Archives for category: Fraud

The new federal law titled “Every Student Succeeds Act” encourages states to welcome newcomers to the field of teacher education, such as the Relay Graduate School of Education and the Match Graduate School of Education. Relay and Match have much in common. They do not have scholars or researchers on their “faculty.” At last check, neither had anyone with a doctorate in any subject on their faculty. They do not appear to teach cognitive development, child study, the history or economics of education, the uses and misuses of testing, early childhood education, or any other subject normally found in a typical graduate school of education. These “graduate schools” consist of charter teachers teaching future charter teachers how to raise test scores and how to maintain strict discipline. They might appropriately be called a “program,” but they are not “graduate schools of education,” nor should they have the right to award master’s degrees. Going to Match or Relay is akin to taking classes in computer programming or cooking or going to a trade school.

I discovered that EduShyster explained the Match “Graduate School of Education” a few years back. Read this short piece to understand what Match is and why so many of its ill-prepared teachers don’t last.

And remember, the Congress of the United States wants to promote more of these sham teacher-preparation programs.

Throughout this presidential campaign, we have been treated (or subjected) to statements by both Democratic candidates Clinton and Sanders about charters: They don’t like “private charters” (Sanders) or “for-profit charters” (Clinton).

There are no “private charters.” All charters receive public funding. That’s what makes them so attractive to investors. That secure stream of government funding.

At the very least, we can be glad that Clinton is opposed to the for-profits, which rip off taxpayers and divert public funding to their stockholders and owners. Let’s hope that means she is prepared to cut off federal funding that goes to the scam artists of the charter world. No more 3-card Monte with public dollars.

But is there a difference between “for-profit charters” and “non-profit charters”?

Peter Greene says it is a distinction without a difference.

He writes:


In this scenario, I set up my non-profit school– and then I hire a profitable management company to run the school for me. The examples of this dodge are nearly endless, but let’s consider a classic. There’s the White hat management company that was being dragged into court way back in 2011. This particular type of arrangement was known as a “sweeps contract,’ in which the school turns over close to all of its public tax dollars and the company operates the school with that money– and keeps whatever they don’t spend. The White Hat story is particularly impressive, because the court decided that White Hat got to keep all of the materials and resources that it bought with the public tax dollars.

Or consider North Carolina businessman Baker Mitchell, who set up some non-profit charter schools and promptly had them buy and lease everything– from desks to computers to teacher training to the buildings and the land– from companies belonging to Baker Mitchell. From Marian Wang’s 2014 profile:

To Mitchell, his schools are simply an example of the triumph of the free market. “People here think it’s unholy if you make a profit” from schools, he said in July, while attending a country-club luncheon to celebrate the legacy of free-market sage Milton Friedman.

Real estate grabs

All charter schools– even the non-profits– can get into the real estate business as a tasty sideline for providing a school-like product. Charter producers can find money to fund a building and then– voila– they own a tasty piece of real estate. Remember– thanks to some Clinton-era tax breaks, an investor in a charter school can double the original investment in just seven years!

In fact, there are real estate companies in the charter school business. And this can be a particularly terrible deal for the taxpayers. Bruce Baker lays out here how the public can pay for the same building twice– and end up not owning it. Read the whole thing– it’s absolutely astonishing.

Write a big fat check

If you have the giant cojones for it, you can just write yourself a big fat check with all those public taxpayer dollars. To use one of everyone’s favorite data points– Carmen farina is paid $200,000 to oversee 135,000 employees and 1.1 million students. Eva Moskowitz’s Success Academy chain handles 9,000 students, for which Moskowitz is paid almost half a million dollars. And while Moskowitz gets plenty of attention, she is by no means unique….

And that’s just the profit issue

This is before we talk about every anti-democratic, school-destroying, segregation-spreading, education-failing, community-disrupting, and achievement-gap-increasing aspect of charter schools. As readers of this blog know, while charters can (and once were) a good thing, the modern charter movement has turned them into one of the most destructive forces in education today.

But we’re going to maintain focus

We’re going to stick to one point, and the point is this– to pretend that there is a substantive difference between profit and non-profit charter schools is either willfully ignorant or deliberately misleading. I’ve said it many times– a modern non-profit charter school is just a for-profit school with a good money-laundering plan.

We previously read about El Camino Real Charter School in the Los Angeles Unified School District. The principal got into trouble because he was moonlighting as a coach for the NBA and charging his travel expenses to the school (i.e., the taxpayers).

The principal spent over $100,000 on personal items and charged them to the school. The school learned of the principal’s lavish spending in October 2015. This past week, the board decided to hire an investigator. Why did it take eight months to act?

He bought a $95 bottle of fine Syrah. Paid for first-class airfare and luxury hotel rooms. And racked up a $15,500 credit card tab at Monty’s Prime Steaks & Seafood.

David Fehte, executive director-principal of El Camino Real Charter High School in Woodland Hills, used the same school-issued American Express card to charge $100,000 over two years. Some charges came while moonlighting as a college basketball talent scout for the San Antonio Spurs.

Now the El Camino high board of directors has decided to launch an independent financial probe of the popular principal’s spending. The forensic accounting comes ahead of a year-long management assistance review by a state financial turnaround agency prompted by the credit card scandal.

“I want guidance from agencies to tighten up the (school fiscal) policy,” El Camino board Chairman Jonathan Wasser said after a unanimous vote late Wednesday to pay for the probe of its principal. “I believe in due process.

“We need to have the forensic accounting look over all the information because it’s big, and I’m not an accountant, and it requires somebody trained to look over the evidence.”

It gets worse.

Carl Petersen, a charter school parent at another charter school, reports on the efforts at El Camino Real Charter School to pre-empt the story before it came out. The school and the principal went into a defensive crouch, treating those who questioned its finances as enemies.

This is one of the strangest stories of the week or year. Back in 2008, a group of parents at the Agora Cyber Charter school in Pennsylvania began questioning the financial affairs of the corporation that owned it. Agora was paying rent and management fees to another company, the Cynwyd Group, which June Brown, the founder of Agora, also owned.

In January 2009, the owners of Agora filed suit against the parents:

As parents tried to gather records and sort out the business relationships at Agora, they circulated emails expressing their concerns. They also complained to the state Education Department when the school did not provide information they requested.

In the suit filed in January 2009, Brown and Cynwyd Group charged that the parents had made statements that defamed and libeled Brown.

The complaint also alleged that the parents’ group had tried to interfere with Cynwyd’s contractual relationship with Agora “by spreading untruths about Dr. Brown and by implying that she had improperly used public funds.”

Brown and Cynwyd sought more than $150,000 in damages from the six parents for libel, slander, and civil conspiracy.

The parents denied the allegations and said they had merely sought information about the taxpayer-funded school their children attended.

Brown said the parents had defamed her and she had to defend her reputation. The parents had trouble paying for legal representation.

The suit dragged on, but in 2012, “federal grand jurors indicted Brown and charged her with defrauding Agora and her other charters of $6.7 million.”

The case against the parents remained active, to be addressed after the conclusion of the criminal trial. Brown’s criminal trial ended in a hung jury in 2014, and a retrial was canceled in 2015 after Brown’s lawyer said that she suffered from dementia. So, she escaped legal action, kept the money, but the parents were in limbo, still facing the charges of defamation that Brown had lodged against them.

Earlier this month, the charges were dismissed. The parents were relieved. One had used the family’s mortgage payment to pay a lawyer and lost her home fighting the lawsuit.

It does seem unjust that the parents were dragged through legal proceedings for more than seven years, accused of defaming Brown, even while she was under federal indictment for defrauding her charters of millions of dollars.

Senator Sherrod Brown of Ohio is a Democrat, and he is known as a progressive. He has also been known in the past as a supporter of charter schools.

However, even Senator Brown had a wake-up call as charter scandals multiplied in his home state. He could not help but notice the multiple editorials appearing in newspapers across the state, as well as news stories in national media about the charter owners who were becoming multimillionaires by donating to Republican politicians and getting more funding and less scrutiny of their charter schools.

He wrote a letter to Secretary of Education John King expressing his concern with the U.S. Department of Education’s award of $71 million to Ohio to open more charter schools (a grant put on hold because of outrage from Ohioans), as well as the embarrassing performance of the state’s charter sector. If Senator Brown has had his eyes opened, at last, that is a big step forward.

The letter can be read here.

Juan Rangel, a political activist in Chicago, created the city’s largest charter chain, called UNO. Rangel was co-chairman of Rahm Emanuel’s mayoral campaign in 2011, when he first ran for mayor. UNO was an amazing cash cow. It collected $280 million over five years from the state. Governor Pat Quinn and House Speaker Mike Madigan took care of UNO, giving it a grant of $98 million to expand, a staggering amount for a single charter chain. Meanwhile, UNO fired its for-profit management firm and took charge of its operations, claiming 10% of all revenues for itself. None of UNO’s activities were monitored by anyone. Conflict of interest rules covered public schools, but not UNO.

Here is the ultimate nonpartisan article summing up the rise and fall of UNO and Juan Rangel. Here is my short summary of that brilliant article.

Once UNO won $98 million from the state, many friends and relatives got a piece of the action:

As the Sun-Times would reveal in February 2013, a long line of contractors, plumbers, electricians, security firms, and consultants tied to many of the VIPs on UNO’s organizational chart got a piece of the action. Rangel spelled out in tax documents and in later bond disclosures that the construction firm d’Escoto Inc.—owned by former UNO board member Federico d’Escoto, the brother of Miguel d’Escoto—was the owner’s representative on three projects funded by the grant. Another d’Escoto brother, Rodrigo, was paid $10 million for glass subcontracts for UNO’s two Soccer Academies and a third school in the Northwest Side neighborhood of Halewood.

The vendor lists were peppered with other familiar names: a $101,000 plumbing contract awarded to the sister of Victor Reyes, UNO’s lobbyist, who helped secure the state grant; a $1.7 million electrical contract given to a firm co-owned by one of Ed Burke’s precinct captains; tens of thousands in security contracts to Citywide Security, a firm that had given money to Danny Solis, and to Aguila Security, managed by the brother of Rep. Edward Acevedo, who voted for the $98 million for UNO.

As the scandals broke into public view, thanks to the enterprising reporting of the Chicago Sun-Times, Rangel resigned in December 2013.

Fred Klonsky writes about the consequences for Rangel. The SEC fined Rangel $10,000 while he admitted no wrong-doing. He is allowed to pay it off at $2,500 per quarter.

Klonsky writes in incredulity:

When he resigned from UNO he received a severance package of nearly a quarter million bucks.

$2500 a quarter?

That probably equals his lunch tab.

When Rangel ran UNO it was reported by the Sun-Times as having spent more than $60,000 for restaurants on his American Express “business platinum” card including thousand dollar tabs at Gene & Georgetti, the Chicago steak house.

Kamala Harris, the state attorney general and candidate for the U.S. Senate, has called for the U.S. Department of Education to strip recognition from the accrediting agency that approved Corinthian Colleges, the now defunct for-profit university that defrauded many thousands of students.

Harris has written the U.S. Department of Education, urging it to revoke federal recognition of the Accrediting Council for Independent Colleges and Schools (ACICS), which among its other accomplishments accedited the now-defunct Corinthian Colleges, Inc., which left tens of thousands of students with useless degrees and millions of dollars in debts.

“The predatory scheme devised by executives at Corinthian Colleges, Inc. was unconscionable. And despite enforcement actions by the California Department of Justice and the federal government against Corinthian, ACICS continued to accredit Corinthian, hurting thousands of students in the process,” Harris said. “Students relied on Corinthian’s accreditation status, believing they were obtaining a high quality-education with real job prospects.”

ACICS boasts of accrediting more colleges than any other agency but a quick perusal of its roster finds that most of them are small vocational training institutions, offering certificates and associate degrees in such fields as dental assistance and office management.

Harris joins 13 other state AGs who are opposing the renewal of ACICS as an accreditation agency. Harris and 10 other AGs are also calling for tougher standards for college recruiters on military bases.

Mercedes Schneider dug into the background of Chris Clemons, the Atlanta charter school principal, who has been accused of stealing $600,000 from his school.

She found an article from his days at MIT, explaining how he developed a passion for teaching “impoverished children in urban areas.”

He trained as a school leader at “Building Excellent Schools,” a Boston-based program to prepare principals to open and run charter schools. He launched a charter school in Denver, his hometown. And then he went to Atlanta to open charter schools. He was charged by the FBI with theft, not only for the missing $600,000 from his current school, but for another $350,000 that was missing from two other charter schools that he ran.

Molly Bloom of the Atlanta Journal-Constitution writes here about the biggest theft in the brief history of charter schools in Georgia. That state is in the process of expanding the number of charters and is considering creating an “Achievement School District,” modeled on the failed ASD in Tennessee, in which low performing schools are turned over to charter operators.

Here is the story of Atlanta’s Latin Academy Charter School.

A $12,000 charge at a strip club. Thousands of dollars spent at Mercedes-Benz of Buckhead. ATM withdrawals of hundreds of dollars at a time.

The charges to Atlanta’s Latin Academy Charter School should have raised eyebrows. For the top state education officials and corporate executives on the school’s board, they should have set off earsplitting sirens.

Instead, the charges continued for years, siphoning more than $600,000 in taxpayer dollars that should have been spent on students.

Christopher Clemons, the school’s founder, has been charged with fraud and theft in the largest such case in Georgia charter school history.

Clemons left Atlanta after the losses were discovered.

He left a rented townhome strewn with Hermes boxes, lease paperwork for a new BMW, used boarding passes and a Rolex receipt.

He left the school so financially troubled that board members closed it.

He left nearly 200 children with few options.

And he left a cautionary tale for Georgia’s growing charter school movement. Latin Academy, with its all-star board and experienced leader, seemed on track to thrive. But behind that facade of apparent success, the school spent millions of tax dollars with little public scrutiny and operated with a lack of public input foreign to many traditional public schools.

Latin Academy’s academic performance ranked in the top 25 percent of all Atlanta middle schools in an area where neighborhood middle schools are better known for hallway chaos than academics.

Clemons is presently in jail in Colorado, awaiting extradition to Georgia.

In the last decade, the number of students in charter schools has tripled to 91,000, with more growth expected. In addition, the legislature allows entire districts to have “charter-like” freedoms, which means deregulation and freedom from oversight.

Expect more scandals, fraud, corruption, and theft. If men were angels, there would be no reason for oversight or regulations.

Could someone explain why deregulation is supposed to create better education?

A new study based on publicly available data on the state’s website finds that the state has wasted millions of federal dollars designated for charter schools. Of the state’s federally funded charter schools, 37% either never opened or were among the state’s lowest performing schools. Only recently, the U.S. Department of Education decided to award another $71 million to expand the charter industry in Ohio, but the new funding has been delayed because of outrage over scandals in the state’s charters. The study was conducted by the Ohio Charter School Accountability Project.

 

 
New Study Shows Millions Intended for High-Performing Charter Schools
Went to Some of Ohio’s Worst – and Others That Never Even Opened

 

 

For Immediate Release: May 26, 2106

 

 

COLUMBUS – The federal government has sent more money to Ohio to expand “high-performing” charter schools than all but two other states, but Ohio spent millions on some of the lowest-performing schools. And nearly $4 million went to schools that never opened, according to a new analysis.

 

 

The Ohio Charter School Accountability Project did the analysis to determine how a state with so many of America’s worst-performing charter schools could be in line for so much federal money intended to help the best ones.

 

 

Ohio ranks third nationally in total money received during the program’s 21-year history. During that time, the U.S. Department of Education did just one assessment of the grants’ success in Ohio. Although it raised serious questions about the Ohio Department of Education’s ability to properly distribute the money, nothing appears to have changed as a result.

 

 

“As Ohio takes steps to make charter school sponsors more accountable under the reform law passed last year, it’s important that policy makers understand the past,” said OEA President Becky Higgins. “Together with our colleagues at Innovation Ohio and ProgressOhio, we examined how these Charter School Program (CSP) grants have been awarded, and tried to identify the shortfalls along the way. Ohio cannot afford to waste money on failing charter schools. It needs to invest in the good ones.’’

 

 

The new analysis, Belly Up: A Review of Federal Charter School Grants, shows how state and federal education departments ignored warning signs, systemically wasted tax dollars and made learning more difficult for many Ohio students.

 

 

Among the main findings:

 

 

· Of the 292 Ohio charter schools that have received federal CSP funding since 2006, 108 (37 percent) have closed or never opened, totaling nearly $30 million. Meanwhile, barely 2 percent of all companies nationwide that have received any federal grants or incentives since 2000 have failed.

 

 

· The Ohio tally includes 26 charter schools that received nearly $4 million in CSP funding but never opened. There are no records to indicate whether any of these public funds was returned.

 

 

· Ohio charters that received past CSP funding and State Report Card grades in the 2014-2015 school year had a median Performance Index score that was lower than all but 15 of Ohio’s 613 school districts.

 

 

· Since the federal grant program began 21 years ago, its lone assessment – conducted by WestEd – identified material weaknesses that appear to have been ignored by federal grant makers. In one instance, a potential grant reviewer even told the Ohio Department of Education that she was unqualified for the job and asked to be excluded from its reviewers’ list. Instead, the department thanked her for “agreeing to participate as a community school grant reader.”

 

 

· Paolo DeMaria, recently appointed Ohio Superintendent of Public Instruction, was Associate Superintendent of Finance and School Options at the time WestEd raised concerns about Ohio’s processes for distributing the federal money to charter schools.

 

 

Of the 44 Ohio charter schools where State Auditor David Yost conducted surprise attendance audits recently, 17 had received federal CSP funding. One of them – the London Academy – only had 10 of the 270 students ODE thought it had in attendance the day Yost’s investigators showed up. All told, these audited schools received about $6.6 million in federal funding.
Last September, federal officials stunned education experts by announcing that Ohio would receive $71 million in CSP grants – more than any other state. Ohio’s large award came in spite of its reputation as one the worst charter states in the country, according to national charter advocates. The swift and severe criticism that followed prompted USDOE to put Ohio’s award on hold.

 

 

“We urge federal regulators to revamp the way in which it makes grants so that the money goes to the best performing charter schools,” said Innovation Ohio President Keary McCarthy. “The mistakes of the past should not be repeated in the awarding of future grants.”

 

 

Those mistakes include giving millions to the state’s most notorious charter school scofflaws, including:

 

 

· Horizon Science Academies and Noble Academies: Total CSP Grants: 7.6 million

 

 

Linked to a Muslim cleric exiled in Pennsylvania, the chain is the subject of an ongoing FBI investigation, and WikiLeaks revealed cables showing the U.S. State Department notified the CIA about suspicious visas for teachers and administrators. In June 2014, 19 of its schools were raided by the FBI, including four in Ohio. The Ohio schools also have been dogged by allegations of test-tampering, teachers using racial slurs in the classroom, unqualified teachers, sexual misconduct in the classroom. ODE investigated allegations raised by teachers who witnessed the problems but found no wrongdoing.

 

 

· Imagine Schools: Total CSP Grants: $5.9 million

 

 

The chain has been under fire nationally for saddling schools with exorbitant leases paid to its subsidiary, SchoolHouse Finance. Imagine recently lost lawsuits in Indiana and Missouri over the same type of abusive leases seen in Ohio. A federal judge in Missouri ordered Imagine to pay $1 million and called the lease arrangement “self-dealing.’’ One of the chain’s worst-performing Ohio schools, Romig Road in Akron, is among the charters that closed – but received federal grant money. All of Imagine’s Ohio schools received a D or F on the most recent state report cards.

 

 

· White Hat Management: Total CSP Grants: $1.4 million
Owner David Brennan has been the most powerful and influential of Ohio’s charter school operators since state money started flowing to them. Brennan’s schools also are routinely among the lowest performing. While Ohio’s historically lax regulations make it difficult to close even the worst schools, several of Brennan’s schools have been shut down for academic reasons or contractual non-compliance. Staffers for GOP state Auditor David Yost made surprise visits to charters to see if they are padding attendance records and concluded that White Hat’s dropout recovery schools were among the worst.

 

 

It’s been well documented that ODE’s grant application for the $71 million was inaccurate and misleading, prompting state officials to revise the number of poor-performing charter schools in Ohio from six on its initial application to 57 – a tenfold increase. The author of the application, David Hansen, was forced to resign as head of ODE’s office of school choice and community schools after getting caught illegally cooking the state’s accountability system to benefit Ohio’s politically connected eSchool operators.

 

 

It is unclear when or if federal regulators will release the $71 million.

 

 

The Ohio Charter School Accountability Project is a joint venture of the Ohio Education Association, Innovation Ohio and ProgressOhio. OEA and IO host the website, knowyourcharter.com, which provides data from the Ohio Department of Education on how the state’s charter schools are faring compared to local public schools.

 

 

For More Information, contact:

 

 

Stephen Dyer, Innovation Ohio Education Fellow, 330-338-1486
Keary McCarthy, Innovation Ohio President, 614-425-9163