in Houston, Texas
Boxes of Houston ISD records yield additional details about gifts, freebies in E-Rate controversy
Monday, Jan 03, 2011, 03:04PM CST
By Lynn Walsh
Boxes of documents

Top technology employees at the Houston school system were privy to friendly lunch invitations, happy hour parties, sporting event tickets and after-hours smoking meet-ups courtesy of vendors doing $75 million in business with the school district, documents show.

A happy hour at Dave and Busters, a baseball game invitation, a secret gift to one employee and requests for trinkets are the latest examples to be revealed of the gift-giving culture between Houston Independent School District employees and vendors through the federal E-Rate program, which funds computers in schools.

The gifts -- which began as early as 2005 and were provided as late as 2008 -- cost the school system $105 million in federal funding, plus an additional $1 million in direct costs.

Some of the E-Rate swag available to HISD workers, including offers of personal loans and trips to Las Vegas, had already been made public. However, Texas Watchdog turned up these additional details by using state public information laws to gain access to boxes and boxes of e-mail correspondence between HISD employees and E-Rate vendors and documentation associated with the investigation into the gift-giving.

The more than 25 boxes of documents show friendly and sometime flirtatious e-mails between HISD employees and E-Rate vendors, countless invitations to sporting events, lunches and happy hours and careful and precise control over communication with federal E-Rate officials.

The investigation did not yield criminal charges for anyone involved in HISD but did in the Dallas Independent School District. A DISD official is now in a federal prison in Fort Worth, and the former owner of one of the vendor firms is being held at a federal facility in Bastrop.

Three companies were at the center of the federal investigation involving HISD: Analytical Computer Services, Micro Systems Enterprises and Acclaim Professional Services. From 2000 to 2006, ACS earned more than $68.4 million through E-Rate, and Micro Systems received more than $9.8 million from 2000 to 2003, documents show.

Allegations of accepting gifts, sporting tickets and lunches were included in the Sept. 3, 2008, memo from Bracewell & Giuliani lawyers to officials with the Federal Communications Commission. Texas Watchdog’s most recent review of documents found e-mail correspondence related to some of the gifts described in the memo, including:

  • Fanny packs: HISD employee Lori Cummings sends an e-mail to both Laura Palmer, an HISD assistant superintendent of technology, and Scott Blankenship of Micro Systems, asking when more free fanny packs will be available. “Scott, when can we expect 100 of the above? Laura spoke with you last week regarding this. We to stuff items into them ...”
  • Rockets suite tickets: Among the thousands of pages of documents made public to Texas Watchdog was a copy of the $300 check then-HISD Superintendent Abelardo Saavedra wrote to ACS owner Frank Trifilio to reimburse the firm for tickets to a Houston Rockets playoff game. Along with the check was Saavedra’s letter to Trifilio, saying: “Thank you for your hospitality during the recent Rockets playoff games. As you know, I cannot accept gifts from vendors. I am reimbursing $300 for the three playoff games that my guest and I attended in your suite. If this does not adequately reimburse the value of the tickets, please let me know so I can ensure full reimbursement.”
  • Free cellphones: E-mail correspondence included a list of Nextel phone numbers and the corresponding HISD employee using those phones. The Bracewell & Giuiliani memo had said E-Rate vendors had provided HISD employees with free Nextel phones to use.
  • Trinkets: In an e-mail, Palmer asks about “trinkets” from Micro Systems: “I need some you have left from the stuff Lori gave you?” HISD employee Andrea Teasley replies, ”just the drink holders from MSE. I ran out of my little gifts...”

Along with Palmer, William Edwards, then HISD’s assistant superintendent for technology, and Steve Kim, then HISD’s head of computer networking, were accused of accepting gifts from E-Rate vendors, documents show. None of the three currently work for the school system.  

Close-up of box

Invitations to lunch and social events from the E-Rate vendors were common, the documents show. An e-mail from Palmer to fellow HISD technology employees thanks them for attending a party at Collina’s restaurant.

On another occasion, Heather Konlande, an employee at ACS, emailed Kim, Edwards and other HISD employees, inviting them to an “HISD appreciation Happy Hour at Dave and Busters.” The goal of the social hour, according to the e-mails, was “to have fun as well as have casual discussion on how we at ACS can improve and ultimately make your jobs easier by providing even more services.”

Kim was invited to a baseball game via e-mail by Allan Folz of ACS but turned it down, saying, “On any other day I would have jumped at the opportunity. However, I have plans tonight that I cannot break. Please let me know if this happens again.”

Another e-mail shows Kim agreeing to a lunch invitation from a Hewlett-Packard representative, the turning the invitation down saying, because it is “RFP season...” The representative responds by inviting Kim to drinks after a Rockets game: “Boo. OK, how about drinks after the Rockets game tomorrow?” Kim does not respond.

In November, HP was forced to pay more than $16 million to the federal government and people in Houston and Dallas in the aftermath of allegations of fraud in a federal program supplying computers to the Houston and Dallas school districts.

In another e-mail from May 2002, Mark Jones from Micro Systems invites Kim to smoke with him at the Downing Street Pub, a haven for Scotch and cigar lovers on Kirby. Jones writes:

Just an FYI that I’ll be at Downing Street tonight from around 6:30-10:00ish. I didn’t bring anything to smoke so I will be getting some local stuff. Let me know if you’re coming and I’ll pick out something nice for you to smoke.”

According to the documents, other instances of lunch invitations and gifts include:

Several e-mails showed trouble with communication between HP, ACS and Micro Systems. E-mail correspondence shows HISD employees had a hard time getting in touch with Trifilio and Wong when a service problem came up.

While the amount of money the companies collected piled up, the relationships between the companies and HISD employees became more friendly. HISD documents show:


In an interview several months ago, Trifilio said his firm was wrongly connected to Micro Systems because some of HISD’s E-Rate paperwork used the same identification code for both ACS and Micro Systems.

The 25-plus boxes of documents Texas Watchdog reviewed strengthens his argument.

E-mails suggest HISD employees were unclear as to whether ACS and Micro Systems had separate E-Rate codes.

In a 2005 e-mail, HISD procurement specialist Ken Phillips asks: “So, is ACS named on the E-Rate extension request and we are only required to have extensions with that company or is it ACS and MSE?” The response from project manager Jacqueline Martin: “It is ACS only.”

Almost a year later the issue comes up again -- this time, about whether or not multiple vendors can use the same ID number. The conversation is stopped by Palmer who writes, ”please set up a meeting. This is not an e-mail topic.”

“We were the scapegoat” in the controversy because of confusion over vendor identification numbers, Trifilio told Texas Watchdog. Micro Systems and Acclaim took on some of the contracted work because the district believed the volume was too much for one company to handle, Trifilio said.
E-Rate obtains the ID numbers from the Universal Service Administrative Co., which administers E-Rate under the direction of the FCC, said Richard Patton, HISD’s internal E-Rate watchdog. Patton said he was not aware of any problems with the vendor ID numbers like what Trifilio described.

Confusion over how to process E-Rate vendors and trouble communicating with them was not all the HISD documents show. Other e-mail correspondence shows Palmer trying to control what was shared with E-Rate auditors. In an June 2005 e-mail, Palmer chose a shorter response, instead of a longer one with more details, to be sent to E-Rate auditors who had posed questions to the district:

“I would [send] the short one because it does not cause someone (like an E-rate auditor) to it a second thought. Sometimes you just do not want to draw attention...I think my language, below, is all we need to satisfy the E-rate administration. If they saw a lot of additional language, it may obscure the issue....”

The e-mail is in response to an E-Rate official asking HISD’s legal department for contracts associated with ACS in June 2005.

Do you have more information about what’s going on in HISD?  Contact Lynn Walsh,, 713-228-2850 or on Twitter @LWalsh.

Photos by Lynn Walsh/Texas Watchdog staff.

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