Butkovitz (Philadelphia) cites charter school profiteering

[Hannah Bell]

City Controller Alan Butkovitz's investigation of 13 Philadelphia charter schools found repeated examples of complex real estate arrangements in which charters leased or rented facilities from related non-profit organizations.

"The way the charter law is written and not enforced--there is a gigantic loophole through which people can profiteer," Butkovitz said. "This is not supposed to be a vehicle for maximizing profit for operators and related parties...The fact there were significant issues at 13 out of 13 raises the likelihood you would see many of these same issues found in a much larger sampling of the schools," Butkovitz said...

http://www.philly.com/philly/news/breaking/90130872.html?viewAll=y


Here's one of the scams (summary): New Foundations Charter School, founded by wife of State Rep. John Perzel, former Republican House speaker.

The school leases its building from Torresdale Corp., a "non-profit" run by Paul Stadelberger, New Foundation's CEO.

The "non-profit" took out a $7 million loan on the building, and used the charter school AS THE GUARANTOR FOR THE LOAN -- local & federal $$ thus = ultimate guarantors.

The charter school contracts its financial business to a for-profit service run by two former board members of the real estate "non-profit".

It contracts "occupational therapy" services to yet another for-profit corp run by the same two board members.

One of those board members runs a different charter school. When the board member became a contractor at New Foundations, his *other* charter school made three grants of $529k to New Foundations.

Little quid pro quo there? Little money laundering?

"The purpose of the grants and the relationship between the grants and the services," the draft said, "and the services provided by Mr. Santilli's firm is unknown."

http://www.philly.com/philly/news/breaking/90130872.html?viewAll=y