On June 27, 2014, Jose Cole Gutierrez, the Director of Charter Schools for the Los Angeles Unified School District sent a letter to Magnolia Schools Board President Umit Yepenel and Magnolia Schools CEO Mehmet Argin informing them that the LAUSD was shutting down two of their charter schools, Magnolia Science Academies 6 & 7, effective July 1, 2014.
The reasons for denying the charter school renewals were copious, wide-ranging, and resulting from a state audit. Some of the reasons included failure to follow GAAP accounting standards, and weak fiscal accounting. According to the audit report, despite declaring a surplus of funds in their Magnolia March 4, 2014 Board Meeting – the schools were in fact -- and according to IRS standards -- actually insolvent.
But one of the more fascinating findings was the “questionable expense transactions,” that involved $206,489.00 of tax payer funds being shelled out for immigration expenses at Magnolia 6. Interestingly, the audit found that 6 out the 9 immigrants that were benefactors of those paid immigration expenses were not actual employees of Magnolia 6 at the time. Now that seems like a clear case of immigration and tax payer fraud to me – but then – that’s for the feds to decide, and the tax payers who unwittingly funded this folly.
The audit also cited payroll accounting irregularities and Principals requesting cash reimbursements for “day laborers,” which is of course somewhat unethical and probably illegal according to public school expenditure standards and guidelines.
Since all 140 of the Gulen “inspired” and American tax funded charter schools are run in the same cookie cutter fashion, it only makes sense that if other state auditors actually started investigations into these schools that they would find similar if not carbon copy findings. So it begs the question – why haven’t the state auditors conducted audits?
Below is a blog by Annie Gilberston published on July 21, 2014 detailing some more specifics of the audit, and likewise there are two links supplied by Sharon Higgins that contain the full audit report and subsequent letter to Magnolia’s administrators:
http://www.scpr.org/blogs/education/2014/07/21/17031/audit-finds-missing-misused-funds-at-la-charter-ne/
Charter schools: Audit finds missing, misused funds at LA network
Annie Gilbertson
July 21, 2014
The Los Angeles Unified school district is investigating a network of eight charter schools for misuse of public school funds.
An audit showed Magnolia Public Schools used classroom cash to help six non-employees with immigration costs. The schools had trouble justifying another $3 million expense.
"These are taxpayer dollars, and we want to make sure they are spent correctly," said José Cole-Gutiérrez, director of L.A. Unified's charter school division.
A June audit, which the district is calling a "forensic review," revealed $2.8 million flowed from schools sites to the network’s management organization in the form of sloppy loans - much of which were never paid back. The management organization was then found to be operating on a $1.7 million deficit, meeting the IRS's definition of insolvent.
Magnolia did not return calls for comment.
Charter schools get taxpayer dollars just like traditional public schools, though opponents complain the financial independence and lax oversight of charters makes it easy to embezzle funds. Charter school supporters point out fewer than 2 percent of charter schools statewide close for fiscal reasons.
Ken Bramlett, L.A. Unified’s inspector general, said there is evidence some members of Magnolia Public schools had ties to a Turkish group under investigation in other states for questionable use of the U.S. visa program as well as misspending public funds.
According to the New York Times, Gulen followers, named after the Turkish preacher Fethullah Gulen, set-up several charter schools around the country, bringing in staff from Turkey and supporting Turkish vendors with lucrative contracts, from construction to school lunches and uniforms.
For years, the Magnolia’s books and bank account didn't match.
An audit in 2012 based on a sampling of transactions found $43,600 missing from accounts: school records showed double payments made to vendors with duplicate invoices attached.
"There was an increased risk of inappropriate or unauthorized expenditures to remain undetected and a potential risk of fraud, abuse and misuse of public funds," read the 2012 report.
L.A. Unified officials have refused to release the follow-up audit concluded in June 2014.
Association spokesman Jason Mandell wrote in a statement. He complained that L.A. Unified has not released the 2014 audit.
“State law also does not allow the district to conditionally renew a charter, let alone rescind that renewal without presenting its findings or providing the school with the opportunity to correct any issues,” he added.
Last fall, the group stood behind San Fernando Valley charter school administers facing trail for embezzlement and money laundering. Yevgency "Eugene" Selivanov, founder of Ivy Academia Charter School, was then convicted and sentenced to almost five years in prison.
Below are the links provided by Sharon Higgins of The Perimeter Primate blog website:
http://www.scribd.com/doc/114358410/LAUSD-Audit-of-MSA123-Aug-2012
http://www.scribd.com/doc/233404441/Report-of-audit-from-LAUSD-to-Magnolia-Science-Academy-outlining-fiscal-audit
The reasons for denying the charter school renewals were copious, wide-ranging, and resulting from a state audit. Some of the reasons included failure to follow GAAP accounting standards, and weak fiscal accounting. According to the audit report, despite declaring a surplus of funds in their Magnolia March 4, 2014 Board Meeting – the schools were in fact -- and according to IRS standards -- actually insolvent.
But one of the more fascinating findings was the “questionable expense transactions,” that involved $206,489.00 of tax payer funds being shelled out for immigration expenses at Magnolia 6. Interestingly, the audit found that 6 out the 9 immigrants that were benefactors of those paid immigration expenses were not actual employees of Magnolia 6 at the time. Now that seems like a clear case of immigration and tax payer fraud to me – but then – that’s for the feds to decide, and the tax payers who unwittingly funded this folly.
The audit also cited payroll accounting irregularities and Principals requesting cash reimbursements for “day laborers,” which is of course somewhat unethical and probably illegal according to public school expenditure standards and guidelines.
Since all 140 of the Gulen “inspired” and American tax funded charter schools are run in the same cookie cutter fashion, it only makes sense that if other state auditors actually started investigations into these schools that they would find similar if not carbon copy findings. So it begs the question – why haven’t the state auditors conducted audits?
Below is a blog by Annie Gilberston published on July 21, 2014 detailing some more specifics of the audit, and likewise there are two links supplied by Sharon Higgins that contain the full audit report and subsequent letter to Magnolia’s administrators:
http://www.scpr.org/blogs/education/2014/07/21/17031/audit-finds-missing-misused-funds-at-la-charter-ne/
Charter schools: Audit finds missing, misused funds at LA network
Annie Gilbertson
July 21, 2014
The Los Angeles Unified school district is investigating a network of eight charter schools for misuse of public school funds.
An audit showed Magnolia Public Schools used classroom cash to help six non-employees with immigration costs. The schools had trouble justifying another $3 million expense.
"These are taxpayer dollars, and we want to make sure they are spent correctly," said José Cole-Gutiérrez, director of L.A. Unified's charter school division.
A June audit, which the district is calling a "forensic review," revealed $2.8 million flowed from schools sites to the network’s management organization in the form of sloppy loans - much of which were never paid back. The management organization was then found to be operating on a $1.7 million deficit, meeting the IRS's definition of insolvent.
Magnolia did not return calls for comment.
Charter schools get taxpayer dollars just like traditional public schools, though opponents complain the financial independence and lax oversight of charters makes it easy to embezzle funds. Charter school supporters point out fewer than 2 percent of charter schools statewide close for fiscal reasons.
Ken Bramlett, L.A. Unified’s inspector general, said there is evidence some members of Magnolia Public schools had ties to a Turkish group under investigation in other states for questionable use of the U.S. visa program as well as misspending public funds.
According to the New York Times, Gulen followers, named after the Turkish preacher Fethullah Gulen, set-up several charter schools around the country, bringing in staff from Turkey and supporting Turkish vendors with lucrative contracts, from construction to school lunches and uniforms.
For years, the Magnolia’s books and bank account didn't match.
An audit in 2012 based on a sampling of transactions found $43,600 missing from accounts: school records showed double payments made to vendors with duplicate invoices attached.
"There was an increased risk of inappropriate or unauthorized expenditures to remain undetected and a potential risk of fraud, abuse and misuse of public funds," read the 2012 report.
L.A. Unified officials have refused to release the follow-up audit concluded in June 2014.
Association spokesman Jason Mandell wrote in a statement. He complained that L.A. Unified has not released the 2014 audit.
“State law also does not allow the district to conditionally renew a charter, let alone rescind that renewal without presenting its findings or providing the school with the opportunity to correct any issues,” he added.
Last fall, the group stood behind San Fernando Valley charter school administers facing trail for embezzlement and money laundering. Yevgency "Eugene" Selivanov, founder of Ivy Academia Charter School, was then convicted and sentenced to almost five years in prison.
Below are the links provided by Sharon Higgins of The Perimeter Primate blog website:
http://www.scribd.com/doc/114358410/LAUSD-Audit-of-MSA123-Aug-2012
http://www.scribd.com/doc/233404441/Report-of-audit-from-LAUSD-to-Magnolia-Science-Academy-outlining-fiscal-audit
