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DPS kickback-scheme ringleader gets five years

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The former school supplies vendor who led a conspiracy to defraud Detroit Public Schools received a five-year prison sentence Tuesday.

Norman Shy had pleaded guilty to running the years-long scheme with some Detroit school principals and an administrator.

They agreed to fix invoices so that Shy was paid for supplies he never provided. In return, they got a cut of his profits.

Federal prosecutors called Shy “a killer of dreams” and “thief of hope,” who lived in a “luxurious mansion in the suburbs” while Detroit schoolchildren went without basic supplies. They asked that he get at least 70 months in prison.

The 74-year-old Shy took “full responsibility” for his actions, telling U.S. District Court Judge Victoria Roberts he “made a horrible mistake by getting involved in this conspiracy.”

His attorney asked the court for mercy, citing Shy’s age and various medical conditions.

Roberts did hand down a shorter sentence than the government wanted, but said Shy’s scheme was too sophisticated and long-running to be a one-time mistake.

Shy kept records of his kickbacks to school employees, and paid himself a commission each time a school employee dipped into the fund he created.

Roberts also noted the “court has evidence … of a similar scheme” involving 22 current and former Detroit school principals.

She did not elaborate, but the comment seemed to take the Detroit U.S. Attorney’s office by surprise. Federal and DPS officials declined to comment on or confirm any further investigation or details.

Roberts said Shy appeared to have used the proceeds from his scam to “amass a fortune in real estate investments.” He has agreed to turn over assets and pay more than $2.7 million in restitution, the amount he defrauded from DPS.

Roberts said she hopes Shy’s sentence sends an “important message” to other white-collar criminals: “There is no immunity from consequences of this type of fraud on our children.”

Roberts also sentenced Shy’s chief co-conspirator, former DPS administrator and principal Clara Flowers, to three years in prison.

Eleven other former principals who have pleaded guilty to participating in Shy’s operation will be sentenced over the coming days. The remaining accused principal will go to trial.

Sarah Cwiek joined Michigan Public in October 2009. As our Detroit reporter, she is helping us expand our coverage of the economy, politics, and culture in and around the city of Detroit.
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