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11 indicted in finance scheme involving California charter schools

May 29, 2019
Leaders of the A3 Education charter management firm, along with some school administrators, are accused of misusing millions of public dollars.

Eleven people have been indicted on charges of conspiracy, personal use of public money without legal authority, grand theft and financial conflict of interest in connection with a network of California charter schools.

The Los Angeles Times reports that at the center of the allegations are leaders of the charter school management corporation A3 Education, whose leaders control 13 charter schools in California.

The indictment says that A3’s chairman, Sean McManus, and president, Jason Schrock, essentially owned and operated the charter schools at the same time that A3 contracted with those schools.

Prosecutors allege that McManus and Schrock operated multiple businesses that charged their own charter schools millions of dollars for services. Then they channeled money from those businesses into their own charitable trust and personal bank accounts.

A3 Education and the businesses affiliated with McManus and Schrock together have invoiced at least $83.3 million from the 13 charter schools, according to the indictment.

From the affiliated businesses, at least $8.18 million went into personal bank accounts, some in Australia, and into charitable trust accounts for McManus, Schrock and their wives, and $500,000 went to a family member of McManus. McManus and Schrock also used $1.6 million of A3 Education’s funds to buy a private residence for McManus in San Juan Capistrano, the indictment states.

Also, according to the indictment, six people, including McManus and Schrock, conspired to collect state money for students who were listed as being enrolled in Valiant charter schools, but were not receiving services.

The Valiant schools — Valiant Academy of Southern California, authorized by the Dehesa School District in El Cajon, and Valiant Academy of Los Angeles, authorized by the Acton-Agua Dulce Unified School District — also were run by McManus and Schrock.

In light of the indictments, the two Valiant schools are now set to permanently close on June 30. In addition to McManus and Schrock, the list of indicted defendants includes Valiant’s Head of School Justin Schmitt.

James Konantz, interim CEO at A3 Education, posted a message on the firm's website stating that  "a new A3 leadership organization is in place and is preparing to close out the current school year and is ready to support all schools for the 2019-20 school year. Additionally, the organization is undergoing significant changes in culture that will be apparent over the next sixty days. We are putting in place internal controls to assure that A3 and its partner schools operate squarely within the confines of the law."

Also among the indicted is Steven Van Zant, a former Mountain Empire Unified superintendent who three years ago pleaded guilty to violating conflict-of-interest laws after he brokered deals with charter schools to operate in other school districts.

Also indicted is Nancy Hauer, the superintendent of Dehesa School District, which authorized several charter schools, including Valiant Academy of Southern California.

In an email statement, Dehesa Board President Cynthia White said: “The Dehesa School District is not in a position to comment on the substance of this matter, as the nature of the criminal charges against Superintendent Hauer have not been made public. The Board of Education was stunned to learn about the charges, and we have engaged legal counsel to review this matter and any possible implications for district operations.”

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