Schools for Scoundrels
Jet Skis, Scottish real estate, Louis Vuitton bags: how crooks have cashed in on the charter school boom.
Charter schools have been held up as models of innovative school reform, but due to a striking lack of oversight (PDF), the sector is also a magnet for fraud. Between 2005 and 2011, the US Department of Education opened 53 investigations into charter school fraud, resulting in 21 indictments and 17 convictions. Twenty-seven investigations are pending. Let's just say the following schools didn't make it into Waiting for "Superman":
- In 2010, the Washington Times reported that L. Lawrence Riccio, the founder of the now-defunct DC-based SAIL charter school, was being investigated by the FBI for financial misconduct, including having the school pay for his frequent trips to Scotland and charging it for purchases at Victoria's Secret and at a wallpaper shop in France, where Riccio owned property.
- The founder of what had been California's largest charter school chain, the California Charter Academy, has been charged with many counts of grand theft after a state audit (PDF) accused the school's operators of misappropriating at least $23 million. (The case is headed to trial next year.) The audit found that Steven Cox and another employee used school funds for personal benefit, including $18,000 for Jet Skis, $11,000 for Disney-related merchandise, $9,000 at the Disneyland Health Spa, and $42,000 to pay personal income taxes. Cox allegedly diverted more than $500,000 into other ventures, including a company called Xtreme Motor Sports; he spent more than $ 1 million hiring family members and giving them retroactive raises.
- Last year, the principal of Chicago's Triumphant Charter School, Helen Hawkins, was sentenced to three years' probation for using the school's credit card to buy Louis Vuitton bags, hair care products, diet pills, and other items. Her daughter used the frequent-flier miles Hawkins had racked up for trips to Europe.
- Charter schools with ties to a Turkish religious movement led by Fethullah Gülen have come under scrutiny by federal investigators for allegedly running an immigration scam. State auditors have found that some Gülen followers have used the charters to obtain work visas for Turkish nationals by claiming they are going to be teachers, when in fact many may not be qualified for the jobs. Parents have complained that some of the teachers barely speak English.
- Philadelphia, where 19 of the city's 84 charters are under investigation by federal authorities, is a particular hotbed of charter school fraud. In April, federal prosecutors indicted the CEO and board president of the New Media Technology Charter School, alleging the pair had stolen more than $500,000 in school funds and used the money on other business ventures, including a private school, a health food store, and a web design firm. At one point, according to prosecutors, they installed a marketing consultant for their health food store in a charter school office and paid him with school funds. Then there's the Philadelphia Academy Charter School, where founders solicited bribes and kickbacks from school vendors and submitted fake invoices to get reimbursed for meals, entertainment, and other personal bills. They proceeded to hire a contractor to help destroy computer records that might implicate them. The former CEO admitted to stealing roughly a half-million dollars from the school—in part by raiding school vending machines.