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The crowd of about 250 parents, teachers and community members applauded when another Ballard Spahr lawyer, Henry E. Hockeimer, announced that his team had recommended the immediate firing of O’Shea and the termination of a consulting contract with Gardiner, who preceded O’Shea as CEO.
The board had suspended both with pay after the allegations of mismanagement surfaced in an April 15 Philadelphia Inquirer article. The newspaper reported in part that Gardiner and O’Shea had collected hundreds of thousands of dollars in recent years in salaries, contract work and other compensation related to PACS.
Further, upon Gardiner’s retirement from the CEO job in 2006, O’Shea was appointed to replace him despite not having a college degree, the newspaper reported.
O’Shea formally resigned in the days leading up to the May 14 board meeting, which neither man attended. At the meeting, the board approved a contract for O’Shea’s permanent replacement, Lawrence Sperling, who had been serving as acting CEO.
Also during the session, Hockeimer reported that the investigators were advising "a significant restructuring of the board of trustees."
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Though the investigators indicated no findings of misconduct by the board, they noted deficiencies in policies and procedures that allowed executive misconduct to occur.
"The board placed significant trust in Gardiner and O’Shea and that trust was abused," Grugan said. "We also believe that if the board had been operating under better guidelines and controls, some of Gardiner’s and O’Shea’s conduct either could have been avoided or eliminated."
Five of the six board members agreed to step down by July 31. The lone holdout was Constance Rodgers, who was elected to the board by parents of students at the school. Rodgers’ term is due to expire in May 2009.
The departing board members include Rosemary DiLacqua, the chairwoman; Preston Feden; Basil Merenda; Joseph Resta; and Victoria Venditti.
Numerous parents speaking on the meeting record accused board members of knowing more about the money trail than they have let on. Others said that the board should have known about it.
"If not all the board, then somebody should have known about these checks that were going out," said Ron Preiss, whose daughter attends the school.
Mike Houser, father of two PACS students, welcomed the changes.
"I was hoping that the board was going to resign. It satisfies me that they’re out of here," Houser said after the meeting. "Hopefully (the specifics) are going to come out at the end."
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According to a restructuring plan adopted by the outgoing trustees, the new seven-member board will be in place by the start of the 2008-09 school year. Parents will elect three members this spring and summer. One will represent the elementary school, one the high school and one the special education program.
Among the four remaining positions, one will be appointed by a local university, one will be appointed by a local business organization and two will be appointed by the board itself.
Parent George McClay protested when the sitting board voted unanimously to approve the new board structure without taking direct public comment on the plan. He noted that parent representatives on the seven-member panel will be in the minority.
Kevin McKenna, a partner in the law firm approved last week as the school’s new general counsel, replied that the school needs to get a new board structure in place quickly to support its application for a five-year charter renewal.
"The plan was put into effect to address the immediate concern of getting the charter renewed," said McKenna, of Latsha Davis Yohe & McKenna.
The School Reform Commission, which oversees all of the city’s public and charter schools, has not set a new date for the renewal vote. The SRC’s inspector general, Jack Downs, is conducting his own investigation into the fiscal and managerial irregularities at PACS and, on the afternoon prior to the May 14 trustees meeting, met with SRC members to update them on his progress. Downs has declined public comment.
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At the trustees meeting, the Ballard Spahr attorneys lamented the limitations of their own probe. Lacking subpoena power, they were unable to force O’Shea and Gardiner to submit to interviews or to surrender key documents despite "repeatedly" requesting them, Hockeimer said.
Hockeimer reported that a large amount of money that the school took in while under O’Shea’s leadership is unaccounted for.
"There was a significant amount of cash taken. How we could ever quantify that would be very difficult," Hockeimer said. "There were charges on credit cards, store charges. We have tried to come up with a certain dollar amount, but our investigation continues. Frankly, every day we look at this, we find more stuff."
According to those familiar with the school, a cash system has been used in the cafeteria, while student fund-raising projects and in-house vending machines generated additional cash. The school has since implemented a non-cash system in the cafeteria.
Other measures taken by the trustees last week included:
• Adoption of amended bylaws.
• Termination of O’Shea’s sister, Constance O’Shea, as coordinator of the PACS Elementary School.
• Termination of O’Shea’s daughter, Tara O’Shea, as an executive assistant at the school.
• Adoption of new conflict of interest, internal controls, public participation in board meetings and whistle-blower policies.
In addition, the school has changed its procedures for handling cash and check authorization. ••
Reporter William Kenny can be reached at 215-354-3031 or bkenny@phillynews.com