Eric Mahmoud charter schools

“Georgia file connects Twin Cities charter school, fraud scheme.” Star Tribune (MN), 3/22/2013

When the news broke last summer that charter school entrepreneur Eric Mahmoud had entered a guilty plea to a mortgage fraud charge in Georgia, Mahmoud had a ready comeback for the Minneapolis school district, under whose authorization he was opening another charter school.

“I assure you that this was a personal, residential matter in Georgia and had nothing to do with Seed Daycare, Harvest Prep or any other educational institution,” Mahmoud told Sara Paul, the district’s liaison with charter schools, in an Aug. 16 e-mail.

In that case, Mahmoud has some explaining to do.

New Orleans Military and Maritime Academy

“Military academy’s background check didn’t turn up employee’s prior theft charge.” The Lens (LA), 4/23/2013

The man police are investigating for theft and fraud involving $31,000 in school funds has been accused of taking public education dollars before.

Joseph A. Craig Charter School

“Military academy’s background check didn’t turn up employee’s prior theft charge.” The Lens (LA), 4/23/2013

The man police are investigating for theft and fraud involving $31,000 in school funds has been accused of taking public education dollars before.

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."

Laboratory Charter School of Communication and Languages

“Feds charge Philly charter school mogul in massive fraud.” Philadelphia Inquirer (PA), 7/24/2012

A charter school mogul was charged today in a multimillion-dollar fraud case by the U.S. Attorney's Office.

Dorothy June Hairston Brown, who received accolades for students' test scores and gained notoriety for collecting large salaries and suing parents who questioned her actions, was indicted on multiple counts of wire fraud, obstruction of justice, and witness tampering.

Brown, 75, and four executives from her charter schools, were charged with defrauding three charter schools of more than $6.5 million in taxpayer funds.

U.S. Attorney Zane David Memeger announced that a federal grand jury had returned a 62-count indictment against Brown and four of her trusted employees...

Florida charter schools (investigator observations)

“Experiences As A Police Officer With The Ugly Side Of Charter Schools And Their Management Companies.” Florida Public Employees Partnership, 12/15/2011 

With such a strong push for continued expansion in Florida, I am compelled to share my experiences as a police officer with the ugly side of Charter Schools and their management companies. As a former investigator and supervisor of a public corruption unit, several years ago my unit was responsible for a series of criminal investigations involving personnel, owners, and partners of Charter Schools. Where as some of these investigations resulted in schools being shut down and arrests others culminated in utter frustration resulting from criminals getting away with fraud. A fact made possible by industry wide practices that benefit from weak laws and the impossibility of effective industry oversight. 

During the course of these investigations members of my unit worked with a host of local, state, and federal investigators. One of which became the target of a multi-state Federal Bureau of Investigations criminal investigation. Where as, I do not claim to be an expert in the business of running Charter Schools my investigative experience provided a good insight into the big businesses of collecting Tax Dollars for educating public school children. It is from this insight that I share the following:

In everyone of our investigative cases, the schools were set up as nonprofit organizations. Most hired management companies to oversee the day to day operation of the schools. They all had a Board of Directors, had applied for and granted a Charter to be a school from local school districts as governed by Florida State Statute 1002.33 http://www.leg.state.fl.us/statutes/. Their main source of revenue was per pupil funding – called Full Time Equivalent (FTE). Some received more funding based on student disabilities.  In every case the drive to recruit more students was the primary focus of the schools and management companies. Most schools had received additional funding from available grants and all claimed Tax Exemptions as nonprofit organizations.

In just about every case the founders of the Charter Schools had ties to the Board of Directors which authorized the hiring of the management companies to run the schools. Even worse, we discovered the owners of the management companies were either the same as the school founders or were directly connected to them.  All of which revealed major conflicts of interests in most of the decisions made on the spending of Tax Dollars and education of students.

Like the Miami Herald’s Charter Schools expose, we confirmed the common practice of management companies charging for the leasing of school site facilities, vehicles, and materials. Items that were either owned by the management company or linked to their owners.  A practice that was followed with exorbitant management fees charged for services that often could not be explained, were unjustified, or could have been done by school staff for less. In all, these companies’ rule over all matters of business resulted in the majority of the schools’ money being collected by the management company or vendors of their choice without the benefit of competitive bids.

Internally, school staff like teachers, school administrators, and other staff were generally paid less than their public school counterparts. Staff had no benefit of collective bargaining, union representation and as such were at will employees.  Teachers were commonly discovered to be teaching out of field. Interviews revealed there were individuals hired with minimal to no qualifications to teach or perform the job functions of their assignments. The majority of these schools were found to be ill equipped with teaching materials that often were substandard to those in public schools.  The lack of common resources available in public school districts was a constant...

The Carden School of Tucson

“2 charter schools struck by thefts.” Arizona Daily Star, 1/1/2012  

When charter school director Bette Jeppson sat down with an accountant last March, she expected to get a few tips on how the school could improve its bookkeeping and finances.

What she got instead was a litany of illegal transactions by the school's business manager that drained resources to the point the school was forced to cut back in educational spending, making it one of two Southern Arizona charter schools to come under investigation by the Arizona attorney general for financial improprieties.

For example, Jeppson didn't expect to learn business manager Keri Gall had given herself a 29 percent raise and was making 40 percent more than she herself was.

Or that the manager had used the school's credit cards to buy a $1,000 boxer, designer clothes, manicures, groceries and items used to remodel her home.

Jeppson was even more stunned to learn the manager hadn't been depositing money into teachers' IRAs and even forced one to pay her own health insurance...

Instead, Jeppson found out that morning Gall had been writing checks to herself and fixing the books, plus misusing the credit cards...

Originally charged with one count of fraud and four counts of theft, Gall pleaded guilty to one count of theft. She was also ordered to pay $150,280 in restitution at no less than $500 a month.

Authorities can prove Gall stole $128,000 between Jan. 1, 2007 and March 23, 2011; the K-8 school couldn't afford to dig back to her 2003 starting date...

Gall is not the only charter school employee to end up before a judge in recent months...[SEE entry for The Pima Partnership School]

The Pima Partnership School

“Former Tucson school principal given probation in theft case.” Arizona Daily Star, 10/13/2011

A former charter school principal was placed on three years probation and ordered to pay nearly $23,000 in restitution for attempted theft Thursday.

William Eddings Jr. was the principal at a charter school operated by the Pima Prevention Partnership when discrepancies were discovered during an audit by the Arizona Department of Education, according to court records.

The audit and subsequent investigation revealed that between June 16, 2006, and March 15, 2008, Eddings submitted inflated attendance records, awarded diplomas to 13 students who didn’t meet the state’s graduation requirements and signed invoices for services not provided to the school. Eddings received bonuses of $5,000 based on the information he provided.

Eddings was indicted in April on two counts of fraud and one count of theft; he pleaded guilty to attempted theft in August.

Under the terms of his plea agreement, Eddings could have received up to three years and nine months in prison.

On Thursday, Assistant Arizona Attorney General Michael Jette told Judge Howard Fell of Pima County Superior Court he is concerned Eddings has not accepted responsibility for his actions.

Eddings told a probation officer he didn’t do anything wrong and only pleaded guilty to end his legal problems.

In addition to the probationary sentence, Eddings was ordered to perform 300 hours of community service.

Eddings, who lives in Arizona City, hopes to have his probation transferred to Pinal County.

Horizons K-8 Charter School

HORIZONS CHARTER FOUNDER FACING THEFT, EMBEZZLEMENT CHARGES; November 13, 2007; DailyCamera.com (Boulder, CO) 

A founder of Boulder's Horizons K-8 Charter School has been arrested on suspicion of theft, forgery and embezzlement based on alleged misrepresentations made to the state's retirement program.

Ann Leslie Kane turned herself in and was arrested Friday. She has bonded out of jail.

Boulder Valley spokesman Briggs Gamblin said Horizon's parent board brought financial concerns to the school district a couple of years ago. The district commissioned an independent audit, which uncovered red flags, he said, and the information was turned over to the Boulder County District Attorney's Office in late 2005…

The possible charges, all felonies,are one count of theft, one count of attempting to influence a public servant, two counts of forgery and one count of embezzlement of public property. All charges relate to allegations that Kane misrepresented her salary, which would allow her to collect more retirement money through the Public Employees Retirement Association, according to a school statement…

Hoggetowne Middle School

FORMER CHARTER SCHOOL PRINCIPAL ARRESTED FOR ALLEGED THEFT OF SCHOOL FUNDS; October 14, 2009; Gainsville Sun (FL)

The ex-principal of a local charter school faces felony charges for allegedly spending more than $18,000 in school funds for personal use.

On Tuesday, Gainesville police charged Kristine M. Santos, 38, formerly the principal and president of the board of directors at Hoggetowne Middle School, with grand theft and fraud. She turned herself in Tuesday and was released on her own recognizance.

Last September, Alachua County School District staff went to Hoggetowne to assist the school's new bookkeeper and reported spending irregularities involving a school debit card that Santos used…

A few of the purchases were listed in the complaint. They included approximately $1,500 at Gainesville Health and Fitness for personal training services, an approximately $380 bill at Hilton Hotels Disney and $139.72 at Victoria's Secret.

According to police, school funds were also used to pay off approximately $31,800 in charges on Santos' personal credit card. She reportedly identified approximately $19,593 of those charges as expenditures for the school but could not provide a school-related purpose for the remaining $12,221.11.

Santos told Hoggetowne school officials that she gave her entire credit card bill to the school's accountants and they mistakenly paid the whole bill instead of only the school-related expenses, according to the complaint.

In the complaint, Gainesville Police Detective William Quirk wrote that the standard procedure should be "to submit a request for reimbursement, not to have the bill paid directly by the school."…

Paramount School of Excellence

CHARTER SCHOOL CO-FOUNDER FACES NEW ALLEGATIONS - LAWSUIT ACCUSES DIMITRI SNOWDEN OF $45K IN FRAUD; March 17, 2011; WRTV Indianapolis 

INDIANAPOLIS -- The co-founder of an Indianapolis charter school is facing new allegations he defrauded schools and small business owners out of thousands of dollars. 6News' Kara Kenney reported Monday that Dimitri Snowden, the co-founder of the Indianapolis-based Paramount School of Excellence, was named in a lawsuit brought by the KIPP Academy, another Indianapolis charter school, which is sponsored by Mayor Greg Ballard and funded by public tax dollars. [More about KIPP Indianapolis HERE]

The school accuses Snowden and his information technology company, Ion360, of breach of contract, fraud and deception totaling $45,796 in damages.

The Paramount School of Excellence also contracted with Snowden's company, but fired him and is now seeking legal action…

Tom Wagenhauser with Indy IT Professionals said small-business owners should always ask for references, certifications and accreditations before doing business with a Web company…

Ion360 is listed as a member of the Indianapolis Chamber of Commerce. The chamber refused to comment on Snowden's membership due to the ongoing lawsuit.

According to the lawsuit brought by KIPP, Ion360 pressured the school to purchase products and services it did not need and could not afford and failed to provide the promised "responsive service and rapid resolution" to technology issues and problems.

It's unclear whether KIPP Charter Academy investigated Snowden prior to hiring him…

Alexander Hamilton Charter School

EX-DIRECTOR OF SCHOOL FACES THEFT COUNTS; April 26, 2002; The Record (Bergen County, NJ)

The former director of Paterson's Alexander Hamilton Charter School was indicted Thursday on theft charges for allegedly cashing one of the school's checks several weeks after she had quit her post.

Carol Ann Gauthier, 46, left her job on June 27, but on July 18, she cashed a school check made out to her for $600, said William Gradisher, Passaic County chief assistant prosecutor.

A count of attempted theft was also filed because on the same day, Gauthier tried to cash a check for $4,500 at another bank, but officials there flagged the check and school officials were able to stop it, Gradisher said.

Gauthier could not be reached for comment Thursday, but previously she said the school owed her $27,000 in expenses and salary.

Gauthier left her job in a storm of controversy, with Alexander Hamilton board members accusing her of the thefts and of trying to sabotage the school. In August, the board members took Gauthier to court, saying she double-crossed the school during negotiations for a building lease.

School officials said they thought Gauthier was securing the lease for the Alexander Hamilton school, when in fact, she signed the lease for her own charter school, which they said she created on the sly.

Gauthier's charter school, called the Silver Fox Learning Center, never got off the ground, according to state records. The Alexander Hamilton charter school, plagued by fiscal problems, was turned over to the public schools in October to prevent the 250-student, K-5 school from being shut down.

The counts of theft by deception and attempted theft by deception each carry a maximum five-year prison term upon conviction. Court records show that several judgments were filed against Gauthier in the wake of a failed Newark restaurant project, and that she filed for personal bankruptcy.

Cleveland Academy of Math, Science and Technology

MINISTER CONVICTED OF STEALING SENTENCED TO 7-YEAR TERM; August 15, 2007 Cleveland Plain-Dealer 

A minister convicted of stealing $1.4 million through a Cleveland charter school he founded was sentenced to more than seven years in prison Wednesday.

The Rev. Mark Olds once garnered national attention for his work helping former convicts. But earlier this year, a federal jury convicted the Solon man on 62 counts, including mail fraud, money laundering and tax charges.

Prosectors said Olds used the Cleveland Academy of Math, Science and Technology to enrich himself.

Olds, 56, and his employees claimed the school on East 71st Street had as many as 650 students, even though the building could hold only 150 students.

The charter school Olds established in 2002 received about $5,200 per student each school year. The school received an additional $1.4 million as a result of the fraudulent head counts.

Olds, of Solon, also used more than $200,000 in school money to buy a building on Woodland Avenue in 2002. Then he spent nearly $400,000 to renovate the building, eventually moving the school into the building in September 2003. Three months later, the school closed. Olds then sold the Woodland Avenue building and kept the profits for himself, prosecutors said.

Chiron Charter School

FORMER CHARTER SCHOOL OFFICIAL FACES 7 FELONY CHARGES; September 6, 2006; Star Tribune (Minneapolis, MN) 

The former top administrator at a defunct downtown Minneapolis charter school has been charged with seven felony counts of misusing more than $300,000 in public money.

Kristin Laxton was accused of overreporting the number of students to bring the school extra money, using federal grants for purposes outside the law, and paying herself more salary and reimbursement than she was due.

The Hennepin County complaint filed late last week is one of the largest theft cases made against a Minnesota charter school. It accuses Laxton of three counts of theft, two counts of forgery and two counts of making false complaints to a public body. Much of the complaint is based on an investigation conducted by the state auditor's office, which sent its report to the county last fall under its responsibility to forward any matters involving misbehavior by public officials…

According to the complaint, the school was paid $238,170 more than it was due for the 2004-05 school year. The complaint alleges that Laxton inflated student counts both by reporting students whom auditors couldn't find on attendance logs and by reporting that students attended for longer than they did…

The redacted version of the auditor's report, made public late last month, suggests potential culpability by others for amounts they were paid for paychecks or other reimbursement to which they were not entitled. Peter Cahill, deputy county attorney, said the investigation into Chiron is continuing. The state's worst charter school scam involved Right Step Academy. A federal judge recently sentenced founders William and Shirley Pierce to prison time and more than $489,000 in restitution of state aid for their role in the fraud.

The report issued by the Minnesota State Auditor is @ http://www.osa.state.mn.us/reports/spi/2006/chiron_06_report.pdf

The Institute for Excellence Charter School

WINSLOW CHARTER SCHOOL FOUNDER INDICTED; Feb. 28, 2011; Courier-Post (NJ) 

The founder of Camden County's only suburban charter school has been accused of attempting to defraud the school in an indictment handed down Wednesday by the state grand jury following an investigation by the state Attorney General Office's Division of Criminal Justice...

In January 2010, the [the state Department of Education's Office of Fiscal Accountability and Compliance] released its findings, listing allegations of misuse of funds and governance practices. It concluded that most of the allegations were out of its jurisdiction and forwarded them to the Attorney General's Office, noting specifically that the fictitious invoice "may constitute a violation of the School Ethics Act and criminal statute."…

The OFAC's review also found that staff members observed [name omitted] and another board member going through student files, that board members regularly visited the school unannounced, that [name omitted] routinely borrowed money from staff members and that she used the school copy machine to run off fliers for a private tattoo party...

(redacted on 9/13/2012 per request )

Children's Conservation Academy

WHEN CHARTERS CLOSE, PUBLIC SCHOOLS FOOT THE BILL; December 4, 2007; Voice of San Diego (CA)

Spending scandals brought down Children's Conservation Academy, a City Heights charter school shuttered in 2007, only two years after it opened. A year earlier, A. Phillip Randolph Leadership Academy dissolved, with questions swirling around its finances. Its closure echoed that of Jola Community Charter School, a girls' charter that sunk two months after opening in 2005.

These schools and two other closed charters owe more than $300,000 to San Diego Unified School District in unpaid fees and property taxes. None have repaid the district. School staff doubts they ever will…

District staffers suspect fraud in the closures of some San Diego charters, most notably Children's Conservation Academy, which closed in August. San Diego Unified claims that CCA spent hundreds of dollars on Padres tickets, cell phone bills and gym memberships, and paid more than $11,000 to executive director Nicole Decatur's mother, a past board president, with little proof of the work she'd performed…

* * * * * * * * * * * * * * * * * * * * * * * * * * *

TROUBLED CHARTER SCHOOL MAY CLOSE, QUESTIONS ON MONEY AND LEADERSHIP ARISE, August 24, 2007, San Diego (CA) Union Tribune

SAN DIEGO – Just days before students are to return to classes at Children's Conservation Academy in City Heights, the taxpayer-funded charter school is in imminent risk of shutting down amid questions of financial mismanagement and a lack of leadership…

District officials threatened to revoke the school's educational contract, known as a charter, unless the school fixes a long list of management and accounting problems. They say the school owes the district more than $97,000 in fees and for various services…

The district said the school has not properly accounted for tens of thousands of dollars in questionable expenses, including an athletic club membership ($638), restaurant food ($2,219), Starbucks coffee ($143), Padres tickets ($369) and cell phone bills ($1,505)…

According to district documents, the school operated for a year and a half without workers' compensation insurance required by state law, and it lacked proof that all of its employees had undergone checks for criminal background and tuberculosis, posing safety and health hazards to students. Decatur was among the employees who did not have proper clearances, the district said. In a series of letters dating to June 2006, the district expressed concerns about “conflicts of interest” and “self-dealing” on the school's governing board. Decatur's mother, Marina Grant, a past board president, was paid more than $11,000 by the school, “without authorization and without sup porting documentation to reflect the work performed,” according to the district…

Some teachers provided affidavits to the district, documenting many concerns, including lack of textbooks and basic supplies. The school's attorney denied there were insufficient instructional materials.

Decatur laid much of the blame for the school's bungled finances on a past business manager and others' mistakes…

WEB DuBois Academy

TWO CHARTER SCHOOLS FACE CLOSURE, June 17, 2010, Cincinnati (OH) Enquirer

Two local charter schools, East End Community Heritage School in Bond Hill and W.E.B. DuBois Academy in Over-the-Rhine, are on a watch list" to be shut down due to poor academic performance.

DuBois is supposed to close this month…

The W.E.B. DuBois Academy once held Ohio’s top academic rating of “excellent.” It made headlines for a different reason, though, when its founder, Wilson Willard III, was convicted in November 2008 for using public money to renovate his home and charging for students who weren’t enrolled. He is serving a four-year prison sentence. He and the school owe the state more than $738,000...

* * * * * * *

FORMER SCHOOL LEADER GETS 4-YEAR SENTENCE FOR THEFT, January 8, 2009, WLWT.com (OH)

CINCINNATI -- A former school leader is going to prison for stealing money from the school.

In November, Willard Wilson admitted defrauding the WEB DuBois Academy charter school of more than $15,000.

Prosecutors said Wilson falsified invoices to reimburse school employee Andrea Peterson for clerical work never performed and overbilled the Ohio Education Department for students who weren't enrolled at the school.

Wilson pleaded guilty to three counts of theft and two counts of tampering. He was sentenced to four years in prison.

Peterson, who pleaded guilty to one count of theft, received five years probation.

* * * * * * *

ONGOING SPECIAL AUDIT OF W.E.B. DUBOIS ACADEMY RESULTS IN INDICTMENT, October 24, 2006, US Fed News Service

The Ohio State Auditor issued the following news release:

A former charter school superintendent was indicted today by the Hamilton County Prosecutor's Office as a result of an ongoing special audit and investigation by Auditor of State Betty Montgomery.

The Auditor of State's Office had initiated the regular annual audit of the W.E.B. DuBois Academy (Hamilton County) in 2005 when a complaint regarding possible fraudulent activity at the academy was received. Further investigation by the Auditor of State's Office into the complaint uncovered fraudulent activity and led Montgomery to open a special audit. Wilson H. Willard, former superintendent at the academy is accused of using public money from the academy for personal use and inflating student enrollment numbers…

Willard is accused of using public money in the amount of $24,000 from the academy to finance remodeling at his private residence and he is accused of taking an additional $20,000 through a series of unauthorized money transfers. He is also accused of inflating student enrollment numbers submitted to the Ohio Department of Education in the amounts of $111,000 in the 2003-2004 school year and $209,910 in the 2004-2005 school year. Specifically, Willard's indictment lists:

* Six felony counts of theft (all fourth degree felonies).

* Two felony counts of unauthorized use of property (both fourth degree felonies).

* Two felony counts of tampering with records (both third degree felonies) in relation to inflated student enrollment.

* Two felony counts of telecommunications fraud (both third degree felonies) in relation to inflated student enrollment.

Willard faces a possible 23 years in prison. Montgomery's special audit of the academy will remain ongoing given facts uncovered which require further investigation. Her office has been working closely with the Hamilton County Prosecutor's Office as well as the Cincinnati Police Department.

Right Step Academy

CHARTER SCHOOL OWNERS SENTENCED FOR DEFRAUDING SCHOOL TO PAY FOR LAVISH LIFESTYLE, May 24, 2006, Investigative Report, U.S. Department of Justice, United States Attorney, District of Minnesota

MINNEAPOLIS — The former owners of one of the first charter schools in Minnesota were sentenced today in United States District Court for defrauding the school to help subsidize an extravagant lifestyle. William Pierce, age 46, was sentenced to 37 months in federal prison and three years of supervised release. His wife, Shirley Pierce, also 46 years of age, was sentenced to 30 months in prison and three years of supervised release. In addition, Judge Michael J. Davis ordered the couple to pay $489,239.65 in restitution to the Minnesota Department of Education, which, along with the federal government, funded the school.

William and Shirley Pierce, both of Minneapolis, once owned and operated the now-defunct Right Step Academy, a not-for-profit school founded in 1993. In 2000, the St. Paul School Board refused to renew Right Step's charter after an audit disclosed that under the Pierces' leadership, Right Step engaged in financial mismanagement, provided students an inadequate education, and provided unsafe transportation and facilities. Right Step, a publicly funded, tuition-free school created to offer a highly structured, discipline-based alternative education to at-risk youth, soon closed.

Following a fifteen-day trial in October of 2005, a jury convicted William and Shirley Pierce of all charges listed in the thirteen-count indictment filed against them. Those charges included one count of conspiracy, three counts of filing false tax returns, four counts of mail fraud, and five counts of wire fraud.

At trial, the government presented evidence that the Pierces conspired to commit fraud in 1997 when they jointly formed a company known as Right Group, which they represented to the board of directors at the Right Step school as wholly owned by Shirley Pierce. Ms. Pierce then proposed to Right Step that Right Group handle the school's accounting, payroll, and human resource duties. During negotiations, William Pierce, Right Step's president and board director, failed to disclose to the other board members or employees the full extent of his interest in Right Group. Ultimately, William Pierce caused Right Step to enter into a contract with Right Group.

Over the next four years, the Pierces repeatedly billed the Right Step school excessive amounts for services allegedly rendered by Right Group. The court estimates those over-charges at $357,652.65. Moreover, the Pierces diverted for personal use payments made by Right Step to Right Group and, on occasion, took money directly from both Right Step and Right Group. Trial evidence revealed, for example, that William Pierce, a former U.S. Army maintenance worker, paid himself $51,855.54 in excessive compensation between 1998 and 2000 for his role as Right Step's executive director. William Pierce also caused Right Step to issue a check to Right Group in the amount of $12,549.35 for company start-up costs and as a retainer. That money was used, however, to pay for, among other things, a Caribbean cruise vacation for the Pierces. In addition, the couple took Right Step funds in the amount of $17,561.87 to pay off personal credit card debt and $11,125.00 to purchase season tickets to the Minnesota Timberwolves. When asked at trial if the purchase of Timberwolves tickets with Right Step money was in the best interest of the school, William Pierce replied, "I believe so." The court found William Pierce "blatantly lied" when he made that statement. Other court documents reflect that the Pierces defrauded Right Step by having the charter school make payments to SBP Managment without a contract or board approval. SBP Management was a business operated by Shirley Pierce. The court held that payments to SBP Management "represented a continuance of the Pierces' scheme to defraud by using Right Step Academy funds for their benefit."

Trial evidence further revealed that the Pierces committed tax fraud when they failed to include as income on their 1998, 1999, and 2000 federal tax returns approximately $55,701.00 in funds diverted from Right Step and Right Group. The Pierces caused Right Group to pay for their Mercedes Benz automobile, the lease of a Lincoln Navigator SUV, as well as expensive clothing and home furnishings. At trial, Shirley Pierce testified that she liked "very nice things." The payments for the things described above, however, were not included as income on the Pierces' tax returns. In addition, the Pierces had Right Group pay $3,000 in tuition to Wilberforce Academy on behalf of their son. Later that amount was falsely claimed as a business expense instead of income on their tax return. The court found that Shirley Pierce, a former IRS revenue officer and special agent, committed perjury when she testified she was unaware of her tax obligations.

Charter schools offer an alternative education for students while creating new professional opportunities for teachers. As executive director of the Right Step charter school, William Pierce was entrusted with acting in the best interest of the school and its students. Yet, under his leadership, Right Step failed to meet its obligations pursuant to state law or its charter agreement with the St. Paul School District. Right Step officials were delinquent in submitting financial statements, payroll taxes, and teacher retirement contributions. They also hired unqualified and unlicensed teachers. The court concluded that William Pierce had abused the public trust; and at sentencing, Judge Davis said to Shirley Pierce, "We all like nice things, but we don't do it on the backs of children."

After sentencing, United States Attorney Rachel K. Paulose added, "Charter schools are an important part of the educational system here in Minnesota. Without charter schools, many young people who have difficulty in the public school system would undoubtedly give up on their education and their future. It is therefore critical that the administration of these schools be conducted with the utmost integrity. Through their actions, the Pierces failed the 290 students enrolled at Right Step Academy."

This case was the result of an investigation by Special Agent Steve Makowski of the IRS, Criminal Investigation Division, and Special Agents Dan Pavlokovich and Jon Greenblatt of the U.S. Department of Education, Office of Inspector General. Assistant United States Attorneys John R. Marti and Ann M. Anaya prosecuted the case.

Center for Economics and Law

FORMER PHILADELPHIA CHARTER SCHOOL PRINCIPAL CHARGED WITH FRAUD, March 21, 2006, Investigative Report released by the U.S. Department of Justice, United States Attorney, Eastern District of Pennsylvania

PHILADELPHIA – United States Attorney Patrick L. Meehan and United States Department of Education Inspector General John P. Higgins, Jr., today announced the filing of an Indictment charging Curtis Andrews with six counts of wire fraud in connection with a scheme to defraud the Philadelphia School District.
According to the indictment, between May 2000 and June 2003, Andrews was the principal and chief administrative officer of the Center for Economics and Law ("CEL"), a charter school located in Philadelphia and operating within the Philadelphia School District (the "School District"). As a charter school operating within the School District, CEL was funded in part with public taxpayer dollars it received from the School District. The amount of funding CEL received from the School District depended upon the number of students attending CEL. Notably, the School District relied upon charter schools like CEL to report their enrollment information honestly and accurately so that these schools received the appropriate amount of funding.
As the principal of CEL, Andrews engaged in a scheme to defraud the School District by causing falsely inflated student enrollment data to be submitted to the School District, thereby causing the School District to provide funding to CEL to which CEL was not entitled. As Andrews knew, limitations in the School District's computer network prevented the School District from knowing that a student had left CEL, where that student had transferred to another school outside of the School District (such as a parochial school or a school outside of Philadelphia) or had dropped out of school altogether. Andrews exploited these limitations in the School District's computer network by directing his staff to report to the Network that students who had either transferred to another school outside of the School District, or dropped out of school altogether, continued to attend CEL, when in fact as Andrews knew, these students did not attend CEL. As a result of the defendant's scheme to defraud, the School District overpaid CEL approximately $200,000 in public education funds.
"Not only did he defraud the school district but he dragged his staff into his scheme," said Meehan. "These are public funds designed to improve the lives of young people through education. When the system is manipulated like this, students suffer and taxpayers are cheated."

Albuquerque Charter Vocational High School

STATE WARNS 2 ALBUQUERQUE CHARTER SCHOOLS; BOARDS COULD FACE SUSPENSION, August 23, 2005, Albuquerque Journal (New Mexico)

The Reader's Digest article that put Albuquerque Charter Vocational High School in the national spotlight was titled "Fixing America's Schools."

Oddly enough, the national story prompted a local inquiry that has landed school founder Danny Moon -- and the charter school's governing board -- in hot water. Now the state wants the problems fixed. Evidence has surfaced that Moon misused school funds and property and directed staff to keep "ghost students" on attendance logs to collect tens of thousands of dollars that Charter Vocational High School and a sister school weren't entitled to...

The Albuquerque Charter Vocational High School is one of the state's most high-profile charter schools and has even been touted by Gov. Bill Richardson.

The Reader's Digest article in May called the school a place that "could transform America's classrooms."

The magazine praised Moon for getting the "hardest-to reach" students interested in learning.

Some of Moon's neighbors read the article with interest, especially the part that mentioned students had built sheds as part of their schoolwork.

Moon had a storage shed on the Paradise Hills lot where he was building a new house, the neighbors noticed. They contacted state Sen. Joe Carraro, R-Albuquerque, with their suspicions after also watching vehicles with government license plates going back and forth from the construction site…

Moon is superintendent of both schools at an annual salary of $175,000.

Investigators concluded Moon used a state vehicle and credit card for personal use and took home a student-built storage shed without paying for it…

"Upon information and belief," her letter stated, "Mr. Moon has intentionally caused or directed subordinate staff" to report students as enrolled even though they had dropped out or were no longer in class.

The inflated enrollment counts resulted in the schools collecting tens of thousands of dollars extra each semester. The state pays roughly $3,000 per student enrolled.

Garcia's letter also criticized the boards for permitting Moon to hire family members as contractors...

* * * * * *

FORMER SUPERINTENDENT TO GO TO TRIAL, February 7, 2010, KRQE News 13 (Albuquerque, N.M.)

Nearly five year's ago, Larry Barker exposed a charter school accused of cooking the books and cheating taxpayers. The former superintendent's racketeering and fraud trail will start on Monday...

* * * * * *

CHARTER SCHOOL FOUNDER DIES, April 8, 2010, Albuquerque Journal

Danny Moon, who founded Albuquerque Charter Vocational High School, died from pneumonia complications Monday,

Moon, 60, was facing 63 counts related to his alleged misuse of funds and credit cards at the school. The charges included racketeering, fraud over $20,000, fraudulent use of a credit card, conspiracy, making or permitting false public vouchers, and embezzlement.

An initial trial for Moon began in February, but a mistrial was declared after Moon's health degenerated, and he was unable to continue. He collapsed after the third day of the trial.

His wife and daughter also faced two counts each in the charter school case. District Attorney's Office spokesman Pat Davis said prosecutors have not decided whether to pursue those charges.

"They were very superficial co-conspirators in this matter," he said...