Hacienda La Puente Unified School District is suing former Superintendent Cynthia Parulan-Colfer, alleging she transferred nearly $250,000 from a defunct scholarship fund into the accounts of two nonprofits created following her retirement in 2020.
The original fund, the HLP Educational Foundation, hosted an annual scholarship dinner, “Stairsteps to Success,” to raise money for the district’s students and awarded about $15,000 in scholarships each year, according to the lawsuit.
The state revoked the foundation’s tax-exempt status in 2020 after years of incomplete filings. It shut down that September.
District employees, who managed the foundation’s day-to-day administration, estimated nearly $250,000 remained in its accounts at the time.
Hacienda La Puente’s attorney’s allege “Parulan-Colfer fraudulently transferred funds belonging to the HLP Ed Foundation to two new non-profit organizations with which Parulan-Colfer is associated — defendants SVG Training Foundation, Inc. and San Gabriel Career Foundation, Inc.,” the lawsuit states.
The district further alleges Parulan-Colfer, who served in leadership roles for all 12 years of the foundation’s existence, misappropriated funds before she retired by unilaterally awarding $4,000 in scholarships to her own sons and by using the foundation’s accounts to pay her husband’s law firm $320 and to cover $3,500 in costs for her own retirement party.
A $750 scholarship check awarded to a Los Altos High School student bounced as a result of the foundation’s shuttering. Legal counsel for Parulan-Colfer, in correspondence with the district, called the bounced check “unfortunate and regrettable” and stated it resulted “from the calculus of dissolving the corporation and the distribution of those asserts (sic) to other charitable organizations,” according to the lawsuit.
SVG Training Foundation, which formed the same month that the scholarship fund dissolved, lists Parulan-Colfer as its CEO and her husband as the secretary and chief financial officer. The San Gabriel Career Foundation, formed the following year in April, has the same structure. Their home in Rowland Heights is listed as the primary office for both, business filings showed.
The district alleges the monies transferred to the two nonprofits were “heedlessly intermingled with Defendant Parulan-Colfer’s finances without any formal requirement for authorization to use funds or any accounting or obligation on the part of the defendants to repay funds taken from the corporate accounts of the foundation.”
Both of the nonprofits “exist solely on paper and have no actual place of business, no employees, no insurance and no significant finances” of their own, the lawsuit states.
Thomas C. Watts III, an attorney representing the three corporate entities named alongside Parulan-Colfer, provided a statement from the nonprofits’ directors denying the allegations.
“The allegations of the District and Anthony Duarte, the former Board of Education president, of any wrongdoing are categorically denied and exquisitely false,” the statement reads. “The function of the complaint seems more an attempt to divert the attention and change the narrative from the many failures and shortcomings of the District rather than the vindication of non-existent claims of right. That attempt will ultimately be quelled in court.”
The nonprofits’ statement criticized the district paying for the representation of Duarte, who donated roughly $3,000 to the scholarship fund, and alleged the case is “motivated by an intense personal vendetta” against Parulan-Colfer by Duarte, the district’s leadership, and its superintendent, Alfonso Jimenez.
“In this lawsuit, Mr. Duarte’s entire claim is based on an absurd allegation that after receiving the benefit of multiple items he purchased in 2019 at the charitable foundation’s charity auction, he should also be given back the $2,975 he spent to buy these items,” the statement reads.
The nonprofits allege Duarte “demanded that the foundation cease any further association with the district and demanded the charitable foundation’s funds” shortly after Parulan-Colfer left the district. The funds could only be transferred to another charitable foundation, they alleged.
Parulan-Colfer had a fiduciary duty to the district and its students and is personally liable for the missing funds, according to Hacieda La Puente’s attorneys. The lawsuit argues that the HLP Educational Foundation is inextricably linked to the district and any remaining funds should have gone to the organization’s original purpose.
The HLP Educational Foundation was formed in 2008 by then-Superintendent Barbara Nakaoka to “solicit, receive, collect, manage and disburse voluntary contributions, less expenses, to the benefit of the Hacienda La Puente Unified School District,” according to corporate filings. It listed the district’s headquarters as its offices in the documents.
Hacienda La Puente’s staff, as part of their district responsibilities, facilitated bill payments for the foundation, maintained donation records and coordinated fundraising events. The employees created the criteria for the scholarships, reviewed applications and chose the winners based on a scoring system.
Parulan-Colfer served as the foundation’s director from 2008, when she was an associate superintendent, until 2017, four years after her promotion to schools chief. Though she turned over the director’s position to another associate superintendent in 2017, the district alleges that Parulan-Colfer continued to control the foundation as a member of its board.
The mismanagement of the foundation during Parulan-Colfer’s time at the helm made dissolution unavoidable, according to the district.
The statement provided by Watts argues that the district knew about the dissolution well in advance and that then-Associate Superintendent Annie Bui, the educational foundation’s director at the time, signed off on it. Filings with the secretary of state’s website show both Bui and Parulan-Colfer’s signatures on the paperwork.
One school board member, Gino Kwok, had sufficient enough notice of the impending shutdown that he was able to remove funds for his own scholarship program, according to the statement.
“In a time when the District is facing financial strains and is in the process of closing schools and discontinuing culturally enriching programs, such as mariachi and folklorico, programs that Ms. Parula-Colfer was instrumental in spearheading, it is truly tragic that the District has chosen to squander its resources on this vindictive and petty lawsuit,” the statement reads.
Parulan-Colfer retired as the district’s superintendent in January 2020.
The latest filing, an amended complaint submitted by the district Oct. 3, asks the judge to order the return of the funds and to award damages, including attorneys’ fees. The case is currently not scheduled to return to court until December.
