The case against of former Scottsdale Unified School District CFO Laura Smith ended with a whimper, not a bang.
After nearly three years in court, Smith, who was facing 12 felony charges, pleaded guilty Dec. 18 to two counts of conflict of interest and will serve three months of unsupervised probation. Superior Court Judge Frank W. Moskowitz also imposed a $15 fine.
The deal, part of a plea agreement between Smith and the Arizona Attorney General’s Office, wraps up litigation that began in May 2018, when Smith was indicted on fraud and conflict of interest charges.
The agreement does not require Smith to testify against former SUSD Superintendent Denise Birdwell, who was fired by the Governing Board a few months after Smith resigned in 2018 over allegations that she violated district policies and accepted payments from an architect who later was awarded district contracts.
Prior to the plea, Smith faced felony charges carrying the possibility of years in prison and thousands of dollars in fines. However, she pleaded guilty to two charges that were downgraded to misdemeanors.
Smith admitted that in March and April 2017 she approved district purchases from Professional Group Public Consulting, or PGPC, a consulting firm owned by her sister Caroline Brackley.
Prior to coming to SUSD, Smith was PGPC’s president and she maintained a 17 percent stake in the company while working for the school district, Assistant Attorney General Mary Harriss said.
In court, defense attorney Richard Gaxiola acknowledged Smith violated state law by failing to adequately disclose her relationship with the company, but argued SUSD higher-ups knew about Smith and Brackley’s relationship.
Gaxiola said the lengthy investigation by the Attorney General’s Office showed no evidence that Smith mishandled funds at SUSD or financially benefited from the work awarded to PGPC.
“At the time of the filling of these charges, Laura had nearly half a billion dollars under her control as the CFO of the Scottsdale Unified School District and not one penny was misspent, misappropriated or
misused in any manner whatsoever,” Gaxiola said. “This was verified by the SUSD’s auditors who found no wrongdoing or any misappropriation of monies.”
In court, Harriss acknowledged that PGPC performed all the work it was paid for and investigators found no evidence Smith received direct payments for that work.
Gaxiola said Smith saw no profits from the company during that time.
“There has never been any shred of evidence to support the state’s argument that Laura financially benefited from any contract with PGPC and the SUSD,” he said.
Harriss asked the court to impose a fine of up to $1,200 and up to one year of probation.
However, Moskowitz gave Smith less than that, citing the impact of the case on her life.
Gaxiola told the court that Smith is now virtually unemployable and that “her reputation is so bad that no district in the State of Arizona would touch her.”
Gaxiola also said the the Arizona Department of Education was terminating Smith’s teaching license.
Moskowitz said Smith has “kind of been on probation” for two to three years as the case played out and had no run-ins with the law.
“So that’s why I just figured three months because I don’t know what much longer is going to do and I didn’t impose any additional fines and fees because it sounds like you’ve been through enough,” Moskowitz told Smith.
Smith was hired by Birdwell in February 2017 and resigned less than a year later during a district investigation into her activities.
The grand jury indicted her months later and then indicted her again in January 2019 after the judge sent the original charges back to the panel over concerns prosecutors did not present evidence that could have exonerated her.
The case moved slowly through the court system since the first indictment in 2018, and most delays appeared connected to plea negotiations between Smith and the Attorney General’s Office.
Over the past three years, there were whispers in the community that Smith may be able to provide evidence against Birdwell in exchange for leniency.
But it appears that is not the case.
Gaxiola said the plea includes “no agreement of any kind.”
In court, Gaxiola seemed to suggest Birdwell actually influenced the investigation into Smith to defer attention away from herself.
“The reason this began to be investigated was because at a seminal point of other investigations, the sitting person at the time who was running the district diverted the investigation onto Laura to divert her efforts,” Gaxiola said.
“That is accurate,” Harriss responded. “This is part of a larger investigation…the initial investigation was done internally by Scottsdale Unified School District. This is a part of that investigation.”
Since Birdwell’s firing, Smith is the only member of her cabinet charged with a crime despite evidence of wider misconduct.
A statement of charges used to justify Birdwell’s firing alleged that Hunt & Caraway Architects paid $30,000 to Birdwell or a joint account she had access to.
The district later awarded contracts to the company for projects related to a $229-million bond passed in 2016.
In 2018, the Attorney General’s office sued SUSD, Hunt & Caraway and company president Brian Robichaux alleging that under Birdwell’s leadership the district violated state procurement laws in selecting construction contractors for rebuilds of Hohokam Elementary and Cheyenne Traditional schools.
The district settled, agreeing to a $5,000 fine and ongoing procurement training and evaluations.
Hunt & Caraway settled in 2019, agreeing to cancel $105,000 in outstanding fee claims against the district, refund $16,000 for work on the central kitchen project and cooperate with ongoing attorney general investigations.
Robichaux settled with the AG’s office in May 2019 and died in January 2020.