Management company for Jacksonville charter schools faces charges of fraud, money laundering, white collar crime

A management company operating two charter schools in Jacksonville pleaded not guilty to criminal charges of grand theft, money laundering, fraud and aggravated white collar crime.
The indictments, handed down earlier this month in Escambia County, charge four companies, including Newpoint Education Partners based in Clearwater and three vendor companies working with Newpoint.

The indictments allege the vendor companies — School Warehouse Inc., Red Ignition LLC and Epiphany Management Group — have ties to Newpoint and yet were fraudulently billing a Newpoint-managed school in Pensacola called 21st Century Academy. The alleged fraud amounted to hundreds of thousands of dollars, which ostensibly paid for supplies, equipment and services from 2011 to 2015, the indictment says.

The indictment also says Newpoint and its vendors laundered the proceeds through multiple bank accounts “to conceal criminal activity.”

Newpoint still manages San Jose Academy, a middle school, and San Jose Preparatory High School in Jacksonville. Both charter schools operate in one building totaling 376 students in December. It is unclear if the schools played any role in the activities alleged in the indictment.

Board members for the two schools declined to comment for this story. One hung up the phone when asked if Newpoint appointed the charter schools’ joint board.

Charter schools in Florida are public schools, but they are independent of elected school boards. Because they receive tax funding, districts provide only limited financial oversight.

Proponents of charter schools say they provide educational choice and innovation. But opponents say they siphon away students and tax dollars from school districts, but with less regulation.

According to an Associated Press story in December, the state spent more than $760 million on charter schools since 2000, but $70 million of it went to schools that later closed.

Business documents and news coverage indicate some corporate leaders of Newpoint are linked to the vendor companies. Also, the indictment lists Newpoint and Epiphany Management as operating at the same address in Akron, Ohio, while School Warehouse and Red Ignition are at the same address in Cincinnati.

The allegedly misused money came from federal school grants dispensed by the state to buy supplies, equipment and services to start up new charter schools, the indictment states.

But what is purchased with start-up money for students in Escambia County is supposed to stay there to be used for their education, state education officials said.

CLOSED SCHOOLS

Newpoint has operated 15 charter schools in Florida; six have closed and seven have severed ties with it. The two Duval schools may be among Newpoint’s last.

In Duval, several parents said they are confused about what it all means for their school. Neither San Jose High nor San Jose Prep are specifically mentioned in the indictment.

Both schools are involved in a continuing investigation into Newpoint’s financial practices, said Russell Edgar, Escambia’s assistant state attorney.

“We’ve requested their records and we’re looking into all their charter schools,” Edgar said. “We’ve requested the receipts for all their schools in Florida for review.”

David L. McGee, a Pensacola attorney representing Newpoint, said it’s hard to tell from the indictments exactly what his corporate client is accused of doing. He noted that the indictment lists only the companies, not their executives.

He said he has asked for a jury trial and requested discovery from the prosecution to ascertain specifics of the charges and what evidence they’ve obtained.

“At this point I don’t know what the allegations are,” he said. “We’re unaware of any wrongdoing on the part of our client.”

Newpoint has struggled throughout Florida to keep its schools open and sometimes it lost.

This month, the Pinellas County School Board voted 7-0 to start the 90-day countdown to close three Newpoint-run schools for “financial deterioration.” Those schools serve about 1,000 students.

Last year, the charter school boards running three Newpoint schools in Escambia County closed them after allegations of grade tampering, inappropriate conduct by teachers and misuse of funds arose. Also Escambia County’s School Board revoked the charters of the three schools, which had about 350 students.

In 2014, a pair of Newpoint schools closed in Sunrise after just two weeks of operation. And in 2013 Newpoint elected not to fight to keep a school open in Hillsborough County when that county’s School Board voted to close it.

JACKSONVILLE SCHOOLS

The San Jose charter schools opened in Jacksonville in 2013, and their contracts expire in 2018.

Both schools earned F’s in 2014, while schools around them earned three A’s, a B and C. They improved; last year San Jose High earned a C and its middle school earned a D.

Duval’s School Board in December approved “school improvement plans” for both of them.

The school’s finances have had ups and downs.

According to a charter school audit, in the fiscal year that ended June 30, 2015, San Jose had a net deficit of $188,556.

The audit stated that most of that shortage is from loans. Among its lenders was Newpoint, which said it lent the school $181,909.

Newpoint also receives a management fee of 18 percent of the San Jose’s revenue each year, not counting the start-up grant money it has taken from the schools as an “education model development” fee.

Duval district officials said through spokesmen that they have no reason to request a financial correction plan or closure for the San Jose schools because the schools’ finances are not deteriorating.

Some of the San Jose schools’ financial records indicate the school has done business with at least three of the companies in the indictment.

The monthly account register dated March 31, 2016, shows Newpoint received $76,095.09 that month from the schools, while Epiphany received $2,925.20. Another account register, dated Nov. 30, 2015, shows School Warehouse receiving $26,707.03 that month and Newpoint receiving $52,478.95.

Newpoint officials could not be reached for comment on the spending. The phone at their Clearwater headquarters was not answered.

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