California School Officials Plead Guilty to Running Crypto Mining Scheme With School Resources

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A sophisticated scheme to defraud Patterson Joint Unified School District has been unveiled, with senior officials Jeffrey Menge and Eric Drabert at the helm, using the district’s resources to mine cryptocurrency illegally, as disclosed by the DOJ.

School Officials Plead Guilty to Crypto Mining Operation Using District Resources

Two senior officials from the Patterson Joint Unified School District in California have admitted to exploiting school resources for their own gain, including orchestrating a cryptocurrency mining operation, the U.S. Department of Justice (DOJ) disclosed. Jeffrey Menge, 43, of Copperopolis, and Eric Drabert, 44, of Modesto, entered guilty pleas to charges of theft concerning programs receiving federal funds, as announced by U.S. Attorney Phillip A. Talbert.

From 2018 through 2022, Menge, serving as the Assistant Superintendent and Chief Business Officer, alongside Drabert, the IT Director hired in 2020, engaged in fraudulent activities to siphon off funds from the school district. Their elaborate scheme involved over $1.2 million in deceitful dealings through Cencal Tech LLC, a company under Menge’s control. By creating a fictitious executive, “Frank Barnes,” they bypassed restrictions on transactions with the school, engaging in double billing and charging for undelivered items.

The duo’s illicit activities extended beyond financial misconduct. Utilizing high-end graphics cards and other district-owned resources, Menge and Drabert established a crypto mining farm within the district’s facilities, directing the proceeds into personal wallets. The operation, whose scope across the district’s 10 schools remains unclear, significantly increased electricity consumption, a matter of growing concern for U.S. energy regulators amidst a crackdown on energy-intensive crypto mining.

In addition to the mining operation, Menge exploited district vehicles for personal gain, including the sale of a Chevy truck acquired at a bargain and the personal use of a Ford Transit van. The funds embezzled, ranging between $1 million to $1.5 million for Menge and $250,000 to $300,000 for Drabert, were lavishly spent on home renovations, luxury cars, and other personal expenses.

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