Rhea Chung and Darryl Holter, Trade-Tech College Execs, Complicated Fiscal Woes With Steamy Emails

Read responses from Darryl Holter and Geragos & Geragos representing Rhea Chung.

Three years ago, beautiful Rhea Chung was a 39-year-old secretary when her boss, Los Angeles Trade-Technical College president Roland "Chip" Chapdelaine, promoted her to run the college foundation -- a modest nonprofit that gives low-income trade school students micro-scholarships and money to buy workaday tools.

Chung's quick rise ended in January: She was placed on administrative leave after an audit revealed that during her short stint, she had been provided nearly $100,000 beyond her salary by an unidentified person who, the auditors say, forged dozens of checks with Chapdelaine's signature.

Los Angeles Community College District auditors found that the checks were used to pay Chung bonuses from the foundation budget totaling $44,265 and a second salary of $39,750 to oversee a Korean-American student orchestra, the Open Academy Youth Orchestra -- which Chung managed on the side as her pet project.

Rhea Chung claps as Darryl Holter holds an award at a foundation gala.

Auditors determined that Chung had a conflict of interest when she oversaw the expenditure of $140,000 by L.A. Trade-Tech College Foundation on the student orchestra because of "the position and authority" she held to spend foundation money. The auditors later found that documents she produced to prove she had reported her dual role "had been changed and/or misrepresented."

Chung's bonuses and salary, and the money lavished on the orchestra, far outstrip the scant $42,400 the foundation board gave to needy Trade-Tech students at the 17,000-student college in fiscal 2011. Yet helping Trade-Tech students acquire job skills is the nonprofit foundation's mission.

The district attorney's Public Integrity Division is investigating whether anyone misappropriated these public funds. Only Chung, Chapdelaine and L.A. Trade-Tech College Foundation Board chairman Darryl Holter had check-signing authority.

Chung now is represented by attorney-to-the-stars Mark Geragos. She has argued that the orchestra payments, her bonuses and other expenses revealed by the audit were included in the annual budget. Auditors found three versions of the budget for fiscal 2010 and could not locate minutes showing if the budget for fiscal 2011 was ever approved.

Documents obtained by the L.A. Weekly from the college district lawyers show that Chung and Holter exchanged a series of torrid emails. Holter, 62, is the prominent CEO of the Shammas Group; his wife's family owns car dealerships such as Downtown L.A. Motors and historic Felix Chevrolet, as well as the landmark Petroleum Building.

Other board members told auditors they relied on Holter "in regards to the foundation finance(s) inclusive of the check procedures."

Chung and Holter's entanglement -- both are married -- emerged in documents provided to board members after Trade-Tech faculty members filed a California Public Records Act Request seeking information on the foundation's emerging fiscal scandal.

Chung and Holter tell the Weekly they are not romantically involved. Geragos denies "any inappropriate conduct" between them. The emails suggest Holter was not the man to oversee Chung, as the pair lightheartedly mixed the public's business with their sexy messages:

• On July 2, 2009, Chung informed Holter she was "shopping for intimate apparel." He responded less than an hour later, "Will the modeling take place later this afternoon?"

• In a series of July 3 emails, Chung sent Holter a love poem, "I like saying your name. I like stroking your fine hair. I like touching your well worked hands. ... I love having you in my heart." Holter asks Chung to write down her words, claiming he was going to delete them.

• On July 28, 2009, Holter informs Chung that he's "waiting for more checks to sign." Later that evening, Chung emails, "Kisses and love ... Thinking of you."

• Two days later, Chung messages, "I deposited the money into our Cash Maximizer account."

• On July 31, Holter emails Chung about Chung's pet project -- the student orchestra that Chung persuaded the foundation to assist. Foundation board treasurer Randall K. Ely says that, without his knowledge, Chung and Holter used foundation money to cover the orchestra's office rental costs at the cut rate of $241 per month -- in Holter's Petroleum Building.

"Now you have a legitimate reason to come into the building," Holter emailed after Chung signed the lease.

• Chung emails later: "Walking around naked after a long shower." Holter responds, "Smoking pot w my ... Brother."

• In an Aug. 13, 2009, email, Chung asks Holter to guess the color of her "articles" and finally admits: "I wasn't fair ... Not wearing any." Holter replies, "Oh, that is very interesting. I may have to verify for myself as a form of due diligence."

• On Aug. 18, Holter offers help with an unspecified problem. "But it can't be done in one day," he writes. "Stay cool and think." Chung responds, "Sorry for burdening you with my problem. I find myself relying on you more and more."

• Chung emails back later, "Good night Darryl ... sweet Darryl." Holter responds, "I love how you pronounce it."

Chapdelaine tells the Weekly that Chung "had the skill set to raise money. What didn't turn out were the other aspects of her personality." Last year, the community college district audited the foundation when the student orchestra failed to obtain required insurance for a summer activity on the Trade-Tech campus.

Two audits have revealed that of the $140,000 transferred to the Open Academy orchestra, about $39,750 was in forged checks signed by "Chapdelaine" to pay a salary to Rhea Chung or "Jiah Chung" -- her full name is Jiah Rhea Chung. But many payments were not on forged checks, including $9,180 to Holter's daughter to teach music to the students and the rent paid to Holter's Petroleum Building.

Board members and Chapdelaine say they didn't know how much was being spent on the orchestra.

Another $60,000 in forged checks written to Chung provided her $44,265 in bonuses, $7,021 in private club memberships and thousands in car expenses. Auditors used a handwriting analyst who said it was "highly probable" Chapdelaine did not sign them.

Chung insisted to auditors that she either hand-delivered the checks to Chapdelaine's office for his signature or saw Chapdelaine sign them. But the auditors' findings support Chapdelaine's claim that he rarely, if ever, signed foundation checks.

Auditors unearthed a 2009 memorandum of understanding signed by the foundation's previous board chairman, Joseph Vecchiarelli, saying the Trade-Tech foundation would entirely underwrite the student orchestra. They also discovered a bonus deal for Chung, signed by Vecchiarelli.

Chapdelaine said he'd never heard of, or seen paperwork for, either deal before.
Ely, now the foundation's interim chairman, tells the Weekly that for months he was rebuffed by Chung and Holter when he sought information about the Open Academy's finances after the foundation gave the music group a $30,000 bridge loan.

"I didn't feel we should continue to support [the Open Academy], and I didn't know how much we were supporting it," Ely tells the Weekly. "It was bugging me.

"The executive director [Chung] and chair [Holter] at the time said they were handling it."
He calls the emails between Chung and Holter "an issue between two adults to resolve."

But it has gone far beyond an issue between two adults.

Holter resigned under a cloud April 5 and lashed out at other board members and Chapdelaine for creating a "toxic brew of personal vendettas that have crippled the organization." Chapdelaine also yanked Holter off a "citizen committee" overseeing the college district's bond program.

In his letter, Holter scoffed that he had too many important foundation duties to give precedence to "scrutinizing daily expense reports, questioning reimbursements for gasoline or agonizing over whether a golf outing with a potential donor was for business or pleasure."

Three weeks later, on April 25, Trade-Tech's faculty leaders called for Chapdelaine to resign after a 17-1 no-confidence vote. He has not done so. The student orchestra, whose members became innocent victims of the alleged scandal, are no longer associated with Trade-Tech's foundation.

The audit also found that Chung paid thousands of dollars to join the California Club, about $3,000 to the L.A. Philharmonic and Hollywood Bowl, $8,000 to join the Central City Association and more than $10,000 for 90 golf dates.

Chung has argued that she needed to spend money to attract foundation donors to help students at Trade-Tech.

But with Chung gone, the low-income, mostly Latino, trade school students are getting significantly more help from the foundation. In the last fiscal year, students in need got just $42,400. Now, the foundation board has boosted that to $183,015.

Of that, $147,615 was approved after Chung left.