Ruben Rojas
By Brian Hews
June 29, 2022 ~ In March of 2017, HMG-CN exclusively reported how an audit firm involved with Montebello Unified School District raised serious questions about MUSD’s school bond financing and internal controls issues at the District.
The exposé triggered an SEC complaint and investigation involving Ruben Rojas alleging fraud, misleading investigators, defrauding bond purchasers, mail fraud, and assisting the MUSD with the ongoing fraud in the sale of municipal bonds in 2016.
In addition, the SEC filed an order against MUSD and Montebello Superintendent Anthony James Martinez.
The audit documents stated that “Martinez signed misleading bond offering documents, a misleading letter to LACOE, and false closing certificates that were provided to bond and disclosure counsel and the underwriters in connection with the offering.”
One letter did not mince words and implicitly indicated they had found fraud linked to Rojas and wanted to meet with the MUSD Board in closed session.
The one-page letter stated, “it has come to our attention that the district has recently terminated its Chief Executive Officer, former superintendent Susanna Contreras, and Chief Financial and Operations Officer Cleve Pell.”
“We also understand that in recent months the District has experienced the departure of other individuals in key financial management positions.”
The positions included the Budget Control and Accounts Payable Manager, Fiscal Services Manager, Chief Information Technology Officer, and the Controller.
The involuntary departures were specifically meant to interfere with any financial audit looking for fraud.
The letter went on, “accusations regarding Mr. Rojas’ qualifications and integrity have been publicly aired (the HMG-CN exposé on Rojas), and we also have been independently made aware of other allegations of impropriety.”
The letter ended with a request to meet board members in a closed session to “discuss the impact of the (new fraud revelations) on our ability to complete the audit.”
In the end, Rojas fired the audit firm, which brought in the SEC.
The SEC’s complaint and order read, “immediately before and concurrently with the District’s sale of $100 million of general obligation bonds in December 2016, Montebello’s independent auditor repeatedly raised concerns about allegations of fraud and internal controls issues to the District’s Board of Education and management. In response, Montebello allegedly refused to authorize the fees needed for the audit firm to complete its audit and instead decided to terminate the audit firm. The offering documents for Montebello’s December 2016 bonds failed to disclose this information to investors and instead included a copy of the District’s audit report from the prior fiscal year, which included an unmodified or “clean” audit opinion from the firm. The SEC alleges that Ruben Rojas, Montebello’s former Chief Business Officer, helped prepare the misleading offering documents and also concealed the audit firm’s concerns by providing deceptive updates about the status of its pending audit to various gatekeepers, including the disclosure lawyers who worked on the bond offering. The SEC’s order found that Anthony Martinez, Montebello’s Superintendent of Schools, signed the final bond offering document and made false certifications in connection with the bonds.”
The SEC’s complaint, filed in U.S. District Court for the Central District of California, charged Rojas with violating the antifraud provisions of Section 10(b) of the Securities Exchange Act of 1934 and Rule 10b-5 thereunder as well as Section 17(a) of the Securities Act of 1933, and seeks permanent and conduct-based injunctions as well as a financial penalty.
Now HMG-CN has obtained the Joint Witness List for the trial, with the SEC calling 17 witnesses and Rojas calling 22.
The SEC list includes Graham Beck, partner at Nixon-Peabody; Margaret McBride owner of the audit firm Vasquez and Company; Christy White, owner of Christy White Associates, another audit company; Michael Wertz, an analyst at Moody’s and Lalo Trujillo, Principal at Mission Trail Advisors.
Trujillo has been reported on several times by this newspaper, he was MUSD’s advisor for the 2016 bond offering and interacted with Rojas.
The list also includes Jeff Tensley, former Superintendent of Elk Hills School District where Rojas worked; Chris Hall former Kern County Superintendent of Schools, and a former Rojas employer; Alvin Momon, Victor Valley Union high School District; Dr. Angel Gallardo, former HR Director MUSD, Lisel Wells from Nixon Peabody and MUSD Board member Dr. Hector Chacon.
Rojas list of 22 witnesses “will provide testimony to Rojas’ competence and communication of the bond process.”
The list includes Rojas and Lisel Wells, of Nixon-Peabody; after that, a strategy emerges.
Cyndi Colmenares, who worked with Rojas and Lalo Trujillo, “will testify to Rojas’ workload and Rojas’ input related to the bond.” Genesis Vega “will corroborate that her and Colmenares provided Trujillo with the auditor’s discoveries.” Two additional witnesses will corroborate Vega.
Former MUSD Superintendent Anthony Martinez, who took a plea deal, is included, as is attorney Rick Olivarez.
Former MUSD President Benjamin Cardenas, former MUSD Board Members Joanna Flores, Dr. Hector Chacon, and Edgar Cisneros are also on the list.
The document indicated a pre-trial conference on July 8, 2022, with a trial date set for July 26, 2022 in the case of the SEC vs. Ruben Rojas.
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