Archives for category: Fraud
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DeVos Appoints Former Governor Engler as Chair of NAEP Governing Board

By dianeravitch
September 29, 2017 //
11

Betsy DeVos apointed her friend and ally in the school choice movement, former Governor of Michigan John Engler, as chair of the National Assessment Governing Board, which administers the National Assessment of Educational Progress.

Engler is a charter member of the “schools-are-failing” club. He recently retired as president of the Business Roundtable, an association representing some of the nation’s leading businesses, and before that was head of the National Association of Manufacturers.

Expect every release of NAEP scores to be a dire warning about how terrible our public schools are, how we are no longer globally competitive, and why we need drastic steps (school choice?) to close the achievement gaps.

Maybe some enterprising journalist will ask Engler about the failure of his reforms in Michigan, as reflected in NAEP scores. Since Michigan became a laboratory for choice, its NAEP scores plummeted.

As a seven-year member of that board, I can tell you we zealously protected the scores from politicization. Don’t expect Engler to maintain that tradition.

Categories Betsy DeVos, Fraud, Michigan, NAEP

Jan Resseger: Will the Ohio Legislature Have the Courage to Reign in Politically Powerful ECOT?

By dianeravitch
September 28, 2017 //
2

Jan Resseger writes here about the fate of legislation that would establish accountability for the Electronic Classroom of Tomorrow (ECOT), which is the worst performing school in the state and is owned by one of the biggest donors to Republican politicians.

ECOT has a bad habit of claiming tuition for students who are theoretically enrolled but never turn on their computer. There apparently are thousands of phantom students. The state has attempted to claw back millions of dollars from ECOT but ECOT has fought them in court.

Can William Lager, owner of ECOT, ever be held accountable for his collection of hundreds of millions of dollars from Ohio taxpayers? It will be settled in court. Unfortunately, Lager has contributed to the campaigns of several judges on Ohio’s Supreme Court.

The law needs fixing, to protect students and taxpayers:

Ohio State Senator Joe Schiavoni ought to be a hero to public school teachers and parents—and to citizens who support responsible stewardship of tax dollars. Except that thanks to the power of the Republican leadership in the Ohio legislature, few people are really aware of Schiavoni’s heroic effort to put a stop to Bill Lager’s massive scam—the Electronic Classroom of Tomorrow.

Schiavoni is a Democrat and his bill to regulate online charter schools has been pushed aside for over a year now. As Schiavoni explained in testimony last February, “Senate Bill 39 is the updated version of Senate Bill 298 from the last General Assembly.” In March of 2016, Schiavoni first introduced a version of this bill—designed to reign in Bill Lager’s giant scam. ECOT was (and still is) charging the state, which pays charter schools on a per pupil basis, for students who have enrolled at ECOT but are not regularly logging onto their computers to participate in the educational program.

Here is how Schiavoni described the bill (then Senate Bill 298) at that time: “We need to make sure that online schools are accurately reporting attendance and not collecting tax dollars for students who never log in to take classes. Online schools must be held accountable for lax attendance policies. Without strong oversight, these schools could be collecting millions of dollars while failing to educate Ohio’s school children.” Schiavoni’s bill required e-schools to keep accurate records of the number of hours student spend doing coursework. It required online schools to notify the Ohio Department of Education (ODE) if a student failed to log-in for ten consecutive days. It required that a qualified teacher check in with each student once a month to monitor active participation. In the last legislative session, the bill was never fully debated and never brought to the Senate floor for a vote.

Schiavoni re-introduced the bill in February, and this afternoon at 3:15, Peggy Lehner, the chair of the Senate Education Committee, is finally holding a hearing on Schiavoni’s bill. When he testified in February about the bill he was introducing, Schiavoni explained why it is needed: “Other than the requirement that e-schools provide no less than 920 hours per year of learning opportunities, there are no specific statewide standards related to the number of hours per day or week that e-school students must be engaged in learning. In an environment where a teacher is not physically able to see students in a classroom, this lack of accountability is very concerning.”

Schiavoni believes Senate Bill 39 will address the outrageous problems at Ohio’s on-line charter schools: “Senate Bill 39 requires each e-school to keep an accurate record of how long each individual student is actively participating in learning in every 24-hour period. This information must be reported to ODE on a monthly basis, and ODE would be required to make this report available on their website. Senate Bill 39 would also require a teacher who is licensed by the Ohio Department of Education to certify the accuracy of student participation logs… on a monthly basis.”

Categories For-Profit, Fraud, Ohio, Virtual Charter Schools

New Mexico Attorney General Demands Charter Founder Step Down at Once Due to Charges of Fraud; She Refuses

By dianeravitch
September 27, 2017 //
9

The New Mexico Attorney General demanded that a charter founder resign, but she refuses to do so.

You think taxpayers just don’t care what happens to their money? You think taxpayers think that anyone should step up and claim public money and do with it as they please?

New Mexico Attorney General Hector Balderas is demanding the immediate resignation of Analee Maestas from the Albuquerque Public Schools Board of Education after fraud and embezzlement allegations involving the charter school she founded and managed.

“School board members have a duty to treat their position as a public trust and at all times act in a manner that justifies the public’s confidence in them,” Balderas said in a statement.

Balderas emailed a letter to Maestas on Monday saying “it is clear that you are no longer qualified to hold your position as a board member” and that if she did not immediately resign, “my office will take all appropriate legal actions.”

Maestas’ attorney, Marc M. Lowry, said she has no plans to step down.

“The Attorney General’s letter is more concerned with capturing a headline than it is with the pursuit of the truth,” Lowry said in an emailed statement.

“Dr. Maestas has not engaged in any conduct that violated her oath of office with the APS Board, or any other law. Dr. Maestas has brought over 45 years of experience and commitment to childhood education to uphold her oath to APS and maintain the public’s trust, and used her APS office only to advance the public benefit. The Attorney General is wrong to suggest otherwise.”

Balderas’ letter mentions two reviews by state Auditor Tim Keller that found serious problems with apparent misuse of funds regarding La Promesa Early Learning Center, the charter school Maestas started in 2008.

This month, Keller released a report that said it appeared Maestas’ daugther, the school’s then-assistant business manager, had embezzled nearly $500,000 under the watch of Maestas. And an earlier report in February 2016 showed that the school submitted a suspicious receipt to the New Mexico Public Education Department for reimbursement when Maestas claimed the $342.40 invoice was for carpet cleaning at the school. However, it appeared the receipt had been written over and the cleaning company reported that it actually worked on ducts at her home.

In his letter, Balderas wrote that “those investigations appear to implicate potential violations of numerous criminal and civil statutes.”

“While those matters are pending, the New Mexico Constitution does not require that you be found guilty of any conduct related to them to be declared unfit to hold your office, and your oath to uphold the very same Constitution now demands your resignation,” he wrote to Maestas.

But Lowry said that “if the Attorney General had read the State Auditor’s report, he would understand that Dr. Maestas is innocent, and that the State Auditor did not make a single finding suggesting that Dr. Maestas participated in that report’s allegations of embezzlement or fraud.”

Last week, Maestas denied any knowledge of the financial mismanagement at her school and blamed her daughter’s substance abuse problems.

Julieanne Maestas diverted about half a million dollars from the charter school into her personal bank account from June 2010 to July 2016, according to Keller’s investigation. In addition, she deposited about $177,000 worth of checks that were payable to the former executive director – her mother – as well as to her boyfriend, who was a school vendor.

Categories Accountability, Charter Schools, Education Industry, Fraud, New Mexico, Privatization

D.C. Charter Operators Agree to Repay $600,000 for Missing $3 Million

By dianeravitch
September 24, 2017 //
8

This looks like a good deal for the leaders of a charter school who were accused of misappropriating
Ropristing $3 million for their personal use. No jail time. A payback of $600,000 and pocket change. And an agreement not to lead any other charters until 2020. The fines apparently will be paid by insurance companies, not the defendants.

“The former leaders of a public charter school for disabled and at-risk teenagers have agreed to settle a District lawsuit alleging they sought to enrich themselves by diverting millions of dollars in taxpayer money meant for the school into private companies they created.

“Donna Montgomery, David Cranford and Paul Dalton, all former managers at Options Public Charter School, agreed to a collective settlement of $575,000, which will be paid to the school that now operates under new leadership as Kingsman Academy. Jeremy Williams, a former chief financial officer of the D.C. Public Charter School Board, who allegedly aided the scheme, agreed to a settlement of $84,237 in a separate deal signed last week. The defendants agreed that they would not serve in a leadership role of any nonprofit corporation in the District until October 2020.

“This settlement ensures that more than $600,000 in misappropriated funds will now go to Kingsman Academy to serve disabled students in the District of Columbia, and will deter future wrongdoing,” said Robert Marus, a spokesman for the Office of the Attorney General. “As the referees for the District’s nonprofit laws, our office will continue to bring actions against any who would misuse funds meant for public or charitable purposes.”

“A statement issued by attorney S.F. Pierson, who represents Dalton, said all three former managers “continue to contest the District’s claims and continue to maintain their position that they managed Options to the highest standards.” Pierson said the former school leaders are “not personally paying” anything to settle the District’s claims. It’s common that insurance plans cover litigation-related costs for nonprofit directors or corporate officers.”

This is a big win for the accused, but a loss for the disabled students, who didn’t get the services intended for them.

Categories Accountability, Charter Schools, Corporate Reformers, Deregulation, Education Industry, For-Profit, Fraud, Funding, Privatization

Arizona: The Widespread Fiscal Mismanagement of Charters

By dianeravitch
September 18, 2017 //
0

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.

The reports can be read here, here, and here.

Categories Accountability, Arizona, Charter Schools, Corporate Reformers, Education Industry, Education Reform, Fraud, Privatization

Arizona: New Study Finds that Three-Quarters of Charters Are Financially Mismanaged

By dianeravitch
September 18, 2017 //
12

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.

Categories Accountability, Charter Schools, Corporate Reformers, Education Industry, Education Reform, Fraud, Privatization

Atlanta: Charter School Founder Facing Dozens of Charges in Connection with Theft of More than $1 Million

By dianeravitch
September 16, 2017 //
5

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.

Mercedes Schneider wrote about Chris Clemons, who graduated from the University of Pennsylvania and received an MBA from MIT. She delved into his history and his self-described passion to help poor kids. Among other things, he opened a charter school in Denver and two charter schools in New Orleans.

Whether he was creating opportunities for poor kids or for himself is an open question, until the case is resolved.

Categories Accountability, Atlanta, Charter Schools, Education Industry, Fraud, Privatization

New Mexico: State Auditor Discovers Likely Fraud, Embezzlement at Charter School

By dianeravitch
September 15, 2017 //
5

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.”

Categories Accountability, Charter Schools, Fraud, Privatization

Anita Senkowski to the New York Times: Please Look at Charter Rip-Offs in Northern Michigan

By dianeravitch
September 12, 2017 //
2

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.

Categories Accountability, Betsy DeVos, Charter Schools, Corporate Reformers, Detroit, Education Industry, For-Profit, Fraud, Michigan, Privatization

Massachusetts: State Fines Dark Money Group $426,000 in Charter Battle

By dianeravitch
September 12, 2017 //
82

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.

Families for Excellent Schools has been ordered to pay a fine of $426,500 for violating campaign finance laws in the 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.

Categories Charter Schools, Corporate Reformers, Dark Money, Education Industry, Education Reform, Fraud, Funding, Massachusetts, Privatization
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