This is a world-class scandal. And it is all legal!
Arizona’s State Representative Eddie Farnsworth sold his for-profit charter chain to a non-profit for about $30 Million and will reap millions in profits, then get a management fee to continue to operate them.
“Yet another millionaire is made, thanks to the latest in charter school scheming.
“This time, it’s state Rep. Eddie Farnsworth, who has figured out a way to sell his charter school business – the one built with taxpayer funds – and make millions on the deal and then likely get himself hired to continue running the operation.
“Which now converts to a non-profit and thus will no longer have to pay property or income taxes.
“Sweet plan. Sickeningly so, when you consider that Farnsworth is making his millions off of tax money intended to be used to educate Arizona children.
“Other charter schools are getting rich
“Farnsworth is just the latest operator to use charter schools as his own personal ATM – one that shoots out public funds.
“The Republic’s Craig Harris has spent all year reporting on operators who are getting rich – or at least, making a tidy pile of cash – off publicly funded charter schools, aided by laughable state laws that require hardly any oversight or accountability.
“There’s the Arizona Charter Schools Association’s No. 2 guy, using his position to throw business to a company he co-owns with his wife by giving her the names of students looking for a charter school. She scores a bounty for every student (and the tax dollars that go with that student) she delivers to certain charter schools.
“There’s BASIS Charters Schools founders Michael and Olga Block, who scored $10 million in fees to manage the charter chain of schools last year.
“There’s American Leadership Academy’s founder Glenn Way, who scored at least $18.4 million profit by getting no-bid contracts to build charter schools thanks largely paid for with public money.
“Then there’s Primavera online school, where most of the public funding has gone not to educate students but to elevate the company’s investment portfolio. Damian Creamer, the school’s founder and CEO, last year scored an $8.8 million “shareholder distribution” from the for-profit company that now runs Primavera, according an audit filed with the Arizona State Board for Charter Schools.
“Taxpayers pay twice for the same schools
“Now comes Farnsworth with his Benjamin Franklin Charter School scheme, approved Monday by the Arizona State Board for Charter Schools.
“Under the arrangement, Farnsworth is selling his for-profit four-school operation to a non-profit run by a trio of handpicked pals who will now select someone to run the schools. Farnsworth has applied for the job.
“According to state records, Farnsworth will score at least $11.8 million in profit from the deal. He’ll also keep nearly $3.8 million in “shareholder equity” accumulated over the years since starting the suburban charter school chain in 1995. But Farnsworth declined to disclose the total profit he will make on the deal.
“I make no apologies for being successful,” he told the Arizona State Board for Charter Schools.
“And you wonder why Farnsworth has fought efforts to require better oversight and reform of Arizona’s charter schools?
“The Republic’s Harris reports that when the sale closes, taxpayers will have paid twice for the same schools – once to essentially pay the mortgage on the Farnsworth-owned buildings and now to assume more debt in order to buy the buildings.
“And – by the way – it’s all legal
“The most outrageous part of this outrageous story is that what Farnsworth is doing is apparently legal.”
Craig Harris of the Arizona Republic reported on Farnsworth’s meeting with the state charter board (which includes other charter operators):
“[Farnsworth] told them he was requesting the change in organization to strengthen the finances of the roughly 3,000-student school chain. Farnsworth said the new structure will allow Benjamin Franklin to avoid property taxes and to qualify for federal education funds.
“The Legislature gives charter operators up to $2,000 more per student in state education funding than traditional district schools. That’s because charters cannot access local property taxes for building debt.
“Farnsworth acknowledged he would make a profit on the deal.
“Board member Erik Twist, who runs the Great Hearts charter schools, tried to press Farnsworth on how much he stands to gain. But Chairwoman Kathy Senseman interrupted him and changed the direction of the discussion.
“Farnsworth told the board that if he had wanted to make money, he merely could have sold the schools and cashed out.
“I make no apologies for being successful,” Farnsworth said.
“The transfer plan calls for the new non-profit operator to hire a contractor to manage the schools, an arrangement similar to other charter chains like Basis and American Leadership Academy.
“Records submitted to the Charter Board appeared to show Farnsworth had already been hired to manage the schools, but he said the document was a “draft” intended to give board members an understanding of the management contract.
“That’s what happens at Basis schools, many of which rank atop U.S. News & World Report’s “best schools” lists. A private contracting arrangement has paid about $10 million in “management fees” to a private firm run by Basis founders Olga and Michael Block.
“Farnsworth told the board, however, that he had submitted an application for the contract to the company’s new three-member board, all of whom he recruited and are his friends.
“Rebecca McHood, a Gilbert resident who attended the meeting, called the board vote “crazy.”
“They just gave a charter to a non-profit, but they didn’t vet them,” said McHood, a charter school critic whose relatives attended Farnsworth’s schools. “Here we are paying for his private property with our tax dollars, and then he can sell them.”
“State to pay twice for campuses
“Farnsworth built his school chain over more than two decades ago and became its sole owner in 2017, when he used $2.2 million of Benjamin Franklin funds to buy out his partners, Sharon Clark and Roy L. Perkins Jr., records show.
“That deal also made him sole owner of LBE Investments, a Gilbert company that owns the four campuses and leases them to Benjamin Franklin. Both companies are headquartered at 690 E. Warner Road in Gilbert.
“Once the planned sale to the new non-profit business closes later this year, taxpayers will have paid for the same schools twice. That’s because Benjamin Franklin, for years, has used education funding from the Legislature to make lease payments to LBE Investments, records show.
“(A 2017 audit showed Benjamin Franklin paid $4.9 million a year in lease payments, and that the remaining lease balance for three elementary schools and one high school was $53.9 million.)
“Farnsworth told the Charter Board that an appraisal of the schools is underway, and they will be sold at fair-market value.
“Documents submitted to the Charter Board indicate the plan is to borrow $65.7 million through the Arizona Industrial Development to purchase the schools. A sale for the projected loan amount would result in an $11.8 million profit for Farnsworth by retiring the outstanding lease balance.”
Why do Arizona taxpayers acquiesce to this blatant Profiteering with money intended to educate children?
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This shameless profiteering should not be ignored by voters in Arizona. Meanwhile, many public school students in the state attend schools in dilapidated buildings with leaking roofs, filthy carpets and torn textbooks a decade old. https://www.azcentral.com/story/news/local/arizona-education/2018/04/05/arizona-teachers-share-stories-crumbling-classrooms-textbooks-education-funding/487106002/
apparently, taxpayers in AZ don’t care where their money goes or who steals it
And it’s not just Arizona, as Utah also has Anerican Leadership Academy charter schools.
The same guy, Glenn Way, started that charter chain in Utah, then moved to Arizona, where the rules are non-existent.
Benjamin Franklin is turning in his grave.
Another suggestion for making money in the Ed Deform rackets: become a standards-and-testing EduPundit. NO KNOWLEDGE OR EDUCATION (OR EVEN COMMON DECENCY) REQUIRED!!! Here, your quick guide to cashing in:
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“There’s BASIS Charters Schools founders Michael and Olga Block, who scored $10 million in fees to manage the charter chain of schools last year.”
If there’s an enterprising journalist (left) out there, this is unexplored territory.
Follow the money. Wouldn’t hurt to look at the “sponsors” too- see what they’re doing to earn a cut of every charter school dollar.
“In fees” isn’t acceptable. Fees for what? Who gets paid? How much do they get paid?
Also- while you’re at it- look into whether the charter chains are transferring state funding from one state to the next. Can they take public funding for education in one state and transfer it to another when they expand? Can they do it if they set up shell companies?
“The charter school” – the official state-listed entity- is only one layer of the onion. There are multiple layers under that. No one knows what they spend, how much they pay, who they pay or what they do for this largess.
This is what happens when the state allows a BASIS school for the “haves,” and an under funded public school or cheap charter for the poor. It promotes the sorting of students by race and class.
Primavera online charter school is pushing back on an Arizona Republic investigation of its financial and academic performance, including an $8.8 million payment to Chief Executive Damian Creamer.”
Turns out it’s profitable to stick kids in front of computers and jam cheap garbage “ed tech” down their throats, instead of giving them an actual school with teachers.
If you wonder why ed reformers are such a lock-step cheerleading squad for ed tech, wonder no more.
Frees up PILES of state funding for the adults to grab and stuff in their pockets.
If Arizona wants to stop this theft of public funds, they are going to have to get rid of the ed reform echo chamber who stack their state government.
Nothing will happen until they clean house.
More regulation won’t do it. Mass firings are required. They won’t get the message until they lose their jobs and the ed reform clique is broken up.
Remember folks, these same charter school profiteers are the same people who smear every public school employee as “self interested”
So, public school employees are “self interested” because they are paid for their work, but the ed reform echo chamber are selfless heroes, who just happen to make millions of dollars churning public funds.
Ed reformers promise that when they succeed in their goal or eradicating public schools the private contractors they hire will be “regulated”
But they schools they have now aren’t regulated! They’ll be better when they are all private contractors?
No they won’t. That’s a fantasy. If they can’t run 10% of schools without massive fraud and profiteering they sure as hell can’t run 100% of schools.
They can’t even manage the small share they have NOW. Multiply the profit motive by 10,000 and watch the corruption bloom. This small scale theft will look like shoplifting in comparison to THAT haul.
Whoever dared to write this should get an award:
“A proposal: We will know students are well-prepared for the jobs of the future when they read a claim like “85% of the jobs that today’s learners will be doing in 2030 haven’t been invented yet” and know it is absolute made-up horseshit.”
https://www.insidehighered.com/blogs/just-visiting/future-work
Seriously though: how smart can they be if they swallow this stuff? My high school student son would question that claim. Anyone would. They all just repeat it?
This reveals how the charter school industry will avoid California’s new bill that bans for-profit charters in the state and still walk away with millions and maybe even billions of public dollars.
The trick: sell to an existing non-profit or set up a new non-profit and sell the for-profit to it.
All the charter school pirates need to do is play a shell game, a deceptive and evasive action or ploy, especially a political one.
It’s all legal because the autocratic billionaires and their loyal minions have spent decades changing or getting rid of laws so they can get away with fraud and theft.
Rudy Giuliani, Trump’s stupider minion mouth, gave the shell game away recently when he said white collar crime isn’t really a crime. Evidently, he knows something about what’s been going on behind the Wizard of Oz’s curtain that the rest of us don’t know.
https://www.newsweek.com/trump-lawyer-rudy-giuliani-manafort-crime-1089109
That is why all the waste and fraud are often ignored unless the FBI gets involved. Lots of politicians are greasing the wheels to keep the money flowing, and they echew any attempts to regulate or provide oversight.
“Unless the FBI gets involved”
This explains why Trump and the GOP are working overtime to discredit the FBI and strip the public’s trust in the FBI as a crime buster.
Once the FBI loses credibility as a crime buster, then Trump and the rest of the frauds and crooks will be free to let their greed run rampant without fear of being caught.
Lloyd, Trump’s biggest targets at the FBI are any agents knowledgeable about the Russia Mafia, with whom he had numerous dealings.
That’s why he is after Bruce Ohr, who is the FBI’s leading specialist on Russian organized crime networks.
There are very few for-profit charters in CA. They will quickly rebrand themselves as nonprofits and hire for-profit management.
Someone has to say it so I will. Taxpayers and voters in AZ, a red state that is supposed to, one assumes, stand for fiscal conservatism and restraint, are either the dumbest people in the nation or the most un-informed/mal-informed people in the nation. Or, perhaps, they’ve all drowned in the koolade of the “prosperity gospel” and have placed the accumulation of wealth above all other moral and ethical teachings of their faiths and their churches, if there’s any remaining Christian values to be found in them in the first place. Are there no investigative journalists reporting on this there? No independant media? Or is AZ nothing more than a collection of sheeple meekly doing the bidding of the money changers who own and operate their state? Perhaps they don’t care about being defrauded and robbed if they like whoever is stealing their tax dollars? This is beyond belief and should be a viral national story about right wing corruption.
What is it about Arizona that made it a prime target for the Koch brothers?
“Racist History 101: When Arizona Blocked Spanish Speakers From Voting”
https://www.phoenixnewtimes.com/news/arizonas-racist-history-blocking-spanish-speakers-from-voting-10239647
Blacks or African Americans made up 3.4% of Arizona’s population; of which 3.3% were non-Hispanic blacks. American Indians made up 4.5% of the state’s population; of which 4.1% were non-Hispanic. … In addition, Hispanics and Latinos made up 29.0% of Arizona’s population.
White alone = 83.1 percent
https://www.census.gov/quickfacts/az
Arizona has more registered Republicans than Democrats:
1,264,295 to 1,111,580.
Arizona is listed as one of the top ten most racist states.
“Every other border state has a hispanic majority except this one, thanks to the aggressive enforcement of highly racist immigration laws. The supporters of these laws, like Jan Brewer and Joe Arpaio, are elected consistently. The state’s border enforcement strategy is centered around forcing illegals to enter the country through the Sonoran Desert, where many die. The state has persecuted those who attempt to provide aid to the dying, making Arizona the only State to actively and legally encourage the slow death by dehydration of Hispanics. Not even the deep south can claim that.”
https://www.thetoptens.com/most-racists-states-us/arizona-459210.asp
The Hypocrisy of Racism: Arizona’s Movement towards State-Sanctioned Apartheid
https://cedar.wwu.edu/cgi/viewcontent.cgi?article=1154&context=jec
Racism is probably at the core of the problem. Arizona has a lot of old white retirees that resent paying for schools that many Latino young people attend. Many people in the state still reject climate change even though Phoenix was on a list of possible uninhabitable cities of the future.
“Advancing White Supremacy through Academic Strategy”- UnKochMyCampus.org
“I make no apologies for being successful,” Farnsworth said.”
As all avaricious bastards who steal from others say.
Lol exactly. If his product is so great why does he need the taxpayers to subsidize it? The hypocrisy of some of these characters here in AZ is incredible.
Trump says that too. He also said, “I make no apologies for paying no taxes.” Taxes are for the little guys (Leona Helmsley)
The clout that makes possible the privatization scheme ripoffs – Chester Finn, Jeb Bush, Cory Booker, Arne Duncan, Fordham Institute, Bill Gates, Reed Hastings, the obvious and expected John Arnold of Enron, etc. Then, we have university faculty getting $10 mil. to develop products and marketing plans for the private sector, some of whom pick up paychecks from taxpayers while doing so. (Michigan State University)