Charter School Moguls Scam Oregon Out of Millions

In the latest incident of charter school fraud, the state of Oregon is going after a pair of charter school con men who reportedly scammed the state out of $17 million.

The Oregonian is reporting that Tim King and Norm Donohoe, who ran a chain of taxpayer-funded charter schools under the guise of a nonprofit named EdChoices, "submitted false, incomplete and misleading records about how many students were enrolled in the schools and how they were spending the state's money.

The report continues:

The pair opened and operated at least 10 charter schools that went by various and changing names, including Baker Web Academy, Estacada Early College and Sheridan AllPrep Academy. Most were launched under the name AllPrep. They existed under agreements with the school boards in Estacada, Sisters, Baker City, Sheridan, Burns and Marcola, but enrolled students from across the state in their online programs.

The state provided startup grants of up to $450,000 per charter school. The state Department of Education also paid about $6,000 a year for each student enrolled, relying on the charter school operators to document the number. The state now says those records were "erroneous, false and misleading."

According to a state court filing (.pdf), brought Thursday by the Oregon Department of Justice in Marion County Circuit Court, the pair is accused of racketeering and money laundering from 2007 to 2010 and is being ordered to repay the $17 million plus an additional $2.7 million for breach of contract and attorney fees.

Reportedly, many of the schools closed abruptly when state regulators began asking questions in spring 2010, leaving students and teachers with nowhere to go. Remaining schools have either since closed or continue to operate under new auspices.

Evidence suggests this is not the first or last time parents, students and state education boards will be swindled by privatized education. This summer, a renowned Philadelphia charter school mogul was indicted on multiple counts of wire fraud, obstruction of justice, and witness tampering. And between 2005 and 2011, the US Department of Education opened 53 investigations into charter school fraud, resulting in 21 indictments and 17 convictions in states including California, Texas, Ohio and Pennsylvania.

"You have so few people keeping track of the charter schools," said Philadelphia Inquirer reporter Martha Woodall, who has been mired in an ongoing investigation into Philadelphia's charter schools, regarding the system's lack of oversight.

Incidents of fraud are among the many reasons why the push to privatize education is wrought with the failings of corporatization.

As education historian Diane Ravitch writes:

The free market works very well in producing goods and services, but it works through competition. In competition, the weakest fall behind. The market does not produce equity. In the free market, there are a few winners and a lot of losers. Some corporate reformers today advocate that schools should be run like a stock portfolio: Keep the winners and sell the losers.

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