Former Little Rock school administrator Karen James pleads guilty to federal mail fraud

Karen James, the former director of the Little Rock School District’s early childhood education program, pleaded guilty today to a federal charge of mail fraud.

She used district credit cards for $230,000 in personal purchases.

The case has been bubbling since August 2018, when a district security officer filed a police report regarding credit card misuse. She received a termination letter soon after, but appealed to Education Secretary Johnny Key, then District Officer, and was eventually allowed to resign from her $108,000 job in January 2019. She was surrendered his state teaching license in September 2020.

A press release from Little Rock’s U.S. attorney on the case:

A former Little Rock School District (LRSD) administrator pleaded guilty to mail fraud this afternoon after spending more than $230,000 of school district funds on personal online purchases. Karen James, 48, of Little Rock, who has been Director of Early Childhood Education and Elementary Literacy for LRSD since 2010, pleaded guilty today before the United States District Court Judge United, Kristine Baker.

James managed procurement for LRSD’s early childhood education programs. As part of this job, she received two credit cards to make purchases for early childhood programs throughout the district. These credit cards were funded by state and federal grants. James had to read and sign several agreements stating that the cards could not be used for personal purchases or for the purchase of gift cards. LRSD has also prohibited the shipment of items purchased with an LRSD credit card to its home address. The district required James to document every credit card purchase by recording each transaction and providing a receipt or other confirmation of the purchase.

In August 2018, LRSD discovered that James was submitting fabricated receipts and fake transaction logs. Receipts and records were altered to reflect authorized purchases, but LRSD obtained original receipts from vendors, which showed that his actual purchases were for personal use. Many purchases were shipped to his original residence in violation of LRSD policy.

From August 2014 until her detection in August 2018, James used her LRSD credit cards to make online purchases for herself. She spent over $4,000 at Wayfair on bath mats, a recliner and other home items. She made 83 unauthorized purchases through PayPal totaling over $27,000. She bought 2,462 items on Amazon, spending more than $199,200 on items including clothes, makeup, household items, knitting supplies, pet products and gift cards. The investigation revealed $230,635.86 in fraudulent purchases. James’ plea deal requires him to pay this amount in restitution to the Little Rock School District.

Judge Baker will sentence James at a later date. The United States Secret Service led the investigation, and Assistant United States Attorney Amanda Jegley is pursuing the case.

Martha K. Merrill