A grand jury in San Diego has indicted 11 people connected with 13 California charter schools, including Valiant Preparatory Academy, an online high school chartered by the Acton-Agua Dulce Unified School District, on multiple criminal charges.
Sean McManus, 46, Jason Schrock, 44, the CEO and president of A3 Education, which operates Valiant Academy, and nine co-defendants were charged with conspiracy, misappropriation and personal use of public money, financial conflict of interest and grand theft, San Diego County District Attorney Summer Stephan announced Wednesday.
McManus, an Australian, and Schrock, his Long Beach-based business partner, allegedly schemed to set up online charter schools for small school districts as a way for the districts to earn additional public funding, and defrauded California of $50 million in education funds, according to the indictment.
The two men also allegedly schemed to use bogus summer-school enrollments in the online schools that would boost the number of students enrolled and generate additional state funding that A3 Education collected.
Stephan said about 40,000 California students were enrolled in the charter schools as part of the scheme.
According to the indictment, A3 and other businesses affiliated with McManus and Schrock invoiced the 13 charter schools involved for at least $83.3 million, while the two men funneled public money into personal bank accounts and charitable trust accounts they controlled.
“These defendants engaged in a devious, systemic public corruption scheme on the backs of students, their parents and the public that over time diverted millions of taxpayer dollars into their own pockets,” Stephan said of the allegations.
If convicted, McManus and Schrock each face up to 40 years in state prison. Sentences for the other nine defendants if convicted could range from 4-11 years.
The San Diego County DA said her office investigated the case for a year, and more than 70 witnesses testified before the grand jury, which returned the 235-page indictment May 17.
A3 Education charter schools involved in the case included Valiant Academy schools in San Diego, Los Angeles and Santa Barbara; four CA STEAM campuses in San Bernardino, Sonoma and Santa Barbara; four Uplift California schools; the California Academy of Sports Science in Fresno; California Vanguard Fresno; three University Prep schools; and two California Prep schools.
Authorities expect all three Valiant Academy schools to close following the indictments. The Los Angeles Times reports the closing date is June 30.
On Wednesday afternoon, San Diego Judge Michael Smyth issued a $5 million bench warrant for McManus, believed to be in Australia but the owner of a California home he bought with proceeds from the scheme, Deputy DA Leon Schorr said. Schrock, who faces 62 charges, pleaded not guilty to all, and Smyth set his bail at $1.5 million.
The A3 Education indictments follow the closing of the Albert Einstein Academy for Letters, Arts and Sciences charter school in April 2018, though there’s no connection other than both schools were chartered by the Acton-Agua Dulce Unified School District.
Around 2015, according to Berkeleyside.com, the Los Angeles Unified School District sued the McManus-controlled Academy of Arts and Sciences, a traditional grades 9-12 high school also authorized by the AADUSD but located in Encino, for failing to provide mandatory notice to the district of its intent to open schools inside LAUSD boundaries. The case was reportedly settled, and McManus had to close three schools in June 2016.
According to CALMatters, suffered a loss in enrollments and subsequent state funding over a decade-long period, so the AADUSD began authorizing charter schools in a bid to collect additional oversight fees.
The district authorized as many as two dozen charter schools, many of which were located outside the district’s boundaries.
That prompted a legislative response, Assembly Bill 1507, co-authored by Assemblywoman Christy Smith, D-Agua Dulce. If passed, the bill would require brick-and-mortar schools to be located and operate within the same district that authorizes the school. (As a virtual school, Valiant would not fall under the proposed legislation.)
Read the complete indictment here.