Ex-Oakland charter schools director charged with grant application fraud, money laundering

Ex-Oakland charter schools director charged with grant application fraud, money laundering
Ex-Oakland charter schools director charged with grant application fraud, money laundering

OAKLAND — Ben Chavis, the controversial former director of three Oakland charter schools, collectively known as the American Indian Model Schools, was charged with mail fraud and money laundering in connection with the schools’ applications for federal grant funds, federal authorities announced Thursday.

Chavis was arrested Thursday morning in North Carolina and has been ordered to appear in federal court in Oakland. He is accused of requesting more than $2.5 million of federally funded grants in violation of conflict-of-interest rules.

This is not the first time Chavis has been targeted for financial impropriety. In 2012, an investigation by the state Fiscal Crisis and Management Assistance Team found that from 2007 to 2011, Chavis had directed $3.8 million from the school to companies he owned for contracts not approved by the school board. He stepped down from the school in 2013. The investigation’s findings prompted the county superintendent to refer the case to federal authorities.

According to the indictment announced Thursday, Chavis, 59, of Lumberton, N.C., and others devised and put into place a scheme from early 2006 through May 2012 to defraud the California School Finance Authority by requesting federally funded competitive grants for three charter schools in violation of federal conflict-of-interest regulations.

From 2000 to 2012, Chavis served off and on as the director and in various additional capacities for three Oakland charter schools — the American Indian Public Charter School, the American Indian Public High School II  and the American Indian Public High School — as well as the schools’ umbrella organization, the American Indian Model Schools, referred to as AIMS.

The indictment, unsealed Thursday, alleges Chavis applied for grants to pay the costs of leasing facilities that he owned or controlled through his companies — American Delivery Systems and Lumbee Properties LLC.  He is accused of concealing his interest in the facilities in the grant applications.

The indictment further alleges that the schools obtained more than $1.1 million in federal grants as a result of this fraud and that Chavis used fraud proceeds to promote the fraud scheme at each school.

As a result, Chavis is charged with three counts of mail fraud and three counts of promotional money laundering. If convicted, the maximum term of imprisonment for mail fraud is 20 years, and the maximum term of imprisonment for money laundering is 10 years for each count.

The 2012 state investigation looked into allegations of operational fraud and other unscrupulous activity by Chavis — and his wife, who provided financial services to the school. It found numerous examples of financial conflicts of interest and fraudulent expenditures, including a $100,000 salary he took during at least one year of his retirement. The audit also found that between mid-2007 and the end of 2011, the school paid Chavis, his wife, Marsha Amador, and their various real estate and consulting businesses about $3.8 million, much of which came from money obtained from state and federal facilities grants. And the school’s weak governing board also did little to stand in the way, auditors found.

But despite the Oakland school board’s attempt to revoke the charter in 2013, an Alameda County judge ruled that the high-performing Oakland charter school could stay open because the district failed to consider academic performance as the most important factor in revoking the charter as required by state education law.

At the time, American Indian Model’s middle schools had at the time the best test scores in Oakland and among the highest in the state; its high school also had near-perfect scores. The schools have since distanced themselves from Chavis with new leadership and purchasing one of the school buildings from him.

Chavis was released on a personal recognizance bond and was ordered to make his initial appearance in the Oakland Courthouse of the Northern District of California before U.S. District Judge Haywood S. Gilliam on or before April 14.

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