Allegations in Kellerman Inquiry Grow

An internal investigation of alleged misconduct by North Orange County Community College District Chancellor James S. Kellerman includes charges that he drew on a district travel account without authorization and pressured district employees for personal loans, a district board member said Wednesday.

Kellerman repaid the district $477 for unused cash advances issued from the travel account--money that he was asked to repay as long ago as October, 1986--with a check dated April 13, the day after he was placed on administrative leave by the board of trustees, district records show.

The expanding investigation also includes reports that Kellerman coerced district workers to host Tupperware-style, home-decorating parties given by his wife, according to a district source. District Finance Director Nancy Rice confirmed Wednesday that she allowed Tricia Kellerman to give a decorating party and sell goods in her home, but Rice said she volunteered to have the party.

Kellerman, 54, was placed on paid administrative leave from his $97,000-a-year job on April 12 after an internal inquiry substantiated allegations of misconduct, according to board members. Repeated attempts to reach Kellerman have been unsuccessful.

The district’s legal counsel, Spencer Covert, met Wednesday with officials of the Orange County district attorney’s office. Deputy Dist. Atty. Wallace J. Wade said his office has opened “a very preliminary” inquiry, adding that information provided by Covert “will be analyzed before we decide whether to pursue a criminal investigation.” No documents were provided by Covert, according to Wade.

Trustees scheduled a special session for tonight to decide whether to present financial records and other evidence of alleged wrongdoing to county prosecutors.

Board member Chris Loumakis, who called for an outside investigation of the charges in a letter delivered Monday to fellow trustees, said Wednesday that records of the travel account, which was used to advance money for numerous business trips by Kellerman, show that money may have been “borrowed.”

He said he did not know how much money may have been involved, or how long the practice allegedly continued. All expenditures from the account are supposed to be approved in advance by the board, Loumakis said, but that hasn’t always been the case, he added.

“There is a historical utilization of that account for purposes not known or authorized by the board of trustees,” Loumakis said. “It was reported to the board in executive session that there were several payments and repayments to that account that were not authorized or approved by the board.”

Among the payments were two advance checks totaling $600 issued to Kellerman for expenses for trips that he planned but later canceled to Las Vegas in March, 1986, and to Vail, Colo., in July of the same year. District records obtained by The Times on Wednesday include a memo dated Oct. 24, 1986, in which Kellerman’s secretary informed the chancellor that district accountants wanted to know if two subsequent reimbursement checks could be applied to the $600 debt.

Kellerman apparently paid a portion of the unused advance, but it is not clear when, according to Donna Hatchett, a spokeswoman for the district. The check Kellerman wrote last week for $477 paid the remaining debt in full, she said. Hatchett also denied Loumakis’ contention that Kellerman may have borrowed from the account on several occasions and said the account could be used for expenditures other than travel.

“The account is a fund for advancing travel expenses and for things we couldn’t normally pay for out of operating funds,” such as award plaques or a staff picnic, Hatchett said. “It’s a small fund, and there were no loans or other expenses taken from that account.”

Hatchett could not immediately provide information on the fund balance. She said the memo from Kellerman’s secretary and the chancellor’s canceled check for $477 are the only existing documentation of the 1986 advances and efforts to obtain repayment.

Loumakis also confirmed on Wednesday that the board has investigated charges that Kellerman sought personal loans from top district employees. The board has received reports that at least one employee did provide a loan to Kellerman “in the five-figure range,” Loumakis said, adding that he does not know the name of the employee.

“If there is merit to these reports, it requires serious investigation by an outside agency,” he said. “The effect of going to employees for loans for personal benefit would be to make employees insecure and subject to intimidation.”

Statement-of-interest forms completed by Kellerman dating back to Jan. 1, 1986, list no loans, gifts or other “reportable interests.” The documents must be filed by district executives and all board members.

In addition to other charges, board President Otto Lacayo has said that the board is investigating a bill the district received for a $2,000 Unisys computer installed in Kellerman’s home for his personal use.

“I don’t think that bill has been paid,” Lacayo said. It was not clear who submitted the computer bill.

Loumakis made unspecified allegations against Unisys Corp. in the letter to fellow board members and requested that all purchases from the computer manufacturer be suspended until an outside investigation can be completed. Shortly after the board first learned of charges against Kellerman in February, trustees delayed a scheduled vote to seek bids for a $450,000 to $500,000 computer system for the district.

Kellerman, Vice Chancellor Joseph Newmyer and computer director Roy Raubolt had been negotiating with Unisys representatives to greatly expand the capacity of the district’s computer.

Unisys sales representative Carl Temple, who was involved in the talks with district officials, declined to comment on the suggestions of wrongdoing Wednesday.

“I’m not in a position to make any comment,” said Temple, who was contacted by telephone in the company’s Santa Ana office.

Loumakis also questioned a $3,120 repair bill to the district for damage from an accident involving Kellerman’s district-provided car. According to police reports and other documents obtained from the district Wednesday, Kellerman’s 1987 Ford Taurus was legally parked on the paved shoulder of Interstate 15 near Barstow on June 30, 1988, when it was sideswiped by another car.

An examination of district travel documents showed no record of a business trip by Kellerman on that date. According to Loumakis, if the accident did not occur while Kellerman was on district business, the district is not liable for repair costs.

Kellerman, who was named chancellor in February, 1986, has a contract that runs until June, 1991. Berdette Cofer, 61, was named interim chancellor after Kellerman’s suspension last week. The district includes Fullerton College and Cypress College and serves 31,000 students in credit courses. In addition, about 37,000 students are enrolled in non-credit, adult-education courses.