Eleven Charged in California $50 Million Charter School Fraud
A3 and its affiliated businesses fraudulently invoiced at least $83 million from 13 charter schools and at least $8.18 million went into personal bank accounts.
A Newport Beach, California firm called A3 Education is at the center of a $50 million charter school fraud scheme in San Diego County, CA. The firm’s chairman Sean McManus, and president, Jason Schrock, plus nine others were charged with conspiracy, personal use of public money without legal authority, grand theft and financial conflict of interest.
McManus, Schrock and their co-conspirators obtained public funds by falsely claiming and obtaining funding for students attending charter schools when the students were not actually receiving charter school services at the time, according to the indictment filed on Wednesday.
According to Courthouse News, A3 had obtained $50 million in public funds to open 19 charter schools across California and secured another $200 million in public funds for future funding.
McManus and Schrock would allegedly approach small public school districts and convince them to authorize the establishment of online charter schools which would earn the district additional public funds.
The schools McManus and Schrock worked with included Valiant Academy, CA STEAM, Uplift California, California Academy of Sports Science, California Vanguard Fresno, University Prep and California Prep.
A3 would then contract with the charter schools using multiple companies owned by McManus and Schrock including A3 Education, A3 Consulting, Global Consulting Services and Mad Dog Marketing. The public funds obtained by the school districts would be funneled through A3’s intermediary companies and ultimately into McManus and Schrock’s own charitable trust and personal bank accounts
According to the indictment, A3 and its affiliated businesses invoiced at least $83 million from 13 charter schools and at least $8.18 million went into personal bank accounts, including some accounts in Australia where McManus is now believed to be at large.
The scheme enrolled approximately 40,000 students in the charter schools, many of whom were unaware they were enrolled in a charter school. Part of the scheme involved paying athletic organizations for student report cards and falsified charter school enrollment documents to falsify enrollment at summer schools.
However, as the LA Times wrote, “the children were not assigned to teachers who have state-required professional certificates, the indictment said. And the students also were not in contact with the schools, nor were they provided with educational services during the summer months, as some of the co-conspirators claimed, according to the indictment.”
Some of McManus and Schrock’s co-defendants include employees at Valiant Acadamey, a poor-performing charter school, the superintendent of Dehesa School District which authorized several charter schools in Valiant, and a Mountain Empire Unified superintendent who performed back-office services for McManus and Schrock.