Will Huntsberry of Voice of San Diego writes here about one of the biggest scams in the history of charter schools (the biggest was probably the ECOT–Electronic Classroom of Tomorrow–scandal in Ohio, which cost the state about $500 million).
The two ringleaders of an online charter school scam that raked in hundreds of millions of dollars in taxpayer money pleaded guilty to conspiracy charges on Friday.
Sean McManus and Jason Schrock, as well as nine other defendants, including a superintendent, were charged back in 2019 as part of a complicated scheme that involved enrolling fake students into their online charter schools and collecting public money for each student...
“The general activity is you and your friend got these millions of dollars from the state and you funneled them into your pocket, correct?” asked San Diego Superior Court Judge Frederick Link, while taking the pleas.
Both answered yes.
Online charter schools are allowed to collect just as much money per student as brick-and-mortar schools. But the case has pushed legislators in Sacramento to re-examine the rules surrounding online charters. Lawmakers passed a two-year moratorium on the creation of new online charters and are considering changes to the state’s enrollment and funding practices.
Over a several-year period leading up to 2019, McManus and Schrock’s schools brought in roughly $400 million in revenue, prosecutors from the San Diego District Attorney’s Office have said.
As part of McManus and Schrock’s plea deal, they have agreed to turn over all remaining cash and assets owned by A3 and its subsidiary companies. So far, that includes at least $215 million that will eventually make its way back into state coffers.
A3 may have misappropriated more than $215 million but that was all the cash and assets they had.
The next time someone insists that “charter schools are public schools,” ask them when was the last time that they heard of a public school stealing $215 million from the state.
A CREDO report in 2015 found that going to an online virtual charter was equivalent to a full year’s of lost time in mathematics, and almost half a year in reading. Yet numerous states are now considering legislating that would fund the child in any kind of school–charter, religious, for-profit, virtual, home schooling, Uncle Jed’s barn, whatever they want. We are rapidly advancing backwards to the 19th century.
Diane Ravitch's blog 
Huntsberry did a follow up story in 2019 that pointed to the major flaw in charter oversight, and that is the yearly required independent audit.
https://www.voiceofsandiego.org/topics/education/a3-charter-scandal-reveals-major-flaws-in-states-auditing-process/
To date, and to the best of my knowledge, none of the large charter scams that have been made public were the direct result of findings in any of these audits. It will be interesting to see what the 2 year pause in opening new online charters will result in. This new part of charter law will hopefully include an extensive investigation in how and why these audits are basically useless. The problem is worse with online charters, but affects all brick and mortar charters too.
Uh oh, the moratorium is not a permanent ban. I haven’t heard about any legislation to reform the horrendous online charters while the moratorium is in place. The program you’re watching, Horror Online, will continue after these commercial messages.
CCSA will prevent any such legislation from seeing the light of day.
“The next time someone insists that “charter schools are public schools,” ask them when was the last time that they heard of a public school stealing $215 million from the state.”
Wow. That’s powerful.
They made $400 million but only bad to repay $215 million ? And even then, only because they got caught?
Sounds like a profitable business.
Where’d the other $185 million go, by the way?
Did they eat out a lot?
The inevitable result of putting public money into private hands.