Three relatives pleaded guilty Monday to swindling at least $5 million from state and federal governments by inflating the enrollment and the number of free lunches served at the defunct Prepared Table Charter School.
The guilty pleas, in a case that tarnished the reputation of charter schools and inspired tougher laws governing their operation, come three weeks after the death of the accused mastermind, the Rev. Harold Wilcox.
Wilcox and three family members were accused of using the bank accounts of the Greater Progressive Baptist Church, where he was pastor, to launder fraud profits.
If the case had gone to trial next week as scheduled, the government would have presented proof that the defendants inflated the enrollment figures at the Prepared Table Charter School's three Houston-area campuses and used a sham catering company to overbill a federal lunch program for needy students, Assistant U.S. Attorney Melissa Annise said.
Annise said the scheme also included a contract to rent church property that overcharged the school by more than $250,000.
U.S. District Judge Nancy Atlas accepted guilty pleas from Wilcox's wife, Louvicy Wilcox, 52; her daughter, Rochall Frank, 32; and Wilcox's brother, the Rev. Anthony Mosley, 40, also a pastor at the church.
In return for the guilty pleas, prosecutors agreed to drop many of the 52 counts in the indictment.
Wilcox pleaded guilty to a single conspiracy count. Frank pleaded guilty to a conspiracy count and a money-laundering count, and Mosely pleaded guilty to two conspiracy counts and four money-laundering counts.
Atlas scheduled sentencing for July 1, when they will face a maximum of five years in prison and a $250,000 fine on each conspiracy count and 20 years and a $500,000 fine, or twice the value of the property, on each money-laundering count.
All three remain free on $50,000 bail.
Louvicy Wilcox and her daughter pleaded guilty to involvement in the false enrollment reports to the Texas Education Agency, which made payments to the school based on the number of students.
Wilcox founded the first nonprofit Prepared Table charter school in 1999 and opened two additional campuses in the fall of 2000.
During its three years of operation, the school received about $2.56 million in federal funds and about $16.76 million from the state, according to the indictment.
A TEA audit found that the school was inflating enrollment, failed to produce enrollment figures and failed to account for at least $1.3 million during its first two years of operation.
(HOUSTON, TX) United States Attorney Michael Shelby announced the indictment of four Prepared Table Charter School officials and employees for their role in a scheme to embezzle millions of dollars in federal funds secured through grants and state programs to the school and laundering the proceeds. Harold W. Wilcox, 52, Louvicy Wilcox, 51, Anthony Mosley, 42, and Roshall Frank, 32, all of Houston, Texas, have been named in various counts in a 26 count indictment returned under seal by a federal grand jury on June 29, 2004, and unsealed today. All four defendants were arrested this morning at their residences by agents of the Federal Bureau of Investigation and appeared in federal court this afternoon before United States Magistrate Judge Calvin Botley.
Following the appearance of the defendants in federal court today, United States Attorney Michael Shelby said, "Today's indictment alleges that the defendants defrauded the taxpayers of Texas and the United States in a deliberate, methodical and significant way. We intend to use every tool federal law provides to protect the nation's treasury from this kind of calculated plunder."
The indictment charges the defendants with embezzling and obtaining by fraud federal and State of Texas money allocated to the Prepared Table Charter School for the educational and nutritional needs of children, during the three years of the schools existence. In July 1998, Harold Wilcox applied to the State of Texas for a charter to run the school and serve as the Chief Administrator and Chairman of the Board of Trustees of Prepared Table Charter School. Wilcox's wife, Louvicy Wilcox, worked in the administrative offices of the school approving expenditures and assisted in the running of the school's operations. Her daughter, Roshall Frank, worked in the school's attendance reporting office. Anthony Mosley, the brother of Harold Wilcox, ran the food services at the school.
According to allegations contained in the 26 count indictment, Prepared Table Charter School received millions of dollars in federal funds under various programs and grants of the Department of Education. They also received federal funds through the Department of Agriculture's National School Lunch and Breakfast Programs. The defendants made claims for reimbursement under these federal programs after posing as an independent contractor with whom the School contracted to cater meals for the school. The defendants had checks issued in the name of this alleged catering service and then deposited the checks into the church bank account.
The defendants are also charged with misrepresenting the attendance figures for the school to the Texas Education Agency and fraudulently obtaining approximately $3 million from the State of Texas, which provided funding to the School, based upon those attendance figures.
Harold Wilcox and Anthony Mosley are ministers of the Greater Progressive Baptist Church and are accused of using the tax exempt status of the church to further their unlawful activity. The indictment charges the defendants with utilizing their positions in the school to obtain money by fraud, and with attempting to hide and disguise the true source of the misappropriated money by depositing the money into a church bank account. They are further charged with depositing this money into the church bank account with the intent to evade federal taxes. Once the misappropriated money was deposited into the church bank account, Harold Wilcox is accused of withdrawing cash from the account in amounts below $10,000 to avoid the requirement that the bank file a Currency Transaction Report on any cash transaction involving over $10,000.
The indictment charges all four defendants with conspiracy to commit wire and program fraud (Count 1), and three counts (Counts 2 - 4) of wire fraud involving a total of approximately $1.7 million, allegedly occurring between December 1999 and April 2001. Harold Wilcox is charged in three counts (Counts 5 - 7) with program fraud involving the transfer of more than $70,000 in school funds to the Church in August 2000, and January and February 2002. Harold Wilcox, his wife, Louvicy Wilcox, and Anthony Q. Mosley are accused of conspiring with one another to launder the money obtained by fraud for the purpose of concealing the source of the money and to evade taxes (Count 8). In furtherance of the conspiracy, Harold Wilcox is charged with four specific counts (Counts 9 - 12) of laundering approximately $97,000 in school fund between January and September 2000. Anthony Mosley is charged with six counts (Counts 13 - 18) of laundering an approximate total of $181,000 in school funds between April and June of 2002. The final eight counts of the indictment (Counts 19 - 26) accuse Harold Wilcox of structuring multiple financial transactions with money allegedly obtained by fraud to avoid reporting requirements during eight short intervals of time between September 1999 and March 2001.
The indictment also includes a number of forfeiture counts providing notice to all defendants of the government's intent to forfeit $3.3 million, the real estate property and all improvements located at 20 Thornhill Oaks, and 9100 Tidwell, and all the amounts alleged in each of the counts of the indictment. The indictment alleges that Harold Wilcox used approximately $51,000 in school funds for a down payment toward the purchase of the residence at 20 Thornhill Oaks, Houston, Texas. Both the Thornhill Oaks and Tidwell properties are titled in the name of Harold W. Wilcox.
This case was investigated by the Federal Bureau of Investigation, Internal Revenue Service Criminal Investigation Division, Department of Agriculture Office of Inspector General, Department of Education Office of Inspector General with the invaluable assistance of the Texas Education Agency. The case will be prosecuted by Assistant United States Attorney Melissa Annis.
The head and three employees of a Houston charter school once said to exemplify the problems with charter schools were arrested today on charges that they embezzled some $3 million in state and federal education funds.
The Rev. Harold W. Wilcox, former head of the now defunct Prepared Table Charter School and pastor of the Greater Progressive Baptist Church, and three family members are accused of siphoning funds from children's programs.
"We are confident that Pastor Wilcox will be exonerated of all charges," said Andrew Martin, Wilcox's attorney. "We are confident that the operation was run within the law."
FBI agents who made the arrest found Wilcox hiding in a false compartment in a closet at his home with $3,500 in cash, Assistant U.S. Attorney Melissa Annis told U.S. Magistrate Judge Calvin Botley.
Botley set a $150,000 bond for Wilcox and required him to be electronically monitored, remain in Houston and to attend Gamblers Anonymous counseling sessions.
Also arrested were Wilcox's wife, Louvicy Wilcox, 51; his wife's daughter, Rochall Frank, 32; and his brother, Anthony Mosley, 42, all of Houston.
Botley set bond for the others at $50,000.
After a court official accused Wilcox of trying to conceal his ownership of a passport, Botley ordered that he surrender it before leaving the courthouse.
The Prepared Table Charter School was at the center of controversy for several years before the Texas Education Agency revoked its charter in 2002.
The school was found to be inflating enrollment, failing to produce enrollment figures and failing to account for at least $1.3 million during its first two years of operation after opening in 1999.
The allegations of mismanagement lead to a tightening of rules governing charter schools in 2001, but charter school supporters in the Legislature repealed the rules in 2003.
Education officials in Texas have pulled the plug on a church-run charter school that has been embroiled in scandal and financial mismanagement.
In mid July the Texas Education Agency (TEA) held a three-day hearing on the fate of the Prepared Table Charter School, an institution run by the Rev. Harold Wayne Wilcox of the Greater Progressive Tabernacle Baptist Church in Humble. The school, which has been in existence since 1998, has allegedly squandered millions in tax dollars.
On Aug. 16, TEA officials revoked the controversial school's state charter and its lucrative public funding.
Texas lawmakers approved a charter school law in 1997 but officials have been lax in overseeing the program. Nearly any group or individual who applied for a charter got one--along with public funding.
The Kingwood Observer reported that Wilcox appointed himself and church board members as school administrators. Classes were held in the church sanctuary, and the "school" began paying the church $68,000 per month in rent, courtesy of the taxpayers.
Within a few years, the church had purchased or rented several other properties to expand, even though these new charters had not been approved by the TEA. By the fall of 2000, reported the Observer, Prepared Table was receiving nearly $8 million per year from the state of Texas.
TEA officials eventually became suspicious over a series of cozy arrangements between the school and church members. A church member who owned a cleaning service that cleaned the schools received $140,000 per month. When Wilcox resigned from the school, he received a "buyout package" worth $235,000 from the board--which consisted of Wilcox, his wife and his wife's sister.
Wilcox, who does not have a college degree, paid himself $210,000 annually to run the school. He paid his wife $50,000 to act as his secretary. This year, only 23 percent of Prepared Table students at the main campus passed Texas' proficiency exam. The figure was even lower at another Prepared Table school--18 percent.
State officials also accused the school of inflating the number of students t attending. The school claimed 2,500 students, but TEA officials said they could never confirm that more than 1,500 were enrolled.
Meanwhile, reports are circulating that the U.S. Attorney's Office is investigating Wilcox.
The Observer, which has covered the problems at Prepared Table in depth, editorialized in July, "[A]fter months and months and millions and millions of local, state and federal dollars being poured into the `school,' it turns out that the children are still failing, they can't pass TAAS [Texas' state proficiency exam], the police are regularly called to the campuses, and the superintendent has paid himself nearly $800,000 and his wife another $200,000 since the school opened in 1998. Your tax dollars have made millions of dollars worth of improvements to the church/school buildings (what we would call a real church/state separation issue) and the TEA won't or can't control the situation."
The scandal, along with other problems, has prompted Texas legislators to take a second look at charter schools. In heavily populated Harris County, the Houston Chronicle reported in June, only 13 of the county's 61 charter schools saw 85 percent of their students pass the state's proficiency exam, putting them far behind public schools in performance.
Americans United Board of Trustees member Charlotte Coffelt, a resident of Houston and a former principal of a public elementary school, commented on the scandal in the July 23 Houston Chronicle.
"Prepared Table Charter School should be a textbook case of what happens when individuals and organizations with no background in either managing a business or having successfully provided effective educational programs are given access to public monies," Coffelt warned. "Many millions were invested in this `innovative' educational program, with dismal academic results and evidence of massive misuse of public money and falsification of public documents."