Denshaw Group LLC

Report of Investigation

Client:

Dallas County Schools (DCS)

Superintendent Dr. Rick Sorrells

Reporting Parties:

Dennis Brady
Shawna Maynard

Investigative Predication:

We were hired to conduct a preliminary investigation to determine if there were financial crimes
committed regarding a reported projection of a $42 Million revenue shortfall in the Dallas County
Schools (DCS) budget, and to recommend whether there was a need for a forensic audit of DCS.

Executive Summary:

We have reached the conclusion that the circumstances surrounding the DCS Stop Arm Camera Program
are largely, but not exclusively, responsible for the present financial condition of DCS.

Internal DCS documents, located during exploitation of the digital media described herein, show DCS
employees documented that the impact of the Stop Arm Camera Program on DCS financial position was
estimated to be an approximately 70 Million USD loss if the program were sold.

Documents located in a similar fashion also show that over the next 3 years the Stop Arm Camera
Program is projected to cost DCS 17 Million USD more than the revenue the Stop Arm Camera Program
is projected to produce.

The standard explanations for a financial loss of this magnitude by those in a fiduciary position are:
ignorance, incompetence, negligence and criminal conduct.

Our review of the available information indicates that, in our opinion, suitable predication may exist to
support a potential federal investigation for violations of Title 18 USC 666 Program Fraud, Title 18 USC
1343 Wire Fraud, Title 18 USC 1341 Mail Fraud as well as related sections of the Texas Criminal Code.

The potential subjects of these possible investigations are detailed more fully within the body of this
report and might include the following individuals for the following actions:
1. DCS Board President Larry Duncan for receiving what could be construed as a bribe related to
campaign contributions provided by individuals associated with Force Multiplier Solutions and
the related quid pro quo regarding actions taken by DCS under his guidance. Analysis of the
timing of these campaign contributions show a significant degree of correlation, over an
extended period of time, with actions taken by DCS, which proved to be of benefit to Force
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Multiplier Solutions. These same actions were clearly detrimental to DCS, and were a significant
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factor that contributed to the present DCS financial situation. This is potentially Program Fraud.
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2. All members of the DCS Board who received a share of these campaign contributions, under the
theory cited above, most particularly those DCS Board members on the Budget/Finance
Committee who received a portion of these campaign contributions, may be exposed to
allegations of a conspiracy. This may also be Program Fraud.
3. There is also potential for a federal investigation related to certain statements attributed to Dr.
Rick Sorrells, and others, regarding Force Multiplier Solutions, including statements that are
posted on the Force Multiplier Solutions web site. These statements may be construed as being
materially false, are transmitted in interstate commerce over the internet and likely through
other means, and may have been used in an effort to solicit funds from other persons or entities
under false pretenses. This may be Mail and/or Wire Fraud.
We do not recommend a forensic audit of DCS, as the time where this technique may have been of
value to DCS has long since passed. We note that the present DCS external audit process failed to fully
identify and articulate this problem in audit reports. This may be of particular significance since this
situation developed over the course of several years, a time period when multiple audits were
conducted by the same audit firm.

Results of Investigation:

This investigation has included voluntary interviews of the DCS personnel identified in our prior report,
review of voluntarily provided DCS records, and analysis of voluntarily provided digital media.

The digital media stems from DCS computers used by Alan King, Richard Coulter, Alan Hagy, Susan Falvo
and Denise Hickman. We have recommended that Dr. Rick Sorrells digital media also be preserved,
imaged and analyzed, but this has not been fully accomplished to date.

As noted above, internal DCS documents, located during exploitation of the digital media described
herein, show DCS employees documented that the negative impact of the Stop Arm Camera Program on
DCS financial position was estimated to be an approximately 70 Million USD loss if the program were
sold. Further documents show that over the next 3 years the Stop Arm Camera Program is projected to
cost DCS 17 Million USD more than the revenue the Stop Arm Camera Program is projected to produce.

Over the course of several years, DCS entered into a series of contracts with Force Multiplier Solutions,
as well as associated entities Ongo and Busguard, that created the Stop Arm Camera Program. These
entities appear to us, based upon the available information, to be owned/operated by Robert Leonard.
These contracts are reported to have been reviewed by DCS executive management and DCS Board
members after having been created and prepared by attorneys retained to benefit the DCS Board. They
are signed by Dr. Rick Sorrels, in his role as superintendent of DCS, on behalf of DCS.

These contracts were available for review by auditors employed by DCS to review the financial
statements and financial condition of DCS over the course of the last several years.

In summary, these contracts stipulate the following:

1. A camera system on DCS buses that records the activity on the buses, as well as activity outside
the buses. The cameras outside the bus activate when the stop arm is deployed for student
loading and unloading (Stop Arm Camera Program).
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This communication and any accompanying documents are confidential and privileged. They are intended for the sole use of the addressee. If you receive this
transmission in error, you are advised that any disclosure, copying, distribution, or the taking of any action in reliance upon this communication is strictly
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communication in error, please contact me at the above email address.
 Denshaw Group LLC
2. DCS, then endeavors to have a citation issued to the registered owner of a vehicle which illegally
passes the stop arm when deployed, without endeavoring to determine whether such
registered owner was actually driving the vehicle.
3. The Stop Arm Camera Program is partially billed as a safety measure, to protect students while
loading or off-loading from the bus.
4. The contracts for the Stop Arm Camera Program discuss the distribution of revenue from this
program. Revenue projections for the Stop Arm Camera Program are used to justify the
program.
5. Anticipated revenues from the Stop Arm Camera Program are included in DCS Budget
projections.
6. DCS has purchased a franchise from Force Multiplier Solutions to market the Stop Arm Camera
Program for Force Multiplier Solutions.
7. DCS has retained Robert Leonard, the CEO of Force Multiplier Solutions on a personal services
contract regarding the Stop Arm Camera Program.
The Stop Arm Camera Program has been incredibly expensive for DCS to acquire. The Stop Arm Camera
Program has failed to generate enough revenue to provide any net benefit for DCS. Documents in the
digital media show that DCS revenues from the Stop Arm Camera Program are either several hundred
thousand US Dollars or tens of millions of US Dollars, depending on who is telling the story, to whom the
story is told and when the story is told.

Interviews with DCS employees determined that there is no special software or hardware involved in the
Stop Arm Camera Program. The components necessary to create the system are readily available from a
number of commercial vendors. Interviews of DCS employees further indicate that DCS paid roughly
double what it would have paid on the open market for the camera system components and also
roughly double for labor costs to install the system that DCS might have paid to vendors other than
those associated with Force Multiplier Solutions.

These interviews also detail that a decision was made to install modems on all of the buses so that the
cameras could immediately and continuously transmit their images to a base station for immediate
review, even though there was no staff scheduled or assigned to review the images in real time. This
decision necessitated the acquisition of cellular service with sufficient bandwidth to transmit these
images in real time. This further inflated the cost of the program, provided no tangible benefit to DCS,
and allowed Force Multiplier Solutions to acquire additional equipment at an additional mark up for
both the acquisition and installation of the equipment.

Force Multiplier Solutions operates a website posted on the internet. This website advertises to School
Districts across the United States that the School Districts can generate revenue from the Stop Arm
Camera Program at no cost to the School Districts. A statement appears on the website, attributed to
Dr. Rick Sorrells, that vouches for the accuracy of these claims and the benefits of Force Multiplier
Solutions to DCS, despite the fact that the Stop Arm Camera Program has provided no tangible benefit
to DCS and has in fact produced a financial loss. The statements attributed to Dr. Sorrells may be
construed as being materially false, and could further be construed as an effort to solicit funds from
other persons or entities under false pretenses. These statements are transmitted in interstate
commerce over the internet and likely through other means. These means include, but are not limited
to, telephone calls, emails, US Postal mail, and interstate travel in order to market the Stop Arm Camera
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Program.
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This communication and any accompanying documents are confidential and privileged. They are intended for the sole use of the addressee. If you receive this
transmission in error, you are advised that any disclosure, copying, distribution, or the taking of any action in reliance upon this communication is strictly
prohibited. Moreover, any such disclosure shall not compromise or waive the privileges as to this communication or otherwise. If you have received this
communication in error, please contact me at the above email address.
 Denshaw Group LLC
We note that the President of the Board of DCS, Larry Duncan, has received campaign contributions
from Robert Leonard and other individuals associated with Force Multiplier Solutions. These campaign
contributions total several hundred thousand dollars.

Documents recovered in the digital media indicate that Larry Duncan is opposed to Ethics Rules for
Public Officials proposed by the State of Texas. In the same document, Larry Duncan also objects to
public disclosure requirements likely intended to prevent potential conflicts of interest for public
officials. These rules might ensure that the public is aware of any such potential conflicts of interest.
These documents may be significant because they speak to the state of mind of Larry Duncan. A
prosecutor may view them as relevant to the specific intent to commit the crimes discussed in this
report.

Comparison of the timing of these Force Multiplier Solutions derived campaign contributions to Larry
Duncan, as well as his further distribution of these same funds to board members and others, with the
timing of the various contracts negotiated between DCS and Force Multiplier Solutions, discloses a
substantial degree of correlation between the timing of the campaign contributions to Duncan and then
ongoing contract negotiations between DCS and Force Multiplier Solutions. These contributions tended
to happen when DCS was considering undertaking actions regarding the Stop Arm Camera Program that
would benefit Force Multiplier Solutions. All of which actions ultimately proved to have a detrimental
impact upon DCS.

Documents located in the DCS digital media indicate that, as early as 2014, Force Multiplier Solutions
developed a history of failing to remit funds to DCS on a timely basis for payments due to DCS from
Force Multiplier Solutions under the contracts that then governed the Stop Arm Camera Program. The
balance of funds Force Multiplier Solutions owed DCS exceeded 100,000 USD. It appears from these
documents that DCS took little, if any, timely action to collect these funds from Force Multiplier
Solutions, waiting until 2015 to inquire about the situation. It appears the balance may still have been
outstanding in 2016. Analysis of the digital media also indicates that the firm hired to audit DCS may
have noticed this issue, according to internal DCS communications.

We note that during the period of time when DCS was making little effort to collect funds owed to DCS
from Force Multiplier Solutions, Force Multiplier Solutions principals, and individuals affiliated with
Force Multiplier Solutions, were consistently making campaign contributions to Larry Duncan. We also
note that Larry Duncan has distributed contributions from his campaign fund, the vast majority of which
came from individuals associated with Force Multiplier Solutions, to other members of the DCS board, as
well as to programs or persons closely related to these board members. The DCS board members in
receipt of these funds include those who also had multiple opportunities to question the Stop Arm
Camera Programs utility to DCS, multiple opportunities to review DCS records related to the Stop Arm
Camera Program, multiple opportunities to call for votes or to vote on matters pertaining to Force
Multiplier Solutions, Robert Leonards relationship to DCS, and/or the Stop Arm Camera Program. This
includes DCS members on the Budget/Finance committee and includes the following board members:

1. Dr. Paul Freeman

2. C.W. Whitaker
3. Omar Narvaez
4. Gloria Levario
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5. Kyle Renard, M.D.

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6. James Hubener
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Review of the digital media relative to this matter further discloses that at one point in time it was
standard DCS practice to have a monthly conference call between some of Larry Duncans campaign
contributors, representing Force Multiplier Solutions, and DCS employees with contracting and/or
purchasing authority, or other ability to impact the Force Multiplier Solutions contracts.

The campaign contributors associated with Force Multiplier Solutions scheduled to be on these
conference calls are:
1. James Buchanan, Jr.
2. Christopher Kerr
3. Slater Swartwood, Jr.
4. Stephen A. Loeb
Other campaign contributors associated with Force Multiplier Solutions include, but are not limited to,
Robert C. Leonard, Linda D. Leonard, Lisa D. Buchanan, ELF Investments, LLC, Heather Swartwood Loeb,
and Kathryn P. Swartwood.
The DCS employees with contracting and/or purchasing authority or other ability to impact the Force
Multiplier Solutions contracts scheduled to be on these conference calls are:

1. Dr. Rick Sorrels

2. Susan Falvo
3. Gary Lindsey

Other DCS employees scheduled to be on these conference calls include, but are not limited to, Charles
Chuck Allsup, Sherry Shaver, Paul Stoughton, Derek Gannaway, Franklin Blanche and Michael Taylor.

One purpose of this conference call was for Force Multiplier Solutions representatives to update DCS
employees on their efforts to market the Force Multiplier Solutions Stop Arm Camera Program to other
school districts across Texas and the United States. This marketing was considered necessary by DCS
personnel because the Stop Arm Camera Program was not generating sufficient revenue for DCS. It was
anticipated that if Force Multiplier Solutions was successful in marketing the Stop Arm Camera Program
to other school districts, DCS could gain a substantial share of the Stop Arm Camera Program revenue
from other such school districts.

Interviews of DCS employees disclose that Force Multiplier Solutions Stop Arm Camera Program
equipment was purchased by DCS, then installed on buses in Harris County, Texas, at the expense of
DCS, in furtherance of this marketing program. When Harris County and Houston declined to enact
municipal ordinances that would authorize the collection of revenue for the Force Multiplier Solutions
Stop Arm Camera Program in those jurisdictions, the equipment was removed, also at DCS expense.

Interviews of DCS employees disclose that DCS has acquired so much unused, uninstalled, camera and
modem equipment for the Stop Arm Program from Force Multiplier Solutions, at DCS expense, that DCS
has felt the need to acquire storage space, at an additional expense to DCS, to store such equipment.
This equipment, as it involves 3G modems, is likely presently obsolete.
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PRIVILEGED AND CONFIDENTIAL

This communication and any accompanying documents are confidential and privileged. They are intended for the sole use of the addressee. If you receive this
transmission in error, you are advised that any disclosure, copying, distribution, or the taking of any action in reliance upon this communication is strictly
prohibited. Moreover, any such disclosure shall not compromise or waive the privileges as to this communication or otherwise. If you have received this
communication in error, please contact me at the above email address.
 Denshaw Group LLC
From our interviews with DCS employees, our review of voluntarily provided documents by DCS, and our
analysis of the digital media, it is apparent to us that there is no useful inventory available for review
regarding this unused Force Multiplier Solutions Stop Arm Camera Program equipment.

Recommendations for Further Investigation:

At a minimum the following should be accomplished:

1. There is additional digital media that should be reviewed. Specifically the computer used by Dr.
Rick Sorrells should be imaged, and reviewed for material pertinent to this investigation.
2. DCS Board members should be interviewed regarding their relationship with Force Multiplier
Solutions, Ongo, Busguard, Robert Leonard and funds derived therefrom.
3. DCS Employees with contracting and/or purchasing authority or other ability to impact the Force
Multiplier Solutions contracts who participated in the conference calls described above should
be interviewed.
4. An inventory of equipment on hand and purchased from Force Multiplier Solutions should be
conducted. This inventory should include a reconciliation between the equipment on hand with
the purchase orders/invoices for such equipment, and be fully verified .
5. Financial information should be acquired regarding all financial transactions between Force
Multiplier Solutions, DCS, and entities or persons associated with each, for other potential quid
pro quo situations or the appearance of kickbacks.
With the submission of this report and our bill, we consider our obligations to DCS, under the current
letter of engagement relating to this matter, fulfilled.

We are aware of investigations by appropriate law enforcement agencies related to this matter. Should
we be contacted, or subpoenaed, by those agencies relative to this matter, we will provide such
agencies with all relevant information, and seek recovery of our expenses and compensation for our
time from DCS, pursuant to our present letter of engagement.

If DCS requires additional future briefings, or future investigative action by us, we believe that it is time
for a new letter of engagement. We believe the situation regarding this investigation has evolved
substantially from what was represented to us by DCS personnel when we were initially engaged in this
matter.

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PRIVILEGED AND CONFIDENTIAL

This communication and any accompanying documents are confidential and privileged. They are intended for the sole use of the addressee. If you receive this
transmission in error, you are advised that any disclosure, copying, distribution, or the taking of any action in reliance upon this communication is strictly
prohibited. Moreover, any such disclosure shall not compromise or waive the privileges as to this communication or otherwise. If you have received this
communication in error, please contact me at the above email address.