NLESD wants friend of convicted employee ordered to return property from fraud case

Newfoundland and Labrador'slargest school board wants to get back a shed and a trailer that are linked to a corruption case involving a former employee.

But there's a problem: the shed and trailer are on the property of a friend of thatformer school board manager.

And that friend won't give them back until the school district pays him for three years of "storage."

Now, the Newfoundland and Labrador English School District wants a judge to issue a recovery order for the property it says has been "unlawfully detained."

Details of the matter are outlined in applications, affidavits and emailsfiled at Newfoundland and Labrador Supreme Court by the school district last month.

In a statement emailed to CBC News, Kevin Walsh the owner of the property where the shed and trailer arenow located said "the district should be ashamed for its actions to date."

Fraud, breach of trust convictions

This summer, a provincial court judge convicted former NLESD manager Derek Newhook on two counts of fraud and one count of breach of trust. Fifteen other fraud charges were dismissed.

Newhook has since appealed the convictions.

• Fired school board manager Derek Newhook appeals convictions for fraud, breach of trust
• Ex-school board manager convicted of fraud, breach of trust gets suspended sentence

Judge Harold Porter ruled thatNewhookhad employees of the Burin Peninsula school bus depot make a shed and trailer that were "surplus to the requirements of the school board."

The trailer was plated with a licence plate inNewhook'sname. The trailer and shed were taken to the equipment yard of Kevin Walsh, a friend ofNewhook.

"Two years later, the shed and trailer were still on Walsh's lot, out of reach of the school board,"Porter wrote in his sentencing decision.

"This was dishonest deprivation, which in law is fraud."

• Former school board manager found guilty of fraud, breach of trust
• School board manager accused of using employees to do jobs for his personal benefit

The judge's decision noted the existence of a dispute between Walsh and the district.

"I asked why the property could not just be returned to the school board, but apparently that is not an available option due to ongoing issues between the school board and Mr. Walsh," the judge wrote.

Efforts to recover property unsuccessful

The school district's court filings outline efforts to recover the shed and trailer from Walsh and his company, Kevin Walsh's Equipment and Services.

They have not gone well.

"The shed and trailer has been stored on my property for approximately three years before releasing I need confirmation of payment for storage," Kevin Walsh wrote in a July 25email to an NLESD official.

"Until then the shed and trailer will remain on my property!"

In reply, NLESD officials stressed that there was no "authorized business arrangement," because there was no paper trail no purchase order, no invoice.

"NLESD does not consider your retroactive claim legitimate," Jim Sinnott, the school district's director of facilities and custodial management, wrote in a July 27 email to Walsh.

Sinnott'semail referenced some of the judge's written decision that convicted Newhook on three counts earlier that month:

• "He and Kevin Walsh have been unjustly enriched, at the expense of the school board, as a direct result of the actions of the accused."
  
• "The unjust enrichment for Walsh includes improvements made to a pickup truck at school board expense, and also the detention of the shed and trailer at Walsh's equipment yard."

Sinnott added,"Should you persist with your meritless claims for further financial benefit, to compound your court-described unjust enrichment, NLESD will seek all legal remedy to both regain ownership of the noted property, and recoup from you all associated legal and other costs associated with this matter."

The school board's lawyer then got involved, but the matter was not resolved, and has now made its way to court.

The NLESD application to recover the property is a civil matter between the two sides.

The school district has pegged the value of the 12-by-16-foot shed at $4,000, and the trailer at $4,500.

The case is scheduled to come before a judge later this month.

Walsh reaction to court action

In a statement emailed to CBC News late Wednesday night, Walsh said it is "ironic that I have been storing this property since 2015 by request of officials of NLESD."

Walsh said, "This has been a past practice for other sheds in previous years belonging to the school district as we wait for direction on where to deliver the NLESD's property."

In 2016, "We were advised by direction from an official of NLESD in Gander and Burin school district to not do anything as it was part of an investigation and to stay away from school district properties," Walsh wrote.

"So after all this time they want to take me to court to get it back when all they have to do is pay the storage fees and it can be delivered without delay.I guess they rather waste money on lawyers than deal with reality. The district should be ashamed for its actions to date."

Widespread financial problems at NLESD

An investigation by the auditor general found endemic oversight problems and financial rule-breaking at the school district that spanned many years.

• AG finds 'pervasive' financial rule breaking and oversight problems at NLESD

Earlier this month, school board trustees unanimously voted in favour of a big-ticket "action plan" to fix financial oversight issues.

The province is now reviewing that proposal.

• Lack of school board oversight appalls minister, but no commitment yet for a fix
• 'Costly' plan for financial oversight fixes gets green light at NLESD meeting
• CBC INVESTIGATES | After years of oversight warnings, a financial scandal at the school district. What now?

The auditor general's findings have been referred to the Royal Newfoundland Constabulary and RCMP for fraud investigations.

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