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Official charged with embezzling more than $14 million from OC school district

October 20, 2023

A former senior Orange County education official has been arrested after authorities allege he embezzled more than $14 million in public school funds over a seven-year span.

Jorge Armando Contreras, 52, is facing a felony charge of embezzling from programs receiving federal money, and has been ordered jailed without bond, according to a U.S. Attorney’s Office statement.

The Yorba Linda resident is accused of embezzling the money while working as senior director of fiscal services at the Magnolia School District.

Prosecutors say from August 2022 to July 2023 alone, Contreras embezzled more than $4 million, using the money to pay $1.9 million to American Express, to withdraw $325,000 in cash from ATMs, to transfer more than $130,000 to a person he would later marry and to purchase a BMW SUV.

Contreras also is accused of using some of the stolen funds to pay $190,000 to a West Hollywood dermatologist and cosmetic surgeon and to buy Versace and Louis Vuitton luxury items.

According to a complaint filed last week at the federal courthouse in Santa Ana and unsealed on Thursday, Contreras made the unauthorized payments to himself, receiving more than 250 checks — ranging from $11,000 to $95,000 — from the school district that were deposited into his personal bank account. Fictitious persons were listed on the checks as the payee, federal prosecutors said.

Prosecutors allege that Contreras altered documents to hide the embezzlement. And some of the money was transferred to bank accounts in Mexico, according to the indictment.

In 2020, prosecutors allege, Contreras when purchasing a home in Yorba Linda paid for more than $1 million of the cost through a wire transfer from a personal bank account, and allegedly altered bank statements submitted for a loan application tied to the property in order to hide the embezzled funds.

The Magnolia School District — which serves students in Anaheim and Stanton — hired Contreras in 2006 to manage their fiscal operations. He was placed on administrative leave in August, according to prosecutors, and the district has filed a lawsuit against him.

The U.S. Attorney’s Office noted that 81% of the children educated by the Magnolia School District are classified as socio-economically disadvantaged, and that the school receives millions of dollars annually in federal funds.

So far, the district has undertaken efforts to recover and freeze some $4 million, said Frank Donavan, district superintendent.

“Mr. Contreras’ actions, which diverted millions of dollars intended to benefit children to his own personal use, are shocking to the conscience and deeply disturbing,” Donavan said in a statement Thursday. “The District will continue to aggressively pursue all options to recover funds and to ensure justice is served.”

Contreras is scheduled to return to federal court for an arraignment on Nov. 27. If convicted, he faces up to 10 years in federal prison.

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