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Table of Contents
Summary .................................................................................................................. 3
Donald Houde's role at the Arizona Department of Education.................................. 4
Employment history and position ........................................................................ 4
Houde's job responsibilities & access to sensitive information............................ 4
Houde's Criminal Past .............................................................................................. 6
Tom Horne’s knowledge of Houde's criminal past .................................................... 7
Houde lies have continued at the AZ Department of Education................................ 8
Lying on a Federal Grant Application .................................................................. 8
False statements on a federal grant application is a serious crime ..................... 9
Houde's lies may put Arizona taxpayers in financial jeopardy........................... 10
Is Houde now ripping off the AZ Department of Education??? ............................... 10
The Houde Consulting Group, LCC .................................................................. 10
Murky Houde company headquartered on a Scottsdale golf course................. 10
Houde company published report for Education Department............................ 10
Houde's double life............................................................................................ 11
Horne hired another shady lawbreaker to work at the Department of Education .... 12
Carmen Chenal................................................................................................. 12
Source Documents ................................................................................................. 14
US News & World Report article detailing Houde's embezzlement................... 15
ABC 15 News story from 2008 regarding Houde .............................................. 16
Donald Houde's fraudulent resume submitted with federal grant application.... 18
Image of Donald Houde's LinkedIn page .......................................................... 22
Corporation Commission filing for Houde Consulting Group, LLC .................... 23
2
Backgrounder
Summary
Superintendent of Public Instruction Tom Horne has knowingly given control of students'
and teacher's personal information to a embezzler/ex-prison inmate.
Amazingly, Tom Horne is running for Attorney General as someone who tough on
crime.
Horne employs his associate, Donald Houde, as Chief Information Officer of the Arizona
Department of Education. As Chief Information Officer, Houde is responsible for managing
and safeguarding the personal information of students, teachers and Department of Education
employees.
Houde, is a convicted embezzler (and ex-prison inmate) who used a similar Information
Technology position to embezzle $1.7 million dollars. Houde also does not have a college
degree and is said to have dropped out of high school.
Horne is aware of Houde's criminal background, yet he chooses to employ him anyway.
Houde's position is one of the highest in the Arizona Department of Education. In fact,
Houde only reports to Horne and Deputy Superintendent Margaret Dugan.
Questions have also been raised as to: (1) why Houde has formed a consulting company
while having a full-time job with the Department of Education; (2) why is Houde's
consulting company listed as a publisher of at least one known Department of Education
reports; and (3) what direct or indirect benefits if any is Houde's consulting company
receiving based on Houde's management of the hiring of consultants.
Horne has displayed a pattern of bad judgment in people who have had trouble with the law.
In addition to Houde, Horne hired his close personal friend Carmen Chenal, despite the fact
he admits knowing that Chenal, an attorney, was currently suspended by the Arizona
Supreme Court from the practice of law for misconduct, gross incompetence and illegal acts.
Horne's willingness to put convicted felons and disbarred attorneys into positions of trust
may stem from his own legal troubles. Horne admitted to misleading investors, filing false
financial statements and violating federal securities law. Horne has been banned for life
from the financial industry by the Securities and Exchange Commission (SEC).
3
Backgrounder
Superintendent of Public Instruction Tom Horne appointed Donald Houde to the position
of Chief Technology Officer of the Arizona Department of Education in August 2005. In
February 2007, Horne gave Houde a promotion to the position of Chief Information
Officer / Deputy Associate Superintendent. (See Houde's LinkedIn profile at
http://www.linkedin.com/pub/donald-houde/9/393/255 and the Arizona Department of
Education organization chart at http://www.ade.az.gov/aboutade/orgchart.pdf.)
As Chief Information Officer, Houde oversees all information technology systems and
databases of the Arizona Department of Education. This puts Houde in charge of
managing and safeguarding valuable information.
Additionally, Houde is responsible for hiring and managing expensive outside consulting
vendors to work on information technology projects.
Information Houde is responsible for managing and safeguarding includes, but is not
limited to:
Teacher information
While most "teacher records" are maintained at the school or district level, Houde
and the Department of Education oversee the processing and storage of teacher
certification records. The information submitted with teacher certification
applications is used to run background checks. This submitted information
includes everything: name, address, Social Security Number, date of birth,
gender, ethnicity, schools attended. (Ironically, this information also includes
data about teacher certification applicants' arrest history or criminal history, if
any.)
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Backgrounder
Student information
Although most official "student records" are maintained at the district or school
level, the information submitted to the SAIS database system that Houde is
responsible for as CIO of the Department of Education, the SAIS, contains a
remarkable amount of detailed information about students.
As CIO, Houde is responsible for maintenance and security of all the Arizona
Department of Education's internal records. This would personal information on
Department employees, such as social security numbers, date of birth, salery
information, etc.
Houde's position is one of tremendous trust, both for taxpayers and for the students,
teachers and Department employees whose information Houde is responsible for
protecting.
Unfortunately, Donald Houde is also a felon, embezzler, mastermind con man and ex-
prison inmate.
5
Backgrounder
At age 38, Houde was the Systems Director at Mile Hi Cablevision in Denver. "Systems
Director" is a position similar to Chief Information Officer position Houde now holds
now at the Department of Education.
According to the article "Crime and the Bottom Line" in US News and World Report on
4/5/92:
Today, thanks to Horne, Houde is in a similar position of trust to the one he used to
perpetrate a giant con of nearly $2 million dollars.
6
Backgrounder
Amazingly, Horne knows the details of Houde's criminal past, yet employs him in such an
important position of trust.
On May 5, 2008, ABC 15 News' Josh Bernstein did a story titled, "State education administrator
may have had inside track on job." The ABC 15 News story quoted Horne defending the
employment of Houde, and provided details for how Houde got his position.
Berstein's ABC 15 News story reported:
Houde’s criminal history did not stop him from landing the
sixfigure
state job.
Just four months later, Houde was hired full-time and is earning
more than $140,000 a year.
7
Backgrounder
“She was one of the ones who said yes he’s doing good work,”
Horne said.
But the ABC15 Investigators have learned that Houde was not
required to fill out a single piece of paperwork, the Arizona
Department of Education never ran a background check, and
Houde never even filled out an application.
Horne might claim to have forgotten or been unaware of Houde's past before ABC 15 News'
2008 story. Horne is well-known for being "forgetful" regarding legal matters, such as his
lifetime ban by the SEC and leading his company to bankruptcy.
However, the ABC 15 News story PROVES that Horne knew of Houde's criminal background
and lack of a college degree and yet continues to employ Houde and trust him with access to
students' and teachers' personal information.
In 2007, Donald Houde's resume was included as part of a Federal Grant Application for
the State of Arizona.
8
Backgrounder
However, these statements on a federal grant application are lies. Houde does not
have a college degree, nor does Houde appear to hold the patent he claims.
In the ABC 15 News story on 5/5/2008, Berstein asked about Houde's educational
background:
According to a June 29, 2010, article in The Badger Herald titled, "Former professor
admits to lying on federal grant application," a woman in Wisconsin is currently facing
jail time for lying on a federal grant application. According the Badger Herald article:
9
Backgrounder
Houde may possibly face legal consequences when information about this lie on a federal
grant application becomes public. However, Houde's false claims submitted as part of a
federal grant application may potentially have put Arizona taxpayers in jeopardy as well.
Grants obtained with applications that contain false statements can be rescinded,
requiring the recipient to repay the full amount of the grant.
Horne will no doubt claim to be unaware of the bogus resume claims being submitted.
However, when a con man is hired to a position of trust, no one should be surprised if
further cons take place.
Ironically, the resume Houde submitted with the federal grant application claims the title
of "Chief Security Officer" in addition to his 2007 title of "Chief Technology Officer."
Has Houde improperly acquired money from the Arizona Department of Education though
consulting arrangements?
At the same time Houde's LinkedIn profile shows he was the full-time "Chief Technology
Officer" of the Arizona Department of Education, Houde was forming a company named
HOUDE CONSULTING GROUP, LLC. (See Houde LinkedIn profile at
http://bit.ly/doT0Nm and Arizona Corporation Commission records at http://bit.ly/dcD3H4 .)
The physical address listed for Houde's company -- 6620 N 78TH ST, SCOTTSDALE, AZ
85250 -- is a fancy condominium overlooking a lush golf course in Scottsdale. (See aerial
photo of Hourde company headquarters here http://bit.ly/cZbzHz )
Houde's current job of Chief Information Officer makes him responsible for hiring and
managing outside consultants for the Arizona Department of Education. In addition to
Houde's salary at the Arizona Department of Education, has Houde hired his own consulting
company separately to do business with the Department of Education as well? Has Houde
recruited consultants with his own company, then hired them to the State of Arizona for a
marked up price? Or has he simply paid himself funds for additional work from the state
though Houde Consulting Group L.C.C.? Documents on file with the Arizona State
Agency Publications archive raise interesting questions worth a closer look.
10
Backgrounder
HOUDE CONSULTING GROUP, LLC is listed as the "Publisher" of this report for the
Arizona Department of Education:
http://azmemory.lib.az.us/cdm4/item_viewer.php?CISOROOT=/statepubs&CISOPTR=1780
&CISOBOX=1&REC=8. The "Document Purpose" is listed as "To provide a summary of
the findings and recommendations for the Arizona Department of Education regarding the
Arizona Education Information Factory Information Factory Data Warehousing Initiative."
Regarding the third-party consultants (besides Houde Consulting Group L.C.C.) that Houde
has hired for the Department of Education, what business relationship do these consultants
have with the Houde Consulting Group?
Obviously, it is a huge conflict of interest for the Chief Information Officer of the Arizona
Department of Education to have started his own consulting company on the side. There is
no accountability and no way for taxpayers to know the truth about what is going on.
More evidence of Houde's double life as both the CIO of the Arizona Department of
Education and a owner of an IT consulting company can be found on the social networking
website Linked In.
Here is a screen shot taken on 8/11/2010 showing two separate LinkedIn profiles for Donald
Houde. (Source: http://www.linkedin.com/pub/dir/Donald/Houde at 6:20 p.m. on
8/11/2010. Link may change as soon as Houde hears about this backgrounder.)
As shown above, one LinkedIn profile shows Donald Houde as CIO of the Arizona
Department of Education. The other omits this and shows Houde in the private sector.
11
Backgrounder
Houde is not the only shady lawbreaker Horne has put in a position of trust and authority at
the Department of Education.
Carmen Chenal
Horne hired his personal friend Carmen Chenal to work at the Arizona Department of
Education. Horne hired Chanal, despite the fact he admits knowing that Chenal: (1) was
currently suspended by the Arizona Supreme Court from the practice of law for misconduct;
(2) had bounced checks; (3) had botched work for clients; (4) had illegally attempted to
practice law in Illinois despite not be licensed to work there; (5) had filed lawsuits without
making allegations against the defendants; and (6) had been ordered by the Arizona Supreme
Court to pay thousands of dollars in restitution.
"Say you're a lawyer, and you've gotten busted for doing the things
that lawyers aren't supposed to do. The Arizona Supreme Court,
not surprisingly, takes away your law license.
You can't practice law. So whaddaya do? If you were The Bird,
you'd probably have to find another way to feather your nest. But if
you're Carmen Chenal, life is a bit easier. All you have to do is
work your connections and get a cushy job with the state.
kind who cares about things like a good résumé and a history of
doing the work someone's paid to do.
Horne, surprisingly, was willing to take The Bird's call. Not only
that, he even volunteered that Chenal's a former law partner and
that, despite knowing all about her problems with her legal career,
Horne personally recommended her hire.
"I've been in court with her, and she's a first-rate lawyer," Horne
confided. "Family problems distracted her, and she neglected some
things that shouldn't have been neglected. But I think we're lucky
to get her."
But that's not what Cari Gerchick, spokeswoman for the Arizona
Supreme Court, said. At The Bird's request, Gerchick searched
high and low for any record that Chenal had even turned in an
application for reinstatement. There wasn't any. Nor, Gerchick
reported, was there any record that Chenal had paid up that
restitution.
And, Horne said, at his direction, she now intends to pay up the
$560 and get her law license again. Not that it's necessary, of
course.
13
Backgrounder
In fact, using Horne's logic, next time a state agency needs a new
employee, just chuck that whole "Help Wanted" thing. The list of
people who've been recently suspended from the Bar is a much
better place to start.
Source Documents
Article detailing Houde's embezzlement and incarceration. "Crime and the Bottom
Line," US News & World Report, 4/5/1992
Image of Donald Houde's resume submitted as part of a 2007 State of Arizona Federal
Grant Application, with fraudulent education and patent claims.
Image of Donald Houde's LinkedIn page showing employment history with Arizona
Department of Education
14
Backgrounder
Source: http://www.usnews.com/usnews/biztech/articles/920413/archive_017547_3.htm
INSIDE JOB Donald Houde might still be driving his Rolls-Royce and vacationing in Europe if
it weren't for a routine personnel shuffle at Mile Hi Cablevision in Denver last year. Instead, the
38-year-old former systems director is parked in the Denver County Jail after a new supervisor
began wondering how Houde's department could spend $30,000 on computers every month and
how Houde's $57,000 salary could pay for three expensive cars and a mansion with Waterford
chandeliers.
On closer inspection, supervisor Romaine Pacheco found that two of Houde's "vendors"
consisted of nothing more than phony letterheads and rented mailboxes. That fact had escaped
notice because Houde, a trusted nine-year employee, often rushed his invoices past supervisors
with little documentation and made sure that no one executive ever saw his total expenses.
Pacheco accused him of embezzling nearly $2 million from the cable television company over
five years--no small sum for a company with annual revenues of $28 million to $30 million.
Houde pleaded guilty last winter to felonious theft and was sentenced to eight years in prison.
As Mile Hi learned so painfully, the biggest crooks sometimes occupy corner offices.
Embezzlement and kickbacks cost business $27.2 billion last year, and some experts believe the
figure is many billions higher because most companies are too embarrassed to report internal
wrongdoing or simply never see it. And the cost is rising fast: Federal embezzlement cases
multiplied by 40 percent during the 1980s, far more swiftly than traditional forgery and burglary
prosecutions.
Business is especially vulnerable to the enemy within because most corporate bookkeeping
systems are unable to catch deception by those in positions of trust. Says Joseph T. Wells,
president of the National Association of Certified Fraud Examiners, "Most auditors couldn't see a
fraud if it hit them right in the face.
15
Backgrounder
ABC 15 News
May 5, 2008
By Josh Bernstein
Donald Houde, ADE’s Chief Technology Officer, was convicted in 1992 for embezzling $1.7
million from his former employer, Mile High Cable Company in Denver, Colorado.
He was sentenced to eight years in prison, but was released after serving only two years.
“I wasn’t in a position of trust with people, but I was in a position of trust with money,” Houde
said.
Houde’s criminal history did not stop him from landing the six figure state job.
He was first hired as a consultant back in August of 2005, and he admitted he did not disclose his
criminal history to the Department of Education for several months.
Just four months later, Houde was hired full-time and is earning more than $140,000 a year.
According to the State of Arizona’s nepotism policy, it is illegal for a public official to play a
role in hiring a family member.
The policy states, “Because hiring a relative is a special type of conflict of interest, it must be
avoided.”
“She was one of the ones who said yes he’s doing good work,”Horne said.
16
Backgrounder
The Superintendent said he’s confident the department did not violate the nepotism policy and
that several other employees also recommended Houde.
But the ABC15 Investigators have learned that Houde was not required to fill out a single piece
of paperwork, the Arizona Department of Education never ran a background check, and
Houde never even filled out an application.
All Houde had to do was submit a resume that includes absolutely no educational background.
When asked by the Investigators, “Do you have a four-year degree from anywhere?” Houde
replied by saying, “Um, no.”
And apparently that’s not a concern to Superintendent Horne, the man responsible for overseeing
education throughout the state.
“Once I know how good someone’s work is, that’s my sole judge,” Horne said.
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Backgrounder
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21
Backgrounder
Source: http://www.linkedin.com/pub/donald-houde/9/393/255
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Backgrounder
Source: http://starpas.azcc.gov/scripts/cgiip.exe/WService=wsbroker1/names-detail.p?name-
id=L12523979&type=L.L.C
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