Reached by phone today, Seattle School Board President Steven Sundquist said that the board will leave no stone unturned to find the perpetrators behind Seattle Public School's alleged $1.8 million financial fraud.

The board has launched its own investigation into the alleged fraud, detailed in a state audit report (.pdf) released today and obtained by The Seattle Times yesterday, which led to the district wasting $1.5 million for services with a "questionable public purpose," and another $280,005 for services it never received and ended up benefiting a private company.

For example, the district paid a vendor $74,780 to develop training materials which the audit found was mostly copied from other sources. Other vendors charged for food, web services, and professional training programs which the audit concluded the district shouldn't have paid for.

Sundquist said that the board had hired Seattle attorney Patricia Eakes to investigate the alleged fraud and was expecting to get some answers by the end of this week. "The state audit report has been published, but the school board wants a better understanding of what happened," he said. "The state auditor's job is to try and figure out where the facts are and whether there were cracks in internal control. We want to know what kind of management oversight occurred." Which basically translates into whether Superintendent Maria Goodloe-Johnson and other top level administrators knew anything about this, and if yes, whether they did anything about it. Although Sundquist couldn't pinpoint exactly when the independent investigation report would be released, he did say that Eakes had "seen all the headlines and was working as furiously as possible to finish the report."

Meanwhile, the district's former program manager, Silas Potter, the person singled out in the audit report for signing off on the contract services the district never received, is missing. Potter is wanted by both Eakes and the county prosecutor's office for questioning, but nobody knows where he is. Potter's immediate supervisor Fred Stephens left the district to take up the role of deputy assistant for commerce secretary Gary Locke in the Obama administration.

Sundquist said that the board hopes to make the findings available to the public either through a press release or the district's website. "We will discuss them at an executive board session Tuesday and there is also a public board meeting Wednesday," Sundquist said. The board decided to launch an independent investigation after the district noticed irregular transactions and reported it to the Office of the State Auditor.

Sundquist said that he along with board member Michael DeBell and the district's Chief Counsel Noel Treat had reported the missing funds to the King County Prosecutor's Office. "The prosecutor's office will determine whether the law was violated and whether they can make a criminal case," Sundquist said. The board's job, he said, was to make sure that proper policies were in place and even remove people if needed, to make sure incidents like this don't happen again. "It's an assault on public confidence," he said. Especially at a time when the district is struggling under a massive budget deficit and needs all the support it can get. This latest audit follows two unflattering audits from the state about the district's handling of public funds, and comes at a time when the City of Seattle is trying to convince its residents to vote in favor of a $231 million education levy which seeks to support programs not funded by the district. Only this time, it's the city, and not the district which gets to be in charge of the levy money.