You won't find Fred Gross' name prominently featured on his company's promotional material. His firm's Web site doesn't list him as one of its executives -- or even as an adviser. Company executive Liz Rocklin goes so far as to say that Fred Gross "has no responsibilities for the company and is not on the board of directors."
But make no mistake: CampusWorks is Gross' baby. He's named in a March 14, 2002 corporate filing as a secretary and director. Buried in a 2001 company press release is the revelation, "CampusWorks is the brainchild of Fred Gross." And up until mid-April, Gross' home phone number was listed on company letterhead as the number for its headquarters.
Rocklin and her colleagues have a good reason for downplaying Gross' role in CampusWorks. Controversy has followed the ex-con for almost two decades. For a corporate executive convicted of securities fraud whose companies' contracts have drawn intense scrutiny across the country, Gross has been remarkably successful in attracting big names to CampusWorks, including current and former college chiefs. Recently, the growing computer-consulting company has landed multimillion-dollar contracts with two Bay Area school districts. And in both cases, Gross boasts a cozy relationship with the heads of the districts.
At the Peralta Community College District, Gross won a lucrative no-bid contract blessed by a chancellor who used to serve on CampusWorks' board of directors. And now the former chancellor of the Chabot-Las Positas Community College District, which also signed a contract with Gross' company, is working as a consultant for Florida-based CampusWorks. Both districts refuse to release records of how the money has been spent, because CampusWorks has threatened them with legal action if they release so much as an invoice. What do they have to hide?
Fred Gross made his fortune managing information technology systems for school districts and other public agencies. He founded Systems & Computer Technology Corp. in 1968, and by the early '80s it was emerging as an industry leader with annual earnings upward of $40 million. But just as the company appeared poised to become a darling of stock analysts, it was rocked by a series of scandals over its business practices.
A civil grand jury in Fresno County concluded that county officials improperly steered the firm a 1982 contract worth $1.37 million by providing it with confidential information and letting a company employee adjust a competitor's bid so it appeared higher. Meanwhile, an investigation by the Detroit News published in January 1984 showed how a $3.3 million computer-consulting contract that Wayne County Community College awarded without competitive bidding ballooned to $9 million because of cost overruns and mismanagement. The News quoted former college presidents accusing other school administrators and trustees of having "personally profited" from the arrangement with SCT. In a recent interview, former Wayne County Community College president Reginald Wilson recalled that the firm helped pay to fly at least six college administrators to Egypt -- birthplace of the school's executive vice president who negotiated the deal -- where it pitched them on a proposal to manage the college's computer systems and develop software. SCT also briefly took over management of Peralta's data center in 1984, only to be let go after its troubled track record caught up with it.
Gross abruptly resigned as SCT's president in February 1985. Later, it surfaced that the company's board had demanded he quit after an auditor found irregularities in the firm's books. Federal investigators reportedly accused him of inflating the company's earnings by doing things such as counting income from binding contracts that didn't exist. At the time, Gross owned more than two million shares, or a reported sixteen percent of SCT's total value, and prosecutors argued that Gross was trying to improperly raise the company's stock value. A jury ultimately convicted him of conspiring to defraud investors and filing false quarterly reports with the Securities and Exchange Commission. He was sentenced to two years in prison and fined $100,000, according to The Legal Intelligencer.
Ronald J. Temple inherited the technological headaches caused by SCT when he became president of Wayne County Community College in 1985. Yet the experience didn't sour him on Gross. In 1994, after Temple had moved on to run Chicago City Colleges, his institution signed a $7.5-million contract to overhaul and manage school computers with a new company bankrolled by Gross, Technology Specialists Inc. Within three years, Temple was suffering from a new set of computer headaches, as his ambitious-but-flawed plan to upgrade the district's technology culminated in an untimely computer crash during spring registration. Around the same time, the board of trustees decided not to renew Temple's contract. But once again, Temple chose not to blame his woes on Gross. Instead, in 1999, he agreed to serve as a director and principal consultant for Gross' newest venture: CampusWorks.
A few months later, Temple took over another school district with major technology shortcomings: Oakland's Peralta Community College District, which oversees Laney and Merritt colleges in Oakland, Vista College in Berkeley, and the College of Alameda. At the time, Peralta still relied on an ancient mainframe computer system. Temple and his colleagues bypassed the competitive-bidding process and turned directly to CampusWorks to come to the rescue. In January 2000 the board of trustees, following the recommendation of Temple and his staff, approved a no-bid, one-year $650,000 service contract with CampusWorks.
It was a sweetheart deal: It amounted to paying two full-time CampusWorks employees $325,000 a year each to run the district's information technology division. But former Peralta trustee Tom Brougham recalls that Temple argued that the no-bid deal was an emergency stop-gap measure necessary to address the district's immediate computer shortcomings. "It was presented to us as a temporary thing," Brougham recalls. "There was no intent to make it a perpetual situation."
Yet in spite of Temple's initial assurances, within a year he was pushing to hire a consultant like CampusWorks on a long-term basis. In early 2001, as CampusWorks' first contract was about to expire, the district sent 59 companies a "request for qualifications," the first step toward establishing a long-term contract to overhaul and manage the district's computer systems. Companies didn't have to submit financial bids or even estimates, just a résumé and a sales pitch. As Temple told the board of trustees, a more formal bidding process "might produce a lowest-bidder company with whom the district does not wish to work."
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