10-21-2023 2:56pm

Former Orange County Education Official Arrested on Complaint Alleging He Embezzled More Than $14 Million from School District

Anita Johnson-Brown Editor

SANTA ANA, California – Jorge Armando Contreras, 52, of Yorba Linda, The former senior director of fiscal services at an Orange County public school district, was taken into custody on October 19, 2023, on a federal criminal complaint alleging he embezzled over $14 million from the district during seven years and used the extorted funds to finance a home, buy high-end merchandise, and receive cosmetic treatment from a dermatologist.

Contreras is charged with embezzlement regarding programs receiving federal funds, a felony punishable by up to 120 months in federal prison.

On October 19, The Defendant appeared in the United States District Court in Santa Ana, and a federal magistrate judge ordered Contreras to be incarcerated without bond. Contreras’ is scheduled for arraignment on November 27.

Contreras was the senior director of fiscal services at Magnolia School District, which serves pupils in Anaheim and Stanton. Contreras was hired by the school district in 2006, he supervised the district’s fiscal operations. The schools in this district educate kids from preschool through sixth grade – 81% of the students are classified as socio-economically disadvantaged. Since 2009, Magnolia School District has received millions of dollars in federal funds annually.

As reported in the affidavit filed with the complaint last week and unsealed on Thursday, from August 2016 to July 2023, Contreras embezzled over $14 million from Magnolia School District by making unauthorized payments to himself from district funds – payments from more than 250 checks from the district and deposited into Contreras’ private bank account.

The checks ranged from about $11,000 to roughly $95,000 and listed fictitious individuals as the payee, the affidavit alleges.

From August 2022 to July 2023 alone, Contreras allegedly embezzled more than $4.1 million from Magnolia School District. During this period, Contreras used the embezzled funds to pay more than $1.9 million to American Express, withdraw $325,000 in cash from ATMs, and transfer more than $130,000 to his counterpart, whom he wedded in August 2023. Contreras allegedly also used the illicitly acquired funds to buy his residence in Yorba Linda for about $1.5 million as well as a BMW SUV for approximately $127,000, which he used to deposit embezzled funds into his personal bank account via drive-thru ATMs.

Contreras bought the Yorba Linda home in 2020 and paid for more than $1 million of it via a wire transfer from his personal bank account. Contreras, also allegedly changed bank statements submitted as part of the loan application for this residence to conceal funds he embezzled from the school district.

The affidavit also alleges that Contreras altered documents over the years to hide his embezzlement and used some of the funds to pay $190,000 to a West Hollywood dermatologist and surgeon for cosmetic treatments. He also allegedly used the embezzled funds to buy Versace and Louis Vuitton.

Contreras allegedly likewise transferred some of the embezzled funds to bank accounts in Mexico.

The school district put Contreras on administrative leave in August 2023 and has filed a lawsuit against him in Orange County Superior Court.

"A criminal complaint contains allegations. All defendants are presumed innocent until proven guilty beyond a reasonable doubt in a court of law."

This case was investigated by the FBI, IRS Criminal Investigation, and the United States Department of Education – Office of Inspector General.

Assistant United States Attorneys Billy Joe McLain of the Public Corruption and Civil Rights Section, Brett A. Sagel of the Corporate and Securities Fraud Strike Force, and James E. Dochterman of the Asset Forfeiture and Recovery Section will be prosecuting this case.

By Anita Johnson-Brown