As Prince George's County schools chief, Andre J. Hornsby kept tabs on a private consulting business he formed before coming to the suburban Washington system, oversaw the awarding of a contract to a company that had failed to meet a bidding deadline and led the expansion of a kindergarten reading program that may have financially benefited a saleswoman he lived with, according to a report released yesterday.

The saleswoman split a commission after a $1 million purchase the school system made last year from LeapFrog SchoolHouse of Emeryville, Calif., according to the report's summary of a conversation between a company executive and a school system attorney. The size of the commission was not reported, nor was the payment confirmed by the company or the saleswoman.

The county Board of Education said the report, issued 10 days after Hornsby resigned, documented "unacceptable" conduct that raised "serious legal and ethical concerns."

In a statement, the board added that Hornsby's actions, as described in the report, appeared "to violate the board's conflict-of-interest policy and betray the public trust."

Hornsby's attorneys responded with a lengthy denial of wrongdoing. In a public statement, they wrote that Hornsby had turned down opportunities for "lucrative financial rewards" to focus on his duties as chief executive of the 136,000-student system.

"His concern has always been on what was best for the school system," Hornsby's attorneys wrote.

The 36-page report on Hornsby's management actions and ethics, by Huron Consulting Group Inc., and the dueling interpretations by the board and the outgoing chief shed new light on the circumstances surrounding his abrupt departure.

Together, they illuminate the sudden rupture between Hornsby and the school board, which had put him in office in June 2003 and generally supported his educational initiatives despite months of controversy after his live-in relationship with the LeapFrog saleswoman was revealed last fall.

Citing the Huron report, the board announced yesterday that it voted to initiate the creation of an inspector general position and new whistle-blower protections to help safeguard the system from ethical improprieties. The board also canceled a contract and froze payments to a company named in the report as a consultant to the school system for the federal telecommunications program known as "e-rate."

Separately, the FBI is investigating Hornsby in connection with the LeapFrog purchase and other matters related to his stewardship of federal funds. Federal agents seized records from Hornsby's office and another school building April 19.

The school board said it had authorized Huron to "cooperate fully" in the federal investigation. The FBI has declined to comment on its review.

"This is not a pleasant day for us," Board of Education Chairman Beatrice P. Tignor said shortly before the report was released yesterday afternoon at school system headquarters in Upper Marlboro. She said the board wanted to put the Hornsby matter to rest so that schools could "focus on academic progress."

Tignor (Upper Marlboro) and board member Robert O. Duncan (Laurel) reiterated their view that paying Hornsby $125,000 in severance, plus a year of continued health benefits, was a prudent move. The board approved the package when it accepted his resignation May 27; board members said afterward that it would protect the system from a lawsuit. Hornsby is now on administrative leave; his departure is set for June 30.

The Huron report centers on Hornsby's actions related to two federal funding streams: money to help disadvantaged children learn to read and money to help improve telecommunications in high-poverty schools. Huron consultants interviewed Hornsby twice and spoke with more than 20 other school system staff and board members. They also spoke with outsiders, reviewed documents and traced e-mails that Hornsby sent and received through an official account.

In one part of the probe, Huron examined a business called Quality Schools Consulting Inc., which Hornsby established in August 2000 after he was fired as school superintendent in Yonkers, N.Y. Hornsby told Huron that he had set himself up at the time as an e-rate consultant, advising schools on federal telecom subsidies. But he maintained that he wrapped up his consulting work soon after he started in Prince George's.

Huron found information suggesting that Quality Schools "was in fact not dormant" during Hornsby's tenure, noting "at least 10" business proposals or quotes referenced in Hornsby's e-mail account from November 2003 to August 2004. Huron found that two proposals from a Houston suburban district may have generated fees of $9,950 and $9,200.

In all, Huron found 98 e-mails related to Quality Schools in Hornsby's in-box.

Hornsby's attorneys -- Robert C. Bonsib of Greenbelt and John Davey and Isaac Marks of Calverton -- responded that Hornsby "did not accept any new e-rate business" after arriving in Prince George's and that he only wrapped up a Texas contract, which netted him less than $10,000, after becoming schools chief.

The report also stated that a company named E-rate Managers received a contract for consulting with Prince George's even though it missed a bidding deadline in November 2003. The company was tied to a Texas woman named Cynthia Joffrion, who had worked for Hornsby in Houston and Yonkers. It won a contract after submitting a bid in December 2003, Huron found, and Prince George's school staff apparently revised its rankings of the bidders to give E-rate Managers an edge. Huron noted that Hornsby was "blind-copied or carbon-copied often in e-mail exchanges" concerning the consultant.

Hornsby's attorneys said that he did nothing improper and that the school system's e-rate funds have tripled, to more than $9 million in the current fiscal year, as a result of his aggressive pursuit of technology funding. The board said it has canceled the E-rate Managers contract.

On a third matter, the report details Hornsby's connections to LeapFrog and the saleswoman, Sienna Owens, with whom he lived at various times in 2004.

Hornsby told Huron that he did not negotiate the LeapFrog purchase and did not know the amount of any commission Owens may have received. But Huron found an e-mail, titled "Negotiations," from the schools chief to a contract administrator just before the purchase. Huron also found that Hornsby received about 150 e-mails from LeapFrog employees between June and late September 2004 and sent 45 to them; most of the messages, Huron found, were to or from Owens.

Through attorneys, Owens, who handled Virginia accounts for the company before leaving LeapFrog in late 2004, declined to speak with Huron consultants. She could not be reached yesterday to comment.

Hornsby's attorneys wrote that there was no evidence that his relationship with Owens had "an adverse impact" on the school system. They also noted Hornsby's explanation for the size of the LeapFrog purchase: The schools had to use the federal funding or risk losing it.

Lawyers for Andre J. Hornsby deny that he did anything wrong.Andre J. Hornsby is also the focus of an FBI investigation concerning his oversight of federal funds.