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New Rochelle Board of Education: Criminal Enterprise Masquerading as an Educational Institution - Part XXIV

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New Rochelle Board of Education: Criminal Enterprise Masquerading as an Educational Institution - Part XXIV

August 17, 2017 - 18:20

Steve Michael counting out cash bribe at McDonald's New Rochelle as Robert Cox observes

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NEW ROCHELLE, NY --  Four illegal vending machines at New Rochelle High School generated over $3,000 in cash in just one month. Twenty percent of that — $640.00 — was paid out in a cash bribe. The bribe was paid to this reporter at a meeting yesterday at the McDonald’s restaurant on North Avenue near Eastchester Road.

For the past two years, Talk of the Sound has been gathering information — photos, videos, invoices, receipts, bank statements, checks, spreadsheets and other public and internal records — that show a long-standing pattern where the City School District of New Rochelle allows the operation of private businesses for personal benefit of select individuals within the public schools in New Rochelle.

We previously reported on many of these private businesses operating out of the school district, on district time. To date, no action has been taken to put a stop to this profiteering on the backs of New Rochelle taxpayers and students in our public schools.

We have told of a security guard at Isaac E. Young Middle School who spends a large part of her work day operating a catalog sales business selling jewelry and makeup and selling banned food products like pizza and ice cream to students; a swim coach who has for years operated an elite (i.e., expensive) swimming program out of the New Rochelle High School swimming pool almost entirely subsidized by the City School District of New Rochelle; a Director of Continuing Education at New Rochelle High School who has for years operated a food concession business out of the “night school” office selling banned food products; teachers who sell candy in their classrooms; grounds crews who operate private waste-hauling and landscaping businesses using district vehicles and equipment; a district locksmith who operates a private locksmithing business out of New Rochelle High School and more. During weekends, holidays and over the summer there are sports coaches who run tournaments and sports camps and clinics on school grounds. In at least one case, school coaches tell student-athletes if they do not pay for their private programs they will not be considered for the public school teams they coach.

There are virtually no financial controls in place to effectively track this activity.

While reporting on the concession stand operated by Maureen Maire out of the Night School Office at New Rochelle High School, we learned of illegal vending machines located throughout the school district including four within a small room within the suite of offices that make up Maire’s Continuing Education offices.

In New York State, vending machines that sell sugary drinks like Cokes or Gatorade, candy like Snickers bars or salty snacks like Doritos are banned from areas in public schools that are accessible to students. A soda or snack machine in a teacher’s lounge is permitted.

We contacted the New York State Education Department for further explanation.

“The sale of sweetened soda and all foods that do not meet the Smart Snacks guidelines are prohibited from the beginning of the school day (midnight the night before) until 30 minutes after the end of the actual school day (dismissal),” said one New York State Education Department official on background. “The Smart Snacks regulation allows the sale of diet soda in High Schools only, but New York State law does not allow this – Section 915 of Education Law.”

“There may be vending machines in teachers lounges filled with soda and candy, as the Smart Snacks guidelines do not limit the sale of prohibited items to adults – the school just needs to ensure that students cannot access the vending machines in the teacher's lounge during the school day. There may be vending machines in the building that contain items that are prohibited, and they may be on timers for after school consumption - as long as students do not have access during the school day (midnight – 30 minutes after dismissal). Also, at sports events in the evening and on weekends, there is no prohibition on the sale of foods and beverages.”

A typical vending machine contract gives the vending machine “exclusive right and privilege to install, operate, and maintain vending machines on the premises of Proprietor” at a particular location. The Proprietor is typically paid 15-30% of the proceeds from sales from each machine and a flat fee to cover the cost of electricity provided by the Proprietor.

There are dozens of vending machines, installed by a myriad of companies, in buildings owned and operated by the City School District of New Rochelle but no records of contracts, payments for electricity or sales commissions. The central office has no record of who installed the machines, when or under what authority.

According to the Vending Times 2010 Census of the Industry, the average machine in the United States generates about $5,800 per year.  On a commission rate of 25% on $5,800 sales per machine a host would earn $1,450 per machine. There are about two dozen machines in the District which, at $1,450 per machine, would generate about $35,000 a year.

Vending machines selling banned products in a public school could be expected to generate revenue far above the national average.

The four machines at the Night School Office at New Rochelle High School are said by their owner to have generated over $3,000 in a single month ($750 a piece, or about $9,000 on an annualized basis).

There are 9 vending machines at New Rochelle High School: two in the area of the Athletic Department Office, two in the Lower Cafeteria, one in the Teacher's Lounge at Room 221 and four in the Night School Office.  Each machine sells prohibited food and beverage items.

There are no records for any of these machines. It is not even clear who owns four of the nine machines. There are no service tags on the vending machines in the Athletic Department and Lower Cafeteria.

There is a service tag on the vending machine in the Teacher's Lounge which reads "CC Vending/1-800-761-0810". CC Vending has an office located in Mount Vernon, NY and a website at www.ccvend-usa.com. This is the only legal vending machine in the building.

There is a service tag on the vending machines in the Night School Office one of which reads "Yonkers Friendly Services 914-424-0490" and another with the name "Steve Michael".  We were unable to find any listing for Yonkers Friendly Services in Google and a reverse lookup for 914-424-0490 returned no results. A number is scratched out on the tag which reads 914-962-0977. A reverse lookup for that number lists "Steve M Michael”.’

In a phone call to Steve Michael last month, this reporter identified himself and asked if he knew why there were no records on file with the school district for his four machines and why, in particular, there were no records of the district being paid any money from the proceeds from those machines or payments for the cost of the electricity.

Michael said he knew why there were no records of any payments to the school district for his machines.

“I don’t pay them”, said Michael.

For reasons that remain unclear Michael then made an offer to this reporter.

“Tell you what,” said Michael. “How about I kick back twenty percent to you”.

He asked to meet the next day at the McDonald’s on North Avenue which is not far from New Rochelle High School.

This reporter accepted the meeting and immediately informed school officials of the proposed bribe.

At the meeting, Michael explained how the vending machines worked, how they tracked sales and stored the money. He repeated his offer to pay a 20% kickback. He never explained why he thought paying a bribe to this reporter would be helpful to him other than that it was important to him to keep those four machines in the high school. He acknowledged that the products sold out of the machines were banned. Asked why the school allowed the machines he said the machines had first been installed 30 years ago by his predecessor and Maire’s predecessor, Thomas Walsh. Sources told Talk of the Sound that Walsh used to divide up the revenue from the four vending machines on a 40/60 split. It is not known if Maire continued that agreement when she took over for Walsh.

Michael asked that this reporter to meet him at the high school so he could explain how the machines counted “vends” and revenue and how the money was stored and removed from the machine. He offered to get me into the building through a back door in violation of the school’s security protocol. After the meeting, District officials were updated on the status of our reporting and it was agreed that this reporter would meet Michael at the high school.

At the high school, Michael proceeded to explain the inner-workings of the machines. We were interrupted by school security guards who were called to the scene by Maureen Maire. Soon after Michael proposed that he would start paying the kickbacks in August.

On August 15th, Michael called to say that summer school was soon to close for the year and he wanted to meet to pay the kickback. We met the following morning at the same McDonald’s as before where Michael paid out $640, the entire exchange was captured on video tape.

The amount was based on sales of $3,195 at the four machines from July 3rd 2017 ot August 1, 2017

Asked if the July numbers were typical, Michael said no, the summer numbers were always higher.

"There's nothing for the kids in the whole school so they have no option whatsoever,” said Michael. “The kids actually stand on line to get to the machine (during the summer)”,

After the bribe was paid, this reporter went directly to City Hall to turn over the cash to senior school officials and was provided a receipt.

While the willingness of Steve Michael to pay kickbacks to a total stranger with no role in allowing or prohibiting his vending machines on school property does not prove that bribery and kickbacks or misappropriation (in cases where a school district employee is stocking a vending machine and withdrawing cash) have occurred elsewhere in the District it seems reasonable to conclude this practice is widespread and has been going on for years.

There are no contracts or payment records related to these vending machines. These are machine that, across the District, generate well over $100,00 a year in cash revenue for their owners. These are machines that in many cases are illegally selling food and beverage products prohibited under New York State and federal law. All of this occurs in plain sight every day of the year. And apparently no one has ever thought to question why these machines are in the school and what happens to all that money? Readers can draw their own conclusions from the fact that one of these owners paid out an unsolicited cash bribe of $640 for one month from four machines.