California School Officials Guilty of $1.8M Embezzlement and Crypto Mining Scheme

In an audacious breach of trust, two officials from a California school district have confessed to their roles in an elaborate scheme that defrauded the district of approximately $1.8 million. This criminal venture also illegally allocated resources for a covert operation mining cryptocurrency.

Jeffrey Menge, who held the position of Assistant Superintendent as well as the title of Chief Business Officer at the Patterson Joint Unified School District, along with Eric Drabert, the district’s IT Director, entered guilty pleas to the theft of funds from federal program-supported activities. This admission came after a thorough investigation by the United States Department of Justice (DOJ).

The scheme unfolded with Menge in the administrative role, utilizing his authority to appoint Drabert as the IT Director in 2020. From there, they engaged in a concerted effort that drained the financial resources of the district. Employing CenCal Tech LLC, a company under Menge’s control, forged transactions were made under the guise of legitimate business. Menge ingeniously masked his involvement by inventing a nonexistent executive by the name of “Frank Barnes” to serve as the face of CenCal Tech.

Their deceptive transactions surpassed $1.2 million and were characterized by duplicative billing, inflated charges, and charges for items that were never provided. The DOJ paints a picture of a calculated fraud rife with double-dealing and deceit.

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But their criminal ambitions did not end with mere embezzlement. The DOJ’s findings show that Menge and Drabert also appropriated school district resources, including sophisticated graphics cards and electrical power, to establish a cryptocurrency mining operation onsite. The illicitly acquired digital currency was funneled into wallets under their control. Further abuses included the misuse of district-owned vehicles by Menge, who is said to have bought a Chevy truck at a substantially reduced cost, selling it for personal profit, and deploying a Ford Transit van for personal use.

The theft was sizable, with Menge diverting between $1 million and $1.5 million for his use, whereas Drabert appropriated between $250,000 and $300,000. The DOJ elaborated that these stolen riches were squandered on extravagant personal luxuries. Menge indulged in renovating his home, splurging on high-end automobiles including a Ferrari, and funding various other personal projects. Drabert was likewise lavish, using stolen funds to renovate his holiday home and cover personal expenses.

This case uncovers an egregious exploitation of public funds by trusted officials of the Patterson Joint Unified School District, revealing the depth of corruption and greed in what was intended to be a bastion of learning and community service. The cryptocurrency market itself, while often associated with innovative financial strategies, became an instrument of clandestine mining operations and personal enrichment at the cost of the public trust and federal funds aimed at education.