Pennsylvania charter school owner stole $1 million from his school

by David Safier

If this were a random theft by one bad actor, I wouldn't be writing about it. But one of the dirty little secrets — not much of a secret, actually, and not so little — is that there are all kinds of ways, legal and illegal, to profit from taxpayers' money when it flows to charter schools. The prefered method: set up a company that sells goods and services to charters at inflated prices.

Nicholas Trombetta created Pennsylvania Cyber Charter School, which brought in $100 million in taxpayer dollars in 2012 to educate 10,000 students. According to a grand jury, he set up dummy companies, diverting about a million dollars for his own personal use.

Mr. Trombetta, the grand jury said, used diverted funds to pay for houses, a Florida condominium and a $300,000 twin-engine plane as well as more mundane items such as groceries and restaurant tabs.

The indictment alleges that the former wrestling coach and school superintendent formed businesses that billed for doing no work; masked his control of a corporation by naming straw owners; hid income from the IRS; took $550,000 in kickbacks on a laptop computer contract with Virginia-based NCS Technologies Inc.; and even "caused" employees to make $40,000 in individual payments to his favored political candidates before reimbursing them through one of his companies.

Lax oversight of charters is one reason this kind of misuse of government funds is so common. Arizona compounds the problem by allowing its charters to use no bid contracts, unlike school districts which are required to take bids on large contracts. Another reason this kind of profiteering is so easy is that charters often take the money they get from the state and send most of it up to CMOs — Charter Management Organizations — which are basically in charge of the schools. There's very little accountability for that money once it leaves the schools.

A WE-DON'T-KNOW-HOW-BASIS-SPENDS-ITS-MONEY NOTE: I have no reason to believe that BASIS charter schools are scamming the state. But if they are, there's no easy way for me — or the state of Arizona — to find out.

BASIS schools are nonprofits, which means their tax forms are public, so there's a certain amount of transparency about where their money goes. But about 70% of their taxpayer funding flows up to BASIS.ed, the for-profit CMO that runs the schools. For-profits don't have to disclose how they spend their money. For instance, we know that the BASIS founders, Michael and Olga Block, together made as much as $315,000 a year when they headed the nonprofit. We also know Olga Block's sister, who was living in the Czech Republic at the time, made $61,000 in 2007 for accounting services. The Blocks' current compensation is unknown, because it's hidden behind the for profit fire wall. And if they're wasting or misusing or misappropriating some of the taxpayer money that's funneled up to BASIS.ed, we have no way of finding out.