KANSAS CITY, Mo. – Tammy Dickinson, United States Attorney for the Western District of Missouri, announced that the former superintendent of the St. Joseph School District and former president of the Board of Education pleaded guilty in federal court today to a fraud scheme in which he received more than $662,000 in pension payments to which he was not entitled.
Danny L. Colgan, 70, of St. Joseph, Mo., waived his right to a grand jury and pleaded guilty before U.S. District Judge Dean Whipple to a federal information that charges him with one count of wire fraud.
“Today’s criminal felony conviction brings to conclusion an extensive, thorough investigation into fiscal wrongdoing in the St. Joseph School District,” Dickinson said. “I commend the professionalism and perseverance of the FBI agents and prosecution team involved in this investigation. We do not anticipate charges against any additional defendants in the future.”
Under the terms of the plea agreement, Colgan will be sentenced to one year and one day in federal prison. He must pay $662,660 in restitution prior to his sentencing hearing (which has not yet been scheduled). Colgan was released on bond.
Colgan was the superintendent of the St. Joseph School District from July 1, 1992, until his retirement on Dec. 31, 2005. Colgan was entitled to retirement benefits from the Public School and Education Employee Retirement Systems of Missouri (PSRS) with the amount of the retirement benefits based upon his highest consecutive three years of reported salary.
By pleading guilty today, Colgan admitted that he caused others to falsely report his salary to the PSRS in order to increase his retirement benefits. Colgan knew that the salary figures he caused the school district to submit to PSRS on his behalf included fringe benefits and other payments to Colgan that were not eligible to be counted as salary under state statutes.
This fraud scheme began during the 1997-98 school year and lasted for eight years, until Colgan’s retirement. Colgan’s retirement benefits were calculated by using the amounts reported by the school district over the final three-year period before he retired.
During that final three-year period, the school district falsely reported that Colgan’s salary totaled $586,030. In reality, his salary totaled $343,286 – a difference of $242,744. As a result of the false statements to the PSRS, the school district made excess payments in the amount of $14,652 to the PSRS from 2003 through 2005, and Colgan was paid excess benefits that totaled $677,313 over a 10-year period.
Colgan’s salary reported for his final three years as school superintendent improperly included the following:
Car Allowance/Travel Stipend: The $9,600 car allowance/travel stipend was a fringe benefit that was ineligible for retirement salary calculation purposes;
Family Insurance Premiums: The family insurance benefits/premiums paid by the district of $5,225, $5,603, and $6,258 were fringe benefits that were ineligible for retirement salary calculation purposes;
District Contribution to Taxable Annuity: The district payment for the school year 2004-2005 of $25,000 to purchase a taxable annuity for the superintendent was ineligible for retirement salary calculation purposes;
“District Vehicle” Payments: In the final three years, the school district reported “District Vehicle” payments of $11,300, $11,300, and $28,975. The “District Vehicle” payments were separate from the $800 per month car allowance payments (described above). The “District Vehicle” payments were fringe benefits that were ineligible for retirement salary calculation purposes; and
Unused Vacation Payment: An unused vacation payment in June 2005 of $10,820 was a fringe benefit that was ineligible for retirement salary calculation purposes.
This case is being prosecuted by Assistant U.S. Attorney Paul S. Becker. It was investigated by the FBI.