In recent developments, two California school district officials have admitted guilty to stealing up to $1.8 million and misappropriating electricity to finance and operate a clandestine crypto-mining operation.
The United States Department of Justice (DOJ) disclosed that Jeffrey Menge, former Assistant Superintendent and Chief Business Officer of Patterson Joint Unified School District, and Eric Drabert, the district’s IT Director, pleaded guilty to charges of theft concerning programs receiving federal funds.
Fraudulent Billing Scandal
According to the DOJ’s statement, Menge, as Assistant Superintendent, hired Drabert as the school district’s IT director around 2020.
Together, they orchestrated a series of illicit activities to siphon funds from the district. Menge reportedly utilized a Nevada-based company called CenCal Tech LLC, which he controlled, as a front for the crypto scheme.
The investigation revealed that to circumvent restrictions on conducting interested party transactions, Menge created a fictitious executive, “Frank Barnes,” to represent CenCal Tech.
Through this setup, it is alleged that Menge and Drabert executed fraudulent transactions worth over $1.2 million, involving practices such as double billing, overbilling, and billing for undelivered items.
Illicit Crypto Mining Operation Unveiled
Diversifying their criminal activities, Menge and Drabert went beyond financial embezzlement, according to the US Department of Justice.
The law enforcement agency stated that the individuals utilized “high-end graphics cards,” school district property, and electricity to establish and operate a crypto mining farm within the school district.
The illegally mined crypto assets were then redirected to wallets under their control. Additionally, Menge is alleged to have exploited school district-owned vehicles, acquiring a Chevy truck at a discounted price and selling it for personal profit while using a Ford Transit van as his vehicle.
The overall magnitude of the embezzlement was staggering. Menge misappropriated funds between $1 million and $1.5 million, while Drabert was found guilty of stealing between $250,000 and $300,000.
The DOJ revealed that the ill-gotten gains were used for “lavish” personal expenses. Menge indulged in remodeling his residence, purchasing luxury vehicles, including a Ferrari sports car, and funding other personal endeavors. Drabert, on the other hand, utilized stolen funds to renovate his vacation cabin and for various personal expenses.
The guilty pleas by Jeffrey Menge and Eric Drabert, former officials of Patterson Joint Unified School District, shed light on a shocking case of embezzlement and crypto mining fraud within the education system.
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