Aspen School District takes bath on $30k employee home loan, will lose more than $27k
The Aspen School District stands to get pennies on the dollar as reimbursement for a $30,000 housing loan it gave to an executive-level employee who resigned one year ago because of her past, which included a criminal conviction and disbarment from the state of Missouri.
A filing from December shows former human resources director Elizabeth Hodges, as part of her exit plan from personal bankruptcy, has agreed to pay $2,548 to the School District on the $30,000 loan it failed to secure because of a clerical oversight by its then-chief financial officer.
District officials said Friday the lapse with the Hodges loan, which they learned of in November 2018, has prompted them to re-examine the entire lending program for employees.
“The procedure should be that obviously you don’t release funds for a loan until you have a signed deed of trust,” said Susan Marolt, president of the Board of Education. “That seems obvious, but now we’re looking at the whole program again.”
The district has until Jan. 23 to object to the proposal, according to bankruptcy records.
“If we can object and get a higher percentage, we’re going to,” said Tom Heald, who has been the district’s interim superintendent since his predecessor John Maloy’s retirement took effect June 30.
Maloy’s retirement after nine years as superintendent, which was accelerated by the Board of Education’s decision in October 2018 to not extend his contract, capped a tumultuous time in the ASD administration during the first half of 2019. Resigning were two members of the executive team — Hodges and Chief Financial Officer Kate Fuentes. The district’s CFO for 11 years, Fuentes had the duty of properly securing Hodges’ loan through a deed of trust filing, officials said.
Prior to that trio’s exit, unrest among parents as well as faculty and staff members had prompted the BOE to hire a Denver firm to conduct a climate and culture study on the district, which began in early 2019, conducting one-on-one meetings with district employees, focus-group discussions and sending a survey to staff and faculty.
The survey’s results were mixed, while one aspect showed 55.2% of the respondents either disagreed or strongly disagreed that “senior leadership can be relied upon to do the right thing even when it’s challenging or difficult.”
In the meantime, the Board of Education will show findings from a search firm’s leadership profile assessment for the next superintendent at its next regular meeting Monday. The public discussion is slated to begin at 6:30 p.m.; the meeting starts at 4 p.m.
The findings will come from an assessment conducted by Hazard, Young, Attea & Associates from Dec. 2 through Dec. 20. The firm’s consultants held one-on-one interviews and focus groups, an on-site community forum, a virtual community forum and an online survey to form its assessment.
Hodges became the district’s full-time human resources director in July 2016. Less than one year later, in March 2017, the district floated her $30,000 through its loan program. Hodges and her spouse used those funds, as well as a bank loan of $530,000 she also received in March 2017, to buy a home in Carbondale.
The HR director, who previously had practiced law outside of Colorado, had been in good graces with the School District until the fall of 2018 when word surfaced that the state of Missouri disbarred her in April of that year. The district also learned that Hodges had a December 2016 misdemeanor conviction for deceptive business practices, which came after a Kansas City, Missouri, grand jury indicted her for felony forgery in May 2016.
Hodges — who as HR director had access to employees’ personal information such as Social Security numbers and bank account information — had not disclosed that information to her superiors, or elected members of Board of Education, until after an anonymous tipster in the summer of 2018 contacted both the district and The Aspen Times, which proceeded to report on her background.
The disbarment and conviction were a result of Hodges’ selling a deceased couple’s Kia Soul to a dealership without reporting proceeds of the sale in their probate case. As an attorney, Hodges helped the couple with their estate planning.
Following a review of Hodges’ background in the fall of 2018, the district placed Hodges on paid administrative leave that December. She resigned from the district Jan. 31, 2019. Her loan balance of $30,000 to the district, however, remained unfinished business.
Hodges had declared personal bankruptcy in February 2018, listing a $1.1 million court judgment — the outcome of a lawsuit the couple’s survivors filed against Hodges over her estate planning — as her largest debt.
In January 2019, attorneys for the Aspen School District filed a proof of claim for the loan in Hodges’ bankruptcy case in Denver.
“At the time the loan was made and processed in the district, the promissory note was signed but we later discovered that the district’s standard deed of trust form was inadvertently not signed,” Maloy said in an email to The Aspen Times in January 2019. “Since it was unsigned, it could not be recorded, which is why our claim is unsecured. Nevertheless, Ms. Hodges has verbally told us that she fully intends to repay the loan.”
Bankruptcy trustee Jared Walters didn’t give the loan high repayment priority because of the School District’s failure to properly file the deed of trust — similar to a mortgage in Colorado — in the Clerk and Recorder’s Office in Garfield County, where her home was located.
Walters declined comment, but his final trustee’s report introduced to Hodges’ bankruptcy case Dec. 26 spells out her proposed plan of paying 8.5% on all of her debts to her five unsecured creditors — three of which are credit card accounts and the other the family that sued her. That family is poised to receive $97,126 of its $1.1 million claim under the proposal. The family’s attorney, Andrew Quiat of Carbondale, could not be reached Friday.
All told, the Hodges proposal seeks to pay $100,568 on the $1.18 million the estate owes to the unsecured creditors.
The Hodges couple, which bought the home for $630,000 in March 2017, sold it for $799,000 in May, according to property records. The main lender was made whole, and other secured creditors, such as trustee’s firm, will receive $36,556 while the trustee will receive $10,738.
Heald said the district wants to be more open about its loan process with staff and faculty members; not everyone had been aware of it, he said.
“We do consider it an anomaly, but we’re also taking steps to be more transparent with the process we use for securing loans and for making sure that the process is public and transparent to the rest of our staff,” Heald said.
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