CHICAGO - The superintendent of a suburban Chicago school district has been indicted on 12 felony counts in two counties, including two counts of official misconduct and one count of theft in connection with the alleged diversion of bond proceeds to a private college.
Allen J. Klingenberg, superintendent of J. Sterling Morton High School District 201, allegedly directed Donald Kane, a principal at Kane McKenna Capital Inc., a Chicago-based underwriting firm, to transfer $4,500 from the district's working cash bond fund issue for a "confidential contribution" to Trinity Christian College in Palos Heights, Ill., according to a Cook County grand jury indictment handed down earlier this month.
Klingenberg became superintendent of the Morton school district in May 1992 after 20 years as superintendent of Lake Forest Elementary District 67, school officials said. The Morton Board of Education earlier this month voted to fire Klingenberg effective today, according to school officials.
The Cook County State's Attorney's office would not comment on Klingenberg's indictment.
A school official who did not wish to be identified said that the indictment involved a working cash bond issue sold last year by the district. A search by The Bond Buyer for debt issued by the school district revealed that the district, which serves Cicero, Berwyn, and several other western Chicago suburbs, sold $4.85 million of unrated general obligation working cash bonds in June 1992. The issue was underwritten by Robert W. Baird & Co., whose affiliate is Kane McKenna. Kane McKenna has served as the school district's financial adviser, according to sources in the industry.
Donald Kane said that his firm was "told by the Cook County State's Attorney's office that [Kane McKenna] was not the subject of any investigation."
Kane acknowledged his firm transferred the contribution to Trinity College, but did not know the purpose of the transfer.
"If we knew there was something not legal, we would certainly not have done it," he said. "We made it absolutely clear with respect to these proceeds that they were to be carefully regulated and subject to disclosure. And [we] did disclose the contribution to all appropriate parties."
Kane said the appropriate parties" included the school board and attorneys for the school district.
The school official said he believes the $4,500 was used to pay the tuition of a former school board member and Klingenberg ally. The official said the contribution came out of a fund containing bond proceeds that were used to pay under-writers and consultants' fees and other costs.
The official said that Kane McKenna notified the board of Klingenberg's "confidential contribution" to Trinity College after questions surfaced earlier this year about an unrelated financial transaction involving Klingenberg and Martin E. Janis & Associates, a Chicago public relations firm.
After the school board received Kane McKenna's disclosure, which the official called an "honorable" action, the board notified the Cook County State's Attorney's office about the transaction, the school official said. The official said the office told the school board that it was already investigating Khngenberg.
Klenberg's attorney could not be reached for comment.
Klingenberg was indicted on June 2 by grand juries in Cook and Lake counties on 12 felony counts of theft, intimidation, and official misconduct.
The remaining Cook County charges - three counts of official misconduct and one count of theft - are related to Klingenberg's dealings with the Janis public relations firm. The county charges that Klingenberg directed Martin E. Janis to make a contribution to the Committee for Excellence in Schools, which was established to promote a referendum for, a tax increase. Klingenberg then allegedly arranged for the firm to be repaid with overcharges on future invoices to the district, according to the indictment.
The Lake County indictment charges Klingenberg with three counts of official misconduct, one count of theft, and one count of intimidation. That indictment alleges that Klingenberg falsified expenses for moving from Lake Forest to Berwyn and that he pressured two school district employees to approve expenses for a trip to Rome for a Lake Forest principal.