These reports document the widespread financial mismanagement of charter schools in Arizona, compiled by Curt Cardine. These reports are also archived on the Grand Canyon Institute website.
Archives for category: Fraud
Curt Cardine, retired educator, has studied the charter schools of Arizona and discovered that most are financially unsound.
Next year, Arizonans will vote on whether to fund religious and other private schools with taxpayer dollars. How much waste are the taxpayers of Arizona willing to tolerate at the same time?
Cardine writes:
The economic theory behind school choice and vouchers relies on the ‘free’ marketplace and the consumers of educational services to cull winners and losers. Children represent ‘backpacks full of cash’ that follow the child to the school of their parents’ choice.
The data gleaned from 20-plus years of financial reports on charter schools paint a different story. In reality, Arizona families lack sufficient information to make an informed choice about what school their children attend. As Ronald Reagan might have put it, we have trusted without verifying the financial and academic results of that trust.
Since 1994, 424 charter schools have shuttered their doors, a failure rate of 43 percent. Thirty-four percent of all charters that fail do not meet the Arizona State Board for Charter Schools Financial Performance Recommendation. Another 90 charter groups that failed did not meet the Cash Flow Standard. My concerns led to three years of intensive research. This effort was undertaken to statistically verify first-hand observations as a charter and district leader. Special attention was paid to the 2013 through 2016 audits, annual financial reviews and IRS 990s (used by the IRS for nonprofits).
The research findings are documented in a series of three policy reports from the Grand Canyon Institute, a nonpartisan public policy think tank.
The reports are ‘Following the Money,’ ‘Red Flags’ and ‘Teachers in the Charter Marketplace.’
Following the Money presents financial data on charter school management salaries. Charter administrative costs on average are twice district management costs. One case showed two administrators earning a total that exceeded $500,000 for managing one small school with less than 300 students. The top earners are often husband and wife teams, relatives or business associates of the charter holder, collectively making more than $200,000 to oversee a few hundred children.
Charters are not required to conduct a competitive bid process like public district schools. This allows many charter holders to earn compensation by doing business with their own for-profit companies. In one case, a charter holder paid his own ‘for profit’ company $12 million in one year for learning-management software. The cost should have been less than 10 percent of that amount, based on what the Mesa Unified School District spends for a similar type of software.
In 2013-14, related-party business practices were worth a half a billion dollars, representing 48 percent of charter school transactions for contracts, leases and rents. As a comparison, public school districts are not allowed to do business with companies owned by the superintendent or school board.
Also, widespread irregularities abound in the financial information that some charter schools provided to different governmental agencies.
The next post contains the background reports. They are also archived here.
In Atlanta, Christopher Clemons faces multiple criminal charges in relation to the alleged theft of more than $1 million from the charter school he founded.
The criminal charges against an Atlanta charter school founder have grown to 55 counts of forgery and theft of at least $1.3 million after a Fulton County grand jury indicted him on seven additional charges.
Christopher Clemons, the 38-year-old founder of Latin Academy, now faces charges linked to two other local charter schools he was associated with, according to the new indictment returned Sept. 1.
The first charges came after a reported theft of more than $800,000 from Latin Academy, which later closed.
The new case is linked to thefts of more than $500,000, including money allegedly taken from Latin Grammar School and Latin College Preparatory School.
Combined, the two cases against Clemons allege a theft of roughly $1.3 million.
Whether he was creating opportunities for poor kids or for himself is an open question, until the case is resolved.
Deregulation has its downsides. When no one watches, no one supervises, bad things happen to taxpayers’ money.
In New Mexico, the state auditor happened upon what seems to be a serious case of fraud and embezzlement.
“ALBUQUERQUE, NM – Today, State Auditor Tim Keller released the results of an investigation into La Promesa Early Learning Center, a state charter school in Albuquerque. The Risk Review found about half a million dollars were diverted from the School into a former employee’s personal bank account between June 2010 and July 2016. Office of the State Auditor (OSA) subpoenas of bank records uncovered that the former Assistant Business Manager deposited over 500 checks written to 53 different vendors into her personal accounts by apparently signing many of them over to herself, through a process known as “dual endorsing.” The report outlines specific potential criminal violations such as fraud, embezzlement, larceny and forgery.
“After reviewing bank statements and school records, we discovered an apparent forgery scheme that funneled over $475,000 from the School to an employee’s personal bank account,” stated State Auditor Tim Keller. “As a result, hundreds of kids were defrauded of funding that should be going to their education. The accountability from our investigations enables the School to get to the bottom of past financial problems so they can continue serving their diverse students well into the future.”
“The Risk Review found that the former Assistant Business Manager for La Promesa deposited over $475,000 worth of checks that were made payable to various vendors into her personal bank account. Additionally, the employee deposited about $177,000 worth of checks that were payable to her mother, who was the Executive Director at the time, and her boyfriend, who was a vendor of the School. The checks made payable to the employee’s mother and boyfriend may also have been fraudulently dual endorsed. The former Executive Director was also responsible for signing all outgoing checks from the school, including the checks in question. Bank records indicate that the money was used by the former Assistant Business Manager to pay for day-to-day expenses, bills and loans.”
Anita Senkowski is a blogger in northern Michigan who has written numerous posts about a for-profit charter operator who ripped off taxpayers and is now serving a term in jail for his financial crimes. She read Mark Binelli’s piece in the New York Times about charter schools in Detroit and its surroundings and hopes that he will come to Northern Michigan to see how the fraudster mentality permeates the DeVos charter industry throughout the state.
She writes:
Binelli’s fine piece, focused primarily on districts south of Eight Mile Road, the northern border of Detroit made infamous by former Detroit Mayor Coleman Young in his 1973 inaugural address. Telling “rip-off artists and muggers” to “hit Eight Mile Road” and leave Detroit, Young made few friends in suburban Detroit, especially Oakland County.
As they say in Las Vegas, the house always wins.
And although Michigan gambled on charter schools and its children lost, there have been winners.
One, former optometrist Steven Ingersoll, (whose story I’ve beaten like a rented mule for three years), walked away with millions. Although he’s serving a 41-month federal prison term, no Michigan authority (state or local law enforcement) has expressed any interest in prosecuting Ingersoll for his admitted fraudulent conversion of approximately $5.0 million from the Grand Traverse Academy and another roughly $1.4 million from the Bay City Academy.
If Ingersoll had lived in Mississippi and not Michigan, John Grisham would have already written a not-very-fictitious-sounding novel about him.
In its theory of the case, the federal government asserted Ingersoll’s federal tax evasion case demonstrated the truth of the sayings that “money gives power” and “unchecked power corrupts”.
“Steven Ingersoll obtained control over millions of dollars by creating and running the public charter schools known as the Grand Traverse Academy. The power of that money enabled Steven Ingersoll to corrupt himself, his wife Deborah Ingersoll, his brother Gayle Ingersoll, Roy Bradley, Sr., and Tammy Bradley.
As the person who controlled the accounting books and public funds intended for the operation of the Grand Traverse Academy, Steven Ingersoll ignored his obligation to separate his personal finances from the finances of the Grand Traverse Academy.
Instead, Steven Ingersoll treated the tax dollars provided for public education as his personal piggy bank, ultimately diverting approximately $3.5 million from the Grand Traverse Academy to uses other than the operation of the Grand Traverse Academy.
Steven Ingersoll also manipulated the books of entities he controlled, including Smart Schools Management and Smart Schools Incorporated, to hide his diversion of the public money that had been entrusted to him.”
And Ingersoll, on who reported to FCI Duluth on February 2, 2017 to serve a 41 month sentence for his federal tax evasion and conspiracy convictions, filed a “pro se” motion to vacate on January 24, 2017, seeking “post-conviction relief” based on attorney Martin Crandall’s alleged “ineffective assistance of counsel” — an attorney who’d sued him for nonpayment of nearly $362,000 in outstanding legal fees.
Ingersoll’s motion was denied, and he’s sitting in stir until January 22, 2020 — ironic, since he was an optometrist.
Let’s hope Binelli takes a look back here in Michigan…about 250 miles north of Eight Mile Road.
In November 2016, the state of Massachusetts held a referendum about whether to expand the number of charters in the state. Millions of dollars were spent on both sides, but the pro-charter groups spent twice as much as the anti-charter groups (mostly funded by teachers’ unions).
Much of the large pro-charter funding was bundled by a group called Families for Excellebt Schools. The names of many individual donors were not released. That’s called “dark money.” It enables the group to pretend to be worried families, eager to enroll their chilren in charter schools, when they are actually billionaires and millionaires who want to promote privatization. One member of the group is billionaire Alice Walton of Arkansas. Another is the chairman of the state board in Massachusetts, who offered nearly $500,000 to undermine public education in a state where he is in control.
FES pulled the same shenanigans in New York, pumping millions into a campaign to persuade the legislature to shower charters with perks and public space and money. But it didn’t work in the Bay State.
“An advocacy organization that gave more than $15 million to a Massachusetts ballot campaign to lift the cap on charter schools has agreed to pay $426,500 to settle allegations of campaign finance violations.
“The Office of Campaign and Political Finance alleged that Families for Excellent Schools contributed money to the ballot campaign in a way that was designed to hide the identity of its donors. The organization denies any wrongdoing.
“This is the largest settlement ever collected by Massachusetts’ Office of Campaign and Political Finance.
“Massachusetts voters deserve to know the identity of all those who attempt to influence them before Election Day,” said Office of Campaign and Political Finance Director Michael Sullivan in a press release. “Complete and accurate disclosure of campaign activity is the goal of OCPF and the cornerstone of the campaign finance law.”
“Families for Excellent Schools is a New York-based advocacy group, which gave $15.3 million to Great Schools Massachusetts, the ballot committee promoting a question in 2016 that would have lifted the cap on charter schools. The question failed at the polls.”
Indeed, the question failed overwhelmingly at the polls.
Families for Excellent Schools agreed not to engage in any election-related activities in the state for four years.
The fine is Penny ante for a group like FES, but it is satisfying to see them get caught hiding the names of donors.
Clayton Christensen, the leading advocate of DISRUPTION, will address the “National Summit on Education Reform,” sponsored by Jeb Bush’s Foundation for Educational Excellence. He will speak on Thursday November 30 in Nashville, as Jeb’s group celebrates a solid decade of efforts to privatize public education. Don’t expect to see or hear about charter school frauds or the failure of vouchers to improve student test scores or the looting of public funds by virtual charter schools.
If you are going, be sure to read the debunking of disruption by Harvard professor Jill Lepore. She demonstrates that disruption is a fraud, a hoax. Even the business disruptions that Christensen boasts about were actually failures. “Disruption is a theory of change founded on panic, anxiety, and shaky evidence….”
Read Judith Shulevitz’s takedown of disruption in The New Republic, and how it has emboldened those who want to destroy public education and diminish democracy. Eli Broad’s love of disruption produced the failed leadership of Michelle Rhee and Joel Klein.
Shulevitz wrote (in 2013):
“But when Broad’s “change agents” move into the institutions they’ve been taught to shake up, as dozens have now done, we can see how disruption, well, disrupts—not just “the status quo,” but peoples’ lives. Teachers quit en masse or are fired. Nearby schools close, forcing students to travel to distant ones. School boards divide and bicker. Parents picket. Broad-affiliated superintendents all over the country—Atlanta; Philadelphia; Rochester, New York; Sumter, South Carolina—have resigned or been forced out after no-confidence votes, corruption or cheating scandals, or, in one case, the discovery of alleged irregularities with a doctorate degree.”
Bringing a disruptor into your school district is like inviting an arsonist into your home. You will have change aplenty, but you will lose your home and possibly your family.
Thanks to Bill Phillis of the Ohio Coalition for Equity and Adequacy for alerting me to this shocking and disgusting story.
A charter school sponsor, the Ohio Council of Community Schools, is responsible for 50 charter schools. It was exempted from any accountability because it split from its partner, the University of Toledo.
“The council and the university have been partners for 15 years in sponsoring – creating and overseeing charter schools – after the state decided to let more organizations beyond the Ohio Department of Education sponsor schools. While the university was the official legal sponsor, it created the council as a non-profit to do all the oversight work.
“The relationship has been a controversial one, drawing accusations over the years of favoritism and nepotism. See below for more on those concerns.
“Most recently, the state rated the two as “ineffective” as a charter sponsor last fall after their 50 schools landed an academic rating of zero – the equivalent of an F – as a group. Those schools include 11 in Cleveland.
“If student test scores did not improve by the end of this school year, the partners would have been booted out of the sponsorship business.
“Not anymore.
“By splitting from the university, the Council moves on with a clean slate and the poor results will be assigned to the university.”
No results. No accountability. State money wasted. Children’s education harmed.
Who are the criminals in state government who permit this fraud to continue.
Samuel Abrams is director of the Teachers College, Columbia University, Center on the Study of Privatization of Education. He wrote a wonderful book called “Education and the Commercial Mindset.” Most of the book is focused on the haplessness and failure of the for-profit Edison Project, which became Edison Schools, which became EdisonLearning, and which lost money, a lot of money. Abrams’ book represents deep scholarship into the consistent failures of for-profit education.
I reviewed it in the <em>New York Review of Bookss, along with Mercedes Schneider’s superb “School Choice.”
Barron’s just posted a negative review of the Abrams’ book by a reviewer who has made a career of besmirching public schools, teachers, and unions. He hates them all, so of course, he hates Abrams’ elegant expose of the profit motive in education. The reviewer is a polemicist, not a scholar, so he probably didn’t understand the book.
I don’t subscribe to Barron’s so I can’t post the review. You probably don’t subscribe either. I wish I could quote it but I can’t. I know it is hostile to Abrams’ scholarly work because the title of the review is “Slurring Charter Schools: A skewed defense of our failing public schools, and a hit job on Harvard Business School.”
But I know a great deal about the reviewer, Bob Bowdon.
Bowdon wrote and produced a “documentary” called “The Cartel,” in which he compared the teachers’ union in New Jersey to the Mafia. He is a familiar figure on far-right TV shows, where he bashes teachers and public schools.
Read his Wikipedia entry, where it says:
Bowdon directed The Cartel, a 2009 documentary film about corruption in American public education that was distributed by Warner Brothers.[1] The film views the current state of public schools in the U.S. as a “national disaster for the workforce of the future.” Bowdon notes that the U.S., by many measures, “spends more on education than any country in the world,” and chooses to concentrate principally on his own state, New Jersey, which spends more per student on public education than any other state, but where average standardized-test scores in public schools are very low. In an effort to explain where all the money allocated to public education is going, Bowdon portrays a union-dominated institutional culture in which bureaucracies are overstaffed by highly paid administrators, expenditures on school-construction projects are unsupervised and out of control, corruption and patronage are rampant, incompetent teachers cannot be fired, and excellent teachers cannot be rewarded. As a solution to the problem, Bowdon proposes school choice and charter schools.[3]
New Jersey Governor Chris Christie, who watched The Cartel twice, has praised it as an influence on his own ideas about school reform.[4][5]
When my book “The Death and Life of the Great American School System: How Testing and Choice Are Undermining Education” was published in 2010, I was invited to be interviewed by Judge Napolitano. I learned when I got there that I was going to debate Bob Bowdon. Judge Napolitano was on Bowdon’s side, and he said snidely, “would you allow any child of yours to attend a public school?” I vowed never again to appear on any show on FOX, as my experience left me feeling deeply outraged by their hostility to the views I had formed over 40 years of study. Bowdon knew nothing whatever about education, nothing whatever about teaching. All he knew was that privatization was good, public schools bad.
It is an ugly experience to get into the ring with someone who literally doesn’t know what he is talking about but is sure of his opinions.
The hits just keep on coming!
Betsy DeVos just hired a former dean from for-profit online DeVry University to police fraud in higher education.
DeVry was forced to pay $100 million for defrauding students.
Diane Ravitch's blog 