Date: March 28, 2024 Contact: newsroom@ci.irs.gov The former senior director of Fiscal Services at an Orange County public school district pleaded guilty today to embezzling approximately $15.9 million from the district over several years. Jorge Armando Contreras, of Yorba Linda, pleaded guilty to one count of embezzlement, theft and intentional misapplication of funds from an organization receiving federal funds, a felony offense that carries a statutory maximum sentence of 10 years in federal prison. Law enforcement so far has seized approximately $7.7 million in personal and real property traced to the scheme, including a home in Yorba Linda, a 2021 BMW automobile, 57 luxury designer bags (mostly Louis Vuitton), various pieces of jewelry, designer clothes and shoes, and eight bottles of Clase Azul Ultra luxury tequila. Contreras was the senior director of Fiscal Services at Magnolia School District, which serves students in Anaheim and Stanton. In this role, Contreras, whom the school district hired in 2006, managed the district’s fiscal operations. The schools in this district educate children from preschool through sixth grade – 81% of whom are classified as socio-economically disadvantaged. According to his plea agreement, Contreras managed and had access to various school district bank accounts as well as the student body bank account. Contreras caused checks from these accounts to be deposited into his personal bank account. Contreras wrote checks in small dollar amounts written to “M S D,” with the letters spaced out, and, after receiving the proper signatures from others, would include fictitious names and increase the amounts of the checks and deposit the checks into his personal bank account via ATMs. To conceal his fraud, Contreras provided bank reconciliation packets to others at the school district with falsified bank statements and records. In total, Contreras admitted to embezzling approximately $15,920,042 from the school district. The school district placed Contreras on administrative leave in August 2023 and filed a lawsuit against him in Orange County Superior Court. United States District Judge Fred W. Slaughter scheduled a July 25 sentencing hearing for Contreras, who is free on $450,000 bond. IRS Criminal Investigation, the FBI, and the United States Department of Education’s Office of Inspector General are investigating this case. Assistant United States Attorneys Billy Joe McLain of the Public Corruption and Civil Rights Section, Brett A. Sagel of the Corporate and Securities Fraud Strike Force, and James E. Dochterman of the Asset Forfeiture and Recovery Section are prosecuting this case.
