United States Attorney Zane David Memeger indicted former school principal Dorothy June Hairston Brown and four others on charges that she orchestrated a scheme that bilked more than $6.5 million from the three area charter schools she founded.
Brown, 75, founded charter schools The Laboratory, Ad Prima and Planet Abacus, and was influential in the creation of Agora Cyber Charter School. Investigators with the Justice Department and Board of Education have targeted Brown’s dealings with each of her schools, along with the dealings of Brown’s private management firms, Cynwyd and AcademicQuest.
“Public education is a cornerstone of American life, which has provided many with the tools for future success,” said Memeger. “As our public schools are funded through dollars earned by hard working Americans, there is a reasonable expectation that their tax dollars will be used to actually educate students. The indictment in this case alleges that June Brown and her four co-conspirators used the charter school system to engage in rampant fraud and obstruction. My office will continue to vigorously investigate and pursue those charter school operators who defraud the taxpayers and deprive our children of funds for their education.”
The 64-count indictment contends that Brown, along with charter school executives Joan Woods Chalker, Michael A. Slade Jr., Courteney L. Knight and Anthony Smoot of running the scheme. The four will also be charged with conspiring with Brown to obstruct justice; the indictment covers the dealings of Brown and her four codefendants from 2007 through 2011.
According to the United States Attorney’s Office for the Eastern District of Pennsylvania, the charges of wire fraud, obstruction of justice and witness tampering each carry a maximum possible sentence of 20 years in prison. The charges of conspiracy each carry a maximum possible sentence of five years in prison. If convicted, Brown, Chalker, Slade, Knight and Smoot all face substantial terms of imprisonment and significant fines and other financial penalties.
The indictment alleges that Brown used her management companies to defraud the schools; specific attention is paid to the $5.6 million Brown caused Agora to pay to Cynywd for management contracts that didn’t exist. The indictment contends that Agora’s board of trustees was unaware of Brown’s actions.
Further, the indictment alleges that Brown and Chalker, who was the CEO of Planet Abacus, caused Planet Abacus to make fraudulent payments to AcademicQuest totaling more than $700,000 under other fabricated contracts that had never been approved by the Planet Abacus board of trustees.
Memeger’s indictment also claims that Brown fabricated documents, including contracts and board meeting minutes to make it appear that these schools signed off on the Brown-fueled payments; that Brown and her cohorts received unauthorized payments of more than $160,000 from an Angora account in June 2007; that Brown twice ordered payments of $37,000 from a Laboratory account to an employee she hired to work at Cynwyd and that as recently as April, Brown allegedly engaged in witness tampering as Brown tried to prevent the witness from identifying forged signatures on a backdated and fabricated contract between Planet Abacus and AcademicQuest.
Brown could not be reached for comment. Her lawyer, Gregory P. Miller, was also unavailable for comment, but has defended Brown’s track record to the media and hailed her as a nationally respected pioneer in education.
“The School District of Philadelphia will review the indictment from the U.S. Attorney and determine the appropriate course of action. We are very concerned about allegations of financial wrongdoing involving certain charter schools reportedly associated with Dorothy June Brown. The School District will appropriately review and investigate,” said School District of Philadelphia general counsel Michael A. Davis, throwing into doubt the survival of the three schools Brown chartered. “We have asked Michael Schwartz of Pepper Hamilton to assist the Office of the General Counsel in conducting an investigation into the allegations, and advice on any future course of action that may be warranted. In the meantime, pending renewal decisions on any charter school alleged by the indictment to be associated with Ms. Brown will be placed on hold.”
Currently, all three schools remain on the district’s 2012–2013 charter school directory, and each has a new CEO in place.
Investigators had strong words for Brown and her associates.
“Charter schools are funded with public money that is intended to help educate children in our communities,” said Special Agent-in-Charge George C. Venizelos of the Philadelphia Division of the FBI. “When individuals misappropriate those funds, as this indictment today alleges, they trade our children’s education and our children’s future for their own illegal profit.”
Special Agent-in-Charge Steven Anderson, of the U.S. Department of Education’s Office of Inspector General’s Mid-Atlantic Regional office which also assisted the investigation, said the indictment shows that “these school officials chose to line their own pockets with federal education dollars instead of using those funds for the intended purpose — educating the students they promised to serve.”
“That is unacceptable,” Anderson said via a statement released by the U.S. Attorney’s Office. “OIG will continue to investigate allegations of fraud to help ensure that education funds reach the intended recipients and protect these vital dollars from such calculated plunder. America’s students and taxpayers deserve nothing less.”