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OIG: Office of Inspector General
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Investigative Reports

FOR IMMEDIATE RELEASE:
October 20, 2004

U.S. Department of Justice
United States Attorney
District of Minnesota

Thomas B. Heffelfinger, United States Attorney
(612) 664-5600
Karen Bailey, Media Coordinator
(612) 664-5610

Former Owners of Right Step Academy Indicted

Minneapolis - The former owners of Right Step Academy, a St. Paul nonprofit charter school whose charter has been revoked, appeared today in federal court on charges of defrauding the school and using the fraudulently obtained funds to finance their lifestyle.

William Pierce, age 45, and his wife, Shirley Pierce, age 45, both from Minneapolis, were charged in a sealed indictment returned by a federal grand jury on October 6, 2004 with one count of conspiracy, three counts of filing false tax returns, four counts of mail fraud, and five counts of wire fraud.

According to the indictment, in 1995, William Pierce obtained a charter from St. Paul Public Schools to open Right Step Academy. Right Step Academy was incorporated as a nonprofit and received most of its income from federal, state, and local education funding programs. William Pierce served as president and director of the school.

In January 1997, Shirley Pierce, a former revenue officer and special agent for the Internal Revenue Service, formed SBP Management, a management support services company that was receiving payments from Right Step Academy. In May 1997, Shirley Pierce also became a paid employee of Right Step Academy in their human resources department, the indictment alleges.

The grand jury alleged in the indictment that in the fall 1997, the Pierces formed another management business, Right Group. In November 1997, while Shirley Pierce was an employee of Right Step Academy, she allegedly proposed to the school that Right Group assume all payroll and human resources support without disclosing to the school's Board that William Pierce had a management and direct financial interest in Right Group.

According to the indictment, during the time the Pierces were employed by Right Step Academy, they diverted substantial amounts of money from the school, either directly or through fraudulent payments, for personal expenditures, including luxury car payments, vacations and cruises, personal real estate, clothing and house furnishings. The Pierces also allegedly diverted money from Right Step Academy to purchase charter schools in North Carolina and Arizona and to purchase homes in both states.

It was further alleged in the indictment that the Pierces substantially under reported their income on federal tax returns by not reporting the value of benefits and monies received from Right Step Academy and Right Group.

If convicted, William and Shirley Pierce each face a maximum potential penalty of five years in prison and/or a $250,000 fine on each count of conspiracy, mail fraud, and wire fraud, and up to three years in prison and/or a $100,000 fine for filing false tax returns. Any sentences would be determined by a judge based on the federal sentencing guidelines.

The case is the result of an investigation by the Internal Revenue Service, Criminal Investigation Division and the Department of Education, Office of Inspector General. Assistant United States Attorneys John Marti and Ann Anaya are prosecuting the case.

Criminal indictments are only charges and not evidence of guilt. A defendant is presumed to be innocent unless and until proven guilty.


 
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Last Modified: 03/03/2005