THE UNITED STATES ATTORNEY'S OFFICE
EASTERN DISTRICT of PENNSYLVANIA
Charter School Founder Charged In $6 Million Fraud Scheme
FOR IMMMEDIATE RELEASE
July 24, 2012
PHILADELPHIA – Dorothy June Brown, 75, of Haverford, Pennsylvania, was charged today by indictment with defrauding three charter schools of more than $6.5 million between 2007 and April 2011. Charged with Brown, in a 62-count indictment, are four current and former charter school executives: Joan Woods Chalker, 74, of Springfield, Pennsylvania, Michael A. Slade, Jr., 31, of Philadelphia, Pennsylvania, Courteney L. Knight, 64, of King of Prussia, Pennsylvania, and Anthony Smoot, 49, of New Castle, Delaware. The four executives are charged with conspiring with Brown to obstruct justice. The indictment was announced by United States Attorney Zane David Memeger, FBI Special Agent-in-Charge George C. Venizelos, and Department of Education Special Agent-in-Charge Steven Anderson with the Office of Inspector General's Mid-Atlantic Regional office. The indictment alleges that Brown used her private management companies, Cynwyd and AcademicQuest, to defraud the Agora Cyber Charter School ("Agora") and the Planet Abacus Charter School ("Planet Abacus") soon after she founded the schools in 2005 and 2007, respectively. Brown is also charged with defrauding the Laboratory Charter School of Communication and Languages ("Laboratory"), a school she founded in 1997.
According to the indictment, Brown caused Agora to make fraudulent payments to Cynwyd totaling more than $5.6 million under a fabricated management contract that had never been approved by the Agora board of trustees. Similarly, 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. In executing the schemes, it is alleged that Brown caused the creation of false documents, including false board meeting minutes, and fabricated contracts to falsely make it appear as if the boards of the schools had held meetings to discuss and authorize contracts with Brown's private companies. The indictment further charges that Brown caused signatures on the contracts to be forged and caused the contracts to be backdated. It is alleged that, in many instances, the individuals whose names Brown caused to be listed as members of the school boards in question never actually served on the boards. It is further alleged that Brown caused over $160,000 in unauthorized payments to be paid to her and others from an Agora bank account in June 2007 and that she caused approximately $37,000 in fraudulent payments to be paid from a Laboratory account, in 2008 and 2009, to an employee she hired to work for Cynwyd.
In addition, all of the defendants are charged with conspiring to obstruct justice from August 2008 through April 2012. The indictment alleges they altered, destroyed and falsified a large number of documents, including contracts, financial records, board meeting minutes, board resolutions and an extensive number of other records belonging to the schools and Brown's private companies, after federal grand jury subpoenas for records were served in 2008. The indictment alleges that Brown recruited others to join the conspiracy by rewarding them with high level administrative positions at the charter schools she controlled, by causing them to be paid high salaries, and by enabling them to use school funds and resources for their own personal benefit. In one instance, it is alleged that Brown permitted her great nephew, Michael Slade, who was an employee of Laboratory at the time, to spend over $40,000 of funds belonging to Main Line Academy, a private school founded and controlled by Brown, on a truck for Slade's own personal use. Brown allegedly later caused Slade to be named Acting CEO of another school she founded, the Ad Prima Charter School ("Ad Prima), and then to be named as CEO of Laboratory. The indictment alleges that Brown also caused Knight to be named as CEO of Ad Prima, and that she hired Smoot to be the business manager for all of the schools she controlled.
In April 2012, Brown allegedly engaged in witness tampering by attempting to prevent a witness from informing law enforcement officers that signatures had been forged on a backdated, fabricated contract between Planet Abacus and AcademicQuest.
"Public Education is a cornerstone of American life which has provided many with the tools for future success," said U.S. Attorney Zane David 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."
"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."
"Today's indictment alleges 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," said Special Agent-in-Charge Steven Anderson, of the U.S. Department of Education's Office of Inspector General's Mid-Atlantic Regional 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."
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 5 years in prison. If convicted, Brown, Chalker, Slade, Knight and Smoot all face substantial terms of imprisonment and significant fines and other financial penalties.
This case was investigated by the Federal Bureau of Investigation and by the United States Department of Education - Office of Inspector General. It is being prosecuted by Assistant United States Attorney Anthony Kyriakakis.
An Indictment or an Information is an accusation. A defendant is presumed innocent unless and until proven guilty.
UNITED STATES ATTORNEY'S OFFICE, EASTERN DISTRICTof PENNSYLVANIA
Suite 1250, 615 Chestnut Street, Philadelphia, PA 19106
PATTY HARTMAN, Media Contact, 215-861-8525