NUSD Files Lawsuit In Land Deal Scandal

The Natomas Unified School District filed suit in Sacramento County Superior Court today alleging that the team of experts hired to handle the purchase of a 41-acre school site were negligent in their duties, causing the district to spend more than $10 million too much for the land.

The lawsuit seeks to have the $13.4 million transaction with AKT Investments, Inc. and West Lakeside, LLC rescinded and revised as well as to have the school district’s overpayment refunded. Developer Angelo K. Tsakopoulos heads the development partnership.

In November 2006 the NUSD Board of Trustees approved the purchase of a new high school site on vacant agricultural land west of I-5 near Del Paso Road. The district used facility funds that can only be used for land acquisition but not for ongoing district expenses such as staff salaries.

A May 2009 Sacramento County Grand Jury report stated that the appraisal commissioned by the district “contained false and misleading assumptions which greatly inflated the sales price paid by the Natomas Unified School District.”

The Grand Jury report also stated that the attorney hired by the school district “failed in his fiduciary responsibility to make the Natomas School District and Superintendent aware of his past dealings with West Lakeside LLC and AKT Development and the conflict of interest.”

Superintendent Steve Farrar and the district launched two of its own internal investigations and hired malpractice attorney Patrick Waltz to negotiate a resolution to the dispute. Those negotiations with the land seller and the land experts hired by the district have not been successful, according to school board President B. Teri Burns.

“We were wronged, and our community and students were wronged. We want our money back,” Burns said.

The defendants named in the lawsuit include attorney Martin Steiner; real estate broker Mark Skreden; appraiser Christopher Ferguson; the partnership of Hefner, Stark & Marois, LLP; West Lakeside LLC; AKT Investments Inc.; and Ferguson & Associates, Inc.

The district also is asking for punitive damages, attorney fees and court costs.

“We’re still hopeful we can negotiate a settlement and avoid the expense of extended litigation,” Burns said.

In a related matter, the Natomas Unified School District earlier this month filed a complaint with the Department of Real Estate against Skreden, alleging that he failed to notify the school district that he was working both for the school district and for the seller of the land.


  1. I way overpaid for my house in 2005, but I’m not going to get that money back. If the school district gets theirs back, I want mine….

  2. HOLY CRAPOLA!! It’s about darn time!! Kudos to the NUSD for FINALLY doing what so desperately needed to be done!!! Woot Woot!!

  3. Why aren’t the Superintendant and Board of Trustees being questioned as to why they didn’t do their due diligence in researching this deal? In a time when our school district is in a complete and utter financial mess they are spending more money on court costs and legal fees. Why haven’t the community members asked the Board the important questions? Why was there only one appraisal? Who looked over the contract (especially when one of our very own board members is an attorney)? Why isn’t the community holding these people accountable?

  4. I wonder if in return AKT Investments is going to ask for a refund of the tens of thousands of dollars it donated to the school district to get this mess in motion in the first place.


  5. I have a question. How does the board get a parcel tax passed in this community with this albatross hanging over their heads? Also, why couldn’t this have been done sooner? It might have helped with the negotiations and built some trust with the NUSD employees. So are we supposed to believe things have changed now with the outgoing supe? Guess we’ll have to see.

  6. Burns, Farrar and company are so obtuse and vapid.

  7. In this morning’s Bee article, Burns goes on to say that the district will need another high school and that this is still a good site for it.

    Have we learned nothing? Why is the district even discussing building another high school during a building moratorium? Why are we paying a designer for property that is involved in a lawsuit and has been virtually deemed unusable? Where is the magical money going to come from for this school since we can’t pay for the ones we already have open?

    I’m beyond astonishment.

  8. Even if there was a valid reason to build a new school (which is apparently debatable), I’m not sure why they need additional land. Don’t they still own that large parcel on Club Center, east of Natomas Blvd? This land was always designated for a school.

  9. I thought the Board just said that they misjudgeed (meaning overestimated) enrollment and that is part of the financial problem we are facing now…

    So, we still need another high school?

    That is hard to believe, especially when we can’t even pay the teachers we need to staff the schools we have now.

    Also, I do not understand how or why we as a community would ever be satisfied with this response, the board led us into this mess by not paying attention, not checking facts or even applying common sense to the situation.

    The Grand Jury report said that our Board needs some training on purchase of land deals because of the poor decision making they showed on this deal. Would that training be more comprehensive than law school? Because one of those board members is an attorney, right?

    It seems to me that the kids are the losers in this situation and we need to remember that as we try to fix this problem.

    Its good the Superintendt is leaving, but he is not the only one who needs to go. Every member of that Board who was a part of the land deal or had an opportunity to prevent it from happening should step down and apologize to this community and to the kids.

    Especially the lawyer.

  10. Sounds like a classic case of narcissism. He was probably hoping it would be his very own Farrar High School. From where do they get these superintendents? Please don’t do it again!

  11. Scott Dosick says

    Lots of good questions. It’s also good to remember the facts – funds designated for facility/capital acquisition cannot be used to pay teacher salaries (or any other school expense) as pointed out by Ms. Burns in NUSD’s press release. So, even when/if we win this lawsuit, NUSD will still own this property and any money restored can only be used to improve/plan/develop property and not for salaries, paper, copiers, sports, SROs, or any other non-capital related expense.

  12. Scott, there is still the untold money spent from the general fund on litigating and investigating this lemon (and who knows how many others?) THAT is the money that would have gone to support areas much needed by teachers, students and classrooms. Our community passed Measure D to improve schools and supposedly create a another K-8, so where do you think that money has gone? Your money and mine. We’re happy to help send money towards our neighborhood schools, but when are we ever going to be able to trust that it won’t get mismanaged or wasted again? That to me is the important point of all of this.

  13. So Scott- then that money should be used for the Bannon Creek reconstruction and to update the 50 year old buildings at Westlake. Best I can tell by all projections, we will not need a new high school for many years to come.

    Also, it appeared that one of the options was to null and void the contract, returning the land to the original owner and NUSD receiving a return of the funds paid. So it’s not a done deal that NUSD must do something with that property.

  14. Good points Coffee & Kids – how about carpet in H. Allen Hight or a swimming pool at Inderkum or the improvements we paid for at the now NP3 campus… It seems to me we had a lot of projects worthy of our millions besides a crappy land deal that we are now blaming on everyone else.


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