State audit uncovers $3.73 million scheme that diverted Tulsa school bond money from classrooms
State audit uncovers $3.73 million scheme that diverted Tulsa school bond money from classrooms
Oklahoma State Auditor and Inspector Cindy Byrd released the second part of her special forensic audit of Tulsa Public Schools on Tuesday, detailing what she described as a complex financial abuse scheme that took money intended for schoolchildren.
The findings center on former TPS Executive Director of Bond and Energy Management Chris Hudgins. Auditors say he used his position for more than a decade to divert millions in tax dollars to himself and preferred vendors while operating a personal business from district offices on the public’s dime.
“This was a complex scheme that took money from school children,” Byrd said. “We found evidence that the TPS Executive Director of Bond and Energy Management, Chris Hudgins, used his position to divert millions of tax dollars to himself and direct contracts to preferred vendors. It appears that for more than ten years, he operated a personal business out of TPS offices on the public’s dime, undermined the bond department’s competitive bidding process, and orchestrated complex financial schemes in cooperation with certain vendors. During that time, he had direct access to and authority over tens of millions of taxpayer dollars.”
The total fraud, misappropriation, and improper payments identified in this phase of the audit reaches $3,730,790.
Key findings include:
- Tulsa engineering firm Allied Engineering paid Hudgins’ personal company, M&G Consulting LLC, a total of $2,625,390 for architectural services—roughly $1 million for roofing, $1 million for interior renovations, and more than $600,000 for HVAC work. Auditors found those services were never delivered.
- Allied collected a 5% fee of more than $58,000 simply for processing the false invoices on the roofing work.
- Hudgins improperly authorized GLD Consulting LLC—a company formed by three Allied employees—to handle the district’s Public Service Company of Oklahoma (PSO) energy rebate process without School Board approval. GLD retained 30% of the rebates, amounting to $547,782.
- Allied used an improper billing method that resulted in at least $499,573 in overcompensation.
- On Hudgins’ recommendations, the TPS School Board authorized payments to the engineering firm without reviewing the underlying project contracts and amendments.
“It appears Hudgins had free reign over the bond department and the TPS School Board rubber-stamped almost every recommendation he made,” Byrd said. “Government employees should never be allowed to exercise unilateral control over public finances. Sadly, each dollar wasted was a dollar that never reached the classroom where it was really needed.”
In June, prosecutors already charged Hudgins and two Allied Engineering partners with attempting to defraud the district of $779,000. The new audit findings expand the scope of the alleged misconduct well beyond that amount.
The initial investigation of Tulsa Public Schools was requested by Gov. Kevin Stitt. After the first audit last year exposed widespread problems with financial transparency and oversight, the governor approved continuing the probe. This second report focuses specifically on the bond and energy management side of the district’s operations.
Byrd’s office has forwarded its findings to the Oklahoma Attorney General and the Tulsa County District Attorney for further review.
The full audit report is available on the Oklahoma State Auditor & Inspector’s website at sai.ok.gov.
For Tulsa families and Oklahoma taxpayers who approved bond issues expecting the money to improve school facilities, the audit paints a picture of long-running failures of oversight that allowed public funds to be steered away from the students they were meant to serve.
