Audit: Des Moines schools reimbursed $200,000 in improper spending, including on snacks, cigarettes

Maintenance workers improperly billed Des Moines Public Schools for $200,000 worth of expenses over seven years for building supplies and personal items like snacks, cigarettes and ammunition, according to a state audit released Wednesday morning.

William Joseph Hinrichs, a 12-year employee, received payments from the district for tools and construction materials that were “not necessary or reasonable” for his work, Iowa State Auditor Rob Sand wrote in the report. Credit card statements showed Hinrichs, 48, also charged the district for purchases that included Carhartt stonewashed jeans, Under Armour T-shirts, Crocs shoes, Sentry wireless earbuds, paintballs, Airsoft pellets, shotgun ammunition, Marlboro cigarettes, diet Mountain Dew and Little Debbie Oatmeal Cream Pies.

The audit said Hinrichs declined to speak with investigators. The auditors reported they also could not reach Kevin Kurth, 37, a contractor with Ja-Ra Enterprises accused of charging the district for tools and personal items like sunglasses and a Yeti tumbler.

Iowa Auditor Rob Sand is shown at a news conference at the Iowa Capitol on Jan. 9, 2020.

Hinrichs and Kurth did not immediately return voicemails left at their listed phone numbers on Wednesday. Sgt. Paul Parizek, spokesperson for the Des Moines Police Department, said the department’s financial crimes investigators are looking into the case and will “determine what charges may be appropriate.”

Sand told the Des Moines Register that Hinrichs and Kurth improperly charged the school system for years because the district did not require detailed receipts on invoices from contractors.

“[Hinrichs] knew how the system worked,” Sand said. “And he knew how he could abuse it. Having someone look at the invoice didn’t really do much without additional verification.”

Des Moines Public Schools Chief Operations Officer Bill Good said the district began requiring contractors to provide more supporting documents with their invoices after the investigation began. Before the allegations came to light, he added, the district’s facilities manager approved Ja-Ra Enterprises’ invoices along with Hinrichs.

“It’s hard for him to go through every single invoice at great length,” Good said. “He does question them and spot checks them and that sort of thing. There‚Äôs a certain amount of trust that we have with employees.”

The district stopped working with Ja-Ra Enterprises after the investigation began. Good added that he hoped the district could recover the $200,000 through a criminal prosecution of Hinnrichs and Kurth. 

“Personally, I would see that as appropriate,” he said.

Ja-Ra Enterprises had contracted with Des Moines Public Schools since 2006, assigning two employees to renovate rooms, change landscaping and assemble playgrounds for the district full-time. The employees reported to Hinrichs, and the company billed the district for the hours the employees worked, as well as any materials they needed to buy.

At Hinrichs’ suggestion, Ja-Ra Enterprises opened a credit card specifically to buy materials for school district jobs beginning in 2013, said Craig Smith, the company’s owner. 

Smith said he was “shocked about [the improper spending], just as much as anybody else.” He said Kurth quit after Des Moines Public Schools began looking into the spending.

Asked why the company opened a credit card, Smith said Hinrichs made the suggestion after the district changed its policy. He said the district previously had purchased building supplies for specific projects. Around 2013, Smith said, the district asked the company to buy the materials and bill the school system.

He said he didn’t hear most of the explanation of the change firsthand and referred the Register to his attorney, who did not return a call seeking comment.

“Bill [Hinrichs] and Kevin [Kurth] had the communication,” Smith said. “I had some communication with Bill, on a limited basis. Most of the communication came through Kevin.”

The investigation began in September 2019, when a source told the district that Kurth had billed the district for tools, which he then turned around and sold, said district spokesperson Phil Roeder. He was not sure whether that allegation turned out to be true. But he said contractors were not allowed to bill the district for tools.

An internal auditor for the district began reviewing Ja-Ra Enterprises’ purchases and discovered that Hinrichs was using the card, according to the state auditor’s report. 

While the purchases included many personal items, Hinrichs and Kurth mostly used the card to purchase building supplies. But even in those instances, Sand said, the purchases were not tied to jobs Ja-Ra Enterprises performed for the district.

For example, Kurth and Hinrichs installed shelves, replaced door frames and hung doors at the district’s central campus in December 2015. But, according to the state audit, they also billed the district for $1,800 worth of concrete and anchors that had nothing to do with the job.

They also billed the district $9,000 to caulk the walls, repair the driveway and work on some bricks at South Union Elementary School. Sand described the expenses as “unusually large” and pointed out that the invoice included a modulating boiler that was not tied to the project.

In total, the auditors concluded that Hinrichs billed the district for $125,000 in improper spending, while Kurth billed the district for $80,000 in improper spending. 

As the school district began looking into the spending, according to the audit, Hinrichs asked Ja-Ra Enterprises staff to “falsify receipts so that they did not include tool purchases.”

Hinrichs told district employees during a February 2020 meeting that he did not use the Ja-Ra Enterprises credit card, despite his name being on some of the receipts tied to the purchases, according to the audit. He skipped two scheduled follow-up meetings with the district, and his attorney later informed Hinrichs’ bosses that he was resigning, the report said.

In addition to his work for the school district, Hinrichs also operated Ridgetop Horse Ranch, a horse barn in Milo. A Facebook post on the barn’s page in September 2019 indicated that the operation was shutting down.

Tyler Jett covers jobs and the economy for the Des Moines Register. Reach him at tjett@registermedia.com, 515-284-8215, or on Twitter at @LetsJett.