The Peralta Community College District (PCCD) Board of Trustees will vote tonight on two high-value contracts to a construction consulting firm. The firm has ties to two past scandals in Southern California school districts that involved allegations of questionable bidding practices, bribery of public officials, and fraud.

High Performance Learning Environments (HPLE) has contracts on the agenda for tonight totaling $1.5 million. One is a $750k amendment to an ongoing contract for an assessment of facilities, utilities, and other facilities related professional services, bringing the total value of the contract to over $2.4 million.

The firm is also up for a separate $750k contract for districtwide infrastructure construction management services. Both HPLE and Cumming Management Group will provide these services, with Cumming set to receive a separate $850k contract.

The board will also vote on whether to approve HPLE and Cumming Management Group as prequalified firms for infrastructure construction management services moving forward. With a list of prequalified firms, further construction projects in this scope would not require an additional formal bidding process.

In 2019, HPLE’s relationship with El Rancho Unified School District in Los Angeles County was investigated by the Fiscal Crisis and Management Assistance Team, or FCMAT. FCMAT found evidence of potential fraud or other illegal fiscal practices, while clarifying that it does not have the authority to make judgements on guilt or innocence.

HPLE’s founder and president, Jaime Ortiz, was witness to a grand jury investigation involving the Sweetwater Union School District and SGI Construction Management (SGI), a firm where he had worked as Vice President. Ortiz testified to purchasing gifts, tickets, and meals for officials while working for SGI.

HPLE and PCCD

High Performance Learning Environments (HPLE) is a construction consulting firm that specializes in overseeing educational facilities projects. HPLE’s largest contract with PCCD would total $2.4 million if the amendment currently on the board agenda is ratified.

The ongoing contract originally awarded HPLE $904k in Measure G funds for districtwide assessments of facilities and utilities, as well as other facilities related professional services for PCCD’s Department of General Services. At the time, HPLE had a few other smaller contracts with the district for facilities-related projects.

HPLE was awarded the large contract after the district released an informal Request for Proposals, also known as an iRFP, to search for suitable vendors for the project. Two vendors submitted proposals, HPLE and Relequity Enterprises, LLC. After reviewing and scoring the proposals, the district determined that HPLE was the most suited for the project.

The $750k amendment on the agenda for tonight is the contract’s third. The board ratified an amendment dated April 1 for an additional $450k on May 23 of this year, as well as an amendment for $350k, dated June 27, on July 11.

The latest amendment, dated Sep. 29, pushed the completion date for the contract to Dec 31 of this year, a six-month extension.

At a Nov. 14, 2023 board meeting, during a discussion of an agenda item proposing another third-party facilities assessment, Interim Chancellor Jannett Jackson referenced a facilities related document, a copy of which she appeared to hold in her hand.

The Citizen submitted a CPRA request to the district on Nov. 15 for a copy of this document to ascertain whether it is a deliverable report referenced in HPLE’s current contract. At time of writing, the district has not provided The Citizen with a ticket number or any documents for the request.

A controversial past

Prior to being awarded contracts with PCCD, HPLE Principal and founder Jaime Ortiz, was implicated in two “pay to play” public corruption controversies and a questionable use of public funds at previous school districts. 

The Sweetwater Scandal

Before founding HPLE, Ortiz served from 2004-2013 as Vice President for SGI Construction Management (SGI), an LA-based firm, according to his LinkedIn. 

During his time at SGI, Ortiz purchased extravagant dinners and gifts, as well as campaign donations, for Sweetwater Union High School district officials at their request, according to Ortiz’s grand jury testimonies. 

When asked to comment on his grand jury testimonies, Ortiz stated in an email, “As an employee and not a decisionmaker of this company, I fully cooperated with the authorities and was cleared of any wrongdoing.”

These district officials allegedly gave the SGI priority for at least one contract bid without disclosing the personal gifts, dinners, or donations, in direct violation of California and federal laws that prohibit bribery and extortion. According to the Voice of San Diego, a 2007 bid for the Sweetwater District to oversee $644 million in construction bond money was awarded to Gilbane/Seville, a joint venture of SGI and Gilbane, Inc. They were not initially a top contender for the contract.

According to NBC San Diego, SGI president, Rene Flores, was one of three Sweetwater contractors that entered guilty pleas for lesser misdemeanors in exchange for their cooperation and testimony in the Grand Jury trials. The San Diego District Attorney’s office brought forth 232 felony and misdemeanor charges against administrators, elected officials, educators, and contractors at three educational institutions including Sweetwater. The charges included bribery and perjury.

A majority of the 18 total defendants entered guilty pleas to various charges “stemming from the allegations that the officials traded their votes on multi-million dollar construction contracts and bond deals for lavish meals and gifts,” according to NBC San Diego.

Ortiz was not charged. Grand jury transcripts indicate that Ortiz was given protection from prosecution as part of a plea deal made by his boss, Rene Flores, who was President of SGI. Ortiz opened HPLE in 2013.

El Rancho Unified School District FCMAT Investigation

Another instance of a contract gone awry under Ortiz’s leadership is HPLE’s short-lived and uncompleted contracts with the El Rancho Unified School District (ERUSD), located in LA County. 

In May 2015, HPLE was initially awarded a little over a million dollar contract for a term of three years. However, in 2017, HPLE received an increased contract of an estimated $10.92 million dollars to oversee $200 million in Measure ER funds without having to go through a formal bidding process. A state audit report found that HPLE spent $11,000 to get Measure ER approved. 

According to the Whittier Daily News, the ERUSD board unanimously approved to terminate their contract with HPLE early and paid $50,000 to the contractor for early termination in Oct. 2018. This move came after multiple district officials questioned HPLE’s plan to demolish school buildings without a clear-cut plan on the buildings that would replace them. At that point in time, the district paid HPLE over $1.6 million for projects utilizing Bond Measure ER funds. 

Following this termination, HPLE made a $15,000 donation to a political action committee that contributed, according to a review conducted by the Fiscal Crisis and Management Assistance Team, at least $13,000 to the campaign of then-ERUSD board member Leanne Ibarra. As reported by Whittier Daily News, Ibarra would shift the voting dynamics for ERUSD and approve to rehire the firm five months after their termination. Ibarra told Whittier Daily that she had no idea that HPLE had donated to the PAC. 

In May 2019, HPLE resigned from its contract after elected officials and community members raised suspicions regarding HPLE’s donation of campaign funds and questions over its fiscal integrity – which led the Los Angeles County Office of Education officials to request an investigation by the Fiscal Crisis and Management Assistance Team (FCMAT). FCMAT reports are state audits that investigate situations regarding suspicions of fraud, misappropriation of funds, and/or other illegal fiscal practices. 

The FCMAT report investigated allegations that formal bid procedures were not taken in awarding contracts, the winning firm had made financial contributions to board member campaigns, and Measure ER funds were not used appropriately at ERUSD. The report screened four other vendors in addition HPLE, but ultimately found ERUSD’s relationship with HPLE to be an area of concern. 

“The expeditious and ambiguous manner in which HPLE was hired, terminated and rehired raises questions about the influences driving those decisions and erodes community trust,” the report stated. 

FCMAT also reviewed Los Angeles County campaign finance documents and found that HPLE has contributed $11k to the Bond Measure ER election, which “raises question about whether it was designed to entice future contracts for projects funded under this new measure.”

The report notes that, “Board members, community members and teaching staff increasingly asked questions about billing costs on HPLE’s monthly invoices. Some of these questions appeared to result from HPLE billing errors.”

Further, the report further states, “in most cases, documentation was insufficient to demonstrate that work cited in invoices had actually been performed.”

Ultimately, FCMAT found that, “these findings should be of great concern to the El Rancho Unified School District and the Los Angeles County Office of Education and require immediate intervention to limit the risk of fraud, mismanagement and/or misappropriation of assets, or other illegal fiscal practices in the future.”

However, FCMAT says its job is not to determine guilt or innocence.

The Citizen reached out to Ortiz via email for comment on these matters.

Regarding the ERUSD scandal, Ortiz stated, “HPLE resigned as that District’s construction manager, shortly after we were asked by the, then board president to hire her grandson as an intern. We refused, as this is a breach of ethics and a conflict. Shortly thereafter, false allegations were issued against our company. We made the right ethical decision, and it cost us our contract. We would do it again. The FCMAT report did not make any determination or conclusion that fraud misappropriation of funds, or illegal fiscal practices occurred.”

When asked to comment on potential concerns of bribery or fraud that could arise from PCCD’s relationship with HPLE, Ortiz stated, “Our relationship with PCCD is founded on a transparent and competitive bidding process. We compete for contracts based on the merits of our proposals, the quality of our work, and the value we provide to our clients. We have no involvement in any unethical or illegal activities and expect the same level of integrity from all our clients, partners and subcontractors.”

“Neither I nor anyone associated with me has made or received any payments, gifts, favors, or contributions of monetary value to PCCD employees or authorized groups,” Ortiz stated.

Small Local Business Enterprise designation

PCCD’s Small Local Business Enterprise (SLBE) program gives a three-to-five percent bidding preference to small local firms.

Construction firms must have a gross annual revenue of under $8.5 million to meet PCCD’s requirements for the program, listed in Exhibit 1 of the iRFP. Additionally, the business must be located within the district’s market area – the East Bay – in a “fixed, established commercial address,” which cannot be “a temporary or movable office, a post office box, or a telephone answering service.”

HPLE’s proposal states that the firm is a SLBE as defined by PCCD. During the bidding process, the firm was awarded the 5-percent preferential for being a SLBE.

Although the firm is based in Pasadena, HPLE’s Northern California Office, is based in Oakland.

The address listed on HPLE’s contracts and proposal, points towards a single family home in Oakland. HPLE lists a different address on its website for its Northern California office, 1901 Harrison St. Suite 1100, in Oakland, which is a co-working space.

Public records obtained by The Citizen show that the deed for the home was sold in November 2019 by Michael Terry and Mary Hernandez, to Running Stream LLC. According to the California Secretary of State, Running Stream filed an Articles of Organization in July of the same year. The documents also list Aerobel Banuelos as the Registered Agent for the LLC.

Terry is Partner at HPLE, and listed as point of contact for HPLE’s Northern California Branch. Hernandez and Banuelos are Equity Partners at Garcia Hernandez Sawhney LLP, which has a long history of providing legal services to PCCD. Nitasha Sawhney, who serves as counsel during district board meetings, is also an Equity Partner at the firm. The firm’s managing partner and founder, Bonifacio Garcia, previously served as the lawyer for the Sweetwater District.

The Citizen reached out to Hernandez for comment via email, regarding the house, her relationship to Terry, and Running Stream. Hernandez told The Citizen that she and Terry, who have been married for seven years, own around 80% of Running Stream, and that Banuelos assisted in setting up the LLC.

Regarding HPLE’s address, Hernandez stated, “We purchased that property together in hopes of having our parents or other family members live with us. We put the property in an LLC for estate and family planning purposes. We called it Running Stream because there is a beautiful little stream that runs in the back. The property has a very large office space area downstairs that Michael uses as a home office and the base for his work with HPLE. HPLE reimburses us for use of the space.”

When asked to comment on concerns that the law firm’s relationship to both PCCD and HPLE could pose a conflict of interest, Hernandez stated, “Garcia Hernandez Sawhney, LLP (GHS) does not review any HPLE contracts, has never recommended that PCCD use HPLE and has never been involved in any way with any decisions relating to PCCD’s use of HPLE. PCCD uses another law firm when it reviews HPLE contracts or has questions about HPLE contracts. I have done very little work for PCCD over the years in which our law firm has performed legal services for them. My law partner, Nitasha Sawhney, is their point of contact from our law firm.”

PCCD spokesperson and Executive Director for Marketing, Communications, and Public Relations told The Citizen, “both PCCD and the GHS are very careful to avoid any potential conflicts of interest.”

Terry could not be reached for comment in time for publication.

Written by Lylah Schmedel-Permanna, Li Khan, and Timothy Lane. Satch Alvarez, Timothy Lane, Ivan Saravia, and Sam O’Neil contributed reporting.

Clarification 12/21/2023 9:56 AM: This article has been edited to clarify that the defendant in the plea deal was Ortiz’s boss, Rene Flores, and not Ortiz himself. Ortiz was not charged with a crime.