Waste, Fraud, and Self-Enrichment In Charter Schools

California Charter Academy a good deal for one family.

Audit: Calif. school misspent millions

By Jennifer Coleman, Associated Press Writer  |  April 14, 2005

SACRAMENTO, Calif. -- Operators of California's biggest charter school system pocketed much of the $139 million the state gave them, spending a fortune on fat salaries for family members, side businesses and overpriced textbooks, according to a state audit issued Thursday.

The audit paints a damning picture of the California Charter Academy -- four charter schools that enrolled thousands of students from 1999 until August, when it closed amid the yearlong investigation.

What the reporter is trying to say is that there was one company, with four different charters (from ?how many?  school districts)  operating up to sixty (60) sites, educating about 10,000 kids at any one time.

"The magnitude of waste of precious education funds outlined in this audit is appalling," said state Superintendent of Public Instruction Jack O'Connell, who ordered the investigation.

State officials said they will submit the case to prosecutors for possible criminal charges, and will file an involuntary bankruptcy petition to try to retrieve school funds.

C. Steven Cox, chief executive of the management company that runs the schools, Education Administrative Services Corp., did not immediately return a call to the EASC office in Arizona, where he runs a charter school in Apache Junction.

California gave the academy $139.4 million to educate students who attended classes at about 60 campuses across the state. When they closed in August, 4,500 students had to find someplace else to go to school.

Auditors found that Cox spent $1.2 million on salaries and perks for his wife, son, daughter-in-law and sister-in-law. The spending included high-priced sport utility vehicles and expense accounts, auditors said.

The schools paid about 13 percent of their state funds to EASC for management services -- considerably higher than the 2 percent to 7 percent similar companies charge, according to the audit.

Cox also invested school money in side businesses, the auditors said. Among the businesses Cox created was a school supply company that sold $920,000 worth of books and other items to the schools at a markup of as much as 57 percent, the auditors said.

The audit said the misspending drained money away from the classroom. Teacher salaries were far less than at other schools, and teachers and parents complained they had trouble getting books and other supplies.

Cox "had the opportunity to direct millions of dollars of (academy) funds to benefit himself, his corporation, his family, and his friends and associates," the audit said. "He took advantage of that opportunity."

Charter schools are public schools that are freed from many regulations in the hope the increased flexibility will help students learn more. But the experiment has been marked by misspending in some cases. One school operator was sentenced to eight months in jail in January for misappropriating funds and conflict of interest.

A state law that took effect last year gives the school districts that authorize charter schools more control, but critics say even more oversight is needed.

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Two charter schools are shut in county

Operator closes  60 campuses in state

By Helen Gao  August 12, 2004

Amid a widening investigation into its finances and management practices, the state's largest charter school operator has shut down all its campuses, including two in San Diego County.

Nearly 10,000 students will need to find new schools. The two satellite campuses in San Diego County are in Vista and Chula Vista and served more than 200 students.

Until its demise, the California Charter Academy operated a network of 60 campuses and nearly 10,000 students. Its headquarters were in Victorville, but school sites were scattered across California, from San Diego to Gridley in Butte County.

The charter school operator said the schools were closed because of financial problems and new laws that cut funds for adult students and require charter schools to be located within the boundaries of the authorizing school district.

The academy's schools in Vista and Chula Vista were among six operated in the state under a charter from the Orange Unified School District. District trustees revoked the organization's charter on Monday.

The Vista site, which leased classrooms from the North County Tabernacle of Praise for three years, served about 100 students. The Chula Vista site, which leased space from Hilltop Tabernacle for 2½ years, served 130 to 150 students, according to people familiar with the schools.

Both campuses offered classes from first grade to 12th to students countywide.

Ann Bancroft, spokeswoman for the California Department of Education, said state officials will work with counties and school officials "to make sure these students have minimal disruption to their education."

Charter schools are publicly funded campuses that operate under sponsorships from school districts. Exempted from numerous education regulations, they are free to experiment with innovations to raise student achievement. Those that fail to live up to their promise are shut down.

The charter school operator drew the attention of state and local officials, who questioned the nonprofit organization's finances and the dual role of C. Steven Cox as CEO of the academy and CEO of a private firm, Educational Administrative Services Corp. It managed the schools in exchange for 8.5 percent of the $35 million in state funding provided to Charter Academy last year.

The California Charter Academy has received more than $100 million in state money since 1999.

 California Department of Education officials last week subpoenaed academic and financial records from the Charter Academy as part of an investigation into a potential conflict of interest and other alleged violations of the law.

Charter Academy's lawyers denied there was a conflict of interest and refused to divulge Cox's salary as CEO of the private company.

Bancroft said Cox has not been responsive to state investigators. Charter Academy recently severed its ties with its private management company, she said, but it was not clear if Cox was still in charge of the organization.

Charter Academy officials could not be reached for comment.

State Superintendent of Public Instruction Jack O'Connell this week expressed "serious doubts about the viability of the entire organization."

Mae Biggs, who taught at the Vista campus, said she learned about the fate of her school last week from school administrators, and she received a certified letter this week confirming the termination of her employment.

"I've had kids called me crying, very emotional," she said, because they didn't want to go back to regular public schools. "We had a smaller setting and were able to work better with the children."

The Rev. Stephen Buxton of Hilltop Tabernacle in Chula Vista said California Charter Academy broke its lease agreement with the church and owes rent.

He said the organization's headquarters, which entered into the lease, didn't notify him about the closure.

He spoke highly of the school, which recently held a graduation ceremony at Balboa Park.

"All the staff at our local site were nothing but professional people to deal with," he said. "It was an excellent program."

Pastor Stephen Miraflor of the North County Tabernacle of Praise, who quit his job as a Charter Academy campus manager last year to become pastor, said administrators of the two satellite campuses are "actively seeking alternatives" to keep the schools open.

Phone messages left at the Chula Vista and Vista sites were not returned. No one answered the phone at the Victorville headquarters of Charter Academy, and the answering machine message said the organization is in the midst of relocating its administrative offices.

Orange Unified School District officials, who began investigating the organization last August, said there has been an exodus of high-level staff members from the Charter Academy in recent months.

State and Orange Unified officials were scrambling to inform students, parents and school districts about the charter closures.

Orange Unified is developing a Web page to inform students of their enrollment options in their home districts. It will post notices at former charter sites and send letters to local superintendents to tell them to expect an influx of displaced students.

At its peak, California Charter Academy enrolled more than 11,000 students at some 60 sites in 20 counties.

Many of its campuses were far away from the school districts that sponsored them and thus did not have close scrutiny   Investigators are also looking at whether an entity established by Charter Academy to fund employee health insurance has paid premiums to providers.

Over the past two years, the state has withheld more than $6 million in funding to Charter Academy because 10 of its satellite sites illegally operated outside of their chartering districts.

 

Comments

[Tammy Easton]

Can anyone answer a question that everyone avoids? Why are there no criminal charges against Steven Cox? Why is he not in jail after embezzling millions of dollars from the state? Why is our education system not doing anything about the distress caused to the students? My daughter is going through great distress because of Steven Cox and the rest of the losers that have been appointed as leaders of our education system. None of them give a damn. There is no point in telling what happened because of those people because no one will do anything about it anyway. If anyone really cares, which I doubt, or they are interested enough to want to know, feel free to contact me and I will give you all the details you want, with documentation if it will do any good. They are going to prosecute eventually by the way. I am going to make sure of that.

[Valerie]

Trust me, they are never going to prosecute Steven Cox because he is buying everybody off. He already won a case in which he was going to be sued but instead he had a counter sue! And I bet he won that too. Everybody (as long as I’ve been alive and known him) is either afraid of him or can sense he has some sort of power over people.
I have challenged him and want him to go to jail for all the wrong doings he has done over the years. He could commit murder and everybody would look away. For goodness sake, he's like OJ Simpson. When will people wake up and realize that he committed a crime? Why is it okay for him to ruin many children's futures for his own personal sick pleasures?
Why doesn't someone nail this bastard? For goodness sake, someone do something and no matter how much money he offers or what a "nice guy" he seems. He is the devil in disguise. Though, I'm not religious, I believe he is evil and needs to pay for the crimes he has committed.

[Don Karg]

C. Steven Cox (Educational Administrative Services-EASC, Morning Star, California Charter Academy-CCA, and a school supply company) indicted with 56 felonies on September 4th, 2007. CUSD Trustee John Casabianca Forced to Appear Before Grand Jury back in October 19, 2006. LA Times Reported, 9/14/2007, "The Board of Trustees of the Capistrano Unified School District voted unanimously Monday not to consider a request by former Supt. James Fleming to pay his legal fees stemming from an indictment for allegedly creating enemies lists to thwart a recall." The Orange Punch reported on 5/24/2007, "We get news that former Capistrano Unified School District Superintendent James Fleming and Assistant Superintendent Susan McGill were indicted by the grand jury. Fleming was indicted for misappropriation of public funds, for using school funds to defeat a recall of his political allies and conspiracy, according to DA Tony Rackauckas' statement. McGill was indicted for conspiracy and perjury. These are all felony charges, relating to their efforts to stop the recall and the compilation of an enemies list." Many of these "employers" abused their workers/Teachers and forced them to use less resources so they can go on vacations, sports games, and to have a good night on the town! Sad thing about it is everyone knew about this back in 1989, when George P. Wright published his book--"The Twisted Badge," pointing to Dr. Simmons/ROP Program/Ed Quesada deposition. And there were many people pointing at the LBUSD [Rayburn] in 1989. And we can see the past and current damages to the LAUSD. “Your tax dollars at work” was an article on a Blog stating $400/hour was spent on an attorney for Fleming. The TV News Media stated, the Party is over, today!
Maybe if the Media would put down their Pom-Poms for the White-collar Criminals---the Citizenry would not live in terrorism.

[beinuounk]

dude you know what I'm talking about! soy desole