Bankruptcy part of school district’s check into HR director

The Aspen School District’s updated background check into Elizabeth Hodges, its criminally convicted human resources director, also is focusing on her personal bankruptcy case, which includes fraud allegations and references to a $30,000 loan the district provided her.

“After my weekly review with legal counsel regarding this matter, legal counsel continues to review court filings including those in bankruptcy court,” Superintendent John Maloy said in an email late last week to The Aspen Times. “As the district would with any employee who has had allegations made against him or her, we want to respect the employee’s due process rights. It is my hope that legal counsel (will) complete its review of this matter within a few days or weeks after the Thanksgiving break and we can bring closure to this matter sooner rather than later.”

Maloy’s reference to the bankruptcy concerned Hodges’ Chapter 7 declaration in February in the U.S. District Court of Colorado in Denver. Her bankruptcy petition lists her largest debt as $1.1 million, the result of a civil court judgment delivered by a Missouri judge in November 2016.

Filings in the bankruptcy case also cite a $30,000 loan the school district provided to Hodges in March 2017. As of Monday, Hodges’ bankruptcy case had yet to identify the loan as an official debt.

“We will be amending the bankruptcy to list the debt,” Hodges’ bankruptcy attorney, Phillip J. Jones of Grand Junction, said in an Oct. 31 email to the Times. “I still need to do a title search to determine the secured/unsecured status. The intent was to make it a secured debt.”

Maloy, in a Sept. 27 email to The Aspen Times, said Hodges “was provided an approved loan by the employee housing loan committee in March 2017. According to district policy, any employee that completes an application and qualifies for his/her loan request may be approved. Credit checks are not done on employees.”

Because the school district provided Hodges a home loan, that would make the district a secured creditor in the bankruptcy case, meaning it could claim an interest in Hodges’ Carbondale home if she defaults on the loan. Should the loan be deemed an unsecured debt, the bankruptcy court could rule Hodges does not have to reimburse the district.

The school district, Maloy said, has provided home loans to staff members “for several years and six employees have been awarded loans in the last five years. The district is proud of the fact that it can provide an option for potential homebuyers to address their family’s housing needs while assisting them with the ability to live and work in the Roaring Fork Valley.”

Meanwhile, the school district’s probe into Hodges started around late August or early September, after it learned the state of Missouri disbarred her in April and a grand jury indicted her on one count of felony forgery in February 2016.

The indictment had been sealed, which explains why it did not show up in the school district’s initial background review of Hodges, which Maloy said was conducted in March 2016 and included fingerprinting.

Two to three months after the school’s background check, on May 31, 2016, Hodges was served with the indictment out of Kansas City, Missouri.

Less than five weeks later, on July 1, 2016, Hodges began her first day as director of HR after months of on-the-job training. She did not report the indictment to her school district superiors before beginning her employment with the district, based on interviews.

The seven-figure civil judgment, disbarment, criminal indictment, bankruptcy and a bankruptcy fraud case all tie in, either directly or indirectly, to Hodges’ estate planning work as an attorney for an elderly Missouri couple in the mid-2010s.

Hodges, whose current annual salary is $132,345, according to school records, did not respond to a message seeking comment. She previously blamed her legal problems on what she said are vindictive heirs to the estate of a deceased couple she once represented.

Hodges is on unsupervised probation through December, after she pleaded the felony forgery charge down to a misdemeanor count of deceptive business practices in December 2016.

The conviction was the result of her 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.

Survivors of the estate sued Hodges in November 2015, and in November 2016 they won a default judgment nearly $1 million — $614,000 along with $378,000 in punitive damages. The higher amount was based how much the heirs claimed Hodges stole from the estate; however, Hodges has maintained that figure was based on rumor and the judge merely awarded that amount because she did not fight the case. The judgment amount has since topped $1.1 million because of interest and fees.

Hodges is trying to discharge the judgment in bankruptcy court, but that has not been a smooth proceeding.

As part of that case, trustee Jared Walters, who is monitoring Hodge’s financial picture through the bankruptcy, filed an adversary complaint in June claiming Hodges hid assets by fraudulently transferring 50 percent ownership of her Carbondale home to her wife.

Walters’ complaint alleges that June 26, 2017 — some eight months after the judgment — Hodges conveyed her 50 percent interest in a Carbondale home to her wife, Nicole, who owned the other half.

Walters also has an adversary proceeding against the wife, who began working in the school district’s special education department this academic year, to stop the transfer of the property ownership.

The complaint by Walters, who declined to comment about the case, also claims Hodges said she transferred the ownership in contemplation of a separation, but she still lives at the home with her spouse.

“Based upon the allegations … the court may infer from (Hodges’) conduct that she acted with actual intent to hinder, delay or defraud her creditors, and in particular the beneficiaries of estate of Joseph Zaiotti (one-half of the couple she represented), when she transferred her joint interest in the Carbondale property to Nicole Hodges,” the complaint reads.

Elizabeth Hodges has denied those accusations in court filings.

Maloy has said the district knows about the bankruptcy case’s adversary proceeding.

“The District is aware that a complaint has been filed in the bankruptcy court and that Ms. Hodges’ attorney had filed answers denying the claims,” he said in the Sept. 27 email.

The matter with Hodges upset some school district parents and in September they launched a committee with the expressed purpose to pressure the Board of Education to remove Maloy from his post. One of their criticisms was that Maloy and Sheila Wills, when she was board president, had shown their public support for Hodges after her legal woes were publicized (both the school district and the Times learned about Hodges’ disbarment through an anonymous mailing received in July).

Maloy’s email from last week did not respond to the question of whether the school district still supports Hodges. Wills, in an email Friday, said: “As I am no longer BOE president, I do not believe my personal opinion is of any pertinence to your story.”

Parents also used their movement as a platform to criticize the school district for what they say is high teacher turnover, though Maloy and others have disputed that; low faculty morale, which Maloy and his supporters have questioned; and dipping academic performances, another matter of debate.

At an Oct. 1 board meeting, Maloy said: “We want to be as transparent as possible, so we’re in the process of developing a link on our web page where you can find information as it becomes verified on topics such as the HR director’s status with the district, our financial condition, salary information and how we stack up against other districts, district performance data, discussions with each principal on math and literacy curriculum changes, facts about our IB performance, teacher turnover … and other topics where there are rumors or concerns.”

The Board of Education announced Oct. 25 it would not be renewing Maloy’s contract, which is set to expire June 30, 2021. Maloy has said he plans to honor the terms of the contract, and he also has his share of supporters.

The board also plans to hire a third-party party to examine the school district’s culture and climate.