer rip-off of $23 million on our bond project. Also, Beadnell and Taylor voted for a 12.4 mill levy which was falsely listed to the public as a renewal levy when it should have been listed as an additional levy. If it had been voted on by the public as a renewal levy, it would have cost the taxpayers an additional $1 million per year. On July 7, 2005, the Ohio Election Commission found the levy committee (Supt. Hiscox and several Board Members) in violation of the law.

Taylor was out of state during the entire months of February and March, 2007 and attended zero Board meetings. Taylor has attended approximately half of all Board meetings late and from appearance, has not opened her Board packet prior to the meeting. These packets are sent to each Board member several days in advance to prepare for the meeting. In 2006, she resented the fact that I was Chairman of the Legal Committee and that I demanded line itemization of all legal fees to account for the excessive legal expenditures. Taylor spent over $800 in legal fees to eliminate me from chairmanship of that committee and to abolish both the Athletic and Food Service Committees. This has proven to be a disastrous move for our district. As previously stated, food service has been out of control and we are inundated with problems involving the athletic departments. Due to the elimination of the Athletic Committee many issues went unresolved. This school year, we came within a day of having all athletics eliminated because we did not have over $40,000 in funding for transportation costs. Taylor, Beadnell and Walton did not address this issue. If we would have lost the athletic program, we would have hemorrhaged open enrollment students to other districts and those students would have been able to participate in sports without any waiting period. I contacted William Wenger, Chairman of the Financial Planning and Supervision Commission, and it was then that our district received approval from the Commission to fund over $40,000 in transportation costs.

Taylor does not pay one penny in property tax to the support of our school district or to the support of the city. She lives in an approximately $140,000 government sponsored home with a lease purchase agreement that has a 15 year tax exemption. She is the Director of the Community Resource Center and has 9 open judgments in the Columbiana County Court of Common Pleas including nonpayment of taxes against the Resource Center for approximately $44,000. If she cannot manage her organization, how can she manage a $41 million school budget?

It is customary for the Board President to be in charge of labor negotiations. Taylor came to me and asked if I would head the teacher and OAPSE negotiating teams because she would be "a nervous wreck." She also stated that she had an illness and would not be able to spend the required hours. If she has an illness and worked long hours out of state for two months, how can she continue to serve in the demanding job as a Board Member? Taylor asked me if I would head the Building Project as Chairman of the Board Liaison Committee. I agreed to do that for the district because I had both the time and the background which included installing $19 million in capital expenditures at Hall China Company. The signing of construction documents which the Board President is responsible for were delinquent by weeks because of her rigorous work schedule. With Taylor's recommendation, the Board authorized me to sign all construction documents involving the $42 million Building Project.

In 2006, Beadnell served as Chairman of the Bond Project Liaison (then a $52 million building project). I served on the core building committee with him, and Beadnell attended zero out of 24 meetings. Because his wife was employed by the district as a teacher, Beadnell, in the past eight years, could not participate or vote on any teachers' negotiations which is the largest portion of our yearly budget. On October 11, 2007, Beadnell's retired wife was approved by the Board as a substitute teacher. If elected this November, Beadnell again would not be able to participate or vote on any contract because his wife is once again employed by our district. As previously stated, Beadnell is no longer employed as Vice President and CFO of the First National Community Bank. During the last several years in which Beadnell was Board Member and President, our district deposited the majority of its $41 million per year budget into FNCB. Conflict of interest?

Beadnell and current President Taylor have turned a blind eye to millions of dollars in abused funding. They, along with Walton, were given 17 financial reasons totaling millions of dollars to non-renew Treasurer Telzrow's contract. Those facts were totally ignored.

Larry Walton, current Vice-President of the Board, continues his unwavering support of Taylor and Beadnell. How can Walton vote on a $41 million budget when he has 28 open judgments against him in the Columbiana Court of Common Pleas for nonpayment of state sales tax totaling $97,200.26?

2. Attempted Trombetta Takeover of our School System

Trombetta stated that because his daughter attended East Liverpool High School, he wanted to help our school system. Trombetta and his organization entered our schools at the beginning of the 2005-2006 school year and offered to supply East Liverpool Schools with an Interim Superintendent - former Principal Rick Wolfe who had left East Liverpool and was working for Trombetta as Director of BOSS. At the beginning of that year, 72 East Liverpool students attended BOSS at an approximate cost to our district of $388,000. Five months after they entered our schools and were able to gain access to school records, 240 East Liverpool students attended BOSS at a loss to our district in excess of $1 million per year. Our district currently has approximately 182 students attending BOSS at a loss of $1.3 million. Trombetta met with all of our principals for ten consecutive Mondays at 6:30 AM at his home without Board knowledge or approval. In my opinion, this was done to help gain access to student records and information to increase his enrollment at BOSS. He also issued illegal stipends (a.k.a. honorariums) of $500 each to all the principals (Please note this involved the previous principals, not our new principals, Randy Taylor and Amy Mabbott). Three of the five principals, Linda Henderson, Stacey Kotsanis and Andy Trotter, did not cash their checks but contacted Board Member Gary Bonnell. As a result, all honorariums were returned to Trombetta. Those honorariums were returned because he violated Ohio Ethics Law. Trombetta also has hired over 12 teachers that currently are employed by East Liverpool City Schools and work for him in the evenings, on weekends and during summers. He also tried to influence, through Beadnell, Taylor and Walton, the hiring of our new superintendent through the superintendent interview process. One question that was consistently asked of superintendent candidates was, "The ELSD has received technical assistance from the National Network of Digital Schools (a Trombetta organization). How would you react to this partnership?" (Please refer to Tab G of my State Senate Testimony of June 6, 2007). What is even more disturbing is that on September 8, 2005, Telzrow, then Board President Beadnell and Member Taylor were sent a 20 page legal opinion advising the Board of Education to stay clear of Trombetta and his organization because of illegalities and potential loss of student enrollment to BOSS. That information was never made public but all Board Members were privy to that information. I was not a Board Member at that time. (Please refer to Tab K of my Ohio Senate Testimony on June 6, 2007).

Trombetta proposed, on September 27, 2005, an Educational Management Agreement that literally would have taken over the management and control of our district by Trombetta. The proposal stated, "(4. NNDS Compensation). NNDS shall be paid the sum of ONE DOLLAR ($1.00) for the services it renders during the 2005-2006 school year. If ELCSD and the Board are satisfied with NNDS's services, compensation for NNDS's services shall be renegotiated for successive school years." (Please refer to Tab J of my Ohio Senate Testimony on June 6, 2007). As verbally stated to the Board, this renegotiation would translate to approximately 12% of the total school budget equating to over $3 million in management fees per year. The only reason this Agreement was not signed was because of the intervention of the Financial Planning and Supervision Commission and the Ohio Attorney General's legal opinion. Please note that Larry Long, Jr., who was on the Board at that time, is now employed by the Trombetta organization along with then President Beadnell's stepson and Denise Taylor's husband. They had the majority vote to approve the Agreement but were told "NO" by the Commission. In my opinion, Trombetta had his eyes on taking over our school district including the new buildings that were scheduled to be built. Trombetta has first choice in obtaining any empty buildings, new or used, for pennies on the dollar according to Ohio Revised Code, 3313.41 and HB 79. (Please refer to Tab L of my Ohio Senate Testimony on June 6, 2007). In my opinion, Trombetta still desires the takeover of our schools.

Trombetta continues his influence with our Board of Education who decided to take a blind eye to the nonpayment of money owed by the Midland Borough School District for their breach of contract over the past nine years. Beadnell, Chairman of the Finance Committee, Treasurer Telzrow and current President Taylor have never questioned this nonpayment of approximately $2.8 million by Midland. It is also very disturbing that Taylor, Beadnell and Walton stone-walled my request during three consecutive Board meetings for a legal opinion on whether or not the Midland contract was valid and enforceable. Only after I threatened malfeasance litigation against them did they finally approve having our Law Director, Charles Payne, issue a legal opinion. In his written opinion, Payne stated the Midland contract is indeed valid and enforceable. His opinion is supported by the Ohio Attorney General's Office (Attorney Donna Marhevka). The Assistant Chief Legal Counsel for the Auditor of State, J. Desiree Blankenship, also supports this opinion. In her letter dated July 10, 2007 to me, she stated, "I encourage you (Gary Bonnell) to discuss the contractual dispute with both the additional members of the East Liverpool Board of Education and its legal counsel, and to pursue all avenues of legal recourse." (Please refer to Tab I of my Ohio Senate Testimony on June 6, 2007).

The public needs to know that as Superintendent of the Midland Borough School District, Trombetta initiated sponsorship by the Borough School District for the PA Cyber School and the Lincoln Park School for the Performing Arts. He then diverted the Midland students, who were to be sent to East Liverpool, to the PA Cyber and Lincoln Park Performing Arts Schools. Some of those students never walked through the doors but were placed there only on paper. He transferred them to brick and mortar PA schools such as the Western Beaver School District and skimmed approximately 30% of Pennsylvania state funds to the PA Cyber and Performing Arts. This was recently found to be in violation of Pennsylvania Law. Western Beaver School District was awarded a court settlement of $450,000 for that violation from the Midland Borough School District whose Superintendent is Trombetta who has not yet resigned. As recent as October 21, 2007, The Review printed an article titled, "Settlement reached between Lincoln Park, state." This falls on the heals of a lengthy investigation of the Performing Arts School of not only the questionable funding for the construction of the school but the accountability of both academics and funding of the operation of the school. Part of this has not only been reviewed by the Pennsylvania Department of Education but also a 13 month PA Grand Jury Investigation has been ongoing and involves not only Lincoln Park, but PA Cyber and National Network of Digital Schools (NNDS) as well. The PA Department of Education settlement reveals some of the unethical and improper if not illegal behavior of the Performing Arts School, a.k.a.Trombetta. The following are areas of violation and settlement:
- No longer send its students to the Western Beaver and Midland Borough School Districts for their education.
- Return per-pupil payments made by Beaver Area, South Side Area and West Allegheny for the 2005-06 school year.
- Not make any attempt to collect funds from six western Pennsylvania school districts.
- Midland Borough School District will not receive reimbursement from the commonwealth for Midland resident students who were enrolled at the Lincoln Park Charter School in the 2005-06 school year.


I find it interesting that the Midland Borough School District, under the leadership of Trombetta, donated $3 million to Lincoln Park and PA Cyber paid a prearranged lease of $10 million to the School for the Performing Arts. If this is the case, why cannot the Midland Borough School District pay East Liverpool City Schools the $2.8 million they owe us?

Another Trombetta organization, Buckeye Online School for Success (BOSS), is currently under investigation by the Ohio Department of Education. This investigation involves questionable academic test scores on their State Report Card that went from a zero last year to a seven this year.

Taylor, Beadnell and Walton support Trombetta and want him running our schools!!!???

I understand that Trombetta is now in the process of developing a School for Autistic Children to be located on the Calcutta Smith Ferry Road. It has been stated to me that his ultimate goal is to eventually takeover the function of the Robert Bycroft School, putting them out of business.

In closing, many allegations have been made that I was responsible for the removal of the floors and ceilings in East Liverpool school buildings at the beginning of the building project. That statement is totally false. The fact is, I had discovered that the enrollment figures used to determine the scope of the building project were falsified. In 2003, I contacted every state agency from the governor on down with no results. On February 27 and again on August 28, 2003, I presented testimony about the falsification of enrollment before the Ohio School Facilities Commission in Columbus. My testimony was disregarded. In April, 2004, the East Liverpool Board of Education, specifically Hiscox and Board Member Brian Farnsworth, were notified by the Ohio School Facilities Commission that the Commission, in fact, was questioning the enrollment figures. The district was not ordered to stop the project until the figures were verified. For over a year and a half, and as reported in the newspapers, I made repeated requests to have the enrollment figures reviewed and was denied by the previous Board of Education with the exception of Richard K. Wolf. I did not enter litigation until all my pleas with the state and our Board of Education were exhausted. I entered that litigation, which personally cost me $44,300, on July 28, 2004. The deciding factor for me to enter into litigation was made when I found out Farnsworth and Hiscox made the decision and started tearing up the floors and ceilings of all schools with the exception of Westgate. In my opinion, this was done intentionally to put the $60 million project beyond the point of no return. If in fact that project had not been stopped and the 1,000 falsified student enrollment had not been discovered, we would currently be closing two new buildings totaling $23 million. We would have had to legally offer these new buildings to our competitor, Trombetta (a.k.a.BOSS), for pennies on the dollar. When the Ohio School Facilities Commission acknowledged the 1,000 enrollment discrepancy, I immediately dropped litigation against the district. I appealed my court costs and attorney fees which in a taxpayer's lawsuit are normally granted; but, because I dropped my lawsuit too quickly, I was not granted the costs and fees. I would not have gained one penny personally if I had continued on and won the case in court.

I respectfully ask that you do not listen to rumors and innuendos but read the facts in the attached Ohio School Facilities Commission documents and the supporting documentation I have provided for this statement. I also ask that you read my state testimony, dated June 6, 2007, and its supporting documentation. I think you will find all of the documents very helpful in understanding the truth for a change.

It has been stated by Taylor that I do not care about kids, only about money. Based on my 30 year management career, I have learned that it takes proper funding to house and educate students. It is ludicrous to think that I do not care about kids and value a quality education when I graduated an honor student and a member of the National Honor Society. (Please refer to personal information in Tab A of my Ohio Senate Testimony on June 6, 2007). I would like to make note that I have not and will not take one penny of the $3,000 per year granted me as a Board Member until we are out of Fiscal Emergency.

If you have questions regarding any information I have provided, feel free to contact me, Gary D. Bonnell, at 1-330-385-3440.

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