BOISE-- Taxpayers are now on the hook to pay for repairs on hundreds of school buses around the state.

The problems began with a former state employee who was eventually arrested.

Prosecutors say Jorge Garcia used his position at a state agency to illegally secure a big-money contract.

The result was shoddy work, students put in harm's way and a $600,000 repair bill that taxpayers must help pay.

Several years ago, the federal government came up with an idea: improve children's health and air quality by reducing pollution from school buses.

The EPA sent money to states, and it was the state's job to hire contractors to install the emission-fighting technology on buses.

To me it seemed like they were in zip, zip, cut, snip and gone, said Marsing School District Transportation Director Ross McWilliams.

In 2009, contractors worked on more than 800 buses around Idaho.

Within months, school districts sent out an SOS.

In e-mails to the state, some districts pleaded for help. Buses were spewing smoke, leaking oil and being towed.

In Marsing, one routine inspection before the school bell rang grounded one bus before it even got out of the lot.

When you saw that pool of oil and you opened up the cab inside what did you see?, the reporter asked. Hot, black oil everywhere, responded Marsing School District Transportation Director Ross McWilliams.

There was a lot of it at Brown Bus Company, too. The contractor that drives for several school districts is out about $80,000 for damage to its fleet.

We've had to repair many, many, many oil leaks from these and we're not done yet, said Brad Carpenter of Brown Bus Company.

When the Payette School District got wind of the problems, it unhooked the units from their buses.

Its mechanic, a former fire chief, said the faulty installations put students at risk.

It's a danger to the kids. You're going to have an engine fire, the bus is going to be on fire, said Bud Fisher, Transportation Technician for the Payette School District.

We do feel responsible, said Curt Fransen, Deputy Director of DEQ. It s not something we re proud of.

In 2008, the Idaho Department of Environmental Quality awarded the installation contract to a company called ECS.

Deputy Director Curt Fransen says within a year DEQ got a tip that led them to this man: Jorge Garcia, the DEQ manager whose job was to oversee the contract with ECS.

Garcia would know what it would take for a contract bid to beat the competition.

What the government now knows is that Garcia was ECS.

What we knew was that we had basically had a fraudulent contract and that the project officer was basically overseeing himself, Fransen said.

Garcia's name was nowhere to be found on the ECS bid. The name Karen Damberg was, and Damberg is Garcia's wife.

He conducted operations. She did payroll.

They hired people they knew to do the installations.

The whole operation went undetected for about a year.

When problems with school buses mounted, Garcia resigned.

I think it just became too much for him to basically work both sides of the street, said Fransen.

The Garcia's scheme got the attention of federal investigators.

They lied about who was going to be doing the work on the buses, they lied about who owned the company, and they lied about the fact that there was no conflict of interest, said U.S. Attorney Wendy Olson, District of Idaho.

Around the time U.S. attorney Wendy Olson started working the case, the Garcias took off for the U.S. Virgin Islands.

She believes the couple knew they were under investigation when federal agents tracked them to the Caribbean and made the arrests.

We were very concerned at the time that they were leaving the country en route to Honduras where Mr. Garcia is a citizen, Olson said.

With growing evidence against them, the Garcias agreed to plead guilty to one count each of conspiracy to commit mail fraud.

But this case is far from over. Schools around the state are left with a mountain of bus repair bills.

They and DEQ want the Garcias to pay restitution.

DEQ estimates that the price tag on the damage caused to be about $600,000 and counting.

I would say in the end, the taxpayers, DEQ will be paying part of the damages, here, Fransen said.

The Garcias are on a supervised release until their sentencing on June 20th.

Both of their passports have been surrendered and Jorge Garcia is wearing an electronic monitoring device.

Prosecutors have not yet determined the restitution amount they'll seek.

No matter what it is, a lot of folks will be in line to collect.

KTVB contacted attorneys for the Garcias, but they did not want to comment.

DEQ says it has changed policies after the Garcia ordeal.

There is now better supervision of supervisors and the bid process has been strengthened to avoid potential fraud.

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