Archives for category: Fraud

Dan Alexander, a senior editor at Forbes who covers Trump’s businessses, writes that Trump really is a billionaire. His net worth, he says, is about $2.5 billion. That’s after taking into account more than $1 billion in Trump debts.

That makes it even more scandalous that Trump employs every accounting trick to pay no taxes in most years (while deducting $70,000 for his hair stylist), and only $750 in two years when he actually paid something to the government.

The former principal of a closed charter school in Arizona was sentenced to 3.75 years in prison for participating in a scheme to loot $2.5 million by inflating enrollment. The principal was a high school graduate, which is okay in Arizona, where credentials don’t matter. The principal and his associates forged documents for phantom students.

Craig Harris of the Arizona Republic wrote:


The former principal of a closed West Valley charter school was sentenced to 3.75 years in prison on Monday, after pleading guilty to engaging in a $2.5 million enrollment-inflation scheme.

Harold Cadiz, 56, expressed contrition and took responsibility for his actions before Maricopa County Superior Court Judge Jay Ryan Adleman, but Cadiz placed much of the blame on two co-defendants who also face prison sentences in the fraud case.

“I’m tremendously sorry,” Cadiz said. “The state is so short-funded for kids, and for this to happen is appalling … The state has suffered because of my involvement. I knew it was wrong.”

Cadiz, who has a high school education, said he was “dragged” into the scheme. Charter schools, unlike traditional school districts, do not require advanced degrees for those running the publicly funded but privately operated campuses.

Cadiz’s plea deal with the state Attorney General’s Office had called for a prison sentence of between 3 and 12½ years with up to 7 years of probation, but Adleman settled on the lower ended and ordered that Cadiz also be placed on 5 years of probation after his release from prison. Cadiz and the two other defendants also must repay $2.5 million.

The judge noted in making his sentencing decision that there were mitigating factors, including that Cadiz was not personally enriched from the scheme other than keeping his job at the charter school.

Two sheriff’s deputies took Cadiz into custody immediately after the roughly 30-minute hearing in downtown Phoenix.

Cadiz is the first Discovery Creemos Academy executive to face prison time. Three former executives admitted to defrauding the state and federal governments by inflating the Goodyear charter school’s enrollment numbers by hundreds of students from 2016 to 2018.

Arizona public schools are funded based on their enrollment, meaning each additional student a school reports to the state brings more tax dollars.

Former Vice Principal Joann Vega is slated to be sentenced Sept. 23. She faces up to 8.75 years in prison.

Daniel Hughes, the former president and CEO of the charter school, is scheduled to be sentenced Nov. 16.

Harris says that Hughes is likely to get a sentence of five years in prison.

I have posted many times about the corruption embedded in the for-profit virtual charter industry. The founder of Pennsylvania’s largest virtual charter school was sentenced to prison for misappropriating $8 million. The single biggest scam in U.S. history involved an online charter chain in California called A3, whose owners managed to make $50 million in state funding disappear. The Electronic Classroom of Tomorrow (ECOT) in Ohio collected $1 billion over its nearly two decades, its owner paid his companies for supplying services, he made generous gifts to elected officials, but ECOT declared bankruptcy in 2018 to avoid repaying the state for phantom students. The stories of corruption, embezzlement, and scamming go on and on.

Therefore I was delighted to find this excellent summary by journalist Florina Rodov, who gathers many of the scandals and research reports in one place to demonstrate the woeful failure of virtual charters. As she points out, the virtual charter industry has beefed up its already massive marketing budget to take advantage of the pandemic and try to gather market share.

One detail that I found fascinating was the link to executive compensation for K12 Inc., the for-profit virtual chain that has the largest enrollment in the nation. The top five executives receive a total of $28 million in compensation. Beats teaching!

She begins:

“Instead of going to school every morning, what if school could come to you?” an ad asks enticingly, promising students “online personalized learning” tailored to their specific needs. It’s one of hundreds of active Facebook ads run by K12 Inc., the largest for-profit virtual charter school provider in the United States. As public schools rose to the challenge of educating students online during the pandemic, corporations like K12 Inc., whose stock price has been climbing since mid-March, were licking their chops at the prospect of moving kids online permanently. Though virtual charter schools perform dismally academically and are plagued by scandal, the goal is for them to replace traditional brick-and-mortar public schools in an effort to privatize education. While this would harm students, it would most egregiously damage Black and Latino children, who’ve already been disproportionately impacted by the coronavirus, due to structural inequities such as lack of access to computers and internet service, as well as inconsistent health care and crowded housing.

The article has many important links and I urge you to read it in full. The virtual charter industry has the full-throated support of Betsy DeVos, who lied about their results at her confirmation hearings in 2017, claiming they had 100% graduation rates, when their graduation rates are abysmal.

Investigative reporter Barton Gellman describes a nightmare scenario that would sow chaos and destroy our democracy.

What if Trump refuses to concede? He has repeatedly said that mail-in ballots are fraudulent. He’s already predicted that, unless he wins, the election will be “rigged.”

Yesterday, he was asked directly if he would accept the results of the election, and he refused to say that he would.

Gellman writes:

In this election year of plague and recession and catastrophized politics, the mechanisms of decision are at meaningful risk of breaking down. Close students of election law and procedure are warning that conditions are ripe for a constitutional crisis that would leave the nation without an authoritative result. We have no fail-safe against that calamity. Thus the blinking red lights.

“We could well see a protracted postelection struggle in the courts and the streets if the results are close,” says Richard L. Hasen, a professor at the UC Irvine School of Law and the author of a recent book called Election Meltdown. “The kind of election meltdown we could see would be much worse than 2000’s Bush v. Gore case.”

A lot of people, including Joe Biden, the Democratic Party nominee, have mis­conceived the nature of the threat. They frame it as a concern, unthinkable for presidents past, that Trump might refuse to vacate the Oval Office if he loses. They generally conclude, as Biden has, that in that event the proper authorities “will escort him from the White House with great dispatch.”

The worst case, however, is not that Trump rejects the election outcome. The worst case is that he uses his power to prevent a decisive outcome against him. If Trump sheds all restraint, and if his Republican allies play the parts he assigns them, he could obstruct the emergence of a legally unambiguous victory for Biden in the Electoral College and then in Congress. He could prevent the formation of consensus about whether there is any outcome at all. He could seize on that un­certainty to hold on to power.

Trump’s state and national legal teams are already laying the groundwork for postelection maneuvers that would circumvent the results of the vote count in battleground states. Ambiguities in the Constitution and logic bombs in the Electoral Count Act make it possible to extend the dispute all the way to Inauguration Day, which would bring the nation to a precipice. The Twentieth Amendment is crystal clear that the president’s term in office “shall end” at noon on January 20, but two men could show up to be sworn in. One of them would arrive with all the tools and power of the presidency already in hand.

“We are not prepared for this at all,” Julian Zelizer, a Prince­ton professor of history and public affairs, told me. “We talk about it, some worry about it, and we imagine what it would be. But few people have actual answers to what happens if the machinery of democracy is used to prevent a legitimate resolution to the election.”

The article goes on to describe in detail how Trump and his allies are already planning to disrupt the election, tie up the count with lawsuits, discredit mail-in ballots, and, if necessary, call out armed mobs to intimidate voters. Gellman believes that Trump will never concede.

I hope the article is not behind a paywall.

It details the worst threat to our democracy in our lifetimes, maybe since the the Civil War, maybe ever.

I just finished reading Michael Cohen’s new tell-all about his years as Donald Trump’s “fixer.” It is called Disloyal: The True Story of the Former Personal Attorney to President Donald J. Trump. Quite a lot of the book consists of Cohen flaying himself for being a lackey who happily did Trump’s bidding, even when he knew that he was being asked to lie, cheat, or cover up for Trump’s misdeeds. He was a lawyer, and he showed no respect for the law. His job for Trump was to twist the law to benefit Trump and to silence those who claimed that Trump had wronged them.

There is a morbid fascination to the book. It confirms everything that Trump’s most rabid critics have said about him. He lies whenever it suits his purposes, and he expects his top executives to lie for him without hesitation. He is unscrupulous, amoral, cynical, and completely self-absorbed. Everyone else in the world is merely an instrument to advance his self-aggrandizement.

He despises the working people who constitute his base. He pretended to be a Christian to win over the evangelical leaders who met with him in Trump Tower and who blessed him with a “laying on of hands” ceremony; as soon as they left his presence, he ridiculed them. He has no religious beliefs whatever. He is obsessed with hating Obama; he even hired someone to impersonate Obama so he could pour out his wrath on the actor. Trump’s ticket to entry into politics was birtherism; he concocted a tale about sending investigators to Hawaii to determine whether Obama was an American citizen. He promised to release the findings. He never did. He claimed that Obama’s success in life was due solely to affirmative action, and hinted that Obama was a mediocre student. Meanwhile, he assigned Cohen the job of making sure that his own academic records from high school, college, and graduate school were never released.

When asked why he didn’t condemn the Saudi government for the murder of journalist Jamaal Khashoggi, Trump would say, “What the f— do I care? He shouldn’t have written what he did. He should have shut the f— up.” So much for freedom of the press.

Cohen spends much of the book explaining his attraction to Trump, whom he knew was a fraud. Trump demanded absolute and complete loyalty, and Cohen gave it to him, like a puppy dog. Cohen admitted that he was drawn to Trump’s outrageousness, his money, his power, his celebrity, his flair, and the excitement of being in a daily circus of chaos and drama. 

Cohen’s fascination with Trump is foreshadowed by his description of his adolescence. He grew up in an affluent suburb on Long Island in New York. His father was a refugee who became a doctor. Young Michael had no interest in school, other than to get by. What he liked best was hanging out at his uncle’s club in Brooklyn, El Caribe, which was a favorite of Mafia figures. They were tough and brazen. They carried guns. He admired their cool, their wealth, their power. He writes about an incident where a wise guy took off his bathing suit in the middle of the club’s swimming pool, which was crowded with women and children. The tough guys told the miscreant to put his suit on; he didn’t. Then one of them pulled a gun and shot him in his butt. Blood streaked the water. When the police arrived, nodody knew anything, no one saw it happen. Cohen relished, as a Trump executive, being armed, with a gun on his belt, another in an ankle holster. He says Trump too was armed.

We learn that Trump regularly ridicules Don Jr. in front of other people. He thinks Don Jr. is a fool and a loser. Don Jr. takes his father’s insults and put-downs with silence; he is used to his scorn. Tiffany, the only child of Marla Maples, is treated by her half-siblings as an outsider. Jared is an arrogant snob. Cohen says that Trump’s first campaign manager in 2016, Corey Lewandowski, was a drunk and was having an affair with Hope Hicks. 

Trump is very boastful about his sexual prowess. He thinks that he can have any woman he wants. Cohen recalls a day when he took his family to swim at Trump’s New Jersey golf club. Trump spotted a young woman on one of his tennis courts and said, “Look at that piece of ass. I would love some of that.” Cohen was mortified. It was his 15-year-old daughter. Cohen was too supine to object. 

If you enjoy hearing tales of how Trump managed to trick others and stiff the little guys, you will find much to enjoy. For Trump, the “art of the deal” consisted of cleverly cheating people of millions of dollars. Contractors and subcontractors who worked on Trump properties were lucky to get 20% of what Trump owed them. Anyone who threatened to sue him was threatened with a countersuit that would bankrupt them. Who wants to be sued by a billionaire with deep pockets?

Michael Cohen is in prison. It is hard to feel sorry for him. He chose his fate. As a young man, he admired gangsters, and he loved being in the company of ruthless thugs. In Trump-world, he found the environment in which he flourished, providing the muscle and threats to compel people to back off when Trump cheated them.

He is less interesting than the mega-star in whose orbit he lived: a liar, a con man, a cheat, a narcissist, a man with no ethics or morality or conscience. Trump attracted moths to his flame, and Cohen got burned.

Tom Ultican, retired teacher of physics and advanced mathematics in California, writes frequently about school “reform,” aka school choice, as a substitute for adequate funding.

In this post, he explains the fraud of school choice and why billionaires and rightwing zealots promote it. To read it in full,as well as his kinks, open the full post.

He begins:

Birthed in the bowels of the 1950’s segregationist south, school choice has never been about improving education. It is about white supremacy, profiting off taxpayers, cutting taxes, selling market based solutions and financing religion. School choice ideology has a long dark history of dealing significant harm to public education.

Market Based Ideology

Milton Friedman first recommended school vouchers in a 1955 essay. In 2006, he was asked by a conservative group of legislators what he envisioned back then. PRWatch reports that he said, “It had nothing whatsoever to do with helping ‘indigent’ children; no, he explained to thunderous applause, vouchers were all about ‘abolishing the public school system.”’ [Emphasis added]

Market based ideologues are convinced that business is the superior model for school management. Starting with the infamous Regan era polemic, “A Nation at Risk,” the claim that “private business management is superior” has been a consistent theory of education reform promoted by corporate leaders like IBM’s Louis Gerstner, Microsoft’s Bill Gates, Wal-Mart’s Walton family, Bloomberg LP’s founder, Michael Bloomberg and SunAmerica’s Eli Broad. It is a central tenet of both neoliberal and libertarian philosophy.

Charles Koch and his late brother David have spent lavishly promoting their libertarian beliefs. Inspired by Friedman’s doyen, Austrian Economist Friedrich Hayek, the brothers agreed that public education must be abolished.

To this and other ends like defeating climate change legislation, the Kochs created the American Legislative Exchange Council (ALEC). This lobbying organization has contributing members from throughout corporate America. ALEC writes model legislation and financially supports state politicians who promote their libertarian principles.

Like the Walton family and Betsy DeVos, Charles Koch promotes private school vouchers.

The founder and headmaster of a charter school in St. Louis admitted to skimming $2.4 million in public funding by inflating enrollment.

This is to be expected when private companies obtain public money without accountability or transparency.

The former head of a failed charter school has pleaded guilty to federal wire fraud charges in a scheme that cost taxpayers $2.4 million.

Michael Malone, who founded St. Louis College Prep, inflated attendance numbers for years as a way to collect more government funding for the struggling school.

“What the former headmaster did through his deception, repeatedly over many years, was take advantage of the Missouri taxpayers, while obtaining an unfair advantage over the St. Louis Public Schools and other area charter schools,” U.S. Attorney for the Eastern District of Missouri Jeff Jensen said in a news release. “This was not a mistake. Evidence proved Michael Malone’s actions were intentional and, unfortunately he got away with it for years.”

Malone, 44, opened the school in 2011 and served as headmaster until November 2018, when he resigned after an internal review and an investigation by Missouri Auditor Nicole Galloway showed he was cooking the books. The school closed in 2019.

As a charter school, St. Louis College Prep was funded through the state Department of Elementary and Secondary Education. The funding is calculated through daily attendance records, and Malone routinely jacked up those numbers to increase funding. At times, those numbers exceeded even the total enrollment by as much as 124 percent…

The fraud meant money that rightfully would have gone to St. Louis Public Schools went to the charter school to educate phantom students, authorities say.

Dabs Milbank is a regular opinion writer for the Washington Post. In this post, he reminds us of the numerous Trump allies who have been arrested or indicted or convicted or pardoned. So much for “Draining the Swamp.” What a joke! Trump’s Swamp is bigger and badder than anyone else’s.

He writes:

As Donald Trump’s chief strategist in 2016, Steve Bannon helped shape Trump’s “America First” campaign. Now, Bannon is inadvertently helping to test Trump’s 2020 reelection message: “Me First.”

On the eve of this week’s Republican National Convention, federal authorities arrested Bannon aboard a Chinese billionaire’s $28 million, 152-foot yacht and charged Bannon and three other men with defrauding donors giving to a private effort to build a wall along the border with Mexico. Bannon and his alleged co-conspirators had promised donors that “not a penny” would go to the organizers and “100 percent” would go to the wall. Instead, they allegedly used donations for such things as home renovations, boat payments, a luxury SUV, a golf cart, jewelry, cosmetic surgery, personal tax payments, credit-card debt, travel, hotels and consumer goods. Bannon allegedly squirreled away $1 million for himself and another organizer, much of it funneled through a nonprofit Bannon created called Citizens of the American Republic, ostensibly devoted to “economic nationalism and American sovereignty.” To top it all off: The small section of the wall the group did build was so poorly done that it is now in danger of falling into the Rio Grande.

Give Bannon credit: The alleged fraud perfectly captures the cynicism and self-dealing among leaders of the American right at this moment. As the president seeks reelection, the moral rot of Trump and his retinue has spread to the core.

At the National Rifle Association, chief executive Wayne LaPierre and other leaders have drained millions of dollars from the organization, the New York attorney general alleged this month, much of it for private jets, security, yachts in the Bahamas and personal payouts.

On Tuesday, Jerry Falwell Jr. said he had resigned as president of Liberty University, which he had used as a forum to vouch for Trump’s moral integrity and religious bona fides. Falwell acknowledged a multiyear affair in which he is accused of watching his wife have sex with a pool boy.

On Monday, the New York state attorney general, Letitia James, reported that the Trump Organization has refused to hand over some documents and that Eric Trump canceled an interview with prosecutors looking into whether the company paid proper taxes when a lender forgave more than $100 million of debt on a Trump hotel in Chicago.

Separately, the Manhattan district attorney, Cyrus Vance Jr., continues to seek Trump’s financial records as part of an investigation into payoffs made in 2016 to women who claimed they had affairs with Trump — and potentially into Trump business dealings.

Last week, a bipartisan report by the Senate Intelligence Committee concluded that Trump’s 2016 campaign chairman, Paul Manafort (now doing prison time over his ill-gotten gains), was a “grave counterintelligence threat” because his receptivity to Russian outreach during the campaign made the Trump campaign vulnerable to “malign Russian influence.”

These developments are on top of former adviser Roger Stone’s prison sentence (which Trump commuted); former Trump adviser Michael Flynn’s guilty plea (which Trump’s Justice Department wants dismissed); the upcoming trial of two associates of Trump lawyer Rudy Giuliani; and former Trump aide Michael Cohen’s three-year prison sentence for what he called “my duty to cover up his dirty deeds.”

But the biggest swindle happens in front of our eyes: a president using his office to promote his business properties around the world, to push for tax policies that benefit his businesses, and to pressure foreign countries to help his campaign.

Former national security adviser John Bolton attributes our current pandemic woes to the president’s pursuit of self-interest: Trump ignored early warnings “because he didn’t want to concede that the pandemic . . . could have a dramatically negative impact on the U.S. economy and therefore his ticket to reelection.”
At the convention this week, we see Trump stripping the GOP of policy (the party declined to approve a platform) and replacing it with a cult of personality. He has stacked the speaking program with members of his family, his friends and himself — nightly. The lead consultant to the convention? A guy who produced “The Apprentice” for Trump and was a judge for Trump’s Miss Universe pageant.

Trump is using federal property — the White House itself — as a political backdrop for his campaign. Secretary of State Mike Pompeo, using Israel as his campaign backdrop, is one of a host of officials violating laws and rules in ways previously unimaginable to play overtly political roles in the convention.
With Trump in charge, is it any wonder those around him are also taking a “Me First” approach? The same day as Bannon’s yacht-deck arrest last week, We Build the Wall posted a picture of Trump on Facebook. Written across the photo: “The Most Honest Man in Washington!”

David Dayen writes a regular column for The American Prospect. In this post, he explains why Bannon was indicted. He and some of his friends created a website to “Build the Wall.” None of them had any engineering experience. They raised $25 million, and they paid personal expenses.

Dayen says this scam was part of a long history of grifting by con artists.

It was ironic that Bannon was taken into custody by agents from the USPS.

Dayen begins:

Author and historian Rick Perlstein (who’s doing a Prospect Zoom event with me about his new book Reaganland on Monday) wrote a famous story back in 2012 about “mail-order conservatism,” the tendency for the conservative movement to bilk their supporters through hysteria and lies and small-time grifting schemes. This tendency to rip off the rank and file dates back to the mail-order empire of Richard Viguerie. Con men were always critical to the conservative movement. Now, they comprise virtually the entire Republican Party.

Read the indictment of Steve Bannon and three associates, accused of defrauding hundreds of thousands of donors to the “We Build the Wall” campaign, a preposterous effort on its face to crowdsource the private construction of the border wall with Mexico. We Build the Wall took in an astounding $25 million, only enough for one mile of the 576 Trump means to erect, but about $25 million more than should be handed over for a building project to people with no engineering or logistics background.

But Bannon and his pals were experts at thievery. He took hundreds of thousands of dollars from We Build the Wall for travel and hotels, while Air Force veteran Brian Kolfage nabbed $350,000 for “home renovations, payments on a boat (named “Warfighter”), a luxury SUV, a golf cart, jewelry, cosmetic surgery (!), personal tax payments, and credit card debt,” per the indictment. The money was routed through a third-party nonprofit and a shell company, using fake invoices and vendor receipts.

The We Build the Wall website, numerous donor solicitations, and written bylaws of the organization made repeated assurances that all the money would go to border wall construction. Hilariously, when they learned of the criminal investigation, they took the “no compensation” pledge off the website.

Anette Carlisle, public education advocate in Texas, describes how State Commissioner Mike Morath, a non-educator, bought into the anti-democratic strategy of killing local school boards and privatizing public schools. He swallowed whole the disruption program of the Center for Reinventing Public Education, one of the Gates-funded think tanks that call for the abandonment of public schools.

Despite a full decade of failure, phony “reformers” claim that education will improve if private corporations and entrepreneurs take over from elected school boards. It hasn’t worked anywhere, and it won’t work in Texas.

Carlisle writes:

Texas has chosen to abandon our local public schools, locally elected school boards, superintendents and our 5.4 million schoolchildren in favor of a “my way or the highway” single system directive by Texas Education Agency Commissioner Mike Morath. That’s why I’m standing up to say, “Whoa! Hold your horses, please, Mr. Commissioner.”

It’s an effort that’s been building for years, right under our noses. People said, “Surely not,” but here we are.

Look back to 2019 and the Center for Reinventing Public Education’s (CRPE) report centered around the System of Great Schools (SGS) concept. The System of Great Schools “starts from the premise that local school districts are ill-positioned to improve schools directly,” and local districts should “get out of the business of managing instruction in schools.”

Morath, according to the CRPE, “prioritized the SGS initiative as a signature project” and even “smoothed the path for the SGS team to work inside the agency” when other TEA staff disapproved.

It’s just one example of the state telling school district leaders to take a hike and locally elected boards to get out of the way.

Earlier this year, The Texas Tribune interviewed Commissioner Morath, and his thoughts on local control came more clearly into focus. Asked about the state’s takeover of Houston ISD, Morath said, “This is basically a grand, philosophical question that is a right for state legislatures around the country to try to answer. Why do we have schools? Do we have schools to teach children, or do we have schools to have elected school boards?”

The takeaway? Local communities don’t know what’s best for kids. The state does.

Who knew that a conservative Republican Governor and his ignorant State Commissioner would launch a state takeover of public schools?