Affidavit details Couch's alleged thefts
BY MONICA KEEN, STAFF WRITER, Sequoyah County Times, Friday, February 8, 2008 1:30 PM CST

An affidavit that led to the Federal Bureau of Investigation (FBI) searching the home of former Marble City School superintendent Larry Couch last month paints a picture of alleged corruption that entailed making false business invoices in order to defraud the school, as well as other alleged misdeeds.

Couch, 55, of Vian is charged in state court with embezzlement of public funds in connection with using $100,000 in school money for a personal land purchase. The embezzlement charge ultimately led to the revocation of Couch's credentials. Couch has since filed an appeal, asking the district court to intercede.

An investigative state audit has since uncovered $500,000 in questionable expenditures at the school, audit officials have said.

A December preliminary hearing was postponed while awaiting the findings of that audit.

Sequoyah County District Attorney Jerry Moore said Thursday that the case is still under investigation.

"There has been no release of finished audits for public review," Moore said, adding that his office has received some audit information. "The feds got that information also."

Moore said he spoke to the auditors Thursday morning and they indicated the signed-off audit could be completed any day.

Couch has been employed for more than 25 years with the school district and for more than 15 years as the superintendent.

Last month, information from a federal affidavit was used to obtain a search warrant for Couch's home and safety deposit box. The FBI descended on Couch's home to serve the warrant, seizing computers, bank statements, credit card statements, and various other documents, according to court records filed last month in federal court in Muskogee.

Sequoyah County Sheriff Johnny Philpot said last month that the FBI requested assistance from Philpot's office, requesting marked units and uniformed deputies to be on the scene during the search.

According to court records, FBI Special Agent Christopher Headrick detailed the allegations in a search warrant affidavit. Headrick noted that his responsibilities include the investigation of all federal violations, such as theft or bribery concerning programs receiving federal funds and money laundering.

As of Thursday, no federal charges have been filed against Couch in connection with the search warrant.

The search warrant affidavit indicated a string of alleged wrongdoings pertaining to illegal use of school funds.

Headrick wrote that Marble City School received $1,402,807 in impact aid money for the 2002-3 to 2006-7 school years. Impact aid money is U.S. government, Department of Education funds provided to assist local school districts that have lost property tax revenue or have an increase in the number of children federally connected.

Couch and a former superintendent at another school were elected to the Organization of Rural Elementary Schools (ORES), a membership organization consisting of various dependent schools throughout Oklahoma. ORES facilitates lobbying efforts on behalf of small dependent schools in the state. On Oct. 29, 1992, Couch helped open an ORES bank account at Vian State Bank, later bought out by Armstrong Bank.

"The investigation determined that at some point prior to July 1999 the mailing address was changed for the ORES bank statements from the Marble City School's address to Couch's residential address...," Headrick wrote. "After May 1998 this account was used by Couch in his scheme to deposit funds from Marble City School warrants paid for false invoices from vendors to obtain purchase orders.

"From this account, Couch routinely wrote checks payable to credit card companies to pay his personal expenditures. Couch issued checks payable to individuals who sold him real property, from the ORES account. Couch issued checks payable to vendors for personal assets from the ORES account. Couch maintained credit card accounts and an analysis of the credit cards accounts verify Couch spent Marble City School funds to pay for a substantial amount expenses which relate to a ranching operation and his wife's florist business."

The investigation also determined during the period from June 1999 to June 2007 there were 63 deposits totaling $857,199.35 made to ORES. From March 1998 through June 1999 additional deposits were made with warrants from Marble City School. During this same period 138 checks were withdrawn from the account, totaling $869,373.03.

"The investigation identified numerous schemes implemented by Couch to defraud the Marble City School," the warrant affidavit indicated. "Couch caused the Marble City School to issue fictitious payments payable to various vendors, and ultimately deposited into the ORES Armstrong Bank account..."

The investigation also revealed Couch allegedly issued payments from ORES to several credit card companies to make payments for land and farm equipment purchases, fertilizer purchases, ranch expenses, a car payment, and other personal expenses, according to the affidavit.

"The investigation specifically identified eight payments to vendor S&S Truck & Bus Sales Inc. for which no amount was owed," the affidavit stated. "Couch caused false invoices to be created, which in turn caused false Marble City School warrants to be issued."

The payments totaled $370,629.50.

The owner of S&S was interviewed and provided with copies of the warrants made payable to his company, which displayed an S&S Bus Sales stamp and a signature in the name of the owner. The owner said he did not sign the endorsement on the warrant and his company did not use a stamp as displayed on the warrant. He also said the computer generated invoice is not an invoice from his company, and the signature on the invoice was not his signature.

"The investigation was able to trace some of the above mentioned warrant proceeds as source funds to make real estate payments for the personal benefit of Couch," according to the affidavit. "Couch submitted false S&S Truck and Bus Sales invoices to the Marble City school board, causing warrants to be paid. Couch then diverted the funds for real estate land payments."

The affidavit also indicated that in March 2006 Couch allegedly caused $100,000 in federal education funds to be transferred from a Marble City School account. The $100,000 was then allegedly used by Couch to pay $250,000 for land in Sequoyah County.

Couch hearing is Thursday
Sequoyah Times, Saturday, December 22, 2007 12:02 PM CST

The preliminary hearing for the suspended Marble City School superintendent accused of embezzling $100,000 from the school is set for Thursday.

According to court records, the hearing, which will determine whether Couch will stand trial on the embezzlement charge, will start at 9 a.m.

Couch, 54, of Vian was accused in August of allegedly taking $100,000 from the school to purchase land.

An investigative audit continues at the school and audit officials have said that they have uncovered $500,000 in questionable expenditures at the school. An audit report is expected to be released in January, officials have said.

Earlier this month, the Marble City School Board voted to suspend Couch without pay and appointed a new interim superintendent, Billy J. London of the Nicut community north of Muldrow.

London has nearly 40 years of experience in education, and has served as superintendent for a number of schools, including those in Ketchem, Talihina, and Colcord. He also served as principal at Gum Springs School.

Couch's suspension came a week after the State Board of Education voted unanimously to revoke Couch's teacher and administrator licenses. Inflation of the school's attendance records was among the state law violations that led to the state board's decision, Sandy Garrett, state superintendent of public instruction, indicated after the hearing.

Rex Earl Starr, the school's attorney, said earlier this month that Couch's attorney has indicated that Couch plans to appeal the state board's decision about revoking his credentials. That appeal is one of the reasons the local school board decided to suspend Couch, instead of terminating his employment, officials indicated after the Dec. 5 meeting.

Marble City Boss Loses Licenses
By Amy Sherrill, TIMES RECORD • ASHERRILL@SWTIMES.COM
Friday, November 30, 2007 10:09 AM CST

OKLAHOMA CITY — Larry Couch, who served as Marble City School District’s superintendent for more than 27 years, was stripped of his teacher’s and administrator’s license Thursday.

The state Board of Education voted 6-0 shortly before 6 p.m. to revoke Oklahoma teaching and administrator certificate 102401 from a man who is accused in a Sequoyah County District Court criminal complaint of embezzling $100,000 from the southeastern school district of approximately 160 students — the majority of whom are Cherokee Indian.

Several documents Couch certified and submitted to the Department of Education did not match documents kept by teachers and staff, according to testimony presented Thursday.

Couch sat next to his attorney, Fourth Scoufos of Sallisaw, during his revocation hearing at the state Department of Education building while the state Board of Education’s general counsel, Kay Harley, presented the case against him.

Couch testified that at least two of the students he counted on attendance registers who were dropped from teacher grade books went to an alternative school program at the Holiness Church located two to three miles from the school after he expelled them.

He added that the school district let the church use old text books and outdated equipment scheduled to go to the salvage yard.

“Students do well and come right back,” Couch said.

Board member Tim Gilpin of Tulsa asked Couch if he knew the district was getting money for students not attending school in the district.

“Yes,” Couch answered.

Couch said, “the problem,” he saw was not with the students attending a church school with no certified teacher, but that there is no alternative school in “rural southeastern Oklahoma.”

Mike Mays, a regional accreditation officer with the state Department of Education, testified he was asked to audit Marble City school documents and he found in several teachers’ grade books that they had dropped a student from class and the corresponding paperwork that Couch filled out showed the student was still attending school in the district.

The School District receives funds for its average daily membership. The more students, the more money.

Mays also testified that Couch certified that a preschool class offered by Cookson Hills Headstart had more eligible students in it than the documentation showed. Many of the students Couch claimed eligible were 3 years old.

Couch said the community had no day care and had many working mothers so the district found 3-year-olds who were eligible for speech therapy and offered it to them at Headstart.

He added that the state has never notified him that were any problems with the early childhood class documentation.

“The school district received state aid for ineligible students in the early childhood class. The district also did not provide a certified teacher for it, the Department of Education contends.

Marble City School District received state and federal funds for 10 students in 2006 who were identified as needing special education and there was no documentation to back up Couch’s claims.

Misty Kimbrough, assistant state superintendent for special education services, said she was on site Aug. 20, 2007, at Marble City and examined special education records, interviewed teachers and observed special education students in classes.

In records Kimbrough examined, she attempted to verify the 49 students Couch listed as special education students. Five of the files were not provided because they were not on school grounds. In all, Kimbrough found 10 of the 49 students Couch claimed as special education either had no IEP (individualized education plan) or had an IEP that was significantly outdated.

While on site, she witnessed a severe special education student playing with plastic Wal-Mart bags. The student was rubbing the bags against her face, Kimbrough testified.

Board member Tim Gilpin of Tulsa asked Kimbrough if she considered that dangerous.

“A child playing with plastic bags? Yes,” Kimbrough answered.

Scoufos contended that Couch relied on staff and teachers to correctly fill out forms that he later certified. Couch testified that special education teacher Stacy Hall often filled out paperwork — related to special education or otherwise — after gathering information from teachers.

“If we have made a mistake we want to rectify that,” Couch said. “If I have people who have dropped the ball, so to speak, I will rectify that situation.”

The Department also contended that Couch paid a regular education teacher using federal special education funds which is illegal.

Couch also said that the “regular teacher” who teaches special education is a special education teacher and just got upset under the scrutiny from the department.

“She didn’t know what she was talking about,” Couch said regarding the teacher’s comments to the Department of Education.

Couch testified that Mary Brown, the school secretary, filled out the school accreditation application.

“I have never had a deficiency (in accreditation) that I’m aware of,” Couch said. “To the best of my recollection we have not had to make any adjustments. This time we were not notified that the state Department was coming.”

Education Board Votes To Pull Superintendent's Certification
posted 11:48 am Fri November 30, 2007 - Oklahoma City from NewsChannel 8 -
LINK

The state Board of Education has voted to revoke the certification of a Marble City school superintendent, effectively prohibiting him from serving in the post.

Superintendent Larry Couch is accused of submitting false claims for state aid and embezzling from his school district.

After a five-hour hearing Thursday, Couch took the stand and admitted under oath he had expelled at least two students and sent them to a church-operated school with no certified teachers, yet continued to claim them as Marble City students on state aid forms.

The hearing came a day after a Marble City School Board meeting where Couch offered to strike a deal with the school to resign and pay the school $100,000, if the board agreed it wouldn't seek further restitution and would seek leniency in a criminal embezzlement case against him.