Ted Kimbrough, the man hired to take over as superintendent of Chicago`s troubled public schools next year, amassed a portfolio of real estate and private business holdings during his many years as an educator in California school systems.
Kimbrough`s outside interests are documented in a study of public records and a recent interview with The Tribune that show he is a man as comfortable with cutting business deals as negotiating teacher contracts.
Some of his business opportunities came about through friendships he developed over the 33 years he has worked and lived on the West Coast, he said. Others were started using his skills and training in industrial arts and home construction.
Land records show that Kimbrough`s investments in the Los Angeles area and elsewhere have made him worth more than $1 million. He declined to discuss his net worth in a recent interview in Compton, Calif., except to say, ”I`m not a poor man.”
Despite his many private-sector successes, court records also show he is part-owner of a manufacturing company that is seeking protection in U.S. Bankruptcy Court. Justice Department officials are deciding whether to pursue a criminal investigation of the firm for possible violations of federal bankruptcy laws by making a $125,000 payment to Kimbrough, as well as payments to others.
Kimbrough declined to discuss the reasons for the payments, saying they were ”private business.” He said he was unaware of the Justice Department`s review of the firm, describing that investment as ”passive” and saying he is no longer an officer of the company.
”One thing is for sure: I never made any money out of it,” he said.
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”It caused me some grief as far as to deal with paying taxes that I really was not responsible for.”
Chicago Board of Education President James Compton said the 54-year-old Kimbrough had discussed his financial ventures during a September job interview. Compton said those activities did not cause great concern among board members because ”individuals enter all kinds of private-business interactions.”
Kimbrough told The Tribune he would curtail his involvement with those firms when he officially takes over Jan. 15 as Chicago schools superintendent at an annual salary of $175,000 plus other financial perks.
Land records show that Kimbrough began investing in real estate in the 1970s. He said none of the businesses or financial investments caused a conflict of interest in his duties as a school official and that he made sure that the school districts he worked for ”never did business with any company I have been involved with.”
One of his first ventures was with an attorney who represented the Los Angeles school system, where Kimbrough worked as an administrator.
The 1977 deal involved a limited partnership that owned 52 acres of land in a Los Angeles suburb. The partnership built 72 single-family homes on the site and has filed a lawsuit contending building restrictions in the community have blocked development of the remaining land.
Kimbrough later became involved in another limited real estate partnership formed by the same attorney, now the chairman of a bank.
He joined forces in 1985 with a former schoolteacher to begin a home-construction business. Kimbrough said the firm builds about two luxury homes a year that sell for upwards of $1 million each. Kimbrough said he built his first home when he was 17 and that the construction business was a logical extension of his engineering-oriented training.
Kimbrough also has a variety of other investments that run the gamut from stocks and single-family homes to companies he runs by himself. They include Kimco Engineering, a private consulting firm, and Hilltop Enterprises, a company that leases machine equipment and apartments, like the 23-unit complex he owns in Los Angeles.
His commingled roles as educator and businessmen fostered a relationship with an aastronauts visiting the Compton Unified School District, where Kimbrough became superintendent in 1981. Kimbrough said he began working with the contractor on educational issues, and the manufacturing firm in which he owned stock had obtained contracts from the firm.
One wall of Kimbrough`s office is covered with autographed, official NASA photographs of many of the astronauts, including Ronald McNair, who died in the 1986 explosion of the Challenger space shuttle.
Kimbrough said he becamn he was never involved with the day-to-day activities of the business, Kimbrough said he showed Holman how to set up a salary and payroll-tax system as part of teaching him ”the general business of operating a business.”
Kimbrough and his wife eventually acquired 30 percent of the firm`s stock, according to court records.
Last year, the firm filed for bankruptcy protection, claiming it had more than $785,000 in debts and $40,000 in assets. A short time later, the Internal Revenue Service began to garnishee a portion of Kimbrough`s paychecks from the Compton school system, eventually seizing $75,000, according to court records. The IRS contended that Kimbrough was responsible for payment of overdue withholding taxes of Holman Industries employees.
In 1987 and 1988, the IRS filed liens against Kimbrough, contending he was responsible for the payment of those taxes, amounting to $178,000. Kimbrough said last week that his school salary is no longer being garnisheed and that the federal government has agreed to release the liens.
”I didn`t owe it to them in the first place when they garnished me,” he said. ”If you know what the law is, it says you have to be a responsible individual and operator. I am not there. I don`t have my name on the checkbook. I am not an officer. How can you hold me responsible?”
Kimbrough served as the firm`s executive vice president in 1984, 1985 and 1986, according to ethics statements filed in California. Those statements, which required him to disclose outside income in broad ranges, show that during those years he received income of between $1,000 and $10,000 from the firm.
Payroll records of the firm show that during parts of 1982 and 1983 Kimbrough was receiving a weekly salary of $300 from the firm.
In addition, court records also disclose that Kimbrough had another source of income from Holman Industries. The plant rented three machines through his leasing company, Hilltop Enterprises. Records show that Holman once owed the leasing firm $163,000 and was supposed to be paying $1,100 a month in rent on the machines.
Court records show that $75,000 of the $125,000 paid to Kimbrough by Holman Industries was a repayment for money that was being garnisheed from his school superintendent`s salary by the IRS. The other $50,000 was for payment of the leased equipment, according to court records.
The records show that Kimbrough`s stepdaughter, Shelli Schaffer, was a bookkeeper and sales representative for Holman Industries and his son, Sean, was paid $50,000 in consulting fees.
Schaffer charged in a bankruptcy court claim that Holman Industries had wrongfully failed to pay her about $60,000 on more than $700,000 in sales she had made on the firm`s behalf to McDonnell Douglas Corp.
The $125,000 payment to Kimbrough that had not been authorized by the court, as well as mer on Schaffer`s claim. Judge Geraldine Mund of U.S. Bankruptcy Court in Los Angeles ruled that Schaffer was due $53,000 in commissions.
Mund`s brother, Alan, an attorney, previously had represented Kimbrough and Holman, court records show, but a spokesman for the judge said last week that she was not aware of that relationship.
The U.S. Trustee Office in Los Angeles, a branch of the Justice Department, said in court documents filed in Los Angeles that the firm might have violated bankruptcy fraud statutes in making the payments to Kimbrough and his son.
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Under federal bankruptcy laws, such payments normally require court approval as well as disclosure of the payments to the company`s creditors. The Justice Department agency contended in October there was no disclosure.
An investigator from the U.S. Trustees Office will review the case to determine whether to refer it to the Federal Bureau of Investigation and the U.S. attorney`s office, according to U.S. Trustee Davis H. von Wittenburg. The procedure could take some time because there are 400 cases under review.
Holman said he made the payments after an attorney told him it was proper.