Archives for category: Scandals

Stephen Dyer of Innovation Ohio, a lawyer and former Ohio legislator, reports that the ECOT scandal is worse than previously known.

He writes:

New state funding reports indicate that ECOT had nearly 8,000 fake students in its last full year of operation. According to the Ohio Department of Education, its last year of operation, ECOT couldn’t account for about 20 percent of its students. However, the monthly finance reports ODE puts out suggests the number may have been closer to 55 percent.

First of all, the last year ECOT was fully operational was in the 2016-2017 school year. So I’m using that as a baseline for comparison.

In the 16-17 school year, ECOT received $103.6 million for 14,208 students. This year, it’s zero dollars. A lot of news stories have tried to figure out what happened to all those students. One of the challenges appears to be that they may not have actually had all those students….

ECOT graduated about 2,000 students in 2017, but even subtracting out those students from the 7,791 “missing” students means 40 percent of the ECOT total is unaccounted for — about double the rate that was found by ODE.

So there seems to be something going on here.

I would sure like to know how many, if any of the 7,791 students ECOT claimed it had in 2016-2017 that aren’t in charter schools anymore were actually ever there to begin with. Because it looks like the state’s 20 percent assessment may be significantly lower than first thought.

Follow him as he connects the dots.

The Clayton Valley Charter High School was audited, and the results were appalling. Actually, they were what you would expect when a private organization gets public funds and is unsupervised and when the state law ignores conflicts of interest and nepotism.

The article appears in the Mercury News Behind a paywall. It begins like this:

CLAYTON — The married top leaders of Clayton Valley Charter High School raked in almost $850,000 in less than two years before leaving the school last spring, a county investigation found.

The probe also revealed that the couple misused school funds, hired people in secret and created positions without the school board’s approval.

An audit report released Friday evening as part of the agenda for the Contra Costa County Board of Education’s Oct. 3 meeting states that the charter school “has not been following best practices” when it comes to “management hiring practices, vendor service contracts, legal fees and credit card purchases.”

The report expresses “concern” over former executive director David Linzey’s salary and benefits and states that his contract was vulnerable to potential “manipulation.”

Signed by a school board member, Linzey’s contract included a base salary of $23,986 per month, plus 10 “floating” work days at $1,115 per month, for an annual package of $301,212. According to the audit, an amendment in 2015 eliminated payments for health benefits and a car allowance and instead added that money to the salary base, which would have potentially increased pension benefits upon retirement.

An annual salary increase of 3 percent a year and a clause that ensured Linzey would get a raise whenever employee unions got them were also worked into the contract, the audit says. Linzey’s compensation between July 1, 2016 and May 5, 2018 totaled $555,109, and while a provision in his contract called for board “evaluations” of his performance, there is no record that ever happened, according to the audit.

The audit also notes that the school board approved the hiring of Linzey’s wife, Eileen Linzey, as chief program officer without posting the open position or holding interviews. Her income from February 2017 through May 2018 totaled $296,047. The Linzeys’ household income from July 1, 2016 to May 15, 2018 totaled $849,776.

In addition, according to the audit, there was no record of the board creating the assistant superintendent position that Concord City Council member Ron Leone took in December 2017 and held during the first half of 2018 for $681 a day while running for county superintendent of schools. After failing to win the seat in this year’s primary, Leone resigned from the position in the same month.

Linzey signed Leone’s employment contract in November 2017 — when hiring was supposed to be approved by the school’s governing board — and no interviews were held or job listings posted. There was no record of the board approving the hire, the report found.

The audit also discovered that of the school’s five listed management positions — operations director, fiscal director, admissions officer, SIS coordinator and human resources director — all except the admissions officer were paid more than the salary schedule’s “highest range.” The management salary schedule was also not recorded as having been approved by the board.

The auditing firm hired by the county, Christy White Associates, recommends that the charter school requires board approval of new positions, hiring and terminations, as well as salary changes. It also urges the school to be more transparent about salaries and more competitive in its hiring process.

The Contra Costa County Office of Education hired the firm last May to audit the charter school’s financial and hiring practices, just as news broke that the Linzeys had left amid long-running criticisms from parents and school staff over questionable spending.

At the time, the school declined to state the nature of the Linzeys’ departure, but the audit report states the couple “resigned” in June.

The report also reveals that upward of $40,000 in school money was used to pay lawyers who helped create a new charter school in Antioch — East Bay Tech Academy.

The audit also found that the charter’s California Credit Union credit cards incurred $610,000 in expenses between July 1, 2016 and May 15, 2018, despite an annual group limit of $50,000. And, the report found, school staff bought supplies without submitting receipts and purchased gift cards without identifying recipients. Receipts for meals were not itemized to show whether alcohol was purchased.

In response to the audit, a letter from the Clayton Valley Charter High School board of directors notes that some of its recommendations have been followed — including implementing a public and competitive hiring process for management and ensuring the board approves all hires — and it is addressing the others. The letter says school officials will publish a new management salary schedule and remove the executive director’s ability to pay more than the amounts listed.

The school board in its letter also said it is working with the newly formed board of the East Bay Tech Academy to “codify in writing” a plan to reimburse Clayton Valley for the legal fees it paid to set up the new school.

The virtual charter industry is booming in Michigan, despite its abysmal performance.

Michigan, DeVos’s home state, has outsourced its education system as much as possible to for-profit entrepreneurs. Michigan is the only state where 80% of charters are operated by for-profit corporations.

http://www.wkar.org/post/study-virtual-schools-growing-mi-despite-poor-outcomes#stream/0

According to this report, one-quarter of the 101,000 students attending virtual charters did not pass a single class.

The graduation rate is far below that of public schools.

Michigan’s standing on NAEP has fallen to the bottom 10 since the widespread adoption of school choice.

Michigan is an exemplar of PROFITS MATTER, NOT EDUCATION.

This is a world-class scandal. And it is all legal!

Arizona’s State Representative Eddie Farnsworth sold his for-profit charter chain to a non-profit for about $30 Million and will reap millions in profits, then get a management fee to continue to operate them.

“Yet another millionaire is made, thanks to the latest in charter school scheming.

“This time, it’s state Rep. Eddie Farnsworth, who has figured out a way to sell his charter school business – the one built with taxpayer funds – and make millions on the deal and then likely get himself hired to continue running the operation.

“Which now converts to a non-profit and thus will no longer have to pay property or income taxes.

“Sweet plan. Sickeningly so, when you consider that Farnsworth is making his millions off of tax money intended to be used to educate Arizona children.

“Other charter schools are getting rich

“Farnsworth is just the latest operator to use charter schools as his own personal ATM – one that shoots out public funds.

“The Republic’s Craig Harris has spent all year reporting on operators who are getting rich – or at least, making a tidy pile of cash – off publicly funded charter schools, aided by laughable state laws that require hardly any oversight or accountability.

“There’s the Arizona Charter Schools Association’s No. 2 guy, using his position to throw business to a company he co-owns with his wife by giving her the names of students looking for a charter school. She scores a bounty for every student (and the tax dollars that go with that student) she delivers to certain charter schools.

“There’s BASIS Charters Schools founders Michael and Olga Block, who scored $10 million in fees to manage the charter chain of schools last year.

“There’s American Leadership Academy’s founder Glenn Way, who scored at least $18.4 million profit by getting no-bid contracts to build charter schools thanks largely paid for with public money.

“Then there’s Primavera online school, where most of the public funding has gone not to educate students but to elevate the company’s investment portfolio. Damian Creamer, the school’s founder and CEO, last year scored an $8.8 million “shareholder distribution” from the for-profit company that now runs Primavera, according an audit filed with the Arizona State Board for Charter Schools.

“Taxpayers pay twice for the same schools

“Now comes Farnsworth with his Benjamin Franklin Charter School scheme, approved Monday by the Arizona State Board for Charter Schools.

“Under the arrangement, Farnsworth is selling his for-profit four-school operation to a non-profit run by a trio of handpicked pals who will now select someone to run the schools. Farnsworth has applied for the job.

“According to state records, Farnsworth will score at least $11.8 million in profit from the deal. He’ll also keep nearly $3.8 million in “shareholder equity” accumulated over the years since starting the suburban charter school chain in 1995. But Farnsworth declined to disclose the total profit he will make on the deal.

“I make no apologies for being successful,” he told the Arizona State Board for Charter Schools.

“And you wonder why Farnsworth has fought efforts to require better oversight and reform of Arizona’s charter schools?

“The Republic’s Harris reports that when the sale closes, taxpayers will have paid twice for the same schools – once to essentially pay the mortgage on the Farnsworth-owned buildings and now to assume more debt in order to buy the buildings.

“And – by the way – it’s all legal

“The most outrageous part of this outrageous story is that what Farnsworth is doing is apparently legal.”

Craig Harris of the Arizona Republic reported on Farnsworth’s meeting with the state charter board (which includes other charter operators):

“[Farnsworth] told them he was requesting the change in organization to strengthen the finances of the roughly 3,000-student school chain. Farnsworth said the new structure will allow Benjamin Franklin to avoid property taxes and to qualify for federal education funds.

“The Legislature gives charter operators up to $2,000 more per student in state education funding than traditional district schools. That’s because charters cannot access local property taxes for building debt.

“Farnsworth acknowledged he would make a profit on the deal.

“Board member Erik Twist, who runs the Great Hearts charter schools, tried to press Farnsworth on how much he stands to gain. But Chairwoman Kathy Senseman interrupted him and changed the direction of the discussion.

“Farnsworth told the board that if he had wanted to make money, he merely could have sold the schools and cashed out.

“I make no apologies for being successful,” Farnsworth said.

“The transfer plan calls for the new non-profit operator to hire a contractor to manage the schools, an arrangement similar to other charter chains like Basis and American Leadership Academy.

“Records submitted to the Charter Board appeared to show Farnsworth had already been hired to manage the schools, but he said the document was a “draft” intended to give board members an understanding of the management contract.

“That’s what happens at Basis schools, many of which rank atop U.S. News & World Report’s “best schools” lists. A private contracting arrangement has paid about $10 million in “management fees” to a private firm run by Basis founders Olga and Michael Block.

“Farnsworth told the board, however, that he had submitted an application for the contract to the company’s new three-member board, all of whom he recruited and are his friends.

“Rebecca McHood, a Gilbert resident who attended the meeting, called the board vote “crazy.”

“They just gave a charter to a non-profit, but they didn’t vet them,” said McHood, a charter school critic whose relatives attended Farnsworth’s schools. “Here we are paying for his private property with our tax dollars, and then he can sell them.”

“State to pay twice for campuses

“Farnsworth built his school chain over more than two decades ago and became its sole owner in 2017, when he used $2.2 million of Benjamin Franklin funds to buy out his partners, Sharon Clark and Roy L. Perkins Jr., records show.

“That deal also made him sole owner of LBE Investments, a Gilbert company that owns the four campuses and leases them to Benjamin Franklin. Both companies are headquartered at 690 E. Warner Road in Gilbert.

“Once the planned sale to the new non-profit business closes later this year, taxpayers will have paid for the same schools twice. That’s because Benjamin Franklin, for years, has used education funding from the Legislature to make lease payments to LBE Investments, records show.

“(A 2017 audit showed Benjamin Franklin paid $4.9 million a year in lease payments, and that the remaining lease balance for three elementary schools and one high school was $53.9 million.)

“Farnsworth told the Charter Board that an appraisal of the schools is underway, and they will be sold at fair-market value.

“Documents submitted to the Charter Board indicate the plan is to borrow $65.7 million through the Arizona Industrial Development to purchase the schools. A sale for the projected loan amount would result in an $11.8 million profit for Farnsworth by retiring the outstanding lease balance.”

Why do Arizona taxpayers acquiesce to this blatant Profiteering with money intended to educate children?

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The Network for Public Education has a Twitter handle called #anotherdayanothercharterscandal, and it is hard to keep up with them. It used to be one or two a week, Carol Burris told me, now it is one or two every day.

Here is only one among many, involving a charter scam that stretched from Ohio to Florida, ripping off taxpayers in both states.

Ohio’s top public accountant is actively investigating the case of two businessmen accused of using charter schools to defraud Florida taxpayers, students and schools — and maybe here, too.

On Friday, Ohio Auditor Dave Yost acknowledged that a probe has been ongoing for a year. Meanwhile, court documents filed this month in Florida indicate 19 Ohio charter schools were overbilled nearly $600,000. Prosecutors and forensic accountants say the money was laundered through 150 bank accounts and shell companies then returned as “rebates” and “kickbacks” to Marcus May, who once ran more than 20 charter schools in Ohio.

In 2012, May used a parent company, Newpoint Education Partners LLC., to open Cambridge Education Group, a charter school operator based in Akron. To grow business in Florida, authorities say he “falsely represented” that his Ohio schools were well managed. By 2016, prosecutors say he allegedly defrauded Florida and its public schools of more than $1 million.

May has repeatedly declined to speak with the Beacon Journal.

The pattern in Florida seems to mirror transactions in Ohio.

One forensic document in the Florida case details how Ohio schools paid $1.1 million to Apex Learning, a Seattle-based company May used to bill the 19 Cambridge schools in Ohio and 15 Newpoint schools in Florida for online and hard-copy curriculum. Russ Edgar, the lead Florida prosecutor in the white collar criminal case against May, has produced invoices that show how Apex inflated pricing to siphon $229,756.57 from Florida’s education system and $456,551.92 from Ohio schools, including four in Akron.

“After the allegations in Florida came to light, Marcus May was immediately relieved of any managerial duties and later of his equity in Cambridge,” John Stack, co-owner of Cambridge, said in a written statement. He said Cambridge hired a forensic accountant to find out if Apex negatively impacted any Ohio schools. Once the schools were identified, the money was returned.

Stack said he no longer owns a stake in Cambridge. He did not say who does owns the company now.

Of the 18 Cambridge schools still open in Ohio, 13 signed new management contracts this summer with Oakmont Education. Stack founded the company with Marty Erbaugh, an investment banker from Hudson. Oakmont will take over Cambridge’s dropout recovery high schools for struggling teenagers and young adults.

“Oakmont doesn’t believe that any of the schools we manage were negatively affected by Marcus May’s actions or Cambridge’s management,” said Stack, who filed the paperwork to create Oakmont on March 20, four days after a Florida jury convicted one of May’s associates.

How reassuring to know that the charter schools are now in the hands of an investment banker. Don’t you feel better already?

I have been waiting for the sentencing of Nicholas Trombetta for years, ever since he was arrested for tax evasion after not reporting the millions of dollars he stole from his cyber charter, the first such in the state of Pennsylvania.

Steven Singer reports the sentencing here, and he is outraged that Trombetta got a slap on the wrist, as compared to the long jail sentences meted out to Atlanta teachers who changed test scores.

What Steven doesn’t understand is that Trombetta was sentenced for tax evasion, not for embezzlement of millions of dollars. Embezzlement of public funds was not an issue, although it should have been. Apparently it is okay to steal from the state as long as you report it on your tax returns. Some of the embezzlement occurred by setting up shell companies with which Trombetta did business with himself, using public money. Watch for the “related companies” when following the money.

Steven writes:

Nick Trombetta stole millions of dollars from Pennsylvania’s children.

And he cheated the federal government out of hundreds of thousands in taxes.

Yet at Tuesday’s sentencing, he got little more than a slap on the wrist – a handful of years in jail and a few fines.

He’ll serve 20 months in prison, be on supervised release for three years, and payback the tax money he concealed.

As CEO and founder of PA Cyber, the biggest virtual charter school network in the state, he funneled $8 million into his own pocket.

Instead of that money going to educate kids, he used it to buy a Florida condominium, sprawling real estate and even a private jet.

He already took home between $127,000 and $141,000 a year in salary.

But it wasn’t enough.

He needed to support his extravagant lifestyle, buy a $933,000 condo in the Sunshine State, score a $300,000 twin jet plane, purchase $180,000 houses for his mother and girlfriend in Ohio, and horde a pile of cash.

What does a man like that deserve for stealing from the most vulnerable among us – kids just asking for an education?

At very least, you’d think the judge would throw the book at him.

But no.

 

Ever since D.C. Mayor Adrian Fenty took control of the D.C.public schools and named Michelle Rhee as its leader, corporate reformers have hailed the long-struggling district as a model of school reform. Rhee was a blazing meteor in the world of reform, appearing on the covers of national magazines and as a frequent guest on national TV. She starred in “Waiting for ‘Superman,’” and prominent reform-loving journalists burbled in print about her miraculous achievements.

She “knew” that “bad teachers” caused low student test scores, so she set about firing teachers and principals and designed an evaluation system tied to test scores to weed out the bad apples.

Her stle was mean. She gloried in her lack of empathy and her contempt for collaboration.

Now, Tom Ultican (like John Merrow before him, whom he cites) dismantles the Rhee legacy as a fraud, an exemplar of the Destroy Public Education Movement, a testament to the failure of the “portfolio model.”

Inflated test scores, inflated graduation rates, doctored data, a regime of deception and boasting. A model of corporate reform. Educators in Atlanta were sentenced to jail for the same things that happened in D.C. yet D.C. was hailed as a model.

Rhee is gone. Her successor Kaya Henderson is gone. Her successor Antwan Wilson is gone. But the hype and spin survives. When will the Mayor and City Council and people of D.C demand accountability?

 

Here is a curiosity. The recent investigation of graduation rates in the D.C. Public Schools–which revealed that one-third of the graduates lacked the minimum qualifications to graduate–did not include charter schools. Nearly half the students in the D.C. schools attend charter schools.  Why were they not included in the investigation?

D.C.’s answer to the scandal is to create an “Office of Integrity.” Former teacher Erich Martel says that is not enough because such an office would be subservient to the authorities creating and covering up the scandal.

He writes:

 

Council Education Committee Chairman and Members, Council Members,

(Council staff: Please print the attachment for your CM, thank you)

 

DCPS chancellor Antwan Wilson’s proposed “Office of Integrity” is inadequate because it is not independent of the education hierarchy that ignored it for years.  Teachers and school staff will not trust any office that is within the DCPS bureaucracy.  And, it doesn’t cover charter schools, voucher recipients, college funding recipients or home schools.

 

The bill before the MD state legislature calling for an Investigator General under a proposed “Education Monitoring Unit” that is INDEPENDENT of the state education hierarchy with an independent funding stream is a far better alternative, more likely to fulfill its intended function. 

 

It has to have investigative powers with full due process protections as the proposed MD bill spells out.

 

Alternatives for DC might be:

An education investigator general (or whatever name) under the DC Inspector General,  DC auditor, with authority over DCPS, DC charters, DC voucher recipient schools, DC college funding recipients and home schools.

 

And – I am waiting for the Council to conduct an independent audit of DC charters’ graduates compliance with attendance requirements and fulfillment of graduation requirements.

 

Erich Martel

Retired DCPS high school teacher

Ward 3

ehmartel@starpower.net

One of the biggest scandals associated with charter school finances has to do with “related parties.” That means that the school engages in financial transactions with a “related party” and money changes hands and ends up in the pockets of friends.

The Gulen schools are one of the nations’ largest charter chains. They are somehow associated or owned by the imam Fethullah Gulen, who lives in seclusion in the Poconos of Pennsylvania. General Michael Flynn apparently offered to extradite Gulen because the Turkish Government blames Gulen for a failed coup. Gulen schools have been accused of hiring Turkish contractors who were not the low bidders on contracts. You can tell a Gulen Charter by the large number of Turks on the board of directors and Turkish teachers.

In Rochester, New York, the local newspaper has uncovered a shady deal between related parties involving a Gulen charter school.

The story reads in part:

“A real estate holding company based in Syracuse cleared more than $300,000 in profit at the expense of a charter school in Greece earlier this year, according to real estate and financial records obtained by the Democrat and Chronicle.

“Both the company, Terra Science and Education Inc., and Rochester Academy Charter School, which opened in 2008 as the first local charter high school, have evident connections with each other, and broadly with the nebulous network of Fethullah Gulen, the reclusive and controversial Turkish cleric living in exile in rural Pennsylvania.

“Both the school and Terra deny there is a connection, but the D&C investigation has found numerous examples of overlapped personnel, lax invoicing, a lack of auditing and shared community affiliations.

“Many Gulen-suspected schools across the country have entered into questionable real estate transactions with related parties, something critics label an attempt to siphon off the public money charter schools receive for their pupils. The importance for Monroe County residents, though, is the disbursal of hundreds of thousands of public dollars to a connected organization.

“Such transactions, while not illegal, point to an oversight weakness in charter schools, which rely more heavily on contracted space and services than traditional public schools.

“The Democrat and Chronicle has rebuilt the timeline of the deal that generated the substantial return for Terra.

*May 2016: Terra Science and Education Inc. buys a shuttered school building on Latta Road from Our Mother of Sorrows Church for $700,000.

*August 2016 to June 2017: Terra spends between $1.2 million and $1.5 million in renovations. Rochester Academy Charter School (RACS) leases the building from Terra in the meantime for $30,000 a month, paying a total of $300,000.

*June 2017: RACS purchases the newly renovated building for $2.5 million — at least $300,000 more than Terra’s costs for purchase and renovation, not including the lease payments.

“The fat profit margin for Terra comes from public funding intended for the hundreds of students attending the school — about $5 million in 2016-17, and growing as the school adds grade levels each year.

“Under normal circumstances, if a developer turned a $300,000 profit after owning a property less than one year and selling it to a public school, it would be evidence of ruthless commercial skill for the one party and hapless poor luck for the other.

“When there is evidence the two parties are connected, it is a different story.”

Bottom line: Taxpayers were ripped off.

There is an inherent problem with privatizing and deregulating publicly-funded schools. Without supervision, without oversight, without accountability, bad things may happen. And they may not be noticed unless there is a whistle-blower, because that’s what happens in the absence of oversight.

Mercedes Schneider reports here on a sex scandal in a New Orleans Charter School.

“It baffled me when I read that administration at a New Orleans charter school, Success Preparatory Academy, failed to immediately alert police regarding a cell phone video of a sexual incident that happened on campus in April 2017.

“School admin are mandated reporters of sexual abuse.

“However, what really sealed the deal for the two administrators arrested is their apparent ignorance that deleting the video from a student’s phone constitutes destroying evidence, and emailing the video– one that falls under the definition of child pornography– to oneself and to another administrator– constitutes possession of child pornography.

“But there is more:

“When made aware of the incident, the principal of the school also failed to report it to the police, and he publicly defends the failure to report the incident to police as well as the decision of the other admin to delete the video from the student’s phone; return that phone to the student, and email the pornographic video to herself and another admin.”

Do sex scandals happen in public schools? Yes. But they are likely to be reported because there is oversight and supervision, and because teachers know that they are mandated to report such cases.

A student was forced to perform sex acts in a bathroom. The student’s mother reported the incident to the police, and the school’s administrators were arrested.

“According to the Advocate, all three administrators (Gangopadhyay, Kusmirek, and Shane) hail from Teach for America. As administrators of a K-8 Louisiana school, all should have been well aware that they are mandated reporters of “the involvement of the child in any sexual act with… any other person… or the aiding of the child’s involvement in any sexual act with any other person [or] …pornographic displays.”

Maybe they didn’t learn that in their five weeks of training.