Cyber schools siphoning funds that could be used for public school funding? Why yes, and Philly's cyber school 'czar' has just been slapped with federal indictments for stealing funds.
August 27, 2013

When engaging in the debate about charter schools, we hear a lot about online education being public schools' salvation, because apparently children need no actual teacher to help them as long as the computer is there. Oh, and a connection.

This myth continues to permeate the debate about public school funding because online education interests want them to, which is why it comes as no surprise to hear that the largest provider of online education to Philadelphia public schools is now facing federal fraud charges. Raw Story:

On Friday, the founder of Pennsylvania’s bigger charter school — PA Cyber — was charged with fraud, for funneling $8 million of the school’s funds into his personal companies and holdings. Nicholas Trombetta allegedly used the taxpayer money to purchase a plane, houses for his mother and girlfriend, and a million dollar Florida condo.

Reading through the indictment, one can't possibly imagine how such a noble operation could be corrupt. Nicholas Trombetta was the CEO of PA Cyber, a non-profit entity that provided online education services to the Philly public school district. As the indictment notes, PA Cyber was treated as its own public school district, receiving federal, state and local funds for students enrolled.

But Trombetta wore many hats. He was also the CEO of an organization called the National Network of Digital Schools (NNDS) Management Foundation, another non-profit which provided curriculum and other services to online charter schools. That organization conveniently had a contract with PA Cyber which supplied a majority of its income. According to the federal indictment, between $22 and $50 million per year flowed into the NNDS entity from 2006-2011.

To complete the pyramid, Trombetta created a third entity called Avanti Management Group, which had a contract with NNDS, where management services were provided to NNDS by...Trombetta! Avanti received $900,000 in 2008 all the way up to $9.2 million in 2011.

Those are stunning numbers, particularly when we recall that Governor Corbett was threatening to shut down Philly's public school opening over $50 million if the teachers didn't shoot themselves in the foot by giving away all of their collective bargaining rights.

Yet here we have a guy who was paid a six figure salary by PA Cyber, plus skimming off money into two other "management entities" and setting things up so he could collect from Ohio online schools and New Mexico online schools to line his own pockets.

From the indictment:

He did this by using PA Cyber and NNDS employees to perform work for out of state companies (such as BOSS and Wingspan) and then secretly directed payments from these out of state companies to himself and his sister.

The "did this" clause refers to Trombetta using NNDS and PA Cyber employees to line his own pockets.

But wait! There's more:

In and around December of 2010 in the Western District of Pennsylvania, Defendant NICHOLAS TROMBETTA did accept and agree to accept, a thing of value, that is, a payment totaling $350,000 from the Technology Company to AMG, intending to be influenced and rewarded in connection with a transaction and series of transactions of PA Cyber, that is, the purchase of computers by PA Cyber, for use by its students, from the Technology Company, involving $5,000 or more (said payment of $350,000 representing a payment by the Technology Company to AMG of $50 for each computer purchased by PA Cyber in 2009 and 2010).

Skimming from the services and skimming from the hardware. Nice work if you can get it.

The indictment goes on and on, listing airplanes and properties in Florida, and more. But this might be the worst part of the whole thing:

Throughout the period of the conspiracy Defendant NICHOLAS TROMBETTA caused employees of AMG, and their spouses, to make financial contributions to political candidates of Defendant NICHOLAS TROMBETTA's choosing. When AMG employees made such contributions, out of their own checking accounts so as to make the checks appear to be from them, they were reimbursed from the funds of AMG. By this means Defendant NICHOLAS TROMBETTA directed payments of more than $40,000 to political candidates of his choosing using the funds of AMG.

$8 million here, $350,000 there, and pretty soon you have a pretty nice thing going on, right? Meanwhile Philly schools starve for meager funds and prisons get the lions' share of state money. No oversight and apparently no real concern over how those funds are being spent.

If you're curious about who Trombetta made his employees and their spouses donate to politically, here's a clue, courtesy of Will Bunch:

If you're a political junkie, you've probably heard of the Pennsylvania Cyber Charter School. It figured prominently in a scandal that helped end the Senate career of Pennsylvania's Rick Santorum. It was the thriving online learning center -- launched in a foundering ex-steel town on the Ohio border called Midland, Pa. -- that was taking $38,000 a year from taxpayers in the blue-collar Pittsburgh suburb of Penn Hills for the home-schooling of five of Santorum's kids, who lived two states away in an affluent Virginia suburb.

The arrangement made Santorum look bad (for one thing, he'd been elected to Congress in 1990 by attacking an incumbent... for moving to Virginia) but it also gave some folks pause about the millions of dollars that Pennsylvania was beginning to hurl into cyber-charter schools -- schools that are getting the same public dollars as bricks-and-mortar charter schools, even through their cost of educating each child is much lower. But the flow of public cash to the Pennsylvania Cyber Charter empire founded by entreprenuer Nicholas Trombetta surged despite the bad publicity in the Santorum case, and despite news in 2007 that a state grand jury was probing the convoluted financial dealings of Trombetta, a GOP donor.

Nothing ever came of that 2007 probe. You may have heard of the state's attorney general back then, a chap by the name of Tom Corbett.

And indeed, Susie reported last year that then-AG Tom Corbett and now-Governor Tom Corbett was uncooperative in the investigation of Mr. Trombetta, to a point where the FBI stepped in and over his head.

Meanwhile, the fight to save Philly's actual brick-and-mortar public schools goes on. Imagine what that money could have meant to the kids whose parents are now being asked to kick in $600 or so in order to just open the doors?

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