While providing educational options to students, Philadelphia’s charter schools have also been the subject of what is probably the most concentrated set of investigations of financial mismanagement, conflict of interest, fraud, and other irregularities involving such schools in one city. Here are some of the major stories from recent years:
The District took a preliminary vote not to renew the charter of Center for Economics and Law in 2003 after finding widespread irregularities. The school then abruptly shut down on its own. Its director, Curtis Andrews, was later sentenced to prison for deliberately inflating enrollment data and bilking taxpayers of more than $200,000.
In 2006, the District forced out Martha Russell, the chief executive of Raising Horizons Quest Charter School after finding that she had hired more than a dozen relatives. Later, Russell and her sister, Viola Bush, the chief financial officer, pleaded guilty to covering up their use of $14,000 in taxpayer funds for personal expenses including restaurants and trips. The school, under new management, is now Global Leadership Academy.
The District trod more delicately in 2004 in the case of New Foundations Charter School, which was founded by the wife of then-House Speaker John Perzel. An audit leaked to the press found that the charter was leasing buildings from a nonprofit controlled by Perzel family members, which was using the rent money to purchase the land – meaning they would have acquired the $4.5 million asset at the end of the 20-year lease entirely using public dollars. The School Reform Commission renewed the charter after saying that family members agreed to resign from the nonprofit board, and the charter adopted new conflict of interest policies.
Most charters create related nonprofits, usually as a way to secure and manage land and buildings. But money-making by these nonprofits seems to be a continuing pattern and is the subject of several ongoing investigations of other charters by the District’s inspector general as well as state and federal authorities. City Controller Alan Butkovitz, in an April report, said that the state charter law created “a gigantic loophole through which people can profiteer.”
At Philadelphia Academy Charter School, a popular charter in the Northeast, the former CEO, Kevin O’Shea, and the former board president, Rosemary DiLacqua, pleaded guilty to fraud in 2009. Both are serving prison terms. O’Shea admitted taking kickbacks from contractors, using school money to make home improvements, pocketing money from school vending machines, and participating in a scheme to make money on a land deal involving another charter, Northwood Academy. DiLacqua admitted taking $34,000 in secret payments and loans from O’Shea and Brien Gardiner, the school’s founder, who committed suicide as authorities prepared to announce indictments.
Gardiner was a partner with Dorothy June Brown in founding Agora Cyber Charter School in Devon and her business partner in the Cynwyd Group L.L.C. Multiple agencies investigated what work Cynwyd did in return for $4.5 million in contracts with Agora. Brown, who also was collecting full-time salaries simultaneously from a private school and two other charters she founded, Ad Prima and Laboratory, agreed to sever her ties with Agora as part of a civil settlement that paid her $3 million in public and private money.
Germantown Settlement Charter School, which was closed down in 2008, is being investigated for diverting charter school funds to other enterprises of its parent organization. And earlier this year, Harambee Institute of Science and Technology was confronted for a long history of operating a nightclub in its building, but agreed to close it.