Bibliography: Federal Bureau of Investigation (FBI) and Charter School Corruption and Fraud: 2009-2016

CHARTER SCHOOLS AND THE FEDERAL BUREAU OF INVESTIGATION (FBI) 1

Query search: FBI Database (“charter school*”)1

Categories: Public corruption, White-collar crime2

Type: Press release

Date: January 15, 2017 (updated)

Date range: 2009 –20163

Bibliography: Federal Bureau of Investigation (FBI) and

Charter School Corruption and Fraud

2009

Federal Bureau of Investigation (FBI; Philadelphia division). (2009, July 01). Former board

president and former CEO of Philadelphia academy charter school charged with fraud

[Press release]. Retrieved from https://www.fbi.gov/philadelphia/press-

releases/2009/ph070109b.htm

Federal Bureau of Investigation (FBI; Philadelphia division). (2009, July 20). Former CEO of

charter school pleads guilty in fraud case [Press release]. Retrieved from

https://www.fbi.gov/philadelphia/press-releases/2009/ph072009.htm

Federal Bureau of Investigation (FBI; Philadelphia division). (2009, October 22). Former CEO

of charter school sentenced to 37 months on fraud, theft, and tax charges [Press release].

Retrieved from https://www.fbi.gov/philadelphia/press-releases/2009/ph102209.htm 1 https://www.fbi.gov/news/pressrel 2 Another place tracking charter school fraud and corruption is the U.S. Department of Education, Office of Inspector General https://ed.gov/about/offices/list/oig/reports.html 3 Original date range: July, 01 2009 – August 26, 2015; updated date range: July, 01 2009 – November 02, 2016.


Federal Bureau of Investigation (FBI; Philadelphia division). (2009, December 15). Former

board president sentenced in charter school fraud case [Press release]. Retrieved from

https://www.fbi.gov/philadelphia/press-releases/2009/ph121509b.htm

2010

Federal Bureau of Investigation (FBI; New Orleans division). (2010, January 29). School

employee charged with theft of funds from Langston Hughes academy charter school

[Press release]. Retrieved from https://www.fbi.gov/neworleans/press-

releases/2010/no012910d.htm

Federal Bureau of Investigation (FBI; New Orleans division). (2010, February 25). Charter

school employee pleads guilty to theft of over $600,000 from school [Press release].

Retrieved from https://www.fbi.gov/neworleans/press-releases/2010/no022510a.htm

Federal Bureau of Investigation (FBI; New Orleans division). (2010, May 27). Employee

sentenced to five years in federal prison for theft of funds from Langston Hughes

academy charter school [Press release]. Retrieved from

https://www.fbi.gov/neworleans/press-releases/2010/no052710c.htm

Federal Bureau of Investigation (FBI; Washington Field Office; WFO). (2010, November 09).

Former charter school bookkeeper pleads guilty to theft of funds [Press release].

Retrieved from https://www.fbi.gov/washingtondc/press-releases/2010/wfo110910.htm

2011

Federal Bureau of Investigation (FBI; Philadelphia division). (2011, April 14). Board president

and chief executive officer of Philadelphia charter school charged with fraud [Press

release]. Retrieved from https://www.fbi.gov/philadelphia/press-

releases/2011/ph041411.htm


Federal Bureau of Investigation (FBI; St. Louis division). (2011, September 13). Chairman of the

board for the Paideia Academy and employee of St. Louis city treasurer’s office indicted

on fraud charges [Press release]. Received from https://www.fbi.gov/stlouis/press-

releases/2011/chairman-of-the-board-for-the-paideia-academy-and-employee-of-st.-louis-

city-treasurers-office-indicted-on-fraud-charges

2012

Federal Bureau of Investigation (FBI; Philadelphia division). (2012, January 20). Former CEO of

charter school pleads guilty to fraud [Press release]. Retrieved from

https://www.fbi.gov/philadelphia/press-releases/2012/former-ceo-of-charter-school-

pleads-guilty-to-fraud

Federal Bureau of Investigation (FBI; Philadelphia division). (2012, April 03). Charter school’s

former board president admits to fraud scheme [Press release]. Retrieved from

https://www.fbi.gov/philadelphia/press-releases/2012/charter-schools-former-board-

president-admits-to-fraud-scheme

Federal Bureau of Investigation (FBI; Cincinnati division). (2012, May 17). Former charter

schools treasurer charged with embezzling federal funds [Press release]. Retrieved from

https://www.fbi.gov/cincinnati/press-releases/2012/former-charter-schools-treasurer-

charged-with-embezzling-federal-funds

Federal Bureau of Investigation (FBI; Cincinnati division). (2012, June 21). Former charter

schools treasurer pleads guilty to embezzling federal funds [Press release]. Retrieved

from https://www.fbi.gov/cincinnati/press-releases/2012/former-charter-schools-

treasurer-pleads-guilty-to-embezzling-federal-funds


Federal Bureau of Investigation (FBI; Pittsburg division). (2012, July 12). Statement on

execution of federal search warrants [Press release]. Retrieved from

https://www.fbi.gov/pittsburgh/press-releases/2012/statement-on-execution-of-federal-

search-warrants

Federal Bureau of Investigation (FBI; Philadelphia division). (2012, July 13). Charter school’s

former board president and former CEO sentenced for fraud scheme [Press release].

Retrieved from https://www.fbi.gov/philadelphia/press-releases/2012/charter-schools-

former-board-president-and-former-ceo-sentenced-for-fraud-scheme

Federal Bureau of Investigation (FBI; Philadelphia division). (2012, July 24). Charter school

founder Dorothy June Brown charged in $6 million fraud scheme: Four school executives

charged with conspiring with Brown to obstruct justice [Press release]. Retrieved from

https://www.fbi.gov/philadelphia/press-releases/2012/charter-school-founder-dorothy-

june-brown-charged-in-6-million-fraud-scheme

Federal Bureau of Investigation (FBI; Cincinnati division). (2012, October 31). Former charter

schools treasurer sentenced to 24 months in prison for embezzling money from schools

[Press release]. Retrieved from https://www.fbi.gov/cincinnati/press-

releases/2012/former-charter-schools-treasurer-sentenced-to-24-months-in-prison-for-

embezzling-money-from-schools

2013

Federal Bureau of Investigation (FBI; Philadelphia division). (2013, January 22). Additional

charges filed against charter school founder and co-defendants [Press release]. Retrieved

from https://www.fbi.gov/philadelphia/press-releases/2013/additional-charges-filed-

against-charter-school-founder-and-co-defendants


Federal Bureau of Investigation (FBI; St. Louis division). (2013, March 26). Chairman of the

board for the Paideia Academy, employee of St. Louis city Treasurer’s Office convicted

on fraud charges [Press release]. Retrieved from https://www.fbi.gov/stlouis/press-

releases/2013/chairman-of-the-board-for-the-paideia-academy-employee-of-st.-louis-

city-treasurers-office-convicted-on-fraud-charges

Federal Bureau of Investigation (FBI; Washington Field Office; WFO). (2013, June 10). Former

accounting employee pleads guilty to stealing more than $75,000 from charter school:

Temporary worker issued and cashed checks to fictitious vendors [Press release].

Retrieved from https://www.fbi.gov/washingtondc/press-releases/2013/former-

accounting-employee-pleads-guilty-to-stealing-more-than-75-000-from-charter-school

Federal Bureau of Investigation (FBI; Philadelphia division). (2013, August 13). Head of charter

school pleads guilty to fraud charges [Press release]. Retrieved from

https://www.fbi.gov/philadelphia/press-releases/2013/head-of-charter-school-pleads-

guilty-to-fraud-charges

Federal Bureau of Investigation (FBI; Pittsburgh division). (2013, August 23). Former CEO of

PA Cyber Nick Trombetta and CPA Neal Prence charged in elaborate fraud scheme

[Press release]. Retrieved from https://www.fbi.gov/pittsburgh/press-

releases/2013/former-ceo-of-pa-cyber-nick-trombetta-and-cpa-neal-prence-charged-in-

elaborate-fraud-scheme

Federal Bureau of Investigation (FBI; Cleveland division). (2013, November 21). Four people

indicted for defrauding Cleveland Heights Charter School of $400,000 [Press release].

Retrieved from https://www.fbi.gov/cleveland/press-releases/2013/four-people-indicted-

for-defrauding-cleveland-heights-charter-school-of-400-000


2014

Federal Bureau of Investigation (FBI; Philadelphia division). (2014, February 10). Former

charter school head sentenced on fraud charges [Press release]. Retrieved from

https://www.fbi.gov/philadelphia/press-releases/2014/former-charter-school-head-

sentenced-on-fraud-charges

Federal Bureau of Investigation (FBI; Washington Field Office; WFO). (2014, April 24). Former

executive director of public charter school sentenced to nine months in prison for stealing

$29,000 in funds: Defendant wrote series of checks for personal benefit [Press release].

Retrieved from https://www.fbi.gov/washingtondc/press-releases/2014/former-executive-

director-of-public-charter-school-sentenced-to-nine-months-in-prison-for-stealing-29-

000-in-funds

Federal Bureau of Investigation (FBI; Cincinnati division). (2014, June 24). Four face public

corruption charges in connection with operation of Dayton charter school [Press release].

Retrieved from https://www.fbi.gov/cincinnati/press-releases/2014/four-face-public-

corruption-charges-in-connection-with-operation-of-dayton-charter-school

Federal Bureau of Investigation (FBI; Boston division). (2014, October 08). Former charter

school principal pleads guilty in connection to MCAS cheating [Press release]. Retrieved

from https://www.fbi.gov/boston/press-releases/2014/former-charter-school-principal-

pleads-guilty-in-connection-to-mcas-cheating

2015

Federal Bureau of Investigation (FBI; Boston division). (2015, January 09). Former charter

school principal sentenced in connection with MCAS cheating scheme [Press release].


Retrieved from https://www.fbi.gov/boston/press-releases/2015/former-charter-school-

principal-sentenced-in-connection-with-mcas-cheating-scheme

Federal Bureau of Investigation (FBI; Cincinnati division). (2015, June 02). Jury convicts trio of

public corruption in connection with charter school kickbacks [Press release]. Retrieved

from https://www.fbi.gov/cincinnati/press-releases/2015/jury-convicts-trio-of-public-

corruption-in-connection-with-charter-school-kickbacks

Federal Bureau of Investigation (FBI; Houston division). (2015, July 16). Former Houston

charter school officials charged with bilking school of millions [Press release]. Retrieved

from https://www.fbi.gov/houston/press-releases/2015/former-houston-charter-school-

officials-charged-with-bilking-school-of-millions

Federal Bureau of Investigation (FBI; Columbia division). (2015, August 26). Former charter

school director sentenced to 42 months for embezzling government funds [Press release].

Retrieved from https://www.fbi.gov/columbia/press-releases/2015/former-charter-school-

director-sentenced-to-42-months-for-embezzling-government-funds

Federal Bureau of Investigation (FBI; Cincinnati division).4 (2015, October 02). Group

sentenced for public corruption in connection with charter school kickbacks [Press

release]. Retrieved from https://www.fbi.gov/contact-us/field-

offices/cincinnati/news/press-releases/group-sentenced-for-public-corruption-in-

connection-with-charter-school-kickbacks

2016

Federal Bureau of Investigation (FBI; Department of Justice, U.S. Attorney’s Office, Middle

District of Louisiana). (2016, April 22). Businessman indicted for fraud and money

4 U.S. Attorney’s Office: Southern District of Ohio


laundering involving charter school construction [Press release]. Retrieved from

https://www.fbi.gov/contact-us/field-offices/neworleans/news/press-

releases/businessman-indicted-for-fraud-and-money-laundering-involving-charter-

school-construction

Federal Bureau of Investigation (FBI; Department of Justice, U.S. Attorney’s Office, Western

District of Pennsylvania). (2016, August 24). Former Pennsylvania Cyber Charter School

CEO pleads guilty to tax conspiracy [Press release]. Retrieved from

https://www.fbi.gov/contact-us/field-offices/pittsburgh/news/press-releases/former-

pennsylvania-cyber-charter-school-ceo-pleads-guilty-to-tax-conspiracy

Federal Bureau of Investigation (FBI; Department of Justice, U.S. Attorney’s Office, District of

Delaware). (2016, November 02). Charter school administrator pleads guilty to federal

program theft [Press release]. Retrieved from https://www.fbi.gov/contact-us/field-

offices/baltimore/news/press-releases/charter-school-administrator-pleads-guilty-to-

federal-program-theft

Former Board President and Former CEO ofPhiladelphia Academy Charter School Charged with

Fraud

U.S. Attorney’s OfficeJuly 01, 2009

Eastern District of Pennsylvania(215) 861-8200

PHILADELPHIA—United States Attorney Michael L. Levy today announced the filing of aninformation charging Kevin O’Shea and Rosemary DiLacqua with mail fraud and honest services fraudbased on their roles in defrauding the Philadelphia Academy Charter School (“PACS”). O’Shea is alsocharged with theft from a federally funded program and filing a false tax return.

The information charges that O’Shea, the former CEO of PACS and BG, another former PACS CEO whodied prior to the filing of these charges, made approximately $34,000 in undisclosed payments toDiLacqua, the PACS board president and a Philadelphia police detective. While receiving this money,DiLacqua approved a series of salary increases for O’Shea and BG as well as entering into a twenty-yearconsulting contract with BG that would have paid him in excess of $100,000 annually for no more than90 days of consulting. DiLacqua did not disclose these payments on her mandatory statement offinancial interest form or to the other board members. O’Shea is also charged with stealing at least$500,000 from PACS and filing a false tax return.

“Charter schools were an innovation to improve education and were never meant to be a source ofpersonal enrichment for those running them,” said Levy. “Even more troubling is the fact that thedefendants both had law enforcement backgrounds. We hope this case awakens board members ofcharter schools to their obligation to safeguard the funds of these schools.”

Kevin O’Shea began working at PACS in 1999 and focused primarily on facilities management. O’Sheais a former police officer with a high school diploma and no prior experience in school administration.In or about September 2002, BG hired O’Shea to be PACS’s director of operations for approximately$60,000 per year. O’Shea soon began to receive significant raises and increased responsibility at PACS.In or about September 2007, at BG’s urging, the board promoted O’Shea to replace BG as the PACSCEO. By the time defendant O’SHEA left PACS in May 2008, he was earning in excess of $200,000 insalary from PACS, with defendant DiLacqua’s approval.

“Today’s action alleges that the defendants defrauded Philadelphia students and taxpayers in adeliberate, methodical, and exhaustive way,” said Mary Mitchelson, acting Inspector General of U.S.Department of Education. “I am proud of the work of OIG’s Special Agents, our colleagues in theInternal Revenue Service Criminal Investigation Division and the FBI for their relentless pursuit ofthese individuals.”

The information alleges that O’Shea, alone and with BG, abused his position through a variety of fraudsincluding: (1) using approximately $710,000 in PACS’ funds to purchase a building in the name of theirpurported non-profit business with the aim of flipping the building to another charter school for a $1million profit; (2) demanding kickbacks from PACS vendors; (3) having lavish offices built forthemselves at PACS, including flat screen televisions, executive bathrooms and granite countertops, ata cost of approximately $145,000 to PACS; (4) submitting for reimbursement at least $40,000 infraudulent invoices for personal meals, entertainment, home improvements, and gas and telephonebills; (5) having approximately $50,000 worth of home repairs improperly billed to PACS; (6)collecting approximately $34,000 in rent from entities using PACS facilities; (7) hiring a computer firmin an attempt to destroy computer evidence to obstruct this investigation; and, (8) filing a false taxreturn for 2006.

“The defendants in this case, in their positions of trust with the Philadelphia Academy Charter School,were responsible for ensuring that the students of the school received the very best education availablethrough the charter school program,” said Special Agent in Charge Janice K. Fedarcyk of thePhiladelphia Division of the FBI. “Instead, as it is alleged, they put their own personal and financialinterests first, robbing the students of the vital educational opportunities they both expected anddeserved.”

“The alleged actions of O’Shea and DiLacqua were motivated by greed and the ultimate victims in thiscase were the students of the charter school,” said Don Fort, Special Agent-in-Charge of I.R.S. CriminalInvestigation. “This investigation necessitated following an intricate web of financial transactions

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devised to conceal the alleged wrongdoings. We are pleased to have had this opportunity to workclosely with the United States Attorney’s Office and the other law enforcement agencies involved in theinvestigation, whose dedication and perseverance brought this case to a successful resolution.”

Information Regarding the Defendant

NAME ADDRESS AGE OR DATE OF BIRTH

Kevin O’Shea Philadelphia, PA 50

Rosemary DiLacqua Philadelphia, PA 51

If convicted of all charges, O’SHEA faces up to 35 years in prison and DiLACQUA faces up to 20 yearsin prison.

The case was investigated by the United States Department of Education - Office of Inspector General,the Federal Bureau of Investigation, and the Internal Revenue Service - Criminal InvestigationDivision. It is being prosecuted by Assistant United States Attorney Derek A. Cohen.

An indictment or information is an accusation. A defendant is presumed innocent unless and untilproven guilty.

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Former CEO of Charter School Pleads Guilty in FraudCase




PHILADELPHIA, PA—Kevin O’Shea, 50, of Philadelphia, pleaded guilty today to mail fraud, theft froma federally funded program, and filing a false tax return, stemming from his role in defrauding thePhiladelphia Academy Charter School (“PACS”), announced United States Attorney Michael L. Levy.

O’Shea admitted to stealing between $400,000 and $1 million from PACS by: (1) using approximately$710,000 in PACS’ funds to purchase a building in the name of his purported non-profit business; (2)demanding kickbacks from PACS vendors; (3) submitting for reimbursement at least $40,000 infraudulent invoices for personal meals, entertainment, home improvements, and gas and telephonebills; (4) having approximately $50,000 worth of home repairs improperly billed to PACS; (5)collecting approximately $34,000 in rent from entities using PACS facilities; and (6) hiring a computerfirm in an attempt to destroy computer evidence to obstruct this investigation. O’Shea also admitted tofiling a false tax return for 2006.

O’Shea faces up to 33 years in prison when sentenced on October 22, 2009.

The case was investigated by the United States Department of Education Office of Inspector General,the Federal Bureau of Investigation, and the Internal Revenue Service Criminal Investigation Division.It is being prosecuted by Assistant United States Attorney Derek A. Cohen.






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Former CEO of Charter School Sentenced to 37Months on Fraud, Theft, and Tax Charges

U.S. Attorney’s OfficeOctober 22, 2009



PHILADELPHIA—Kevin O’Shea, 50, of Philadelphia, was sentenced today to 37 months in prison formail fraud, theft from a federally funded program, and filing a false tax return. At the time of thecrimes, O’Shea was working for and defrauding the Philadelphia Academy Charter School (“PACS”),announced United States Attorney Michael L. Levy.

In July 2009, O’Shea entered a guilty plea admitting that he stole between $400,000 and $1 millionfrom PACS by: (1) using approximately $710,000 in PACS’ funds to purchase a building in the name ofhis purported non-profit business; (2) demanding kickbacks from PACS vendors; (3) submitting forreimbursement at least $40,000 in fraudulent invoices for personal meals, entertainment, homeimprovements, and gas and telephone bills; (4) having approximately $50,000 worth of home repairsimproperly billed to PACS; (5) collecting approximately $34,000 in rent from entities using PACSfacilities; and (6) hiring a computer firm in an attempt to destroy computer evidence to obstruct thisinvestigation. O’Shea also admitted to filing a false tax return for 2006.

In addition to the prison term, U.S. District Court Judge Eduardo C. Robreno ordered O’Shea to payrestitution in the amount of $900,000, to forfeit $500,000, and pay a $1,000 fine. O’Shea must reportto prison by December 7, 2009.

The case was investigated by the United States Department of Education Office of Inspector General,the Federal Bureau of Investigation, and the Internal Revenue Service.

Criminal Investigation Division. The School District of Philadelphia’s Office of Inspector Generalassisted in the investigation. It was prosecuted by Assistant United States Attorney Derek A. Cohen.






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Former Board President Sentenced in Charter SchoolFraud Case

U.S. Attorney’s OfficeDecember 15, 2009



PHILADELPHIA—Rosemary DiLacqua, 51, of Philadelphia, was sentenced today to a year and a day inprison for honest services mail fraud committed while she was board president for the PhiladelphiaAcademy Charter School (“PACS”), announced United States Attorney Michael L. Levy. DiLacquaaccepted a total of approximately $34,000 in payments from codefendant Kevin O’Shea, the formerCEO of PACS, and another former school official that she did not disclose on her mandatory statementof financial interest form or to the other board members. After receiving these undisclosed payments,DiLacqua approved a series of salary increases for O’Shea and also a 20-year consulting contract for theother former school official that would have paid him in excess of $100,000 annually for no more than90 days of consulting each year. When O’Shea left PACS the following Spring (May 2008), he wasearning in excess of $200,000 in salary from PACS.

DiLacqua pleaded guilty to the charge in July 2009. In addition to the prison term, U.S. District CourtJudge Eduardo C. Robreno ordered DiLacqua to pay a fine in the amount of $10,000 and to pay aspecial assessment of $100. Co-defendant Kevin O’Shea was sentenced, in October, to 37 months inprison and $900,000 restitution.

This case was investigated by the United States Department of Education Office of Inspector General,the Federal Bureau of Investigation, and the Internal Revenue Service Criminal Investigation Division.The School District of Philadelphia’s Office of Inspector General assisted in the investigation. It wasprosecuted by Assistant United States Attorney Derek A. Cohen.






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School Employee Charged with Theft of Funds fromLangston Hughes Academy Charter School

U.S. Attorney’s OfficeJanuary 29, 2010

Eastern District of Louisiana(504) 680-3000


NEW ORLEANS, LA—KELLY A. THOMPSON, age 39, a resident of New Orleans, Louisiana, wascharged in a Bill of Information for Theft of Federal Funds from Langston Hughes Academy CharterSchool announced United States Attorney Jim Letten.

According to the Bill, THOMPSON was employed at Langston Hughes Academy Charter School as theBusiness and Human Resources Manager/Financial Manager beginning approximately July 1, 2008,until approximately November 6, 2009. It is alleged the defendant made cash withdrawals while actingin her capacity as Business and Human Resources Manager/Financial Manager, and then manipulatedthe school’s record in order to conceal the thefts. The alleged amount of loss to Langston HughesAcademy Charter School is approximately $660,000.

United States Attorney Letten reiterated that the bill of information is merely a charge and that theguilt of the defendant must be proven beyond a reasonable doubt.

In convicted, THOMPSON faces a maximum term of imprisonment of ten (10) years, a fine of$250,000, and up to three (3) years of supervised release following any term of imprisonment.

This case was investigated by the Federal Bureau of Investigation. The prosecution is being handled byAssistant United States Attorney Brian M. Klebba, Salvador Perricone and James R. Mann.

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Charter School Employee Pleads Guilty to Theft ofOver $600,000 from School

U.S. Attorney’s OfficeFebruary 25, 2010



NEW ORLEANS, LA—KELLY A. THOMPSON, age 39, a resident of New Orleans, Louisiana, pledguilty in federal court today before United States District Judge Carl J. Barbier to theft of federal funds,announced United States Attorney Jim Letten.

According to the documents filed today in court, THOMPSON was employed at Langston HughesAcademy Charter School as the Business and Human Resources Manager/Financial Managerbeginning approximately July 1, 2008, until approximately November 6, 2009. THOMPSON admittedthat in her position at Langston Hughes Academy Charter School, she would make cash withdrawalswhile acting in her capacity as Business and Human Resources Manager/Financial Manager and thenmanipulated the school’s record in order to conceal the thefts. The amount of loss to Langston HughesAcademy Charter School is approximately $660,000.

THOMPSON faces a maximum term of imprisonment of ten (10) years, a fine of $250,000, and up tothree (3) years of supervised release following any term of imprisonment. Sentencing is set for May 20,2010.

This case was investigated by the Federal Bureau of Investigation. The prosecution is being handled byAssistant United States Attorney James R. Mann.






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Employee Sentenced to Five Years in Federal Prisonfor Theft of Funds from Langston Hughes Academy

Charter School

U.S. Attorney’s OfficeMay 27, 2010



KELLY A. THOMPSON, age 38, a resident of New Orleans, Louisiana, was sentenced today in federalcourt by U.S. District Judge Carl J. Barbier to five (5) years’ incarceration, announced U.S. AttorneyJim Letten. Judge Barbier also ordered the defendant to pay $673,671.86 in restitution to the victims ofher criminal conduct, and particularly the Langston Hughes Academy Charter School, and ordered thedefendant to serve three (3) years of supervised release, during which time she will be under federalsupervision and risk additional imprisonment should she violate any terms of the release.

According to the court documents, on February 25, 2010, THOMPSON pled guilty to theft of federalfunds from Langston Hughes Academy Charter School. THOMPSON was employed at LangstonHughes Academy Charter School as the Business and Human Resources Manager/Financial Managerbeginning approximately July 1, 2008, until approximately November 6, 2009, and in that capacity,made cash withdrawals and then manipulated the school records in order to conceal the thefts.

U.S. Attorney Jim Letten stated, “ The defendant’s reprehensible crimes directly and negativelyimpacted the children of New Orleans at a critical time in which this struggling community—andespecially our most vulnerable citizens—cannot afford even a single individual putting their own needsahead of the needs of our children.”

Assistant U.S. Attorney James Mann requested permission for representatives of the Langston HughesAcademy Charter School to address the Court and speak to the damage experienced as a result of thedefendant actions. Former Chairman of the Board, Attorney Michael Allweiss, founder and formerschool CEO, John Alford and seventh grade Social Studies teacher, Andrew Sullivan, all described howthe defendant’s crimes robbed the school’s children of much needed resources. They said her theftaveraged $1300 per student.

Prior to issuing the sentence, Judge Barbier admonished the defendant saying that this was one of themost horrific crimes he had ever seen and that the defendant’s criminal conduct “was routine,systematic, and planned.” The Judge further stated, “You have managed with your crime to deal adevastating blow to the charter school reform movement,” and, “You robbed inner city children ofeducational opportunities.”

This case was investigated by the Federal Bureau of Investigation and the Department of Education,Office of Inspector General. The prosecution is being handled by Assistant United States AttorneysJames R. Mann, Chief of the Financial Crimes Unit, and Brian Klebba.






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Former Charter School Bookkeeper Pleads Guilty toTheft of Funds

U.S. Attorney’s OfficeNovember 09, 2010

District of Columbia(202) 252-6933


WASHINGTON—Ashanti Bumbray, a former bookkeeper for the Hospitality Public Charter HighSchool in the District of Columbia, pled guilty today to a felony charge stemming from her theft of morethan $23,000 of school funds, announced U.S. Attorney Ronald C. Machen Jr.; John G. Perren, ActingAssistant Director in Charge of the FBI's Washington Field Office; and Charles J. Willoughby, InspectorGeneral for the District of Columbia.

Bumbray, 32, of Waldorf, Maryland, pled guilty in the U.S. District Court for the District of Columbiabefore the Honorable Judge Rosemary M. Collyer to a charge of theft from a program receiving federalfunds. The charge carries a maximum sentence of 10 years' incarceration and a fine of up to $250,000.Based on the sentencing guidelines, the likely range is probation to six months of incarceration with afine of $1,000 to $10,000. Sentencing is set for February 9, 2011.

According to the Statement of Offense filed with the Court, Bumbray was a bookkeeper at HospitalityPublic Charter High School from approximately September 2008 until February 2009. Starting in earlyOctober 2008 through late January 2009, she stole more than $23,000 of Hospitality's funds byissuing checks and initiating banking transactions for her personal benefit.

In announcing the plea, U.S. Attorney Machen, Assistant Director Perren, and Inspector GeneralWilloughby praised the investigative efforts of the special agent who worked on the case for the FBI'sWashington Field Office, as well as Special Agent Kerthalia Peavely of the District of Columbia Office ofInspector General. They also recognized the efforts of U.S. Attorney's Office Legal Assistant JaredForney and Assistant United States Attorney John D. Griffith, who prosecuted the case.

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Board President and Chief Executive Officer ofPhiladelphia Charter School Charged with Fraud

U.S. Attorney’s OfficeApril 14, 2011


PHILADELPHIA—An indictment was unsealed today charging Hugh C. Clark and Ina M. Walker withconspiracy, wire fraud, and theft from a federally funded program based on their roles in defraudingthe Philadelphia based New Media Technology Charter School (“New Media”), announced UnitedStates Attorney Zane David Memeger.

The 27-count indictment charges that Clark, the former president of the board, and Walker, the formerCEO, improperly used approximately $522,000 in New Media funds to enrich themselves and advancetheir personal interests. According to the charges, Clark and Walker stole from New Media, a charterschool funded with federal tax dollars, to (a) pay expenses at a small private school they controlled,Lotus Academy (b) advance their personal business ventures, including the Black Olive health foodstore and the Black Olive restaurant, and (c) pay personal expenses. In addition, defendant Clarkallegedly diverted substantial funds from New Media and Lotus Academy to benefit Tekhen, a webdesign and Internet access company he owned and controlled.

The indictment charges that Clark and Walker diverted at least $309,000 in fraudulent paymentsdirectly to Lotus Academy, which were often disguised as prepaid rent or bogus security deposits. Oncethe funds were deposited into Lotus Academy bank accounts, the defendants allegedly spent the moneyon the expenses of their private school, and on their personal and business ventures.

In addition, defendants Clark and Walker allegedly used approximately $213,000 of New Media’smoney to pay third parties for expenses for Lotus Academy, the Black Olive business ventures, Tekhen,and personal expenses. The indictment alleges that the defendants often disguised these payments byadding additional expenses to existing New Media expenses. For example, the indictment charges thatClark and Walker used New Media funds to hire and pay a contractor for the purpose of creating andpreparing the Black Olive health food store for opening. Although the contractor had an office at theNew Media middle school, the contractor did not teach students or have any legitimate function in theNew Media middle school, it is alleged. Similarly, the indictment charges that defendant Clark hired amarketing contractor to provide marketing services to New Media, Lotus Academy, the Black Olivebusiness ventures, and another restaurant in which Clark and Walker had an ownership interest. Clarkand Walker allegedly paid the marketing contractor with New Media’s funds.

Further, the indictment charges that defendant Clark, without notice to or approval from the NewMedia board of directors, entered New Media into a written contact to purchase a school property forthe sole purpose of benefitting Lotus Academy. Defendants Clark and Walker allegedly used $15,000 ofNew Media's funds as part of the $45,000 deposit for purchase of the school property. When the saledid not close and the $45,000 deposit was returned to Lotus Academy, defendants Clark and Walkernever returned the $15,000 to New Media, it is alleged. Rather, Clark and Walker allegedly caused theentire $45,000 to be spent in various ways, including for Lotus Academy expenses (rent and payroll),payments to the Black Olive business ventures, and a cash deposit into defendant Walker’s personalbank account to pay Walker’s personal bills.

It is alleged that Clark and Walker spent New Media funds on additional "joint" expenses with LotusAcademy, such as two annual awards banquets at a Philadelphia hotel, and two overnight staff retreatsto Ocean City, Maryland. New Media allegedly covered all of these costs without reimbursement byLotus Academy.

The indictment alleges that Clark and Walker caused New Media to pay utility expenses for LotusAcademy and the Black Olive business ventures including a July 2009, payment of $3,617.29 to PECOpay the overdue PECO bill for Black Olive health food store. It is also alleged that Clark spent NewMedia funds to pay two different vendors for Clark's personal business, Tekhen Communications.According to the indictment, defendant Clark caused New Media to pay a Tekhen vendor, HivelocityVentures, not just for web domains and services that Hivelocity provided to New Media, but also forweb domains and services for Lotus Academy, Black Olive, Tekhen, and Hugh Clark's law firm, Clarkand McGill. The indictment also alleges that defendant Clark caused New Media to pay a differentTekhen vendor, Dialup U.S.A., which provided no services to New Media. New Media was neverreimbursed for these costs, it is alleged.






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According to the indictment, as a result of the improper and fraudulent payments directed by Clark andWalker, New Media failed to pay legitimate New Media expenses. For example, from December 2007,through February, 2009, New Media failed to remit the required monthly employee withholdings andquarterly employer contributions to the Pennsylvania School Employees Retirement System. PSERS isthe defined benefit retirement plan for public school employees of the Commonwealth of Pennsylvania.From October 2006, through November 2008, New Media carried a past-due balance with one of itsprimary textbook vendors, it is alleged. On several occasions, there were allegedly insufficient funds inNew Media’s bank account to cover employee payroll checks. According to the indictment, in Spring of2009, coaches for New Media’s athletic teams remained unpaid or partially paid.

Information Regarding the Defendants

Name Address Age

Hugh C. Clark Philadelphia 64

Ina M. Walker Philadelphia 58If convicted of all charges, Clark and Walker each face a substantial term of imprisonment, three years’supervised release, a $6,750,000 fine, and a $2,700 special assessment.

The case was investigated by the United States Department of Education - Office of Inspector Generaland the Federal Bureau of Investigation. The School District of Philadelphia’s Office of InspectorGeneral provided assistance in the investigation. It is being prosecuted by Assistant United StatesAttorney Joan E. Burnes.

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Chairman of the Board for the Paideia Academy andEmployee of St. Louis City Treasurer’s Office Indicted

on Fraud Charges

U.S. Attorney’s OfficeSeptember 13, 2011

Eastern District of Missouri


ST. LOUIS—The United States Attorney’s Office announced today that Fred W. Robinson was indictedon multiple fraud charges involving his alleged submission of false time sheets in the Treasurer’s officeand his alleged diversion of federal and state education funds from the Paideia Academy charter school.

According to the indictment, Robinson was the chairman of the board of trustees for Paideia Academy,a Missouri Charter school. He maintained an office in the school’s administration building and wasinvolved in the day-to-day management and administration of the school. Paideia was tuition free,andfunded by federal and Missouri education funds intended for legitimate school operations. TheMissouri Department of Education failed to renew Paideia’s charter during June 2010 as a result ofPaideia’s sponsor, Missouri University of Science and Technology, withdrawing its sponsorship. Theindictment alleges that during 2009 and 2010, Robinson diverted approximately $257,000 of PaideiaAcademy funds for the purchase, construction, renovation, and rehabilitation of a building at 4028West Florissant Avenue in St. Louis for the purpose of developing and operating a Little People’sAcademy day care center in which Robinson had a ownership and financial interest. Robinson failed todisclose his ownership and financial interest in the proposed day care center to the Paideia AcademyBoard of Trustees. Robinson’s partner in the proposed day care center, identified in the indictment asLatasha P., was a friend and associate of Robinson who worked as a bartender at a lounge frequentedby Robinson, and who had no background, experience, or training in early childhood education or theoperations of a day care center.

Additionally, the indictment alleges that Robinson, during each year from 2006 through 2010, as anemployee of the Treasurer’s Office for the City of St. Louis, submitted false weekly time sheets falselycertifying work hours and was paid approximately $35,360 each year in salary based upon those falsetime sheets.

Robinson, 69, St. Louis, was indicted by a federal grand jury on one felony count of wire fraud andseven felony counts of federal program theft. He was arrested earlier today, and is scheduled to appearfor his initial appearance at 2:00 p.m. before United States Magistrate Judge Nannette Baker.

If convicted, wire fraud carries a maximum penalty of 20 years in prison and/or fines up to $250,000;each count of federal program fraud carries a maximum penalty of 10 years in prison and/or fines up to$250,000. In determining the actual sentences, a judge is required to consider the U.S. SentencingGuidelines, which provide recommended sentencing ranges.

This case is being investigated by the Federal Bureau of Investigation and the United StatesDepartment of Education, Inspector General’s Office. Assistant United States Attorney Hal Goldsmithis handling the case for the U.S. Attorney’s Office.

As is always the case, charges set forth in an indictment are merely accusations and do not constituteproof of guilt. Every defendant is presumed to be innocent unless and until proven guilty.

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Former CEO of Charter School Pleads Guilty to Fraud




PHILADELPHIA—Ina Walker, 59, of Philadelphia, pleaded guilty today to conspiracy, wire fraud, andtheft from a federally funded program in connection with a scheme to defraud the New MediaTechnology Charter School (“New Media”) and bank fraud in connection with the property that alterhoused the Black Olive Restaurant. Walker, who is the former CEO of the school, was indicted withHugh C. Clark, the former president of the board for New Media, who is awaiting trial. Sentencing forWalker is scheduled for April 27, 2012. She faces a substantial period of incarceration.

New Media is a charter school funded with federal tax dollars. Walker, allegedly with Clark, improperlyused approximately $522,000 in New Media funds for her own enrichment to (a) pay expenses at asmall private school, Lotus Academy (b) advance her personal business ventures, including the BlackOlive health food store and the Black Olive restaurant, and (c) pay personal expenses. At least$309,000 was fraudulently diverted from New Media to Lotus Academy, often disguised as prepaidrent or bogus security deposits. Once the funds were deposited into Lotus Academy bank accounts, thedefendants allegedly spent the money on the expenses of their private school, and on their personal andbusiness ventures.

Walker used New Media funds to hire and pay a contractor for the purpose of creating and preparingthe Black Olive health food store for opening. Although the contractor had an office at the New Mediamiddle school, the contractor did not teach students or have any legitimate function in the New Mediamiddle school. Walker also paid a marketing contractor with New Media’s funds.

As a result of the improper and fraudulent payments, New Media failed to meet legitimate expensesincluding, but not limited to monthly employee withholdings and quarterly employer contributions tothe Pennsylvania School Employees Retirement System. PSERS is the defined benefit retirement planfor public school employees of the Commonwealth of Pennsylvania. From October, 2006 throughNovember, 2008, New Media carried a past-due balance with one of its primary textbook vendors, it isalleged. On several occasions, there were allegedly insufficient funds in New Media’s bank account tocover employee payroll checks. According to the superseding indictment, in Spring of 2009, coaches forNew Media’s athletic teams remained unpaid or partially paid.

The bank fraud scheme involved defendant Ina Walker, allegedly acting at the direction of defendantHugh Clark, purchased 22-24 East Mount Airy Avenue On July 14, 2006, after having submitted falseinformation to the lender. That location eventually housed the Black Olive Restaurant when it openedin 2008; it also has an upstairs apartment. The sales price was $450,000 and the loan fromWilmington Savings Fund Society (“WSFS”) was $357,500. As described in the supersedingindictment, the lender relied on income from three fake leases submitted by the defendants whenvaluing the collateral and determining Walker’s ability to repay the loan. Defendant Ina Walker failedto make the required loan repayments to WSFS and defaulted on the loan for an amount ofapproximately $339,000 due and outstanding.

The total loss under the plea agreement is $861,000.

The case was investigated by the United States Department of Education-Office of Inspector Generaland the Federal Bureau of Investigation. The School District of Philadelphia’s Office of InspectorGeneral provided assistance in the investigation. It is being prosecuted by Assistant United StatesAttorney Joan E. Burnes.






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Charter School’s Former Board President Admits toFraud Scheme




PHILADELPHIA—Hugh C. Clark, 65, of Philadelphia, pleaded guilty today to conspiracy, wire fraud,bank fraud, and theft from a federally funded program stemming from a scheme to defraud thePhiladelphia-based New Media Technology Charter School (New Media). Clark was the president of theboard at the time of the fraud. The 28-count superseding indictment charged Clark and Ina Walker,who was the CEO at the time, with improperly using approximately $522,000 in New Media funds toenrich themselves and advance their personal interests. A sentencing hearing is expected for July 2012.Walker pleaded guilty to the charges on January 20, 2012. New Media was a charter school funded withfederal tax dollars. Clark and Walker stole school funds to pay expenses at a small private school theycontrolled, Lotus Academy; to advance their personal business ventures, including the Black Olivehealth food store and the Black Olive restaurant; and to pay their own personal expenses. Clark alsodiverted substantial funds from New Media and Lotus Academy to benefit Tekhen, a web design andInternet access company he owned and controlled.

As a result of the defendants’ improper and fraudulent use of funds, New Media failed to meet itsexpenses, such as employee payroll checks, monthly employee withholdings, and quarterly employercontributions to the Pennsylvania School Employees Retirement System; payments to the school’sathletic coaches; and payments to a textbook vendor.

Clark and Walker diverted at least $309,000 in fraudulent payments directly to Lotus Academy, whichwere often disguised as prepaid rent or bogus security deposits. Once the funds were deposited intoLotus Academy bank accounts, the defendants spent the money on the expenses of their private schooland on their personal and business ventures.

Clark and Walker also used approximately $213,000 of New Media funds to pay third parties forexpenses associated with Lotus Academy, the Black Olive business ventures, Tekhen, and personalexpenses. They often disguised these payments by adding additional expenses to existing New Mediaexpenses. For example, Clark and Walker used New Media funds to hire and pay a contractor for thepurpose of creating and preparing the Black Olive health food store for opening.

The contractor had an office at the New Media middle school but did not teach students or have anylegitimate function in the school. Clark also paid a marketing contractor with New Media funds toprovide marketing services to New Media, Lotus Academy, the Black Olive business ventures, andanother restaurant in which Clark and Walker had an ownership interest.

Clark, without notice to or approval from the New Media Board of Directors, entered New Media into awritten contact to purchase a school property for the sole purpose of benefitting Lotus Academy. Clarkand Walker used $15,000 of New Media’s funds as part of the $45,000 deposit for purchase of theschool property. When the sale did not close and the $45,000 deposit was returned to Lotus Academy,Clark and Walker did not return the $15,000 to New Media. Rather, Clark and Walker allegedly causedthe entire $45,000 to be spent in various ways, including for Lotus Academy expenses (rent andpayroll), payments to the Black Olive business ventures, and a cash deposit into defendant Walker’spersonal bank account to pay Walker’s personal bills. Clark and Walker also defrauded WilmingtonSavings Fund Society (WSFS) by providing false documents to obtain a $357,500 loan from the bank in2006. The loan, obtained in Walker’s name, was used to buy a commercial property at 22-24 E. MountAiry Avenue, which housed the Black Olive restaurant, and Walker ultimately defaulted on $339,000 ofthe debt.

The case was investigated by the United States Department of Education Office of Inspector Generaland the Federal Bureau of Investigation. The School District of Philadelphia’s Office of InspectorGeneral provided assistance in the investigation. It is being prosecuted by Assistant United StatesAttorney Joan E. Burnes.






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Former Charter Schools Treasurer Charged withEmbezzling Federal Funds

U.S. Attorney’s OfficeMay 17, 2012

Southern District of Ohio(937) 225-2910


COLUMBUS—Carl W. Shye Jr., 57, of New Albany, Ohio, was charged with embezzling more than$470,000 in federal funds between 2005 and 2011 while serving as treasurer for a number ofcommunity schools in Ohio.

Carter M. Stewart, United States Attorney for the Southern District of Ohio; Ohio Auditor of State DaveYost; Edward J. Hanko, Special Agent in Charge, Federal Bureau of Investigation (FBI); and ExecutiveDirector Paul Nick of the Ohio Ethics Commission announced the charge contained in a one-count billof information filed today in U.S. District Court for the Southern District of Ohio.

“School treasurers bear the solemn responsibility of protecting public funds,” Stewart said. “Shye isaccused of willfully and negligently abusing that position of public trust.”

Upon taking office in January 2011, Auditor Yost quickly noticed a pattern in problem audits aroundthe state involving Shye. In February 2011, the Auditor of State’s Office contacted the FBI to launch ajoint investigation into Shye’s involvement in community schools across Ohio. Auditor of Stateinvestigative and audit staff worked through 17 audits and issued 62 findings for recovery against Shyeover the last 10 years, totaling $1,012,490.

“Carl Shye has run amok with taxpayer dollars for a decade, but his run ends today,” Auditor Yost said.“I am proud to see the culmination of countless hours of work and the strong partnership between theAuditor of State’s Office and law enforcement to stop this crime against the public.”

Under Ohio law, community schools or charter schools are public, non-profit, non-sectarian schoolsthat operate independently of any school district but under a contract with a sponsoring entity. Theschools involved include the former George Washington Carver Preparatory Academy in Columbus, theformer Legacy Academy for Leaders & the Arts in Youngstown, the former NuBethel Center ofExcellence, and New City Community School, both in Dayton.

“The laws that protect the public from wrongdoing at traditional public schools apply equally tocommunity schools,” said Executive Director Nick. “Taxpayers expect that school officials andemployees will use tax dollars for student education, not fraud and self-dealing.”

Embezzlement from a program receiving federal funds is punishable by up to 10 years in prison, a fineof up to $250,000, and three years of supervised release.

The charge also seeks forfeiture of $472,579.90, which represents or is traceable to the gross receiptsShye obtained through the alleged embezzlement.

U.S. District Judge Gregory L. Frost, who is presiding over the case, has scheduled Shye’s arraignmentfor June 21 at 10 a.m.

Stewart acknowledged Ohio Attorney General Mike DeWine, whose office provided assistance in theinvestigation and conducted civil proceedings against Shye.

Charges contained in an information are allegations only.

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Former Charter Schools Treasurer Pleads Guilty toEmbezzling Federal Funds

U.S. Attorney’s OfficeJune 21, 2012


COLUMBUS—Carl W. Shye, Jr., 57, of New Albany, Ohio, pleaded guilty in U.S. District Court today toone count of embezzlement from a program receiving federal funds, admitting that he illegally took$472,579.90 in federal funds between 2005 and 2011 while serving as treasurer for four communityschools in Ohio. The schools involved include the former George Washington Carver PreparatoryAcademy, which was located in Columbus, Ohio; the former Legacy Academy for Leaders & Arts, whichwas in Youngstown, Ohio; and the former NuBethel Center of Excellence and New City CommunitySchool, both in Dayton.

Carter M. Stewart, United States Attorney for the Southern District of Ohio; Ohio Auditor of State DaveYost; Edward J. Hanko, Special Agent in Charge, Federal Bureau of Investigation (FBI); and ExecutiveDirector Paul Nick of the Ohio Ethics Commission announced the plea entered today before U.S.District Judge Gregory L. Frost.

According to court documents, between October 2005 and September 2011, Shye used his position astreasurer of multiple Ohio community schools to embezzle from the schools that employed him. Shyewas a registered Certified Public Accountant (CPA) who had been certified as a School Treasurer by thestate of Ohio and is the sole proprietor of an accounting business called Justyn Gabriel Co.

Treasurers are required to obtain a license from the Ohio Department of Education (ODE) in order tobe employed in that position by an Ohio community school, and, as such, they are considered by thestate of Ohio to be public officials.

An FBI agent testified during the hearing that the primary means by which Shye illegally convertedcommunity school funds to his own use was through checks he made to himself as Treasurer andcustodian of the schools’ bank accounts that were in excess of his approved salary or contractedcompensation amount. Shye took steps to hide these payments from the administrators and boardmembers of the respective schools.

In one example presented to the court, Shye made five salary payments to himself for one serviceperiod. Shye also admitted that he cut and pasted the signature of the then-deceased board member ofone community school onto a copy of a false contract with the school after auditors requested a copy totry and verify his compensation.

Upon taking office in January 2011, Auditor Yost quickly noticed a pattern in problem audits aroundthe state involving Shye. In February 2011, the Auditor of State’s office contacted the FBI to launch ajoint investigation into Shye’s involvement in community schools across Ohio. Since 2002, Auditor ofState investigative and audit staff worked through 19 audits and issued 67 findings for recovery againstShye, totaling $1,115,461.

“Carl Shye broke the law and the public’s trust—now he’ll pay the price,” Auditor Yost said. “Today’scourt proceedings are the next step in bringing justice to Ohio’s taxpayers.”

The plea agreement also calls for Shye to forfeit the money he obtained through the embezzlement, topermanently surrender his CPA license, and not to reapply for a treasurer’s license from the OhioDepartment of Education. He surrendered the one he had.

Shye also agreed to a civil judgment settling outstanding claims and civil findings for recovery by OhioAttorney General Mike DeWine as of March 30, 2012, totaling $671,860.58.

Embezzlement from a program receiving federal funds is punishable by up to 10 years in prison, a fineof up to $250,000, and three years of supervised release. Judge Frost will schedule a date forsentencing.

Stewart acknowledged Ohio Attorney General DeWine, whose office provided assistance in theinvestigation. Stewart also commended the cooperative investigation by the FBI, Ohio Auditor DaveYost’s Office, and the Ohio Ethics Commission, as well as Assistant U.S. Attorney Doug Squires, who isprosecuting the case.






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Statement on Execution of Federal Search Warrants


Western District of Pennsylvania


PITTSBURGH—The United States Attorney’s Office for the Western District of Pennsylvania issued thefollowing statement today in response to media inquiries regarding searches conducted by federalagents on July 12, 2012:

“On Thursday, July 12, 2012, special agents from the Federal Bureau of Investigation, Internal RevenueService-Criminal Investigation, and the U.S. Department of Education-Office of Inspector GeneralInvestigation Services executed search warrants at several locations in Pennsylvania and Ohio,including the executive offices of the Pennsylvania Cyber Charter School, located at 1200 MidlandAvenue, Midland, Pennsylvania, as part of an ongoing investigation.

“The Pennsylvania Cyber Charter School, as an entity, is not a current target of this investigation.”

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Charter School’s Former Board President andFormer CEO Sentenced for Fraud Scheme




PHILADELPHIA—Hugh C. Clark, 65, and Ina Walker, 59, both of Philadelphia, were sentenced todayfor their respective roles in a scheme to defraud the Philadelphia-based New Media Technology CharterSchool (New Media) and the Wilmington Savings Fund Society. Clark, who pleaded guilty in April toconspiracy, wire fraud, bank fraud, and theft from a federally funded program, was sentenced to 24months’ imprisonment and five year supervised release. Walker, who pleaded guilty in January, wassentenced to six months’ imprisonment and five years’ supervised release to include 1,00 hours ofcommunity service. U.S. District Court Judge Jan E. DuBois also ordered the defendants to payrestitution in the amount of $861,000 and a special assessment of $2,800.

Clark was a founder of New Media in 2004 and served as president of the New Media board ofdirectors. Walker was a founder and served as CEO. Both were forced to resign effective December 31,2009. The superseding indictment charged Clark and Walker with improperly using approximately$522,000 in New Media funds to (a) pay expenses at a small private school, Lotus Academy; (b)advance Clark and Walker’s personal business ventures, including the Black Olive health food store andthe Black Olive restaurant; (c) benefit Tekhen, a web design and Internet access company that Clarkowned and controlled; and (d) pay their own personal expenses. At least $309,000 was fraudulentlydiverted from New Media to Lotus Academy, often disguised as prepaid rent or bogus security deposits.Once the funds were deposited into Lotus Academy bank accounts, the defendants spent the money onthe expenses of their private school and on their personal and business ventures.

As a result of the defendants’ improper and fraudulent use of funds, New Media failed to meet itsexpenses, such as employee payroll checks, monthly employee withholdings and quarterly employercontributions to the Pennsylvania School Employees Retirement System, payments to the school’sathletic coaches and payments to a textbook vendor.

Clark, without notice to or approval from the New Media Board of Directors, entered New Media into awritten contact to purchase a school property for the sole purpose of benefitting Lotus Academy. Clarkand Walker used $15,000 of New Media’s funds as part of the $45,000 deposit for purchase of theschool property. When the sale did not close and the $45,000 deposit was returned to Lotus Academy,Clark and Walker did not return the $15,000 to New Media. Rather, Clark and Walker caused theentire $45,000 to be spent in various ways, including for Lotus Academy expenses (rent and payroll),payments to the Black Olive business ventures, and a cash deposit into defendant Walker’s personalbank account to pay Walker’s personal bills.

Clark and Walker also defrauded Wilmington Savings Fund Society (WSFS) by providing falsedocuments to obtain a $357,500 loan from the bank in 2006. The loan, obtained in Walker’s name, wasused to buy a commercial property at 22-24 E. Mount Airy Avenue, which housed the Black Oliverestaurant. Walker ultimately defaulted on $339,000 of the debt.

The case was investigated by the United States Department of Education Office of Inspector Generaland the Federal Bureau of Investigation. The School District of Philadelphia’s Office of InspectorGeneral provided assistance in the investigation. It was prosecuted by Assistant United States AttorneyJoan E. Burnes.






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Charter School Founder Dorothy June BrownCharged in $6 Million Fraud Scheme

Four School Executives Charged with Conspiring withBrown to Obstruct Justice



PHILADELPHIA—Dorothy June Brown, 75, of Haverford, Pennsylvania, was charged today byindictment with defrauding three charter schools of more than $6.5 million between 2007 and April2011. Charged with Brown in a 62-count indictment are four current and former charter schoolexecutives: Joan Woods Chalker, 74, of Springfield, Pennsylvania; Michael A. Slade, Jr., 31, ofPhiladelphia, Pennsylvania; Courteney L. Knight, 64, of King of Prussia, Pennsylvania; and AnthonySmoot, 49, of New Castle, Delaware. The four executives are charged with conspiring with Brown toobstruct justice. The indictment was announced by United States Attorney Zane David Memeger, FBISpecial Agent in Charge George C. Venizelos, and Department of Education Special Agent in ChargeSteven Anderson with the Office of Inspector General’s Mid-Atlantic Regional Office.

The indictment alleges that Brown used her private management companies, Cynwyd andAcademicQuest, to defraud the Agora Cyber Charter School (“Agora”) and the Planet Abacus CharterSchool (“Planet Abacus”) soon after she founded the schools in 2005 and 2007, respectively. Brown isalso charged with defrauding the Laboratory Charter School of Communication and Languages(“Laboratory”), a school she founded in 1997.

According to the indictment, Brown caused Agora to make fraudulent payments to Cynwyd totalingmore than $5.6 million under a fabricated management contract that had never been approved by theAgora board of trustees. Similarly, the indictment alleges that Brown and Chalker, who was the CEO ofPlanet Abacus, caused Planet Abacus to make fraudulent payments to AcademicQuest totaling morethan $700,000 under other fabricated contracts that had never been approved by the Planet Abacusboard of trustees. In executing the schemes, it is alleged that Brown caused the creation of falsedocuments, including false board meeting minutes and fabricated contracts to falsely make it appear asif the boards of the schools had held meetings to discuss and authorize contracts with Brown’s privatecompanies. The indictment further charges that Brown caused signatures on the contracts to be forgedand caused the contracts to be backdated. It is alleged that, in many instances, the individuals whosenames Brown caused to be listed as members of the school boards in question never actually served onthe boards.

It is further alleged that Brown caused over $160,000 in unauthorized payments to be paid to her andothers from an Agora bank account in June 2007 and that she caused approximately $37,000 infraudulent payments to be paid from a Laboratory account, in 2008 and 2009, to an employee shehired to work for Cynwyd.

In addition, all of the defendants are charged with conspiring to obstruct justice from August 2008through April 2012. The indictment alleges they altered, destroyed, and falsified a large number ofdocuments, including contracts, financial records, board meeting minutes, board resolutions, and anextensive number of other records belonging to the schools and Brown’s private companies, afterfederal grand jury subpoenas for records were served in 2008. The indictment alleges that Brownrecruited others to join the conspiracy by rewarding them with high level administrative positions atthe charter schools she controlled, by causing them to be paid high salaries and by enabling them to useschool funds and resources for their own personal benefit. In one instance, it is alleged that Brownpermitted her great nephew, Michael Slade, who was an employee of Laboratory at the time, to spendover $40,000 of funds belonging to Main Line Academy, a private school founded and controlled byBrown, on a truck for Slade’s own personal use. Brown allegedly later caused Slade to be named ActingCEO of another school she founded, the Ad Prima Charter School (“Ad Prima”), and then to be namedas CEO of Laboratory. The indictment alleges that Brown also caused Knight to be named as CEO of AdPrima and that she hired Smoot to be the business manager for all of the schools she controlled.

In April 2012, Brown allegedly engaged in witness tampering by attempting to prevent a witness frominforming law enforcement officers that signatures had been forged on a backdated, fabricated contractbetween Planet Abacus and AcademicQuest.

“Public education is a cornerstone of American life which has provided many with the tools for future






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success,” said U.S. Attorney Zane David Memeger. “As our public schools are funded through dollarsearned by hard working Americans, there is a reasonable expectation that their tax dollars will be usedto actually educate students. The indictment in this case alleges that June Brown and her fourco-conspirators used the charter school system to engage in rampant fraud and obstruction. My officewill continue to vigorously investigate and pursue those charter school operators who defraud thetaxpayers and deprive our children of funds for their education.”

“Charter schools are funded with public money that is intended to help educate children in ourcommunities,” said Special Agent in Charge George C. Venizelos of the Philadelphia Division of theFBI. “When individuals misappropriate those funds, as this indictment today alleges, they trade ourchildren’s education and our children’s future for their own illegal profit.”

“Today’s indictment alleges that these school officials chose to line their own pockets with federaleducation dollars instead of using those funds for the intended purpose—educating the students theypromised to serve. That is unacceptable,” said Special Agent in Charge Steven Anderson, of the U.S.Department of Education’s Office of Inspector General’s Mid-Atlantic Regional office. “OIG willcontinue to investigate allegations of fraud to help ensure that education funds reach the intendedrecipients and protect these vital dollars from such calculated plunder. America’s students andtaxpayers deserve nothing less.”

The charges of wire fraud, obstruction of justice, and witness tampering each carry a maximumpossible sentence of 20 years in prison. The charges of conspiracy each carry a maximum possiblesentence of five years in prison. If convicted, Brown, Chalker, Slade, Knight, and Smoot all facesubstantial terms of imprisonment and significant fines and other financial penalties.

This case was investigated by the Federal Bureau of Investigation and by the United States Departmentof Education-Office of Inspector General. It is being prosecuted by Assistant United States AttorneyAnthony Kyriakakis.

An indictment or an information is an accusation. A defendant is presumed innocent unless and untilproven guilty.

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Former Charter Schools Treasurer Sentenced to 24Months in Prison for Embezzling Money from

Schools




COLUMBUS—Carl W. Shye, Jr., 57, of New Albany, Ohio, was sentenced in U.S. District Court today to24 months in prison and ordered to repay $472,579.90 in federal funds that he embezzled between2005 and 2011 while serving as treasurer for four community schools in Ohio.

Carter M. Stewart, United States Attorney for the Southern District of Ohio; Ohio Auditor of State DaveYost; Edward J. Hanko, Special Agent in Charge, Federal Bureau of Investigation (FBI); and ExecutiveDirector Paul Nick of the Ohio Ethics Commission announced the sentence imposed today by U.S.District Judge Gregory L. Frost.

Shye pleaded guilty on June 21, 2012, to one count of embezzlement. Shye admitted that, betweenOctober 2005 and September 2011, Shye used his position as treasurer of multiple Ohio communityschools to embezzle from the schools that employed him.

The schools involved include the former George Washington Carver Preparatory Academy which waslocated in Columbus, Ohio; the former Legacy Academy for Leaders & Arts which was in Youngstown,Ohio; and the former NuBethel Center of Excellence and New City Community School, both in Dayton.

The primary means by which Shye illegally converted community school funds to his own use wasthrough checks he made to himself as treasurer and custodian of the schools’ bank accounts that werein excess of his approved salary or contracted compensation amount. Shye took steps to hide thesepayments from the administrators and board members of the respective schools. In one examplepresented to the court, Shye made five salary payments to himself for one service period. Shye alsoadmitted that he cut and pasted the signature of the then-deceased board member of one communityschool onto a copy of a false contract with the school after auditors requested a copy to try and verifyhis compensation.

Ohio Attorney General Mike DeWine will oversee distribution of the restitution. Judge Frost orderedShye to surrender to the facility to be designated by the U.S. Bureau of Prisons when notified by theU.S. Marshals Service.

Stewart acknowledged Ohio Attorney General Mike DeWine, whose office provided assistance in theinvestigation. Stewart also commended the cooperative investigation by the FBI, Ohio Auditor DaveYost’s Office, and the Ohio Ethics Commission, as well as Assistant U.S. Attorney Doug Squires, whoprosecuted the case.






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Additional Charges Filed Against Charter SchoolFounder and Co-Defendants




PHILADELPHIA—A superseding indictment was filed today against Dorothy June Brown, 75, ofHaverford, Pennsylvania, charging her with two additional counts of wire fraud and one additionalcount of obstruction of justice in connection with schemes to defraud three charter schools of morethan $6.7 million. Charged with Brown in the 67-count superseding indictment are Joan WoodsChalker, 74, of Springfield, Pennsylvania; Michael A. Slade, Jr., 31, of Philadelphia, Pennsylvania;Courteney L. Knight, 65, of King of Prussia, Pennsylvania; and Anthony Smoot, 50, of New Castle,Delaware.

All five defendants were previously named in a 62-count indictment filed on July 24, 2012. The originalindictment alleges that Brown used her private management companies, Cynwyd Group andAcademicQuest, to defraud the Agora Cyber Charter School (“Agora”) and the Planet Abacus CharterSchool (“Planet Abacus”) soon after she founded the schools in 2005 and 2007, respectively. Brown isalso charged with defrauding the Laboratory Charter School of Communication and Languages(“Laboratory”), a school she founded in 1997, by using Laboratory funds to pay the wages of anemployee at one of Brown’s private management companies.

The new indictment includes an additional wire fraud scheme alleging that Brown and Chalker causedLaboratory to pay them approximately $214,095 in compensation that they were not entitled to receive.It further alleges that Brown and Chalker obstructed justice by fabricating Laboratory records andpolicies to make it falsely appear as if they were owed the payments from Laboratory due to unusedvacation and sick time. The superseding indictment also includes new charges that Slade and Knightobstructed justice by fabricating board resolutions of Laboratory and another school, the Ad PrimaCharter School.

Each of the wire fraud and obstruction of justice counts carry a maximum possible sentence of 20 yearsin prison. If convicted, the defendants face substantial terms of imprisonment and significant fines andother financial penalties.

This case was investigated by the United States Department of Education-Office of Inspector Generaland the Federal Bureau of Investigation. It is being prosecuted by Assistant United States AttorneyAnthony Kyriakakis.






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Chairman of the Board for the Paideia Academy,Employee of St. Louis City Treasurer’s Office

Convicted on Fraud Charges

U.S. Attorney’s OfficeMarch 26, 2013

Eastern District of Missouri


ST. LOUIS, MO—After a seven-day jury trial, Fred W. Robinson was convicted on multiple fraudcharges involving his submission of false time sheets in the treasurer’s office and his diversion offederal and state education funds from the Paideia Academy Charter School.

Robinson was the chairman of the Board of Trustees for Paideia Academy, a Missouri Charter schoolfor kindergarten through eighth grade. He maintained an office in the school’s administration buildingand was involved in the day-to-day management and administration of the school. Paideia was tuitionfree and funded by federal and Missouri education funds intended for legitimate school operations.

According to testimony presented at trial, during 2009 and 2010, Robinson diverted approximately$242,333 of Paideia Academy funds for the purchase, construction, renovation, and rehabilitation of abuilding at 4028 West Florissant Avenue in St. Louis for the purpose of developing and operating aLittle People’s Academy day care center to be operated by Robinson and an associate through Paige C.Investments LLC, in which Robinson had a ownership and financial interest. Robinson failed todisclose his ownership and financial interest in the proposed day care center to the Paideia AcademyBoard of Trustees. Robinson’s partner in the proposed day care center was a friend and associate ofRobinson who worked as a bartender at a lounge frequented by Robinson and had no background,experience, or training in early childhood education or the operations of a day care center.

Additionally, during each year from 2006 through 2010, as an employee of the Treasurer’s Office forthe City of St. Louis, Robinson submitted false weekly time sheets falsely certifying work hours and waspaid approximately $35,360 each year in salary based upon those false time sheets.

Robinson, 71, St. Louis, was convicted of one count of wire fraud and seven felony counts of federalprogram theft after a seven-day trial before United States District Judge Audrey G. Fleissig. Sentencinghas been set for July 19, 2013.

When asked about the likelihood of additional charges against other defendants, United StatesAttorney Richard G. Callahan stated, “The current status and progress of the investigation into the St.Louis City Treasurer’s Office is reflected by the charges that have been filed to date. No further chargesare anticipated unless or until additional evidence is developed.”

Other defendants that have been charged as part of the investigation are Dannielle Benson and FrankHabeebullah, both of whom plead guilty late last year.

Wire fraud carries a maximum penalty of 20 years in prison and/or fines up to $250,000; each countof federal program fraud carries a maximum penalty of ten years in prison and/or fines up to$250,000. In determining the actual sentences, a judge is required to consider the U.S. SentencingGuidelines, which provide recommended sentencing ranges.

This case is being investigated by the Federal Bureau of Investigation and the United StatesDepartment of Education, Inspector General’s Office. Assistant United States Attorney Hal Goldsmithis handling the case for the U.S. Attorney’s Office.

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Former Accounting Employee Pleads Guilty toStealing More Than $75,000 from Charter School

Temporary Worker Issued and Cashed Checks toFictitious Vendors




WASHINGTON—Darlene Ford, 46, of Temple Hills, Maryland, pled guilty today to a federal chargestemming from the theft of more than $75,000 from a charter school where she worked as a temporaryaccounting employee.

The guilty plea was announced by U.S. Attorney Ronald C. Machen, Jr.; Valerie Parlave, AssistantDirector in Charge of the FBI’s Washington Field Office; Cathy L. Lanier, Chief of the MetropolitanPolice Department; and Steven Anderson, Special Agent in Charge of the U.S. Department of EducationOffice of Inspector General’s Mid-Atlantic Region.

Ford pled guilty in the U.S. District Court for the District of Columbia to a charge of theft from aprogram receiving federal funds. The Honorable Robert L. Wilkins scheduled sentencing for September16, 2013. The charge carries a statutory maximum of 10 years in prison and financial penalties. Underfederal sentencing guidelines, the parties have agreed that the applicable range is 12 to 18 months inprison and a fine of $3,000 to $30,000.

Under the plea agreement, Ford must pay $75,350 in restitution to the César Chávez Public CharterSchools for Public Policy. She also is subject to the forfeiture of a money judgment of the same amount.

According to the government’s evidence, Ford was a temporary employee at the César Chávez PublicCharter Schools for Public Policy. She was placed at the school’s finance department by a temporaryaccounting staffing firm from January 2010 until March 2010. Her responsibilities included theprocessing of invoices from vendors, including presenting documents to the director of Finance forsignature on payments.

Public charter schools are independently operated public schools that are open to all District ofColumbia residents. César Chávez Public Charter Schools for Public Policy received variousgovernment funds, including funding from the U.S. Department of Education.

While in the finance department, Ford carried out her scheme by accessing the school’s accountingsystem and changing names listed on pending checks. She replaced the names of legitimate vendorswith those of fictitious vendors and then forged the signature of the director of Finance on the checks.Ten such checks were made out to fictitious vendors, totaling $75,350.

These checks were then cashed and used for the benefit of Ford and/or her friends and associates.

In announcing the guilty plea, U.S. Attorney Machen, Assistant Director in Charge Parlave, ChiefLanier, and Special Agent in Charge Anderson commended the work of those who investigated the case.They also expressed appreciation for the efforts of those who worked

on the case from the U.S. Attorney’s Office, including Paralegal Specialists Diane Hayes and KrishawnGraham and Assistant U.S. Attorney Lionel André, who is prosecuting the matter.






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Head of Charter School Pleads Guilty to FraudCharges

U.S. Attorney’s OfficeAugust 13, 2013



PHILADELPHIA—Masai Skief, 32, of Philadelphia, Pennsylvania, pleaded guilty today to aninformation charging him with two counts of wire fraud, arising from the abuse of his leadershippositions at a Philadelphia charter school, announced United States Attorney Zane David Memeger.Skief was the chief executive officer of Harambee Institute of Science and Technology Charter School(“Harambee Charter School”) and the president and chief administrative officer of a related non-profitorganization, Harambee Institute Inc. (“Harambee Institute”).

Harambee Charter School, a non-profit corporation, was established to educate children fromkindergarten to eighth grade, and it promoted itself as Pennsylvania’s first African-centered charterschool. Harambee Institute was a separate non-profit corporation that had been established to providestudents with educational services and vocational training. Harambee Institute owned the schoolbuilding that was used by Harambee Charter School and collected rent from the school. For itsstudents, Harambee Charter School created a scholarship fund intended to benefit those who intendedto attend a “historically black institution of higher education in the United States.”

During a guilty plea hearing before the Honorable Paul S. Diamond, Skief admitted that he engaged ina scheme to improperly obtain the funds of both the scholarship fund and Harambee Institute. First,Skief improperly withdrew $9,000 from the scholarship fund in order to purchase a house for himselfin Philadelphia. Then, through his control of the bank accounts of Harambee Institute, Skief convertedfor his own personal use approximately $79,000 from Harambee Institute. He did this primarilythrough a series of improper cash withdrawals from the bank accounts of Harambee Institute.

Skief also made substantial efforts to conceal his illegal activities, both during and after the fraud. Inparticular, he attempted to disguise a significant portion of his improper cash withdrawals from theaccounts of Harambee Institute as labor costs for Harambee Institute, when there were no such laborcosts associated with the improper withdrawals. Skief directed an accountant to create IRS forms toreflect this false information. Skief also directed others to lie for him to federal agents and to a federalgrand jury about the use of the funds that the defendant had unlawfully converted.

A sentencing hearing is scheduled for November 14, 2013. Skief faces a maximum possible sentence of40 years in prison and an expected advisory sentencing guideline range of at least 21 to 27 months’imprisonment, plus full restitution to the scholarship fund and to the Harambee Institute.

“Masai Skief stole scholarship money, mortgaging children’s futures to help buy himself a house,” saidFBI Special Agent in Charge Edward Hanko. “His further theft from the education non-profit taughtPhiladelphia’s kids a harsh lesson about unmitigated greed.”

“Today’s action shows that Mr. Skief not only abused his position of trust for personal gain but did so atthe expense of students. That is unacceptable,” said Special Agent in Charge Steven Anderson, of theU.S. Department of Education Office of Inspector General Mid-Atlantic Office. “OIG will continue toaggressively pursue those who misappropriate education funds for their own purposes. America’sstudents and taxpayers deserve nothing less.”

The case was investigated by the Federal Bureau of Investigation and the United States Department ofEducation Office of Inspector General. It is being prosecuted by First Assistant United States AttorneyLouis D. Lappen and Assistant United States Attorney Joseph J. Khan.






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Former CEO of PA Cyber Nick Trombetta and CPANeal Prence Charged in Elaborate Fraud Scheme




PITTSBURGH, PA—The former CEO of the Pennsylvania Cyber Charter School and his accountanthave been indicted by a federal grand jury in Pittsburgh on charges of mail fraud, theft or briberyconcerning a program receiving federal funds, tax conspiracy, and filing a false tax return. Theannouncement was made today at a news conference by United States Attorney David J. Hickton; FBISpecial Agent in Charge Gary Douglas Perdue; Akeia Conner, Special Agent in Charge of theIRS-Criminal Investigation-Philadelphia Field Office; and Steven Anderson, Special Agent in Charge,Department of Education Office of Inspector General-Mid-Atlantic Region.

The 11-count indictment, returned on August 21, and unsealed today, named Nicholas Trombetta, 58,of East Liverpool, Ohio, and Neal Prence, 58, of Koppel, Pennsylvania.

According to the indictment, Trombetta was the founder and superintendent of the PA Cyber CharterSchool. Trombetta created a series of connected for-profit and not-for-profit entities to siphon taxpayerfunds out of PA Cyber and to avoid federal income tax liabilities. The indictment alleges that Prence, anaccountant, assisted Trombetta in the tax fraud scheme.

“As the founder and CEO of PA Cyber, Trombetta was a custodian of the public trust, receiving publicfunds,” said U.S. Attorney Hickton. “These charges reflect our obligation to protect the education ofchildren, who are our future, and to protect the compact with hardworking taxpayers.”

“Charter schools are funded with public money that is intended to help educate children in ourcommunities,” stated FBI SAC Perdue. “When individuals enrich themselves with this money ratherthan act as stewards of the education funds entrusted to them, our communities and the children weare obligated to educate are the true victims.”

“During a six-year period that began in 2006, Mr. Trombetta with the assistance of CPA Prence,concealed his position as the direct beneficiary and recipient of funds generated by PA Cyber,” saidIRS-CI SAC Conner. “Mr. Trombetta exerted his influence to control the flow of funds and falsifycorporate books and records, ultimately shifting more than $8 million in income attributable to him, tothe federal income tax returns of other persons so as to conceal his true income from the IRS. Thegovernment must hold corporations and their executives accountable for their actions. It is for thisreason that IRS-Criminal Investigation continues to vigorously pursue corporate fraud and thoseindividuals who employ illegal accounting practices for personal financial gain.”

“Mr. Trombetta and Mr. Prence knowingly and willfully abused their positions of trust for personalgain and did so at the expense of the educational development of children. That is unacceptable,” saidSteven Anderson, Special Agent in Charge of the U.S. Department of Education Office of InspectorGeneral’s Mid-Atlantic Regional Office. “Deservedly, Mr. Trombetta and Mr. Prence will now be heldaccountable for cheating Pennsylvania’s students.”

The law provides for a maximum total sentence of 100 years in prison, a fine of $3,250,000, or both forTrombetta and five years’ imprisonment, $250,000, or both for Prence. Under the Federal SentencingGuidelines, the actual sentence imposed would be based upon the seriousness of the offenses and theprior criminal history, if any, of the defendant.

Assistant United States Attorneys James R. Wilson, Robert S. Cessar and Stephen R. Kaufman areprosecuting this case on behalf of the government.

The Federal Bureau of Investigation, the Internal Revenue Service-Criminal Investigations, and theU.S. Department of Education Office of Inspector General conducted the investigation leading to theindictment in this case.

An indictment is an accusation. A defendant is presumed innocent unless and until proven guilty.

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Four People Indicted for Defrauding ClevelandHeights Charter School of $400,000

U.S. Attorney’s OfficeNovember 21, 2013

Northern District of Ohio(216) 622-3600


Four people were indicted on charges of wire fraud, mail fraud, and conspiracy to launder money fortheir roles in a scheme to defraud a Cleveland Heights charter school of more than $400,000, saidSteven M. Dettelbach, United States Attorney for the Northern District of Ohio.

Indicted are Joel B. Friedman, 65, of Mayfield Heights; Jeffrey A. Pope, 46, of Bowie, Maryland;Marianne Stefanik, 64, of Parma; and Virgil B. Holley, 51, of Cleveland Heights.

“These defendants are accused of taking money intended for students and using it to enrichthemselves,” Dettelbach said.

“Joel Friedman and his co-conspirators violated the trust of taxpayers and the students of GreaterHeights Academy,” said Kathy Enstrom Special Agent in Charge, IRS-Criminal Investigation,Cincinnati Field Office. “Running a charter school does not give you a license to steal.”

Friedman served as chairman of Greater Heights Academy, a charter school located in ClevelandHeights. Stefanik worked as Friedman’s secretary at the school. Pope operated a consulting business inMaryland known as R&D International. Holley worked as Friedman’s employee at GHA in variouscapacities, including starting Holley Enterprises to provide security at GHA.

Around 2006, Friedman approached Pope with a proposition for Pope to make extra money. Friedmanand Stefanik provided Pope with legitimate previous orders to use as templates, which he then used tocreate fraudulent invoices on R&D letterhead. Stefanik then processed the payments, knowing theinvoices were false. Friedman then called Pope and instructed him on how much of the money he couldkeep and how much he should return to Friedman, according to the indictment.

The defendants caused a loss of approximately $287,269 to GHA and its students as a result of thescheme, $14,000 of which was retained by Pope, according to the indictment.

Beginning in 2006, Holley, at Friedman’s suggestion, began submitting false invoices to GHA for workthat Holley Enterprises did not perform. Upon receipt of a check from GHA, Friedman would tellHolley whether the payment was for a legitimate invoice or whether the proceeds were to be diverted toFriedman personally or an entity Friedman controlled, according to the indictment.

As a result of this scheme, the defendants caused a loss to GHA and its students of approximately$117,000, according to the indictment.

This case is being prosecuted by Assistant United States Attorney Robert J. Patton. The case wasinvestigated by the Federal Bureau of Investigation and Internal Revenue Service-CriminalInvestigations.

If convicted, the defendant’s sentence will be determined by the court after consideration of the FederalSentencing Guidelines, which depend upon a number of factors unique to each case, including thedefendant’s prior criminal record, if any; the defendant’s role in the offense; and the uniquecharacteristics of the violation. In all cases, the sentence will not exceed the statutory maximum, and inmost cases it will be less than the maximum.

An indictment is only a charge and is not evidence of guilt. A defendant is entitled to a fair trial inwhich it will be the government’s burden to prove guilt beyond a reasonable doubt.

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Former Charter School Head Sentenced on FraudCharges

U.S. Attorney’s OfficeFebruary 10, 2014



PHILADELPHIA—Masai Skief, 32, of Philadelphia, Pennsylvania, was sentenced today to 36 months inprison for abusing his leadership positions at a Philadelphia charter school in order to enrich himself.Skief pleaded guilty to two counts of wire fraud in August 2013. He was the chief executive officer ofHarambee Institute of Science and Technology Charter School (Harambee Charter School) and thepresident and chief administrative officer of a related non-profit organization, Harambee Institute Inc.(Harambee Institute). In addition to the prison term, U.S. District Court Judge Paul S. Diamondordered Skief to pay restitution in the amount of $88,000 and a $200 special assessment and orderedthree years of supervised release, during which time Skief is not permitted to work in an administrativecapacity at any school or in any capacity at Harambee Institute and Charter School.

Harambee Charter School, a non-profit corporation, was established to educate children fromkindergarten to eighth grade. Harambee Institute was a separate non-profit established to providestudents with educational services and vocational training. For its students, Harambee Charter Schoolcreated a scholarship fund intended to benefit those who intended to attend a “historically blackinstitution of higher education in the United States.”

Skief engaged in a scheme to improperly obtain the funds of both the scholarship fund and HarambeeInstitute. First, Skief improperly withdrew $9,000 from the scholarship fund in order to purchase ahouse for himself in Philadelphia. Then, through his control of the bank accounts of HarambeeInstitute, Skief converted for his own personal use approximately $79,000 from Harambee Institute.He did this primarily through a series of improper cash withdrawals from the bank accounts ofHarambee Institute.

Skief also made substantial efforts to conceal his illegal activities, both during and after the fraud. Inparticular, he attempted to disguise a significant portion of his improper cash withdrawals from theaccounts of Harambee Institute as labor costs for Harambee Institute, when there were no such laborcosts associated with the improper withdrawals. Skief directed an accountant to create IRS forms toreflect this false information. Skief also directed others to lie for him to federal agents and to a federalgrand jury about the use of the funds that the defendant had unlawfully converted. Finally, even afteragreeing to plead guilty, Skief continued to steal from Harambee Institute, taking over $12,000 inadditional funds, some of which he stole while awaiting sentencing.

The case was investigated by the Federal Bureau of Investigation and the United States Department ofEducation Office of Inspector General. It was prosecuted by First Assistant United States AttorneyLouis D. Lappen and Assistant United States Attorney Joseph J. Khan.






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Former Executive Director of Public Charter SchoolSentenced to Nine Months in Prison for Stealing

$29,000 in FundsDefendant Wrote Series of Checks for Personal Benefit



WASHINGTON—Monique S. Murdock, 45, the former executive director of Nia Community PublicCharter School, was sentenced today to nine months in prison on a federal theft charge stemming fromthe embezzlement of $29,000 in funds meant for the school.

The sentence was announced by Ronald C. Machen Jr., U.S. Attorney for the District of Columbia;Dana J. Boente, U.S. Attorney for the Eastern District of Virginia; Valerie Parlave, Assistant Director inCharge of the FBI’s Washington Field Office; Charles J. Willoughby, Inspector General for the Districtof Columbia; Steven Anderson, Special Agent in Charge, Mid-Atlantic Regional Office, Office ofInspector General, U.S. Department of Education; and Robert E. Craig, Special Agent in Charge of theMid-Atlantic Field Office of the Defense Criminal Investigative Service (DCIS).

Murdock, of Fort Washington, Maryland, pled guilty in November 2013 in the U.S. District Court forthe District of Columbia to a charge of theft from a program receiving federal funds. As part of herguilty plea, Murdock also admitted making unauthorized purchases with a government-issuedpurchase card while she worked for another employer in Virginia.

She was sentenced by the Honorable Richard J. Leon. Upon completion of her prison term, Murdockwill be placed on three years of supervised release; Judge Leon ordered that the first three months ofthat time be spent on home confinement. Judge Leon also ordered Murdock to pay more than $40,000in restitution for her crimes. Finally, he ordered her to pay an additional $29,000 forfeiture moneyjudgment.

According to the government’s evidence, Murdock was a co-founder of Nia Community Public CharterSchool and its executive director from June 2006 through October 2008. As the executive director ofthe Northeast Washington school, she had the primary responsibility of overseeing its fiscalmanagement.

Public charter schools are independently operated public schools that are open to all District ofColumbia residents. Enrollment is on a space-available basis. Public charter schools receive publicfunds based on the number of students they enroll. Nia Community Public Charter School, for example,received funding through the District of Columbia Public Charter School Board, as well as through theU.S. Department of Education.

Between July 2006 and August 2008, the school received more than $3.3 million from the District ofColumbia Public Charter School Board. The school also received more than $548,000 from the U.S.Department of Education during the 2007 and 2008 fiscal years.

From March 2008 through August 2008, Murdock signed five checks on the school’s account, totaling$29,000, and converted them to her own personal use and benefit.

The theft charge involved the money stolen from the charter school.

The guilty plea also resolved a criminal investigation in Virginia. After separating from the school,Murdock was hired in August 2009 as a Child Youth and School Services Assistant Director by theCody Development Center in Fort Myer, Virginia. In this position, she was provided with a governmentpurchase card that was to be used for buying work-related items.

As part of her plea, Murdock admitted that from February 2012 through December 2012, whileemployed by the Cody Development Center, she used her government purchase card to make $11,773 inunauthorized gift card purchases.

Murdock’s restitution payments will include $29,000 to the U.S. Department of Education and another$11,773 to the U.S. Department of Defense.

The theft from Nia Community Public Charter School was investigated by the FBI’s Washington FieldOffice, the District of Columbia Office of the Inspector General, and the U.S. Department of






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Education’s Office of Inspector General. The activities at the Cody Development Center wereinvestigated by the Office of the Inspector General for the Department of Defense.

U.S. Attorney Machen, U.S. Attorney Boente, Assistant Director in Charge Parlave, Inspector GeneralWilloughby, Special Agent in Charge Anderson, and Special Agent in Charge Craig commended thework of those who investigated the matters. They also acknowledged the efforts of those who workedon the case from the U.S. Attorney’s Office for the District of Columbia, including Paralegal SpecialistsKrishawn Graham and Diane Hayes and Assistant U.S. Attorney Catherine K. Connelly, who assistedwith forfeiture issues. Finally, they thanked Assistant U.S. Attorney Lionel André, who prosecuted thecase.

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Four Face Public Corruption Charges in Connectionwith Operation of Dayton Charter School




COLUMBUS, OH—A federal grand jury has indicted four people, alleging that they offered andaccepted bribes and kickbacks as part of a public corruption conspiracy in their roles as managers and aconsultant for Arise! Academy, a charter school in Dayton, Ohio.

Carter M. Stewart, United States Attorney for the Southern District of Ohio, Kevin Cornelius, SpecialAgent in Charge, Federal Bureau of Investigation (FBI) and Ohio Attorney General Mike DeWinewhose office oversees the Ohio Bureau of Criminal Investigation (BCI) announced the indictmenttoday.

The indictment charges Shane K. Floyd, 42, Strongsville, Ohio, who served as superintendent of Arise,Carl L. Robinson, 47, Durham, North Carolina, who operated an educational consulting business calledGlobal Educational Consultants, and Arise board members Christopher D. Martin, 44, Springfield,Ohio and Kristal N. Screven, aka Kristal Allen, 38, Dayton, Ohio.

The indictment alleges that Floyd, Martin and Screven solicited and accepted bribes from Robinson inexchange for awarding a lucrative, unbid consulting contract to Global. The indictment says Arise paidGlobal $420,919 over 12 months starting in October 2008 at a time when Arise had difficulty makingpayments to other vendors and staff. In exchange for the consulting contract, Robinson paid Floydmore than $5,000 in cash, gave Martin cash and a trip to Las Vegas, and bribed Screven with cash andpayments for a school security services company she and her husband owned.

All four are charged with conspiracy, a crime punishable by up to five years in prison, and with aidingand abetting federal programs bribery, which is punishable by up to ten years in prison. In addition,Floyd, Screven and Martin are each charged with one count of making false statements, punishable byup to five years’ imprisonment. Screven is also charged with one count of witness tampering forallegedly telling a witness to lie to the grand jury investigating the case. Witness tampering ispunishable by up to 20 years in prison. All counts also carry potential fines of up to $250,000.

The indictment also seeks a total of $420,919 in forfeiture that the defendants will have to pay if theyare convicted. The amount represents the money derived from the crimes.

Floyd, Robinson and Martin will be summoned to appear in federal court. Screven surrendered tomembers of the FBI’s Central Ohio Public Corruption Task Force, which includes special agents fromthe FBI and Ohio BCI, today. She will receive an initial appearance today before a federal magistrate inDayton. Senior U.S. District Judge James L. Graham will preside over the case.

Arise! Academy was an Ohio Community School, commonly known as a charter school, which operatedwith federal funds provided through the state of Ohio.

U.S. Attorney Stewart commended the investigation by the FBI’s Central Ohio Public Corruption TaskForce and Assistant U.S. Attorneys Doug Squires and Heather Hill, who are prosecuting the case.

An indictment merely contains allegations, and the defendants are presumed innocent unless provenguilty in a court of law.

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Former Charter School Principal Pleads Guilty inConnection to MCAS Cheating


District of Massachusetts(617) 748-3100


BOSTON—A former Springfield charter school principal pleaded guilty today in U.S. District Court to afederal felony in connection with assisting students to cheat on the MCAS.

Janet Henry, 42, pleaded guilty to an Information charging her with committing mail fraud. U.S.District Judge Mark G. Mastroianni scheduled sentencing for Jan. 8, 2015.

According to the Information, in 2009 Henry became Principal of the Robert M. Hughes AcademyCharter School in Springfield. In March and April 2009, the Massachusetts Comprehensive AssessmentSystem (MCAS) tests were administered to the student body during which time Henry instructedteachers to give clues and other tips to students. For example, if teachers saw students enteringnonsense answers, then they were to tell students to review their answers again. During preparationmeetings, Henry stated to teachers that “this is where we earn our money,” and warned that the schoolcould close or everyone would lose their jobs, if the test scores were not satisfactory. According to thestatement of fact filed in the case, Henry was acting under the pressure form a member of the charterschool’s board of directors.

On April 16, 2009, upon the completion of the MCAS examinations, Henry falsely certified that thetests had been administered honestly.

The charging statute provides a sentence of no greater than 20 years in prison, three years ofsupervised release, and a fine of $250,000. Actual sentences for federal crimes are typically less thanthe maximum penalties. Sentences are imposed by a federal district court judge based upon the U.S.Sentencing Guidelines and other statutory factors.

United States Attorney Carmen M. Ortiz, Brian M. Hickey, Special Agent in Charge of the U.S.Department of Education, Office of Inspector General, Northeast Region, and Vincent B. Lisi, SpecialAgent in Charge of the Federal Bureau of Investigation, Boston Field Division, made the announcementtoday. The case is being prosecuted by Assistant United States Attorney Kevin O’Regan of Ortiz’sSpringfield Office.

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Former Charter School Principal Sentenced inConnection with MCAS Cheating Scheme


District of Massachusetts(617) 748-3100


BOSTON—A former Springfield charter school principal was sentenced yesterday in U.S. District Courtin Springfield for a federal felony in connection with assisting students to cheat on the MCAS.

Janet Henry, 42, was sentenced by U.S. District Judge Mark G. Mastroianni to one year of probationand a $500 fine. In October 2014, Henry pleaded guilty to an Information charging her with mailfraud.

According to the Information, in 2009 Henry became Principal of the Robert M. Hughes AcademyCharter School in Springfield. In March and April 2009, the Massachusetts Comprehensive AssessmentSystem (MCAS) tests were administered to the student body during which time Henry instructedteachers to give clues and other tips to students. For example, if teachers saw students enteringnonsense answers, then they were to tell students to review their answers again. During preparationmeetings, Henry stated to teachers that “this is where we earn our money,” and warned that the schoolcould close or everyone would lose their jobs, if the test scores were not satisfactory. On April 16, 2009,upon the completion of the MCAS examinations, Henry falsely certified that the tests had beenadministered honestly.

United States Attorney Carmen M. Ortiz; Brian M. Hickey, Special Agent in Charge of the U.S.Department of Education, Office of Inspector General, Northeast Region; and Vincent B. Lisi, SpecialAgent in Charge of the Federal Bureau of Investigation, Boston Field Division, made the announcementtoday. The case was prosecuted by Assistant U.S. Attorney Kevin O’Regan of Ortiz’s Springfield BranchOffice.

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Jury Convicts Trio of Public Corruption inConnection with Charter School Kickbacks




COLUMBUS, OH—A United States District Court jury convicted three people of offering and acceptingkickbacks as part of a public corruption conspiracy involving a Dayton, Ohio charter school. Twodefendants were public officials who ran the school and the other secured a lucrative consultingcontract in exchange for bribes to school officials.

Carter M. Stewart, United States Attorney for the Southern District of Ohio, Angela L. Byers, SpecialAgent in Charge, Federal Bureau of Investigation (FBI), Ohio Attorney General Mike DeWine whoseoffice oversees the Ohio Bureau of Criminal Investigation (BCI), and Ohio Auditor Dave Yostannounced the verdicts reached today which was returned following a trial that began on May 18, 2015before U.S. District Judge Algernon L. Marbley.

The jury convicted Shane K. Floyd, 42, Strongsville, Ohio, who served as superintendent of Arise, Ariseboard chairman Christopher D. Martin, 44, Springfield, Ohio, and Carl L. Robinson, 47, Durham,North Carolina, who operated an educational consulting business called Global EducationalConsultants.

According to court testimony, Floyd and Martin solicited and accepted bribes from Robinson inexchange for awarding a lucrative, unbid consulting contract to Global. Arise paid Global $420,919over 15 months starting in September 2008 at a time when Arise was in a financial crisis unable to payother vendors and teachers pay and benefits were cut. In exchange for the consulting contract,Robinson paid Floyd and Martin large amounts of cash and other benefits, like an all-expense -paid LasVegas trip taken by Martin.

All three were convicted of conspiracy, a crime punishable by up to five years in prison, and withfederal programs bribery, which is punishable by up to 10 years in prison. In addition, Floyd andMartin were each convicted of one count of making false statements to the FBI, punishable by up to fiveyears’ imprisonment.

The trio also faces a $420,919 forfeiture, which represents the amount of money derived from thecrimes.

A co-defendant, Kristal N. Screven, also known as Kristal Allen, of Dayton, Ohio admitted her role as anArise board chairman who was bribed by pleading guilty to conspiracy to commit federal programsbribery on May 8, 2015, before U.S. District Judge Marbley.

Arise! Academy was an Ohio Community School, commonly known as a charter school, which operatedwith federal funds provided through the state of Ohio.

U.S. Attorney Stewart commended the investigation by Special Agents of the FBI and Ohio BCI, whoare a part of the FBI’s Public Corruption Task Force, as well as Assistant United States Attorneys DougSquires and Peter Glenn-Applegate and Special Assistant United States Attorney Kim Robinson, whoprosecuted the case.

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Former Houston Charter School Officials Chargedwith Bilking School of Millions


Southern District of Texas(713) 567-9000

HOUSTON—A federal grand jury has returned a 19-count indictment against the foundingsuperintendent of The Varnett Public School and her husband alleging charges of conspiracy, mailfraud, tax evasion and obstruction of justice, announced U.S. Attorney Kenneth Magidson along withSpecial Agent in Charge Perrye K. Turner of the FBI, Special Agent in Charge Lucy Cruz of InternalRevenue Service—Criminal Investigation (IRS-CI) and Special Agent in Charge Neil Sanchez of the U.S.Department of Education—Office of Inspector General.

Marian Annette Cluff and Alsie Cluff Jr. are expected to surrender to authorities and make their initialappearance before U.S. Magistrate Judge Nancy Johnson later this week.

The indictment was returned late yesterday.

Annette Cluff was the founding superintendent of The Varnett Public School and her husband AlsieCluff Jr. was the facilities and operations manager of the three campus charter schools located inNortheast and Southwest Houston. The Indictment alleges the couple embezzled in excess of $2.6million in funds intended for the operation and function of the charter school and its programs.

“We take allegations such as these very seriously,” said Magidson. “If proven guilty, those found to havetaken funds intended for the benefit of students for their personal benefit will be held accountable fortheir actions.”

“Those in positions of public trust must and will be held to higher standards,” said Turner. “The FBIand our law enforcement partners take all allegations seriously and are committed to fightingcorruption at all levels.”

The Cluffs are also charged with tax evasion of approximately $851,845 which does not include interestand penalties owed to the IRS. According to the indictment, the Cluffs did not pay income taxes on themoney they received as a result of the scheme.

“IRS-CI enforces the nation’s tax laws, but also takes particular interest in cases in which someoneappears to have taken what belongs to others for their own personal benefit,” said Cruz. “Thisindictment alleges these two not only betrayed the public’s trust by diverting funds intended for thebenefit of underprivileged students for their own personal gain, but also allegedly conspired to defraudthe IRS and evade paying their taxes. IRS-CI is committed to identifying and holding accountable thosethat seek to enhance their lives by misappropriating funds intended to educate our children.”

The indictment alleges that the Cluffs used their positions of trust and authority to embezzle moneyfrom the charter school by opening four “off-books” accounts (bank accounts not directly tied to thefinancial operation of the charter school) in a name similar to The Varnett Public School. The Cluffswere the signatories of the accounts, according to the allegations, and only used the off-books accountsfor the purpose of diverting money intended for the charter school for their own personal use andbenefit. Annette and Alsie Cluff allegedly concealed the off-books accounts from the charter schooloffice manager, the school’s external accountant and their income tax preparer.

“Today’s indictment alleges that these school officials abused their positions of trust to steal funds fromthe very ones they promised to serve—the children who attended the Varnett Public School,” saidSanchez. “As the law enforcement arm of the U.S. Department of Education, we are committed toensuring that Federal education dollars reach the intended recipients. That’s why we will continue toaggressively pursue those who seek to enrich themselves at the expense of students. America’sstudents, their families and taxpayers deserve nothing less.”

According to the indictment, the Cluffs embezzled more than $1 million from “money orders”submitted by parents of the students to pay for school field trips and student fundraisers, such aschocolate sales, book fairs, school carnivals and other school related activities. Additionally, the Cluffsalso allegedly diverted and concealed money received from vendors of the school, insurance companiesand federal agencies into the off-books accounts.

In a separate false invoicing scheme also charged in the indictment, Annette Cluff directed the charter

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school’s building maintenance and landscaping contractor to submit false invoices to the school forpayment on work that was never actually done. The indictment alleges the charter school paid invoicestotaling more than $115,000. Mrs. Cluff allegedly instructed the contractor to return the money bywriting checks from the contractor to her personally, which she deposited into her personal bankaccount. Later, she told the contractor to make a false statement to the FBI that the money was for a“loan” and that she paid the contractor back in cash, according to the allegations.

If convicted of either mail fraud or obstruction of justice, each defendant faces up to 20 years’imprisonment, while the conspiracy and tax evasion charges carry a possible five-year federal prisonsentence. All charges could also result in a possible $250,000 fine, upon conviction.

The charges are the result of the investigative efforts of the FBI, IRS-CI and the U.S. Department ofEducation-OIG. Assistant U.S. Attorneys Quincy L. Ollison and Cedric L. Joubert are prosecuting thecase.

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Former Charter School Director Sentenced to 42Months for Embezzling Government Funds


District of South Carolina(803) 929-3000


COLUMBIA, SC—United States Attorney Bill Nettles stated today that Benita Dinkins-Robinson, age40, of Bishopville, South Carolina, was sentenced in federal court in Columbia, South Carolina, forembezzling government funds in violation of 18 U.S.C. § 641. United States Chief District Judge TerryWooten sentenced Dinkins-Robinson to 42 months’ imprisonment and ordered her to pay over $1.5million in restitution.

Evidence presented during the ten-day trial and during the asset forfeiture phase of the caseestablished that from 2007 to 2013, Dinkins-Robinson embezzled more than a million dollars infederal funds supplied by United States Department of Agriculture and the United States Departmentof Education that were intended to be used for the Mary L. Dinkins Higher Learning Academy, acharter school Dinkins-Robinson established in 2005. The jury also determined that Dinkins-Robinsonmust forfeit over $750,000 in annuities that she purchased while serving as the Executive Director ofthe charter school as well as her share in a Camden house that she owned.

The case was investigated by the Federal Bureau of Investigation and the United States Department ofEducation Office of Inspector General. Assistant United States Attorneys Winston Holliday and BenGarner of the Columbia office handled the case.

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Group Sentenced for PublicCorruption in Connection withCharter School KickbacksCOLUMBUS, OH—Four people were sentenced for their roles in offering and acceptingkickbacks as part of a public corruption conspiracy involving a Dayton, Ohio charterschool. Two defendants were public officials who ran the school and the other secureda lucrative consulting contract in exchange for bribes to school officials.

Carter M. Stewart, United States Attorney for the Southern District of Ohio, Angela L.Byers, Special Agent in Charge, Federal Bureau of Investigation (FBI), Ohio AttorneyGeneral Mike DeWine whose office oversees the Ohio Bureau of Criminal Investigation(BCI), and Ohio Auditor Dave Yost announced the sentences handed down by U.S.District Judge Algenon L. Marbley.

Shane K. Floyd, 44, of Strongsville, Ohio, who served as superintendent of Arise, wassentenced to 84 months in prison. Arise board chairman Christopher D. Martin, 45,Springfield, Ohio, was sentenced to 60 months in prison and Carl L. Robinson, 48,Durham, North Carolina, who operated an educational consulting business calledGlobal Educational Consultants, was sentenced to 78 months in prison.

According to court testimony, Floyd and Martin solicited and accepted bribes fromRobinson in exchange for awarding a lucrative, unbid consulting contract to Global.Arise paid Global $420,919 over 15 months starting in September 2008 at a time whenArise was in a financial crisis unable to pay other vendors and teachers pay andbenefits were cut. In exchange for the consulting contract, Robinson paid Floyd andMartin large amounts of cash and other benefits, like an all-expense -paid Las Vegastrip taken by Martin.

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October 2, 2015

All three were convicted following a jury trial in May of conspiracy and with federalprograms bribery. In addition, Floyd and Martin were each convicted of one count ofmaking false statements to the FBI.

A co-defendant, Kristal N. Screven, also known as Kristal Allen, of Dayton, Ohioadmitted her role as an Arise board chairman who was bribed by pleading guilty toconspiracy to commit federal programs bribery on May 8, 2015, before U.S. DistrictJudge Marbley. She was sentenced to 27 months in prison.

The four also face a $420,919 forfeiture, which represents the amount of money derivedfrom the crimes.

Arise! Academy was an Ohio Community School, commonly known as a charter school,which operated with federal funds provided through the state of Ohio.

U.S. Attorney Stewart commended the investigation by Special Agents of the FBI andOhio BCI, who are a part of the FBI’s Public Corruption Task Force, as well as AssistantUnited States Attorneys Doug Squires and Peter Glenn-Applegate and SpecialAssistant United States Attorney Kim Robinson, who prosecuted the case.

This content has been reproduced from its original source(http://www.justice.gov/usao/ohs/).

FOR IMMEDIATE RELEASE Friday, April 22, 2016

U.S. Attorneys » Middle District of Louisiana » News

Department of Justice

U.S. Attorney’s Office

Middle District of Louisiana

Businessman Indicted for Fraud and Money LaunderingInvolving Charter School Construction

BATON ROUGE, LA - United States Attorney Walt Green announced today that a federal grand jury hasreturned an indictment against NATHIAN D. HOSSLEY, age 50, of Baton Rouge, Louisiana. Theindictment charges the defendant with five counts of wire fraud, in violation of Title 18, United StatesCode, Section 1343, one count of mail fraud, in violation of Title 18, United States Code, Section 1341,and one count of engaging in monetary transactions in property derived from specified unlawful activity,in violation of Title 18, United States Code, Section 1957. The indictment also includes a forfeitureallegation which requires the defendant to forfeit the proceeds of his fraud if convicted.

The Indictment alleges that the defendant engaged in a scheme to defraud Bouma Construction("Bouma"), a full-service construction company headquartered in Grand Rapids, Michigan, from March2014 through December 2014. According to the Indictment, Bouma hired a company owned by thedefendant, First Millennium Construction ("FMC"), to serve as a subcontractor in the construction of theImpact Charter School in Baker, Louisiana.

The Indictment further alleges that, unbeknownst to Bouma, the defendant provided false information in a"Qualification Statement" submitted to Bouma in connection with FMC’s bid for the Impact Charter Schoolproject. Additional allegations in the Indictment state that, without knowledge of the defendant’s history offederal convictions, Bouma hired FMC and agreed to pay over $1.2 million for its work on the project.

The Indictment further alleges that, after being hired, the defendant submitted, or caused to be submittedthrough FMC employees, multiple applications for disbursements of payments by Bouma to FMC inaccordance with their contractual agreement. These applications for payments allegedly made falserepresentations related to the amount of work that had been completed by FMC and the amount ofmoney that FMC had paid and still owed to certain subcontractors. It also allegedly omitted the names ofnumerous subcontractors to which the defendant owed money for work on the project.

The defendant also allegedly forged and caused to be forged signatures of certain FMC subcontractorson joint check agreements and lien waivers for the purpose of obtaining $96,125 in joint checks from

Bouma. According to the Indictment, the defendant then forged or caused to be forged thesubcontractors’ endorsements on these checks, which were then deposited into the FMC’s bank account.This money was allegedly intended for the four subcontractors, not FMC. Finally, the Indictment allegesthat the defendant arranged for another individual to submit a false affidavit claiming responsibility for theforged signatures, which was then sent to the District Attorney for the 19th Judicial District.

The Indictment alleges further that Bouma ultimately paid over $948,000 to FMC, less than half of whichwas paid to subcontractors to which the defendant owed money for work on the Impact Charter Schoolproject and that, during the relevant time period, the defendant diverted tens of thousands of dollars fromFMC’s bank account to sources which benefitted him personally.

United States Attorney Green stated: "My office is committed to rooting out and aggressively pursuingdishonest businesspeople who seek to advance themselves through fraud. We look forward to continuingto work closely with the FBI and our other federal, state, and local partners to appropriately address anysuch criminality."

This matter is being handled by the U.S. Attorney’s Office for the Middle District of Louisiana and theFederal Bureau of Investigation. It is being prosecuted by Assistant United States Attorneys RyanCrosswell and Rene Salomon.

NOTE: An indictment is an accusation by the Grand Jury. The defendant is presumed innocent until andunless adjudicated guilty at trial or through a guilty plea.

USAO - Louisiana, Middle

Updated April 25, 2016

FOR IMMEDIATE RELEASE Wednesday, August 24, 2016

U.S. Attorneys » Western District of Pennsylvania » News




Former Pennsylvania Cyber Charter School CEO Pleads Guiltyto Tax Conspiracy

PITTSBURGH - The former CEO of the Pennsylvania Cyber Charter School pleaded guilty to a charge oftax conspiracy, United States Attorney David J. Hickton announced today.

Nicholas Trombetta, 61, of East Liverpool, Ohio, pleaded guilty to one count before Chief United StatesDistrict Judge Joy Flowers Conti.

In connection with the guilty plea, the court was advised that Trombetta was the founder and ChiefExecutive Officer of the PA Cyber Charter School. Trombetta created a series of connected for-profit andnot-for-profit entities to siphon taxpayer funds out of PA Cyber and to avoid federal income tax liabilities.

Judge Conti scheduled sentencing for Dec. 20, 2016, at 10 a.m. The law provides for a maximum totalsentence of five years in prison, a fine of up to $250,000, or both. Under the Federal SentencingGuidelines, the actual sentence imposed is based upon the seriousness of the offense and the priorcriminal history, if any, of the defendant.

Assistant United States Attorneys Robert S. Cessar, Stephen R. Kaufman and James R. Wilson areprosecuting this case on behalf of the government.

The Federal Bureau of Investigation, the Internal Revenue Service - Criminal Investigations and the U.S.Department of Education Office of Inspector General conducted the investigation leading to theprosecution of Trombetta.

USAO - Pennsylvania, Western

Updated August 24, 2016

FOR IMMEDIATE RELEASE Wednesday, November 2, 2016

U.S. Attorneys » District of Delaware » News



District of Delaware

Charter School Administrator Pleads Guilty to FederalProgram Theft

WILMINGTON, Del. – Charles M. Oberly, III, United States Attorney for the District of Delaware,announced today that Sean Moore, age 43, of New Castle, Del., pleaded guilty to three counts of federalprogram theft before U.S. District Judge Richard G. Andrews. Moore is scheduled to be sentenced onMarch 2, 2017.

According to court records and statements made in open court, between July 1, 2011 and January 31,2015, while serving as the Director of Finance and Operations for the Family Foundations Academy, acharter school in New Castle, Del., Moore embezzled $161,871 from the school.

Moore accomplished this embezzlement in a number of ways. First, Moore charged personal expensesto an unauthorized credit card he opened in the name of the school. Moore also abused the State ofDelaware’s voucher program, by which charter schools are permitted to submit qualified expenses forreimbursement, and the State of Delaware’s procurement card system, by which the State of Delawareissues credit cards to charter school administrators to purchase necessary school supplies. In addition,Moore stole money from the school’s fundraising account, which consisted of money collected fromparents of school students, local sponsors, and an after-school program. Moore also took money fromthe school’s construction loan account.

Moore used the embezzled money for personal expenses such as retail purchases, home improvementpurchases, electronics, auto loan payments, auto services and accessories, federal tax payments,groceries, entertainment, food, gas, travel, gifts and collectibles, shoes, hotels, jewelry, train tickets, andvideo games.

During this time, the Family Foundations Academy received significant federal funding, which providesthe basis for the federal program theft charges. The maximum penalty for each count is ten years inprison followed by a three years of supervised release and a fine of $250,000.

This case is the result of an investigation conducted by the Federal Bureau of Investigation, the U.S.

Department of Education – Office of the Inspector General, and the Delaware Attorney General’s Office,with assistance from the Delaware Office of Auditor of Accounts. Assistant U.S. Attorney Elizabeth L.Van Pelt is prosecuting the case on behalf of the United States.

USAO - Delaware

Topic: Financial Fraud

Updated November 2, 2016

Bibliography: Federal Bureau of Investigation (FBI) and Charter School Corruption and Fraud: 2009-2016

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