EdChoices

“Oregon charter school founders accused in $20 million racketeering lawsuit.” The Oregonian, 1/4/2013

Tim King and Norm Donohoe, who ran a chain of taxpayer-funded charter schools across small-town Oregon from their headquarters in Clackamas, scammed the state out of $17 million and must repay that plus $2.7 million more, the state said in a court filing this week...

King and Donohoe, who were the director and president, respectively, of a nonprofit they named EdChoices, submitted false, incomplete and misleading records about how many students were enrolled in the schools and how they were spending the state's money, state prosecutors say in the complaint...

The pair opened and operated at least 10 charter schools that went by various and changing names, including Baker Web Academy, Estacada Early College and Sheridan AllPrep Academy. Most were launched under the name AllPrep. They existed under agreements with the school boards in Estacada, Sisters, Baker City, Sheridan, Burns and Marcola, but enrolled students from across the state in their online programs.

The state provided startup grants of up to $450,000 per charter school. The state Department of Educationalso paid about $6,000 a year for each student enrolled, relying on the charter school operators to document the number. The state now says those records were "erroneous, false and misleading."

Mavericks High of Palm Beach County

“Audit claims Palm Springs charter school got nearly $160K more in state money by overstating enrollment.” Palm Beach Post (FL), 1/6/2013

A Palm Beach County charter school got nearly $160,000 more in state education money than it was entitled to receive after overstating 2011-12 enrollment, a draft audit released last week by the school district’s inspector general claims.

According to the draft audit from Inspector General Lung Chiu, Mavericks High School in Palm Springs counted and was given funds for at least 56 students who did not attend the school at all during two 11-day “survey periods” last year required by the state Department of Education. The survey periods are used to establish enrollment figures on which the department bases its per-student funding to schools.

Mavericks, a West Palm Beach-based chain of seven Florida charter schools, offers live and online classes and caters to at-risk students. It’s perhaps best known for its president and chief development officer, Frank Biden, brother of Vice President Joe Biden.

Chiu’s office began investigating the school after a former teacher — Angenora Mechato — filed a lawsuit in April alleging that Mavericks fabricates enrollment data and that she was fired for refusing to falsify records. Two teachers at the Mavericks school in Homestead have made similar allegations in lawsuits. The Miami attorney for all three teachers, Dale Morgado, could not be reached for comment...

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“Lawsuit alleges high school asked teacher to fabricate grades in classes students didn't take.” The Palm Beach Post, (FL), 4/14/2012  

PALM SPRINGS — A former teacher at the new Mavericks High School in Palm Springs has filed a lawsuit alleging that the school falsifies enrollment records and fabricates student grades in classes the students did not take.

The lawsuit, filed by Angenora Mechato, is the third such whistleblower lawsuit to be filed by former employees of the chain of Florida charter schools. The chain is run by a for-profit management company based in West Palm Beach, Mavericks In Education Florida LLC...

Mavericks in Education Florida LLC

“Mavericks High Schools Hope to Profit From Education – But at What Cost?” Broward-Palm Beach New Times (FL), 12/29/2011    

...This is Frank Biden, the brother of Vice President Joe Biden. He's here, at a ribbon-cutting event August 31, to promote the first Palm Beach County location of a local for-profit chain of charter schools called Mavericks in Education Florida...

But so far, Mavericks' lofty goals haven't materialized. Most of their schools graduate less than 15 percent of eligible students. On state report cards, the schools get "incompletes" because so few of their students are taking the FCAT. In Miami, two former teachers filed whistle-blower lawsuits alleging the Homestead school is inflating attendance records and failing to report grades properly.

Plus, there are rampant financial questions, cozy ties between Mavericks and local politicians, and a legal fight with former celebrity spokesman Dwyane Wade...

Mavericks' story begins in Akron, Ohio, with a wealthy industrialist who loved to wear big cowboy hats and donate millions of dollars to Republican politicians. In 1998, David Brennan launched White Hat Management. His charter schools were housed in strip malls, and the students herded in to sit at computers for three shifts a day. This was an education model Mavericks would later call the "next generation in education." But state auditors weren't so fond of the company...

One of White Hat's early leaders was Mark Thimmig. As CEO from 2001 to 2005, he helped grow the company into one of the largest charter school chains in the country. As of 2010, White Hat had 51 charter schools in six states, including ten charter schools in Florida called Life Skills Centers.

Two years after leaving White Hat, Thimmig alleges in court documents, he was approached by Palm Beach Gardens developer Mark Rodberg about launching a chain of charter schools here. Rodberg had built a few schools for White Hat, but had never run one before. He owned restaurants, including Bucky's Bar-B-Que in Boca Raton and Bucky's Grill in Fort Lauderdale. Together, Thimmig and Rodberg came up with a plan that was nearly identical to White Hat's: Students would attend school but take all their courses online, using virtual technology that required minimal maintenance. Classrooms could hold rows of cubicles with computers where kids would sit elbow-to-elbow. There would be no after-school sports teams, just "cyber-athletics" that allowed kids to play Wii instead of shooting hoops...

Each school is overseen by a local, nonprofit board. Mavericks in Education Florida LLC then charges the nonprofit hundreds of thousands of dollars in management fees to run daily operations. Mavericks also handles the real estate, charging the schools $350,000 a year in rent...

Hollander says the charters planned to use the basketball star [Miami Heat star Dwyane Wade] as a celebrity spokesman, encouraging kids to enroll in Mavericks and graduate. "Kids related to him. Parents related to him. Even grandparents related to him! He was the biggest celebrity ever to be connected with the national high school dropout crisis," Thimmig told New Times in 2009...

But pairing schools with a restaurant chain and a basketball star turned out to be a lethal mix. Wade would later allege in court documents that the partners were scheming to cut him out of profits. When they asked him to invest $1 million in the Aventura location of the restaurant, he refused...

In December 2009, Thimmig resigned as CEO. Then he sued Mavericks for back salary and money he said he lent the company — a total of at least $300,000. He also aired the company's dirty laundry in public court documents. Just two years after its founding, the hope factory was floundering...

... Only Michigan has more charter schools run by for-profit companies than Florida, according to a 2010 study published by the National Education Policy Center at the University of Colorado. Last year, there were 145 schools in Florida run by companies such as Mavericks.

Plenty of government grants help charters grow. Reports submitted to the state by Mavericks show their schools each receive about $250,000 a year in federal grants...

Often these schools struggle academically or financially, yet their management companies are allowed to keep opening new campuses...

Biden says, "We just graduated almost 200 people in one location."

But figures from the Florida Department of Education paint a vastly different picture, showing that Mavericks schools have a worse graduation rate than traditional public schools in Florida...

On Florida's state report cards, Mavericks schools in Miami-Dade, Pinellas, and Osceola counties have all scored "incomplete" because not enough students have taken the FCAT. Hollander says she expects the FCAT grade to change as more students enroll...

Meanwhile, recent lawsuits filed against Mavericks raise questions about whether any of the schools' statistics can be trusted...

Mavericks' paper trail is also troubling. Accountability reports, submitted by Mavericks to the state, contain bizarre financial figures...

Money has long been a problem for Mavericks. At the Fort Lauderdale Mavericks in June, independent auditors found the school met state criteria for a "financial emergency," with a net deficit of at least $520,000. At the same time, an audit showed that the North Miami Beach Mavericks was $400,000 in debt and had borrowed from the Mavericks management company to stay afloat. The state department of education also required the Mavericks school in Pinellas to create a financial corrective action plan...

...In 2010, Mavericks in Homestead paid the management company $418,000, or 17 percent of its state funds...

But most of the time, Mavericks isn't buying buildings. It's striking deals with private landlords, then charging individual schools rent of $350,000 per year for five years, regardless of the price of the building. That's the case in Homestead, North Miami, Kissimmee, and Pinellas. In Homestead, the school building's current market value is $1.2 million, but the school is on the hook for $1.75 million in rent over five years.

That sum, combined with its management fee, means the Homestead school paid 28 percent of its revenue to Mavericks in Education in 2010...

BE SURE TO READ THE WHOLE THING!

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“Joe Biden’s Brother Helping God Privatize Public Schools.” By Doug Martin, Firedoglake, 11/29/2011   

When Lisa Rab outed Joe Biden’s brother, Frank, as a major force behind a for-profit education management organization (EMO) dead set on building 100 new charter schools across Florida,* it came as no surprise to anyone who has been paying the slightest bit of attention to the corporate school reform movement, the Obama/Biden/Duncan regime, or Florida.

What was surprising was that Francis W. Biden told Rab that he and Mavericks in Education Florida, LLC  were on “a mission from God.”...

Not testing students to earn state ratings is nothing new to Mark Thimmig, one of the original founders of Mavericks in 2007. In 2005, after the former AutoNation official joined the notorious for-profit charter school operator White Hat Ventures, Thimmig took heat from the Ohio Department of Education for not adequately reporting student test scores in four of its Life Skills high schools. Also, the Akron Beacon Journal discovered that when Ohio switched testing from the 9th to the 10th grade, White Hat enrolled almost half of its Life Skills schools’ student body into the 9th grade in order to avoid testing these students...

READ THIS ARTICLE, TOO!

Believe Southside Charter High School

“Williamsburg Charter School Officially Closed By Board Of Regents.” NY 1 News (NY), 3/20/2012

The Board of Regents officially decided to close Believe Southside Charter High School on Tuesday.

The State Department of Education announced in January it intended to revoke the charter of the school in Williamsburg, Brooklyn because of what it called "significant management and financial improprieties."...

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“With Controversial Leader Gone, Charter Makes Bid to Stay Alive.” SchoolBook, New York Times, 3/13/2012

The lawyer for a troubled Brooklyn charter school that the city’s Department of Education has flagged for closing made a forceful case at a hearing on Tuesday for keeping the school open.

The city announced in January that it planned to close the school, Williamsburg Charter High School. It had been placed on probation in September after an investigation by Eric T. Schneiderman, the state attorney general, raised questions about its management and finances.

The decision to revoke the school’s charter came less than a week after Williamburg Charter’s board of trustees voted to rehire the school’s controversial founder, Eddie Calderon-Melendez.

In a notice, Recy Dunn, the director of the city’s charter school office, wrote that Mr. Calderon-Melendez had run up the school’s debts while giving himself a hefty salary and consultant fees — $378,000 in 2010 — as well as $40,000 over two years in payroll advances...

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“Two More Believe Network Charters Are Put on Probation.” New York Times, SchoolBook blog (NY), 9/26/2011

Two Brooklyn charter high schools have been placed on probation by state education officials, putting them on a path that could lead to their being closed.

The two schools, Believe Northside Charter High School and Believe Southside Charter High School, which opened in 2009, are both managed by the Believe High School Network.

A third high school operated by the network, Williamsburg Charter, which opened in 2004, was placed on probation on Sept. 16 by city education officials.

All three schools, which were founded by Edward Calderon-Melendez, the network’s chief executive, have been under investigation by the office of Attorney General Eric T. Schneiderman of New York for several months because of questions about their financial management. They face possible closing if they do not follow the city and state’s recommendations in the next year.

Cliff Chuang, director of the state’s charter school office, sent probation orders to Northside and Southside on Wednesday, charging that trustees at both schools had little knowledge of their own finances and appeared to have surrendered financial and operational control to the Believe network, which has left both schools in debt and almost unable to act independently.

Believe has also kept city education officials in the dark and has not shown them its annual budget for the 2010-11 school year or its projections for 2011-12, according to the probation orders.

According to the state, although the Northside and Southside schools share a city-owned building in Williamsburg and do not pay rent, they are $161,779 and $117,213 in debt, respectively. Yet the probation orders state that when the chairwomen of the schools’ boards of trustees, Candace Cobo of Northside and Marcenia Johnson of Southside, spoke with state officials, both demonstrated an “alarming lack of familiarity” with the fiscal issues facing their schools, including the schools’ current financial conditions.

“Given the negative working capital position of the school, and a networkwide pattern of significant expense-side budget variances, the long-term viability of this school” remains in question, Mr. Chuang wrote in both schools’ probation orders.

A lawyer for the Believe network schools, Sharon McCarthy, said the schools would work to correct their mistakes.

“Everyone is disappointed this has happened, but we are making a concerted effort to work directly with the State Department of Education to address the issues raised in the probation reports,” Ms. McCarthy said. “I think this is fixable, and they’re committed to fixing it.”

Mr. Chuang’s notices charge the schools with overstating their enrollments, saying each billed the city for 300 students. Southside has an enrollment of 246 this year and Northside has 267.

In addition, both schools have violated state law by having fewer than five voting board members, according to the state. The skeletal boards that do exist have met only four times in the last year, and several of their members have conflicts of interest that they have not disclosed, according to the state.

Information on the Believe network’s Web site suggests that its schools’ board members are, in some cases, also network employees. Jonna Caramico, for example, is listed as both a special education consultant to Williamsburg Charter and a board member for Southside.

The probation notices also said both schools were open for 180 days last year, instead of the required 186.

Believe Northside Charter High School

“Two More Believe Network Charters Are Put on Probation.” New York Times, SchoolBook blog (NY), 9/26/2011

Two Brooklyn charter high schools have been placed on probation by state education officials, putting them on a path that could lead to their being closed.

The two schools, Believe Northside Charter High School and Believe Southside Charter High School, which opened in 2009, are both managed by the Believe High School Network.

A third high school operated by the network, Williamsburg Charter, which opened in 2004, was placed on probation on Sept. 16 by city education officials.

All three schools, which were founded by Edward Calderon-Melendez, the network’s chief executive, have been under investigation by the office of Attorney General Eric T. Schneiderman of New York for several months because of questions about their financial management. They face possible closing if they do not follow the city and state’s recommendations in the next year.

Cliff Chuang, director of the state’s charter school office, sent probation orders to Northside and Southside on Wednesday, charging that trustees at both schools had little knowledge of their own finances and appeared to have surrendered financial and operational control to the Believe network, which has left both schools in debt and almost unable to act independently.

Believe has also kept city education officials in the dark and has not shown them its annual budget for the 2010-11 school year or its projections for 2011-12, according to the probation orders.

According to the state, although the Northside and Southside schools share a city-owned building in Williamsburg and do not pay rent, they are $161,779 and $117,213 in debt, respectively. Yet the probation orders state that when the chairwomen of the schools’ boards of trustees, Candace Cobo of Northside and Marcenia Johnson of Southside, spoke with state officials, both demonstrated an “alarming lack of familiarity” with the fiscal issues facing their schools, including the schools’ current financial conditions.

“Given the negative working capital position of the school, and a networkwide pattern of significant expense-side budget variances, the long-term viability of this school” remains in question, Mr. Chuang wrote in both schools’ probation orders.

A lawyer for the Believe network schools, Sharon McCarthy, said the schools would work to correct their mistakes.

“Everyone is disappointed this has happened, but we are making a concerted effort to work directly with the State Department of Education to address the issues raised in the probation reports,” Ms. McCarthy said. “I think this is fixable, and they’re committed to fixing it.”

Mr. Chuang’s notices charge the schools with overstating their enrollments, saying each billed the city for 300 students. Southside has an enrollment of 246 this year and Northside has 267.

In addition, both schools have violated state law by having fewer than five voting board members, according to the state. The skeletal boards that do exist have met only four times in the last year, and several of their members have conflicts of interest that they have not disclosed, according to the state.

Information on the Believe network’s Web site suggests that its schools’ board members are, in some cases, also network employees. Jonna Caramico, for example, is listed as both a special education consultant to Williamsburg Charter and a board member for Southside.

The probation notices also said both schools were open for 180 days last year, instead of the required 186.

Franklin High & Franklin Arts Academy

EX-SCHOOL WORKER TO REPAY $50K; February 8, 2007; The Arizona Republic

A former employee of Franklin High in Mesa has agreed to repay nearly $50,000 for office supplies that were purchased with school funds but never arrived on campus, according to Gilbert police.

Police began investigating the purchase of the office supplies by Jesse Bowler after the school reported the situation in November…

The board reached an accord with Bowler last month in which he agreed to repay the cost of the office supplies, said Gilbert Detective Chris Wakefield. Bowler apparently is taking out an equity loan to repay the money, Wakefield said.

Franklin High shut down in November after state education officials caught the charter school with an inflated enrollment, prompting the state to pull its funding for November.

An internal audit of Franklin High's finances revealed the alleged misuse of funds by Bowler, who was fired.

Franklin High shut its doors Nov. 22 because it lacked the money to meet payroll obligations, according to a letter sent from Jerry Stansbury, executive direct of Franklin High and Franklin Arts Academy, to Kristen Jordison, then executive director of the state Board for Charter Schools.

The staff of the state Board for Charter Schools is investigating Franklin Arts Academy's enrollment, which was overstated by at least 267 students. It also appears the state Attorney General's Office could be looking into the academy's enrollment problems, or at least was asked to do so…

Stone Creek Elementary

SCHOOL FOUNDER ARRESTED FOR THEFT; July 19, 2007; Vail Daily 

AVON — As Stone Creek Elementary opened its doors to Eagle County kids last fall, its founder was stealing money from the struggling charter school checking account, Avon police say.

Bill Hammer was arrested Thursday in Jefferson County, accused of stealing $68,539 from Stone Creek to help his two failing businesses and to pay off a lawsuit to the Vail Resorts Development Corporation, police say.

Police had issued an arrest warrant, but couldn’t find him locally. Soon after the news broke on the Vail Daily’s Web site, a reader called police with a tip on his whereabouts. Avon police then called the Jefferson County Sheriff’s Department, who found him in Evergreen.

The theft is a class three felony and could put Hammer in prison for four to 12 years if convicted. His bond is set at $75,000, and he’ll be given a court date to appear in Eagle County.

The news is upsetting — but not necessarily shocking — to the people still running Stone Creek. Earlier this year, the school board disclosed a series of financial problems that had gone unchecked since the school opened and put the school behind in bills. Expenses outpaced the money coming in, and the school board was soon looking a giant debt in the eye…

Police were approached by newly elected members of the Stone Creek Board of Directors in February who were concerned about discrepancies they discovered in the school’s financial records.

Treasurer Kevin Randel said he and other board members weren’t prepared for the mess they found in the books. The records were scattered, incomplete and didn’t quite add up.

They also found a slew of unaccounted for funds — checks written without matching receipts or invoices adding up to more than $68,000…

Checks written directly from Stone Creek’s account were found deposited in Hammer’s personal business accounts for Noel, a Christmas shop in Beaver Creek, and the Oregon Country Tree Farm, a business in Oregon, Arnold said.

Both those businesses were failing, Arnold said. “The books showed he had $182,000 in losses in his businesses. He was losing money in both.”

Hammer was also behind on rent at his shop in Beaver Creek, and Vail Resorts Development Corporation sued him. Hammer paid them off, but with Stone Creek money, Arnold said.

“He wrote a check to Wells Fargo, then they made it a cashier’s check, and when he paid off Vail Resorts, they never knew where the money was coming from,” Arnold said. “The school didn’t realize where the money went because the check was made to Wells Fargo.” …

The school overestimated its enrollment numbers, which means it received more state funding per student than it should have, according to Randy DeHoff, executive director for the Colorado Charter School Institute.

At first, Stone Creek received money for 250 kids, while only 151 were actually enrolled. Stone Creek was denied state funding for December and had its funding severely cut through May to make up the money…