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Friday, July 25, 2014

Rampant Charter School Rip-offs


Here is the latest federal government report on fraud, waste, and abuse in the charter sector. 

It was released in May 2014 by the Center for Popular Democracy and Integrity in Education. The most common type of fraud identified was embezzlement.

Here is the summary of their findings:

With the increase in funding that schools are receiving through the Recovery Act, we issued a report that highlighted past OIG investigations involving fraud at charter schools.


The report brought to the Department’s attention our concern about vulnerabilities in the oversight of charter schools. Since 2005, OIG has opened more than 40 criminal investigations at charter schools, which have thus far resulted in 18 indictments and 15 convictions of charter school officials.

Charter schools generally operate as independent entities that are subject to oversight by an LEA [“local educational authority”] or authorized chartering agency.

Our investigations have found, however, that LEAs or chartering agencies often fail to provide adequate oversight needed to ensure that Federal funds are properly used and accounted for.

The type of fraud we identified generally involves embezzlement. The schemes that are used to accomplish this are varied.

For example, we have found cases where charter school executives falsely increased their schools’ child count, thus increasing the funding levels from which to embezzle.

We also identified an alleged grade changing scheme that allowed failing students to pass in order to ensure that the school met Adequate Yearly Progress, which allowed the school to continue operating, thus continuing a funding scheme from which to embezzle.

We have also unraveled schemes where owners or employees of the charter schools created companies to which they diverted school funds and misused school credit cards for personal expenditures.

Our report provided examples of investigative cases involving charter schools.


The Department generally agreed with our observations and expressed interest in working with OIG in determining how to enhance, when appropriate, its policies and monitoring processes involving charter schools.