$2.7 MILLION IS MISSING AT CHARTER: L.A. Unified moves to close charter school over alleged misuse of funds.

Audit discloses alleged financial misconduct.

District’s Inspector General has complicated relationship with school.

An audit finds that the founding principal at NEW Academy Canoga Park allegedly misused or misappropriated money, depositing funds into an Ameritrade account and claiming payments to a nonexistent company.

By Howard Blume, Los Angeles Times

August 31, 2010 - Los Angeles schools Supt. Ramon C. Cortines has moved to shut down a San Fernando Valley charter school over the alleged theft or misuse of as much as $2.7 million by the school's founding principal.

The problems at NEW Academy Canoga Park turned up in an audit released Monday by the inspector general's office of the Los Angeles Unified School District.

More than "$2 million of misappropriated and unaccounted public funds is egregious," Cortines wrote in a letter to the board of the school. "Students have been inexcusably deprived of funds that were designated solely to further their education."                 >>>continues after jump>>>

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additional coverage

AUDIT: Principal of Canoga Park charter accused of misusing $2.7 million.

Contra Costa Times [Daily News] - Connie Llanos – 31 Aug

Los Angeles Unified officials said they might revoke the school's charter as a result of the audit. In addition to the money he deposited in his Ameritrade ...

LAUSD audit finds $2.7M fraud at Canoga charter

89.3 KPCC – 30 Aug

Los Angeles Unified School District auditors accused administrators of a Canoga Park charter school of gross mismanagement and fraud that could total nearly ...

from the LAUSD’S Inspector General’s website

Audit Report: NEW Academy of Canoga Park Elementary (Charter) School

This report contains the results of our audit of NEW Academy of Canoga Park Elementary (Charter) School (“NACP”). NEW Academy of Canoga Park Elementary School is a charter school located in Los Angeles, California that serves students from kindergarten through fifth grade. This audit was requested by the President of the NACP Board.           Document OA 10-432   Published August 18, 2010

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As a charter school, NEW Academy is governed by its own board of directors, independent of L.A. Unified, which authorized the school. Los Angeles has more charters, public schools that are independently run, than any school district in the nation.

Virtually no local charter schools have been forcibly shut down by the district, although several have closed after officials failed to renew an expiring charter agreement, which typically lasts three to five years.

The elementary school of about 500 students faces a charter revocation hearing. The chairwoman of the school's board contends that NEW Academy should survive because students are thriving.

Although the school's scores are still in the lowest 30% of schools statewide, according to last year's data, its students' gains on standardized tests have been among the region's strongest each of the last three years.

"It is clear that our school has been a victim of fraud," board chair Maggie Cervantes said in a statement. "The school is taking aggressive and necessary steps to recover its assets and work to successfully resolve this issue. These steps have included terminating the employment of the former principal of the school."

The former principal, Edward Fiszer, could not be reached for comment. Although not identified by name in the published audit, Fiszer was the target of the inquiry, officials confirmed.

NEW Academy Canoga Park opened in 2005 as an unusual example of public-private collaboration using school bonds and other funding sources to combine a new school with low-income housing.

The school's visible face, Fiszer, the author of three education and motivational books, was once honored as a "Champion of Children" in a City Hall ceremony.

Among the auditors' findings is that Fiszer allegedly withdrew cashier's checks totaling nearly $1.1 million from school accounts between July 1, 2007, and Sept. 30, 2009.

"The former principal claimed that funds deposited into his personal Ameritrade account were not withdrawn, but were deposited and repeatedly lost," the auditors wrote, apparently as a result of unsuccessful investments.

One cost questioned by auditors was $62,247 paid to a company called Burgundy Bunny for science enrichment for fourth- and fifth-graders over a six-week period. "We performed an Internet search to verify the validity of the vendor," auditors wrote. "We noted that the address and phone number were invalid. The address shows as a vacant lot. In addition, the business entity name does not exist."

Auditors also allege that the principal paid a former teacher — who at some point married the principal — $129,450 for services as a grant writer, although a company was already being paid for grant writing.

The audit included a harsh assessment of the oversight by the charter's governing board and the outside company that provided accounting services.

Handling the audit became complicated because the school system's interim inspector general is a member of the board of directors of the charter's founding organization. Jess Womack is board secretary of New Economics for Women, whose acronym, NEW, is part of the school's name. Womack, a retired L.A. Unified attorney, recently rejoined the school system as inspector general. Womack recused himself from dealing with this audit, district officials confirmed.

The charter has a board of directors separate from New Economics, but there's overlap: Cervantes is executive director of New Economics and Loyola Marymount University Assistant Dean Marta Sanchez serves on both boards. A second NEW Academy operates near downtown.

The Los Angeles County district attorney's office said it hasn't yet received the audit for review for potential prosecution.

The school becomes the second San Fernando Valley charter school facing allegations of impropriety. The founders of Ivy Academia face felony charges related to co-mingling private and public accounts. They have denied wrongdoing.