Charter School Fraud Grow as Oversight Continues to Lag

by Gary Snyder

Given the ability to operate outside the traditional public school bureaucracy and often freed from many of the mandates and requirements that traditional public schools are required to fulfill, charter schools have all too often also become laboratories for ways to misuse public funds and mislead their supporters. Examples of mismanagement and worse make headlines regularly; two new ones hit the news just a few weeks ago.

In Dayton, Ohio, the Education News reported:

“A recently-closed charter school in Dayton, Ohio now owes taxpayers close to $1.2 million after it was said to have falsified its attendance records and received state funding for students who never attended the school. An investigation by state auditor Dave Yost found that almost half of the reported 459 students enrolled at General Chappie James Leadership Academy had either never attended the school or had already left the school. Of the alleged students found by investigators, some had been incarcerated, moved out of state, or had been working and not attending school.”

Across the country, in San Francisco’s Bay Area, ABC News recently uncovered that the FAME charter school had not been paying many of their vendors. “County officials say as of March, the school had enough funds in its reserve to make payments to vendors and their recent attempts to get financial statements from FAME have been unsuccessful.”

Over one year ago, the Center for Popular Democracy and Integrity in Education issued a report in response to one from the Department of Education’s Office of the Inspector General that had raised concerns about vulnerabilities in the oversight of charter schools, pointing out that “state level agencies were failing to provide adequate oversight needed to ensure that Federal funds [were] properly used and accounted for.” 

The CPD report found “charter operator fraud and mismanagement is endemic” and “at least $100 million in public tax dollars has been lost due to fraud, waste, and abuse.” (source)

Nonprofit Imperative gathers its information principally from public documents...some of which are directly quoted. Virtually all cited are in some phase of criminal proceedings; some have not been charged, however. Cites in various media: Featured in print, broadcast, and online media outlets, including: Charity Navigator, Vermont Public Radio, Miami Herald, National Public Radio (NPR), Huffington Post, The Sun News, Atlanta Journal Constitution, Wall Street Journal (Profile, News and Photos), “Betrayal”, (a movie), NBC (on Charity Fraud…TBD), FOX2, ABC Spotlight on the News, WWJ Radio, Marie Claire, Ethics World, Aspen Philanthropy Newsletter, Harvard Business Review, Current Affairs, Charity Navigator, The Chronicle of Philanthropy, St. Petersburg Times, Board Room Insider, USA Today Topics, Accountants News, Newsweek.com, Responsive Philanthropy Magazine, New York Times, Portfolio Magazine, The Virgin Islands Daily News, NANKAI (China) BUSINESS REVIEW, National Religious Broadcasters newsletter, The Charity Governance Blog, American Chronicle, Palm Beach Post, Detroit Free Press, Oakland Press, Nonprofit World, Socially Responsible Business Forum, PNNOnline, Ohio Nonprofit Resources, Nonprofit Good Practice Guide, Nonprofit Startup Guide, Nonprofit Blog, National Coalition of Homeless Newsletter, Finance and Administration Roundtable Newsletter, MichiganNonprofit.com, CORP! Magazine, Crain’s Michigan Nonprofit, ncrp.org, PhilanTopic, Nashville Free Press, Nonprofit Law Blog, Seniors World Chronicle, Carnegie Reporter, Assoc. of Certified Fraud Examiners Examiner, msnbc.com, Worchester (MA) Telegram and Gazette, Carnegie Corporation of America, EO Tax Journal, Wikipedia: Non-profit Organizations; Parent: Wise Austin, Accountants News, Veterans Today, Answers.com, Far-roundtable, #Nonprofit Report, nonprofithelpnews, nonprofit news; National Enquirer, Northwest Herald, The HelpWise Daily, The #Nonprofit Report, Wikipedia (Nonprofit Organization), Answers.com, Nonprofits: On the Brink (2006) Silence: The Impending Threat to the Charitable Sector (2011)