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Michigan: A Spectacular Charter School Scandal

By dianeravitch
April 9, 2016 //
13

This is one of the most curious, most convoluted charter scandals I have come across. Of course, it happened in Michigan, where about 80% of charters  operate for-profit and where the state exercises minimal oversight of the charter sector.

 

In 1999, an optometrist named Steven Ingersoll was among the first to see the potential in the charter industry. He developed his own pedagogy called Integrated Visual Learning and opened the first of four charters, Grand Traverse Academy. The board of directors were other optometrists who liked Ingersoll’s ideas. Certainly, optometrists would be drawn to a teaching method based on “visual learning.”

 

There were chummy relationships among Ingersoll, the management company he hired, and board members:

 

“It was not until lawyers for the school began asking questions that the tangled financial relationship between Ingersoll’s management company and the charter he founded began to unravel, culminating in the most significant federal criminal case in the history of Michigan’s 20-year-old charter school industry. Ingersoll, who started Smart Schools Management, Inc., stands accused of illegally diverting construction loan money for another charter school to his private account, in part to pay back money he had taken from the Grand Traverse charter. His hand-picked members on the school board knew he had advanced himself money from Grand Traverse, but had no problem with the arrangement, school records show.

 
“Ingersoll will go on trial next month on seven criminal charges of bank fraud and tax evasion. The allegations of financial self-dealing and cozy relations between Ingersoll, his associates and board members could not come at a worse time for the Michigan charter movement. The state’s powerful, mostly for-profit charter school industry has found itself on the defensive since the Detroit Free Press published a devastating series last June chronicling how charters receive nearly $1 billion a year in state taxpayer money with little accountability or transparency on how that money is spent. The series detailed how board members at some charter schools were forced out when they pushed to learn more about finances from management companies, and how state law failed to prevent self-enrichment by those operating some low-performing charter schools.”

 

One blogger, Anita Senkowski, doggedly followed the case of Steven Ingersoll and posted documents. Her blog is called “Glistening Quivering Underbelly,” where she calls herself Miss Fortune. She described Ingersoll as the poster boy for Michigan’s lack of charter oversight.

 

Ingersoll was indicted in 2014 and convicted in 2015 for tax evasion and fraud.

 

Senkowski wrote last fall:

 

“Convicted in March [2015] on three counts of tax evasion and conspiracy, Ingersoll owned and formerly managed the Bay City Academy and managed the Grand Traverse Academy until days before his April 10, 2014 indictment.

 

“Between 2007-2012, Ingersoll misappropriated an estimated $3.5 million dollars from the Traverse City charter school — but has never been investigated or charged with embezzlement.

 

“And what about the Grand Traverse Academy’s Board of Directors? After much public posturing, it opted not to pursue any legal remedy to recover the money, and apparently that’s where it stands.”

 

Senkowski alleged that the board knew what Ingersoll was doing and didn’t care.

 

Now she has another bombshell report. Even after Ingersoll’s indictment, he continued to receive monthly payments of $12,500 from Mark Noss, a member of Ingersoll’s original board who started his own charter management company.

 

She writes:

 

 

“An accountant formerly employed by Mark Noss at his Full Spectrum Management, LLC (FSM) sent a stunning whistleblower email to the Grand Traverse Academy Board of Directors on March 15, 2016 at 6:00pm, alleging Noss deceived the Board when he stated during its December 17, 2015 meeting that he “has no business relationship with Dr. Ingersoll at the present time.”

 

“The former FSM accountant disclosed information to Board president Brad Habermehl and Grand Traverse Academy employee, Heidi Sych, that revealed Noss had been making monthly $12,500 payments to Steven Ingersoll for nearly two years.

 

“The incendiary email, sent by former FSM accountant Richard Lowe, and a March 16, 2016 response from Mark Noss, were both provided to the U. S. Attorney’s Office by counsel for Lake Superior State University.

 

“According to a supplemental brief filed late this afternoon by government prosecutors, FSM honcho Mark Noss acknowledged paying Ingersoll $12,500 per month since he took over the role of educational services provider for the Grand Traverse Academy on March 19, 2014, with the first payment issued in April 2014.”

 

 

 

 

 

 

 

 

 

 

Categories Charter Schools, Education Reform, Fraud, Michigan

Steven Singer: Charter Lobby Donates $50,000 to Candidate Backed by Pennsylvania Teachers’ Union

By dianeravitch
April 3, 2016 //
8

Now here is a conundrum: Why would the charter school lobby donate $50,000 to a candidate for State Attorney General who is already backed by the Pennsylvania State Education Association, the teachers’ union?

 

Steven Singer poses that question here. Pennsylvania is a state that is rife with charter school scandals. Such scandals would normally be investigated by the State Attorney General. Duh. If Josh Shapiro gets elected, let’s see how vigorous in investigating the scandals that Singer links to in his blog, and how vigorously he prosecutes the charlatans and frauds who are profiting off the gullibility of parents.

 

Singer asks:

 

 

What’s the best way to avoid a charter school scandal?

In Pennsylvania, apparently you bribe the Attorney General.

 

That may be why Students First PAC donated $50,000 to Josh Shapiro, a Democrat running for the position.

 

This political action committee is not to be confused with the infamous national group founded by Michelle Rhee. Students First PAC is a state organization that typically contributes to charter school friendly candidates.

 

And $50K is quite a chunk of change in a State Attorney General race – the office in charge of prosecuting charter schools for breaking the law.

 

 

Charter school scandals have been an almost weekly occurrence throughout the Commonwealth. Chester Community Charter School, the state’s largest brick-and-mortar organization, is under investigation for pocketing $1.2 million “in improper lease-reimbursement payments.” As Philadelphia public schools are being closed due to a miserly state budget, “nonprofit,” charter operator Aspira Inc. was caught using public money to boost its real estate holdings instead of using those funds to educate children. Nicholas Trombetta, the founder of Pennsylvania’s largest cyber charter, an institution that operates exclusively over the internet, “was charged with fraud, for funneling $8 million of the school’s funds into his personal companies and holdings.”

 

It’s easy to see how having the state Attorney General on your side would benefit an industry rife with fraud and malfeasance.

 

Shapiro, chair of the Montgomery Country Board of Commissioners, is the odds on favorite to succeed Kathleen Kane as the state’s highest ranking law enforcement officer.

 

He is running for the Democratic nomination against Northampton County District Attorney John Morganelli, and Allegheny Country Attorney General Stephen Zappala.

 

Despite strong corporate education reform ties, Shapiro has been endorsed by the Pennsylvania State Education Association (PSEA), the largest teachers union in the Commonwealth.

 

Categories Education Industry, Education Reform, For-Profit, Fraud, Pennsylvania, Virtual Charter Schools

California Judge Orders Failed For-Profit Corinthian Colleges to Pay Students $1.1 Billion

By dianeravitch
March 31, 2016 //
49

California’s Attorney General Kamala D. Harris won a settlement in excess of $1.1 billion against defunct for-profit Corinthian Colleges for defrauding students  with false advertising. There is a website in the linked article where students can apply for restitution. Since the corporation is bankrupt, they may never see any repayment. The entire for-profit sector is a mighty scam; they should all be tightly regulated for fraud and predatory practices. Or shut down before more students are ripped off.

 

The Los Angeles Times reported:

 

 

Granting a default judgment, San Francisco Superior Court Judge Curtis Karnow found that Corinthian Colleges provided untrue or misleading statements about graduates’ job placement rates, duping both students and investors, and that the Santa Ana-based company unlawfully used U.S. military seals in advertisements, among other claims.
The for-profit college operator, which filed for bankruptcy protection in May, was also faulted for advertising programs or degrees that it didn’t offer, such as training programs for X-ray and dialysis technicians, according to court papers.

 

The judgment found that Corinthian and its subsidiaries had unfair and unlawful debt collection practices, including barring students from attending classes if they were behind on loan payments, and that they failed to disclose their role in the “Genesis loan” program.

 

Corinthian Colleges, along with its Heald College business, were also faulted for misrepresenting the likelihood of whether academic credits earned at their programs could be transferred to the Cal State system, according to court papers.

 

In his 21-page judgment, Karnow ordered restitution of $820 million for students and civil penalties of just more than $350 million.
“For years, Corinthian profited off the backs of poor people — now they have to pay. This judgment sends a clear message: There is a cost to this kind of predatory conduct,” Harris said in a statement.

 

Harris filed suit against Corinthian Colleges Inc. and its subsidiaries in 2013, accusing the company of targeting low-income students with a “predatory scheme,” touting untrue job placement rates.

 

The attorneys for Corinthian did not appear at hearings, because they say the  corporation is bankrupt and there is no one to represent.

 

 

 

 

Categories Education Industry, For-Profit, Fraud, Higher Education

Chicago: Why UNO Charters Fought Public Audits

By dianeravitch
March 28, 2016 //
14

The Chicago Sun-Times reported the results of its battle to gain access to the financial records of the UNO charter chain. UNO fought to keep its records secret, claiming they were a “private” organization. What the newspaper discovered when it won was a spending spree on the taxpayers’ dime–er, make that hundreds of millions.

The CEO of UNO, Juan Rangel, was politically powerful: he served as co-chair of Rahm Emanuel’s first mayoral campaign. Rangel got a grant of $98 million from the state to build more charter schools. He was compelled to resign when news broke that millions in contracts from the state grant were awarded to allies of Rangel.

But the new revelations show a pattern of profligate spending by the organization. It also shows how charters used taxpayer money to buy political favors.

Dan Mihalapoulos writes:

“Even as they ran a network of charter schools for thousands of students in low-income neighborhoods across Chicago, United Neighborhood Organization leader Juan Rangel and other UNO officials were piling up big bills at fancy restaurants and for travel on the taxpayers’ dime, records obtained by the Chicago Sun-Times show.

“In the year before a contracting scandal led to Rangel’s forced resignation, the clout-heavy Hispanic community organization and charter-school operator spent more than $60,000 for restaurants on his American Express “business platinum” card, according to the records, which UNO fought for nearly three years to keep secret.

“The spending spree included $1,000-or-higher tabs at Gene & Georgetti, Carmichaels, Vivo Chicago, Rosebud Prime, the East Bank Club, Carnivale, a downtown hotel’s rooftop bar and Soldier Field’s concessions during a soccer game featuring Mexico’s men’s national team.

“And UNO spent more than $60,000 a year on travel in 2010 and 2011, the internal records show. Rangel alone flew out of town 31 times in four years.

“In 2010, Rangel traveled at the organization’s expense to Managua, Nicaragua, the records show. Rangel and two aides, Miguel d’Escoto and Francisco “Pancho” d’Escoto, met during that trip with the d’Escotos’ uncle, a former diplomat advising them on possible expansion.

“Rangel’s and UNO’s fortunes took a downturn after the Sun-Times reported in February 2013 that the organization paid millions of dollars from a $98 million state school-construction grant to companies owned by two brothers of Miguel d’Escoto, who was Rangel’s top deputy, and to other contractors with close ties to the group.

“As federal and state authorities began investigating, the newly obtained records show, UNO officials spent hundreds of thousands of dollars trying to contain the scandal, which cost the organization millions of dollars in state funding and resulted in a federal consent decree requiring outside oversight of the group’s contracting practices.

“UNO has paid more than $962,000 since the start of 2013 to the firm of Mary Patricia Burns, who became the group’s primary lawyer shortly after the scandal broke.

“Her law firm, Burke Burns & Pinelli Ltd., has been a major campaign contributor to Illinois House Speaker Michael Madigan. The state Democratic Party boss from the Southwest Side sponsored UNO’s state grant — which was the biggest government subsidy given to charter schools in the country. Burns didn’t return calls seeking comment.

“The organization also paid more than $307,000 to retired federal judge Wayne Andersen and others who aided him in an investigation of UNO’s contracting practices.

“The spending took place as UNO was operating a government-funded charter schools serving about 8,000 predominantly Hispanic students, largely from low-income families. About 96 percent of students at UNO’s 16 campuses qualify for free or reduced lunches, records show.

“Despite being almost entirely government-funded, UNO leaders fought to keep the spending records secret, arguing that they didn’t have to comply with the state’s Freedom of Information Act because UNO is a private organization. But they ultimately released the records in a recent legal settlement with the Sun-Times.

“Since UNO founded the charter-school chain in 1998, the Chicago Public Schools system has given the privately run schools hundreds of millions of dollars in taxpayer funding, in addition to the state funding the organization got for school construction. Until less than a year ago, the UNO Charter School Network — which is separately incorporated — passed along much of the CPS funding to UNO, which managed the schools.”

Categories Charter Schools, Chicago, Fraud
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