The FBI is investigating a longtime Burlington school district official for embezzling as much as $1.8 million over more than a decade until her recent retirement.
Investigators have carried out search warrants at the Colchester home of Stephanie Phillips and seized her laptops and an email account, newly unsealed court filings in U.S. District Court reveal.
Phillips, who worked as a teacher and administrator at the district for 28 years, including a brief stint as interim superintendent in 2014, has not been charged with a crime.
The search warrant applications detail what the FBI alleges was a yearslong scheme by Phillips to skim district funds, which she appears to have used to fund home improvement projects and purchase a dog from Italy.
Investigators told a federal judge that Phillips set up a consultancy called Leading and Learning Consultants of VT, LLC, which then billed the district dozens of times with fabricated invoices for work that either wasn't performed or was part of Phillips' salaried job.
Vermont Public could not reach Phillips for comment. Her husband, Patrick, who was also listed on the consultancy’s business filings, did not immediately return a request for comment.
Independent journalist Michael Donoghue first reported news of the investigation.
In a statement, district Superintendent Tom Flanagan said the district has moved to improve its procurement and invoicing procedures and is working with “outside experts who are reviewing our systems and providing us with feedback on additional steps we can take.”
“If these allegations are proven true, our district and community are victims, and we will seek to recover all funds and bring them back to our students,” Flanagan wrote in an email Tuesday to staff and students’ families.
District officials reported the suspicious transactions to the Burlington police over the summer, shortly after Stephanie Phillips retired in the spring, Flanagan said.
During the investigation, a district finance administrator called Phillips to inquire about the vendor. Phillips said that the company had a point of contact named “Jess” and that Phillips had primarily communicated with her by email, a search warrant application states.
Investigators examined the email account and found almost no activity on it. But shortly after the phone exchange with the administrator, an email was sent to the district, signed by “Jess.”
FBI agents wrote in court documents that they linked the email account to Phillips and believe she sent the emails from it.
Leading and Learning Consultants of VT, LLC listed relatives of Phillips among its members, and Phillips rented the mailbox that the company used as its address, court records state. It was formed in 2013.
Phillips began a brief tenure as the district’s superintendent the following year, during a tumultuous time for the district. The previous superintendent, Jeanne Collins, had resigned amid persistent budget deficits.
“Phillips' charge is to restore public confidence in a school system badly tarred by revelations of financial management problems,” the Burlington Free Press wrote in an editorial following her appointment.
Just months into the interim job, Phillips and the rest of an interim leadership team resigned. They penned a joint letter that blamed the school board for making their work “impossible.”
Phillips then returned to her previous post as curriculum director.
At the time of her retirement, Phillips was the “primary approval authority” at the district for payments related to curriculum development, investigators wrote.
