CHARTER SCHOOLS MUST NOW COMPLY: Principal confesses fraud to board member

Written by Andres Chavez,  San Fernando Valley Sun Staff Reporter

Thursday, 2 September 2010  -- The Los Angeles Unified school board Tuesday unanimously approved new regulations intended to tighten the district's oversight of charter schools.

The new rules cover the approval and renewal of the independent schools and the procedures for shutting them down if they miss academic benchmarks, engage in fraud, or are fiscally irresponsible.

California law gives charter schools a great deal of autonomy.

But LAUSD Superintendent Ramon Cortines said having clear rules would help effective charters run better and help the district identify problems with less effective schools sooner.

The Board's action was prompted by two sets of allegations of mishandling of funds at San Fernando Valley charter schools. In the first, Ivy Academia, which runs four campuses in the west San Fernando Valley, was charged with 38 counts of fraud and misuse of public funds two months ago.

But what really lit the fire under the Board was the revelation Monday by the LAUSD's Office of Inspector General (OIG) alleging Edward Fiszer, the former principal of NEW Academy Canoga Park, mishandled $2.7 million in public funds, including transferring $1.1 million in school funds into a personal investment account to speculate on the financial market and another million in questionable expenses.

The odd thing about the investigation is that the apparent fiscal misdealing came to light because Fiszer couldn't keep the alleged misdeeds to himself. "It was kind of bizarre.

I asked the OIG office if this was a random audit," said Robert Alaniz, Director of Communications for LAUSD.

"They said 'No, it was brought to our attention by the Board.' Apparently this guy, the former principal, decided he was going to confess to a board member.

Of course, that started the chain (of investigations) rolling." Some of the charges of fraud contained in the OIG report include:

• Withdrawal of funds by NACP's former principal in the form of cashier's checks totaling $1,073,700, which were deposited into the principal's personal investment account.

• Los Angeles County of Education (LACOE) revenue checks totaling $106,351.73 for average daily attendance (ADA) apportionment were untraceable to any of NACP's accounts.

• Use of Professional Services/Consultants for "Related Party Transaction" in the amount of $129,350.

• Use of Professional Services/Consultants without a valid contract in the amount of $400,410.

One of the companies that were supposed to have done school programming didn't exist. There was no phone number or website listed for the company, and the address turned out to be an empty lot.

Superintendent Cortines, in a formal letter dated August 27, 2010, and in compliance with statutory requirements, initiated Charter revocation proceedings against NEW Academy. A public hearing is being scheduled.

Cortines also wants NEW Academy to take the following steps (this is only a partial listing) within the next 45 days:

• Restructure the NACP board of directors, select at least two new financially experienced board members, and train board members in fiduciary responsibility, especially in the oversight of public dollars.

• Implement all of the OIG recommendations within six weeks of the date of this letter.

• Submit the following items for review:

• A framework for proper fiscal oversight of public dollars, including, but not limited to, updated fiscal and accounting policies and controls;
• Evidence of a new back office provider and CPA firm.

Maggie Cervantes, Chairperson for the Board of Directors for New Academy of Canoga Park, responded in a written statement on August 30, 2010:

"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 school also filed criminal charges against the former principal, who is the subject of continued investigation by legal authorities.We will work closely with the LAUSD to implement the recommendations in today's Audit Report, and do not expect any interruption of operations at the school."

According to Alaniz, if the school meets the requirements set out by the district, things should work out. "Our end game is not to shut them down but rather to get them in conformance with business practices that are for the best interest for the kids, the parents and, obviously, the school."

Fiszer seems to have disappeared. One news organization reported that he had left the state.