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School operators rarely face criminal charges in fraud cases
April 5, 2008

Many charter schools have encountered trouble for mishandling taxpayers' money, but state and federal prosecutors don't often pursue criminal charges against them. State government usually goes after errant charter operators through the regulatory process or in civil courts. Some charters clean up their accounting procedures and repay their debt to the state.

Written by Stella M. Chavez, The Dallas Morning News

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Many charter schools have encountered trouble for mishandling taxpayers' money, but state and federal prosecutors don't often pursue criminal charges against them.

State government usually goes after errant charter operators through the regulatory process or in civil courts. Some charters clean up their accounting procedures and repay their debt to the state.

Others close down and never repay their debts, which stem mostly from inflating student attendance figures.

Donald L. Jones, a former public school teacher, opened the state's first charter school in 1996. He touted the Irving campus, called Renaissance, as a "model school."

Four years later, Renaissance and an affiliated school, Heritage Academy in Dallas, closed their doors. They owed the state $4.5 million that has never been recovered, according to Texas Education Agency records.

Mr. Jones and his son, Donald Mathew Jones, eventually went into the real estate investment business. In March 2007, a federal grand jury in Dallas indicted them and six other defendants on charges of conspiracy to commit mortgage fraud.

Mr. Jones and his son did not return phone calls to comment on their case.

Renaissance struggled financially from the beginning. TEA auditors found erroneous attendance records that allowed the school to obtain more than $2.9 million in undeserved state funding.

Nepotism concerns


Questions also surfaced about family connections. Donald L. Jones was the founder of Renaissance. His son-in-law founded Heritage. And his son Mat was a Heritage board member and assistant principal at Renaissance.

Both schools closed within weeks of each other at the start of the 2000-01 school year, after TEA scrutiny revealed problematic student attendance reporting and other financial irregularities.

In July 2002, the Texas attorney general sued the officers and employees of Heritage and a related company. The state eventually recovered $300,000 from the school's insurance company.

A settlement agreement barred the Joneses and another Heritage employee from working in the Texas charter school system or receiving state and federal money. Four others associated with Heritage were barred for five years.

The Joneses await trial on Aug. 11 for conspiracy to commit mortgage fraud.

Prosecutors never charged the Joneses in connection with their charter school activities. But one operator in Austin and two in Houston have faced criminal charges in separate cases.

A Travis County grand jury indicted Dolores Hillyer, the former chief executive officer of the Texas Academy of Excellence in Austin, in 2007.

The indictment alleges that Ms. Hillyer spent more than half a million dollars in charter school funding on her private child care center and personal vehicles – Lincoln Navigators and a Cadillac DeVille. A pretrial hearing is scheduled for Monday.

In July 2004, Baptist preacher Harold W. Wilcox was running the Prepared Table Charter School in Houston. He and three relatives were indicted on federal charges that they defrauded the state and federal governments of more than $3.8 million, including $3.3 million attributed to student attendance fraud.

Mr. Wilcox died three weeks before his three relatives pleaded guilty. They were all sentenced to prison.

Houston case


Another case involving two key employees at Gulf Shores Academy in Houston broke late last month.

Linda Johnson and her daughter, Marian Johnson, each face felony charges of tampering with a government record.

Anna Emmons, Harris County assistant district attorney, said undercover officers posing as parents went to Gulf Shores last month and paid $150 for a class credit that could be used to help their fictitious child graduate from high school.

"They [Gulf Shores officials] never saw a student," Ms. Emmons said in an interview.

If convicted, Linda Johnson and Marian Johnson face up to 20 years in prison.

State Rep. Harold Dutton, D-Houston, an attorney who represents Gulf Shores, said the Johnsons did nothing wrong. Many schools across the state charge students for so-called credit-recovery programs, he said.

Richard Swetnam, a state-appointed monitor sent to Renaissance and Heritage, questions why charter schools continue to have the same problems every year.

"Why is the state giving these charters [more money] and not providing reassurance that there's fiscal accountability?" he asks. "Why do they continue to issue charters?"

He believes that in some cases, attendance and accounting mistakes happen because of lack of training and rules.

"Most of the people involved don't have much school experience," said Mr. Swetnam, now retired. "Some of them have been around schools but don't know how to handle tax money and public funds."

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