The San Ysidro School District abruptly dropped its lawsuit against one of its former superintendents after having spent more than $480,000 in legal fees to try to recover $211,000 the District wrongly paid him.

The case filed against Manuel Paul in 2015 sought to recovery money paid to him when the District accepted his resignation after he was indicted by a Grand Jury on corruption charges in December 2012. Paul, who was accused of accepting meals from prospective contractors, was indicted along with 14 other school officials and contractors in a wide-ranging corruption scandal that included San Ysidro School District, Sweetwater Union High School District, and Southwestern College.

Last week, the San Ysidro School Board voted to accept a settlement agreement with Mr. Paul where each party simply walks away. The District dismissed its claims that Paul return the severance package after more than three years of discovery, hearings, and depositions. Under the terms of the settlement, Mr. Paul will not be required to reimburse the District for any of its legal fees.

On April 4, 2013, the San Ysidro School Board had voted to accept Paul’s resignation as Superintendent and approved a buyout that included 12 months’ salary, health benefits, and past overtime and vacation pay. In total, the District paid Paul over $211,000.

At the time of the buyout, Paul’s employment contract only required a payout of 12 months if the District elected to cancel his contract for no reason, meaning an early termination. The contract did not require a payout if Paul resigned or retired, as he did.

When residents and parents complained about the buyout, Paul told a local NBC News reporter that he would return the severance money if he was convicted of any crime.

Just eight months later in December 2013, Paul plead guilty to a misdemeanor count of failing to disclose gifts from contractors beyond the legal limit, and was sentenced to three years’ probation, 40 hours of community service, and was fined $4,589.

Mr. Paul was also under investigation at that time by the FBI for allegedly extorting $3,600 from a prospective contractor. Paul admitted under oath to accepting the cash outside of a Chula Vista restaurant and taking the money to Tijuana to pay for campaign signs for three school board members.

In August 2014, Paul plead guilty to another misdemeanor count for accepting the cash and was sentenced to 60 days in federal jail, paid a $5,000 fine, and served one year of supervised release.

At his sentencing, Paul admitted to extorting the contractor, and apologized for his actions.

“I’m very sorry for what I did,” Paul said in court. “I’m very sorry that I have offended and humiliated, if I did humiliate and offend anybody in the San Ysidro School District and the community of San Ysidro where I have spent my entire professional career.”

In February 2015, while Paul was serving his 60 days in prison, the San Ysidro School District filed the lawsuit to recover the severance package claiming his convictions proved he had abused his office. Paul’s lawyers responded that the crimes happened before a 2012 state law that allows public agencies to recover payments to officials convicted of abuse of office.

During the past three years, the case moved forward with depositions being conducted of various individuals, including Mr. Paul. Several court hearings were held with the trial judge, and a court date for trial was set for later this year.

Then, last week, the school board abruptly decided in a closed-door meeting to accept a settlement agreement with Mr. Paul that will allow him to keep the entire severance package, and the District will lose all of the legal fees it paid in pursuing the case.

In total, the Paul buyout and legal fees cost the District nearly $700,000.

Requests for comment on this story sent to each of the five board members this week went unanswered.

In addition to the severance package, Mr. Paul was also entitled to keep his state retirement benefits which, according to the State Teachers’ Retirement System, is over $173,000 a year for the rest of his life, with an annual increase of 2% each year. Upon his retirement, Paul began receiving $14,460 per month in retirement pay.

The school district is also currently involved in a similar lawsuit to recover a nearly $400,000 severance it paid last year to Superintendent Julio Fonseca. Fonseca resigned last September after a female employee he was dating filed a harassment claim against him. The school board voted unanimously to approve that severance pay.

Fonseca was also accused of improperly receiving $106,000 in life insurance benefits, as well as cashing out unearned vacation days. That case was initially filed by San Diegans for Open Government, a local taxpayer advocacy group. It is unclear how much money the District has incurred in legal fees so far in that case.

Since Fonseca’s resignation, a state extraordinary audit concluded that the Board failed in its fiduciary duty to review the Superintendent’s actions and approving the improper payout of the insurance benefits. The board had discussed the insurance payout at a December 2017 meeting, but two board members voiced frustrations at having to discuss the issue.

“This was already ratified and, like, why is it even coming up,” Board President Rosaleah Pallasigue said at the time. “And frankly, to me, it’s a waste of time. If I were in [Fonseca’s] position, I would be offended if anybody looked at my employment agreement after the fact and tried to renege on something that they gave me.”

During the same meeting, board member Antonio Martinez also dismissed the value of reviewing the Superintendent’s insurance payout.

“I suggest that we don’t waste more time in terms of this discussion,” Martinez said during the discussion. “Frankly I find it, like Ms. Pallasigue said, it’s a waste of my time, a waste of our time,” Martinez added as the Board moved quickly past the issue.

The state audit found evidence that Fonseca and his deputy superintendent may have committed fraud and misappropriation of funds by granting themselves the unearned payments and life insurance benefits without proper board approval.

The audit also concluded that Fonseca “used the board’s lack of fiscal knowledge… so they could use the district’s resources for their personal benefit.” The audit was conducted by the California Fiscal Crisis & Management Assistance Team (FCMAT) comprised of public agency financial experts.

Together with the payout of insurance benefits and unearned vacation days, along with the Board’s severance package, Fonseca received over $550,000, in addition to his salary of over $200,000.

The District’s case against Fonseca is still in discovery phase and no date has been set for a trial.

The District has had seven different superintendents since Paul’s resignation.