A compilation of news articles about charter schools which have been charged with, or are highly suspected of, tampering with admissions, grades, attendance and testing; misuse of funds and embezzlement; engaging in nepotism and conflicts of interest; engaging in complicated and shady real estate deals; and/or have been engaging in other questionable, unethical, borderline-legal, or illegal activities. This is also a record of charter school instability and other unsavory tidbits.
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]
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…
WASHINGTON—Ashanti Bumbray, a former bookkeeper for the Hospitality Public Charter High School in the District of Columbia, pled guilty today to a felony charge stemming from her theft of more than $23,000 of school funds, announced U.S. Attorney Ronald C. Machen Jr.; John G. Perren, Acting Assistant Director in Charge of the FBI's Washington Field Office; and Charles J. Willoughby, Inspector General for the District of Columbia.
Bumbray, 32, of Waldorf, Maryland, pled guilty in the U.S. District Court for the District of Columbia before the Honorable Judge Rosemary M. Collyer to a charge of theft from a program receiving federal funds. The charge carries a maximum sentence of 10 years' incarceration and a fine of up to $250,000. Based on the sentencing guidelines, the likely range is probation to six months of incarceration with a fine of $1,000 to $10,000. Sentencing is set for February 9, 2011.
According to the Statement of Offense filed with the Court, Bumbray was a bookkeeper at Hospitality Public Charter High School from approximately September 2008 until February 2009. Starting in early October 2008 through late January 2009, she stole more than $23,000 of Hospitality's funds by issuing checks and initiating banking transactions for her personal benefit.
In announcing the plea, U.S. Attorney Machen, Assistant Director Perren, and Inspector General Willoughby praised the investigative efforts of the special agent who worked on the case for the FBI's Washington Field Office, as well as Special Agent Kerthalia Peavely of the District of Columbia Office of Inspector General. They also recognized the efforts of U.S. Attorney's Office Legal Assistant Jared Forney and Assistant United States Attorney John D. Griffith, who prosecuted the case.
BREVARD COUNTY, Fla. -- The former principal of Explorer Charter School, a Brevard County elementary and middle school, turned himself in at the Brevard County jail Tuesday. He's accused of stealing funds from the now-defunct school.
The Florida Department of Law Enforcement has also issued an arrest warrant for Jay Maer, the former finance director, who is also accused of stealing funds from the school. He was arrested Tuesday afternoon in Indian River County.
Eyewitness News was there when Ruben Rosario turned himself in to Florida Department of Law Enforcement agents at the Brevard County jail. The former principal is facing four counts of grand theft for stealing thousands of dollars from the charter school he ran in West Melbourne…
Rosario's finance director, Jay Maer, an ex-con, defended the school's bookkeeping as the district took over the school last spring. He is in even more trouble. He faces 46 charges, including grand theft and forgery. Investigators said he wrote checks to himself for all sorts of things, including coaching stipends, providing security at the school grounds and forging the principal's name.
"When in reality there was no work being done and no extra duties being performed," Ivey explained.
Investigators said they know as much as $100,000 was stolen, but there were so many financial records missing they may never know exactly how much was taken or whether the school would have survived if the money wasn't stolen.
The school's financial problems were disclosed last March and the Brevard County School District took over in April. The school was then shut down.
Maer's bond is set at $133,500. Rosario's bond is set at $12,000.
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."…
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.
For nearly half a decade, Escambia Charter School hired out a group of students to cut roadside grass and weeds during class time for about 32 hours per week.
The privately run high school made about $200,000 by paying the children less than required under a state Department of Transportation contract. Meanwhile, it continued accepting tax money from the state Department of Education to teach the children five hours a day.
Until state prosecutors investigated complaints from teachers at the campus north of Pensacola, the falsifying of attendance records, course schedules and grade reports went unchecked.
Even after pleading no contest to grand theft, the school remains open. No more than 12 percent of its students have ever been able to read at grade level, test scores show…
The student work crews started at Escambia Charter in 1999. Stan Callender, the school's chief executive officer, signed a $250,000 contract with the Transportation Department to tend roadside grass and weeds in Escambia and Santa Rosa counties.
Callender and Principal Jerome Chisolm devised a plan that called for a group of students to work eight hours per day, Monday through Thursday, for up to 15ƒ|weeks during school hours, according to state investigators.
The contract paid $16.25 for each hour a teen worked. The school, however, gave the students only $10 an hour, prosecutors said.
That meant the school collected about $40,000 a year from the student labor.
The administrators presented the program to charter-board members and county school-district officials as on-the-job training, investigators said.
Each week, however, Escambia sent false attendance records to the school district showing students were in class, investigators found. Report cards falsely showed that the work-crew members completed the courses…
State investigators amassed enough evidence to charge Escambia with one count of organized fraud, a felony, in April 2004.
Thomas said the criminal charge helped him negotiate an end to the student-labor abuses. The road crews were restructured into proper on-the-job training programs. Students attended class the required five hours per day. Grade and attendance reports were no longer falsified.
But Callender, whom state investigators identified as the mastermind of the scheme, remained in charge at the school. Thomas said there was little he could do, because charter governing boards have authority over staff matters…
Pat and Tammy Rasmussen had no idea they'd sent their son Daniel to one of the lowest-performing schools in Florida [Richard Milburn Academy in New Port Richey] -- until he came home one day and said he was helping teach math class…
…Administrators offered to pay their son $50 for each friend he persuaded to join…
More than 300 charters teaching about 92,000 students have sprung up, funded by $1.5 billion in local, state and federal taxes in the past three years alone. Eighty schools are operating in Central Florida.
But a statewide investigation by the Orlando Sentinel found that while many charters serve children well, scores of others offer a poor choice…
But Jim Warford, Florida's former chancellor of public schools, said state officials were so busy promoting an alternative to conventional schools that they looked the other way when problems arose…
What the Sentinel found is a state system that encouraged the schools to grow but made it difficult to curb bad ones. Many charters have academic and financial problems that state and local officials do not have under control.
The rapid growth of the system alarms Panhandle state Sen. Don Gaetz, a former school superintendent who chairs the Education Committee.
"Charter schools were a movement," said Gaetz, a Republican from Niceville, "but now charter schools are an industry. They have lobbyists -- they walk around in thousand-dollar suits, some of them. Some are still struggling, idealistic, mom-and-pop shops, and they need assistance. But the big boys and the mature organizations should be held accountable for how they use public money and how they educate children."…
Districts shut down Richard Milburn's Tampa and Sarasota schools last year for low student achievement.
In Tampa, nearly half of the 42 graduates Richard Milburn reported last year did not earn a diploma or a certificate of completion, district officials found. As for New Port Richey, district officials said they discovered that more children were eligible to graduate than the school identified because transcripts were in disarray…
As for paying students $50 for each friend who enrolled, Crosby called that a "reasonable incentive" and part of the company's "overall recruiting strategy." Doing crossword puzzles can be valuable because they make students think, and having students help teach classes improves their confidence, he said.
The Pasco principal in 2004 was not available for comment. But Crosby said his school administrators all know the importance of the head count to state funding.
"A charter school is an entrepreneurial activity," he said...
Pasco officials put the Milburn school that Daniel Rasmussen attended on probation last May. They reported finding, among other things, that the campus had no curriculum, no professional guidance counselor and a Spanish teacher who could not speak the language…
…A decade after Florida launched charter schools to give students more choice in where they attend public school, nearly half of the 300-plus charters have operating deficits.
At the same time, more than $200 million of the $492 million Florida spent on these privately operated schools in 2005 went to charters that had business relationships with school officials: renting buildings to the charters, selling services to them, hiring relatives as employees.
Then there are the odd expenditures.
Palm Beach County's Survivors Charter Schools had a 10-year, $100,000 contract for eight season tickets to Miami Dolphins games, which it distributed to the principal and others.
One of the two Survivors campuses also gave the principal $600 a month to lease a BMW car and paid him $163,412 a year, according to 2006-07 audits by the Palm Beach County School District…
One of the biggest differences between charter and regular schools is also the source of many charter money woes: the need to find a school building…
Funding challenges have opened the door for charter directors, employees and managers to lease buildings they own to their schools. Of the more than $40 million Florida gave to charter schools for facilities in 2005, about $4 million went to charters with such arrangements, charter audits show.
More than 60 charters studied by the Sentinel had such financial ties, underscoring the interconnected relationships of some charters and their officers. By contrast, members of a county school board are barred by state law from leasing buildings to their districts…
Loans are another business tie between some charter directors and their schools. Six charters collectively owed their board members more than a half-million dollars in 2005, the audits showed…
Charters that go into debt either have to cut services, such as teacher pay, or they have to shift funds from education of children to interest payments, a state auditor general's 2005 report stated…
For nearly half a decade, Escambia Charter School hired out a group of students to cut roadside grass and weeds during class time for about 32 hours per week.
The privately run high school made about $200,000 by paying the children less than required under a state Department of Transportation contract. Meanwhile, it continued accepting tax money from the state Department of Education to teach the children five hours a day.
Until state prosecutors investigated complaints from teachers at the campus north of Pensacola, the falsifying of attendance records, course schedules and grade reports went unchecked.
Even after pleading no contest to grand theft, the school remains open. No more than 12 percent of its students have ever been able to read at grade level, test scores show…
Each week, however, Escambia sent false attendance records to the school district showing students were in class, investigators found. Report cards falsely showed that the work-crew members completed the courses…
State investigators amassed enough evidence to charge Escambia with one count of organized fraud, a felony, in April 2004.
Thomas said the criminal charge helped him negotiate an end to the student-labor abuses. The road crews were restructured into proper on-the-job training programs. Students attended class the required five hours per day. Grade and attendance reports were no longer falsified.
But Callender, whom state investigators identified as the mastermind of the scheme, remained in charge at the school. Thomas said there was little he could do, because charter governing boards have authority over staff matters…
Warford, the former public-schools chancellor, said the lack of will to improve oversight of charters came from the Governor's Office down through his appointees. Two Education Department workers who proposed more accountability for charters and other school-choice programs were removed from their posts during his tenure, he said.
A climate was created, he said, where "no one stood up and said anything" to improve monitoring or address the problems in charter schools…
After a decade of chafing under the supervision of county school districts, Florida charter-school operators left Tallahassee in 2006 with a law that could allow looser oversight.
Advocates for these taxpayer-supported schools persuaded legislators and Gov. Jeb Bush to create a new agency that charters could choose as their monitor instead.
Now, the Florida Schools of Excellence Commission is on the verge of becoming a school district without borders, based in Tallahassee. Charters it approves are not required by law to meet some of the standards that local school officials must enforce in the name of accountability to taxpayers. The commission also can delegate its role as primary overseer to others, such as cities or charter advocacy groups, two of which have already applied to approve start-up schools.
A majority of the new commissioners have backgrounds in real estate, banking or charter management, all industries with an interest in making sure Florida has plenty of the independently run schools…
Campuses sponsored by the charter commission are exempt from the list of guiding principles and statutory purposes required of charters monitored by districts, such as to improve learning, teacher development and the performance of low-achieving students…
John Lewis, a real-estate-company president who chairs the charter commission, said the National Association of Charter School Authorizers had been hired to help the commission develop application criteria…
State Rep. Elaine Schwartz, D-Hollywood, said it makes no sense for the state to allow the Florida Consortium of Public Charter Schools to get into the business of authorizing charters.
"That would be kind of like the fox watching the henhouse, now, wouldn't it?" said Schwartz, who filed a bill to disband the Florida Schools of Excellence Commission…
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...
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.
BRIGHTON, Colo. -- An Adams County charter school official was charged with six felony counts and one misdemeanor Thursday in connection with the theft of more than $72,000.
The Adams County District Attorney's Office announced the charges that came at the conclusion of a three-month investigation involving Katie Squair, 51.
She is the founder and former business manager of the Community Leadership Academy and was accused of using checks, wire transfers and debits to embezzle money from the school, which opened in August of 2005.
She was charged with three counts of felony theft, two counts of felony computer crime, one count embezzlement of public property and one count of misdemeanor theft.
Squair was arrested Wednesday and is free on a $10,000 bond. She had resigned from the school last February.
ADAMS COUNTY - The former finance director of the Community Leadership Academy will be spending time in prison for stealing $72,300 from the charter school she helped found.
Katie Squair, 51, was sentenced Friday to two years in prison and ordered to pay full restitution, said Michael Goodbee, spokesman for the Adams County district attorney's office.
Squair pleaded guilty to theft last November and has admitted she had embezzled from the school to feed a gambling addiction.
Squair wrote herself checks from the academy's account totaling more than $21,800 and deposited more than $49,700 in wire transfers to her personal bank account.
Christina Gonzales, the academy's acting principal, discovered the improprieties last January and confronted Squair, who resigned.
A former D.C. charter school official intends to plead guilty to stealing more than $400,000 in public money and steering contracts to consulting
According to the "criminal information" charging document filed last week, [Brenda] Belton faces five counts: theft from a program receiving public funds; conversion of public money; bankruptcy fraud; and federal and local tax evasion. No other employee of the D.C. Board of Education, to whom Belton reported, was knowingly involved in or benefited from the schemes, the papers say…
The Washington Post reported in May 2006 that Belton was under federal investigation over allegations that she had ties to a contractor, Equal Access in Education. According to public records, the company's billing address at 26 Underwood Pl. NW was formerly owned by Belton and subsequently owned by her daughter, Lindsey Holmes. The Post reported in October that Equal Access in Education was paid $395,000 to train reading and math teachers at four low-performing charters but that principals at those schools said they never received the services.
According to the charging document, which was first reported by the Examiner yesterday, Belton wrongfully paid herself more than $418,000 from 2003 to 2006 and obtained seven contracts worth $444,620 without competitive bid…
Belton also steered contracts to her friends, according to the document. She hired Sandifer to serve as liaison to the school board. Sandifer was paid $75,268 in salary and consulting fees even though she worked for only a few months. Another friend, Wanda Gordon, was paid $292,968 for consulting services…
The school board placed Belton on leave in June 2006 and fired her in October. The investigation of Belton in part prompted the board in November to give up its authority to open charter schools, leaving them to be absorbed by the city's second charter authorizer, the D.C. Public Charter School Board.
Hours after rebuffing parents and voting to shut 19 public schools, education officials announced plans to end most programs at Alfred E. Smith High in the Bronx and replace them with a charter school.
That charter school, however, has its own troubled history.
It's called the New York City Charter High School for Architecture, Engineering and Construction Industries (AECI), and it has been in operation fewer than two years.
Last June, a Manhattan federal grand jury charged its founder and chairman, Richard Izquierdo Arroyo, with stealing more than $200,000 from a nonprofit South Bronx housing organization.
Prosecutors say Izquierdo spent the money on designer clothes, fancy restaurants and trips to the Caribbean for his grandmother, state Assemblywoman Carmen Arroyo, and his aunt, City Councilwoman Maria del Carmen Arroyo.
Another board member of the school, Margarita Villegas, an employee of the housing group, was indicted with Izquierdo. Both have pleaded not guilty. They immediately resigned from AECI's board and from the board of the South Bronx Charter School, where Izquierdo was chairman.
Virtually all the teachers who began at AECI when it opened its doors in September 2008 resigned within the first year.
This month, 17 of the 19 new staff members at the school filed a state labor petition to have the United Federation of Teachers represent them.
The angry teachers claim that Victory Schools Inc., the for-profit management company hired by AECI to administer their school, is charging an exorbitant management fee.
Meanwhile, DOE has posted little information on the academic performance of AECI students.
James Stovall, the executive at Victory in charge of AECI, did not respond to a request for comment. Neither did Irma Zardoya, the retired DOE administrator who replaced Izquierdo as chair of AECI's board.
None of these problems seem to trouble the educrats at Tweed.
One day soon, our city will wake up to discover that Bloomberg's mad rush to create hundreds of independent charter schools has unleashed bigger financial scandals than in the bad old days of community school boards.
At least new city Controller John Liu announced Thursday he would audit how the city decided to close these schools.
The DOE posted a notice on its Web site Wednesday, detailing plans to move AECI into the Alfred E. Smith building in September. Chancellor Joel Klein scheduled a Feb. 24 vote on the plan by the mayor's Panel for Educational Policy.
Amazingly, the vocational programs the charter school will offer when it moves to Smith are virtually the same programs the public school offers.
Smith accepts all students who apply. AECI only takes students by lottery.
At Smith, 21% of the students are in a special education program; at AECI, only 9% are.
At Smith, 71% of the students come from such low-income families that they qualify for the federal free lunch program; at AECI, only 47% do.
What happens to the poorest kids, to that huge special education population, to those who need the most help?
Liu needs to ask tough questions fast. And he needs to follow the money going to charters, because Klein's people are not.
This story is a dramatic progression of events. The full articles offer additional fascinating details. Charter founder getting consulting fees (The Philadelphia Inquirer, May 14, 2008)
Philadelphia Academy Charter School founder Brien N. Gardiner's web of business relationships includes a $108,000-a-year consulting agreement with an education company that does business with the city's school district. Camelot Schools of Pennsylvania L.L.C. is paying Gardiner's consulting company - Charter School Development Associates - $9,000 a month, for a total of $108,000 this year, Camelot officials said. The Texas-based company has a multimillion-dollar contract with the district to operate three schools, two disciplinary and one for at-risk students. The company received $10.4 million from the district for its programs the last school year. Gardiner's Camelot fee is in addition to the hundreds of thousands that he has collected from companies tied to Philadelphia Academy Charter in the Northeast, where he remains on paid leave as a consultant. Gardiner's status at the charter he founded in 1999 will come up tonight when the school's attorneys present results from an internal investigation of allegations of conflicts of interest, mismanagement, and nepotism. The school district's inspector general has been looking into the same issues at the school, which has 1,200 students in kindergarten through 12th grade, for the last month. Gardiner's relationship with Camelot began in 2004, when he was instrumental in helping the company navigate the Philadelphia School District and obtain its first contract, said Todd Bock, Camelot's senior vice president for education services. "He does consulting," Bock said. "He knows a lot of people." Albert S. Dandridge 3d, Gardiner's attorney, yesterday said neither he nor Gardiner would comment on Gardiner's ties to Camelot. Camelot arrived when Paul Vallas, then the district's chief executive officer, was expanding alternative and disciplinary programs with the School Reform Commission's approval… The school's former CEO, Kevin M. O'Shea, who was demoted to chief operating officer, was suspended with pay. O'Shea, who earned $206,137 as CEO in 2006-07, resigned last Wednesday. It is not known whether Gardiner's deal with Camelot was covered in the board's inquiry. Henry E. Hockeimer Jr., the lawyer who is overseeing the investigation, declined to comment yesterday. But as The Inquirer reported last month, Philadelphia Academy Charter School paid Gardiner's Charter School Development Associates $216,130 during the 2006-07 academic year "for services." The other charter school that Gardiner founded - Northwood Academy - paid the company $86,044, records show. Gardiner worked for free to help Camelot get its first contract, Bock said. Once the contract was secured in 2004, Bock said, the agreement called for Gardiner to be paid $3,000 per month for each program. He said that Gardiner started out receiving $6,000 because the district contracted with Camelot to operate Boone, a disciplinary school, and Excel Academy, a school for at-risk over-age students…
The federal criminal probe of former top administrators at Philadelphia Academy Charter School has expanded to land deals, including one involving another Northeast Philadelphia charter school. Investigators are interested in the methods that charter founder Brien N. Gardiner used to buy buildings that allegedly were leased to the charters at high rates, enabling him to accumulate reserves of public funds for other purposes, according to several people with knowledge of the probe. "They're following the money trail," one source said. A slew of grand jury subpoenas have been issued for documents related to the purchase and financing of a building for Northwood Academy Charter School at 4621 Castor Ave. and for Philadelphia Academy's high school campus at 1700 Tomlinson Rd. Gardiner, who founded Philadelphia Academy in 1999, opened Northwood in 2005 and at one time was chief executive of both charters. His contracts were terminated in April and May. It's not clear what parts of the real estate deals federal investigators are focusing on. But an Inquirer examination of documents shows that Gardiner and his associates created nonprofits they controlled to buy property from a local developer, borrowed money to renovate the buildings, and then refinanced the debt through a state tax-free program. The result: allegedly lots of missing cash, at least $710,000, according to lawyers who investigated one of the school's finances. The cash reserves have also raised questions about whether Gardiner and others went too far using options allowed under state law… In a subsequent internal probe, lawyers said they uncovered "substantial evidence" that Gardiner and O'Shea systematically looted the school for personal gain and to benefit their other businesses. The federal criminal investigation of Gardiner and O'Shea was launched in the spring. In the widening probe, investigators have been asking questions and issuing subpoenas for documents to track every step of the land transactions. Interviews and documents show that this is how Gardiner put together the land deals that have captured the attention of federal investigators: Philadelphia Academy's elementary school building at 11000 Roosevelt Blvd. is owned by a corporate landlord. But after the SRC gave the charter permission in May 2003 to add a high school, Gardiner decided to buy a building. He used Philadelphia Academy Community Development Corp., a nonprofit he had created a year earlier. O'Shea's wife, Jamie, was named board president. Another nonprofit owns Northwood's building on Castor Avenue: NW CDC L.L.C. State records show that Gardiner has sole control. In both cases, the nonprofits bought their buildings from the same seller: the developer Hardeep Chawla. Property records show that a Chawla company paid $700,000 in December 2003 for a former warehouse on Tomlinson Road. After making some upgrades, he sold it two months later to the nonprofit Philadelphia Academy Community Development Corp. for $2.45 million. The Reinvestment Fund, a nonprofit based in Center City that finances neighborhood and economic development projects, later provided a $6.8 million loan that was used to pay off a short-term loan, complete renovations and outfit the school, an official with the Reinvestment Fund said. Chawla was indicted last month on charges of conspiracy, wire fraud and bribery as part of a federal corruption probe involving City Councilman Jack Kelly's chief of staff and campaign treasurer. He has pleaded not guilty. Neither Chawla nor his attorney could be reached for comment… Philadelphia Academy's high school building opened in September 2005. The charter's lease set rent at 110 percent of the nonprofit's debt service. The Reinvestment Fund recommends that amount to cover costs and give the nonprofit a cushion. The lease runs through 2033. Under that formula, Philadelphia Academy's current monthly rental costs should be about $16,500, according to attorneys for Ballard Spahr Andrews & Ingersoll L.L.P. who conducted the internal investigation for the charter's board. In reality, the charter was paying $66,975 per month, state education department records show. A recent Philadelphia Academy audit says the school was paying the higher rate "due to increasing cash flow needs" but provides no explanation and does not say who set the higher payment… The nonprofit that owns Northwood - Gardiner's second charter - also used a tax-exempt note to lower its costs from the purchase of the school building on Castor Avenue. Northwood's nonprofit refinanced an existing loan from Sovereign Bank in December with a $5.3 million tax-exempt note from the Abington Township Industrial and Commercial Development Authority. Despite the savings the nonprofits achieved through the refinancings, the charters' rent was not reduced. Federal investigators are trying to determine what happened to the extra rent, sources said…
Megan Snyder Galo reread her long e-mail to the Philadelphia School District's charter school office. "I am the parent of a child attending the Philadelphia Academy Charter School. There are things that are going on at the school which are alarming . . ." Galo, who had gone over each word with fellow parent Lisa George, took a deep breath and hit the send key. That simple act last November triggered a chain of events that resulted in the overhaul of Philadelphia Academy's operations and a widening federal criminal probe that has ensnared at least three charter schools.
BRIEN N. GARDINER, the former darling of Philadelphia's charter-school movement who fell from grace amid a financial scandal, shot himself to death yesterday afternoon in the parking lot of a SEPTA regional-rail station, police in Montgomery County said last night.
Gardiner was under investigation for thievery and other forms of corruption related to his work for a number of charter school outfits, including one called Camelot Schools of Pennsylvania. Gardiner had been instrumental in guiding Camelot to part of the $40 million that Philadelphia schoolman, Paul Vallas, was paying out to have Philadelphia's "high-need" students professionally handled.
PHILADELPHIA - United States Attorney Michael L. Levy today announced the filing of an information1 charging Kevin O'Shea and Rosemary DiLacqua with mail fraud and honest services fraud based on their roles in defrauding the Philadelphia Academy Charter School (“PACS”). O'Shea is also charged with theft from a federally funded program and filing a false tax return. The information charges that O'Shea, the former CEO of PACS and BG, another former PACS CEO who died prior to the filing of these charges, made approximately $34,000 in undisclosed payments to DiLacqua, the PACS board president and a Philadelphia police detective. While receiving this money, DiLacqua approved a series of salary increases for O'Shea and BG as well as entering into a twenty-year consulting contract with BG that would have paid him in excess of $100,000 annually for no more than 90 days of consulting. DiLacqua did not disclose these payments on her mandatory statement of financial interest form or to the other board members. O'Shea is also charged with stealing at least $500,000 from PACS and filing a false tax return. “Charter schools were an innovation to improve education and were never meant to be a source of personal enrichment for those running them,” said Levy. “Even more troubling is the fact that the defendants both had law enforcement backgrounds. We hope this case awakens board members of charter schools to their obligation to safeguard the funds of these schools…”
PHILADELPHIA - Kevin O'Shea, 50, of Philadelphia, was sentenced today to 37 months in prison for mail fraud, theft from a federally funded program, and filing a false tax return. At the time of the crimes, O'Shea's was working for and defrauding the Philadelphia Academy Charter School (“PACS”), announced United States Attorney Michael L. Levy. In July 2009, O'Shea entered a guilty plea admitting that he stole between $400,000 and $1 million from PACS by: (1) using approximately $710,000 in PACS' funds to purchase a building in the name of his purported non-profit business; (2) demanding kickbacks from PACS vendors; (3) submitting for reimbursement at least $40,000 in fraudulent invoices for personal meals, entertainment, home improvements, and gas and telephone bills; (4) having approximately $50,000 worth of home repairs improperly billed to PACS; (5) collecting approximately $34,000 in rent from entities using PACS facilities; and (6) hiring a computer firm in an attempt to destroy computer evidence to obstruct this investigation. O'Shea also admitted to filing a false tax return for 2006. In addition to the prison term, U.S. District Court Judge Eduardo C. Robreno ordered O'Shea to pay restitution in the amount of $900,000, to forfeit $500,000, and pay a $1,000 fine. O'Shea must report to prison by December 7, 2009...
PHILADELPHIA—Rosemary DiLacqua, 51, of Philadelphia, was sentenced today to a year and a day in prison for honest services mail fraud committed while she was board president for the Philadelphia Academy Charter School (“PACS”), announced United States Attorney Michael L. Levy. DiLacqua accepted a total of approximately $34,000 in payments from codefendant Kevin O’Shea, the former CEO of PACS, and another former school official that she did not disclose on her mandatory statement of financial interest form or to the other board members. After receiving these undisclosed payments, DiLacqua approved a series of salary increases for O’Shea and also a 20-year consulting contract for the other former school official that would have paid him in excess of $100,000 annually for no more than 90 days of consulting each year. When O’Shea left PACS the following Spring (May 2008), he was earning in excess of $200,000 in salary from PACS. DiLacqua pleaded guilty to the charge in July 2009. In addition to the prison term, U.S. District Court Judge Eduardo C. Robreno ordered DiLacqua to pay a fine in the amount of $10,000 and to pay a special assessment of $100. Co-defendant Kevin O’Shea was sentenced, in October, to 37 months in prison and $900,000 restitution...
