UNO corruption just the 'tip of the iceberg'. Billions lost to waste, fraud and corruption annually in privately-run charters

UNO boss Juan Rangel was Rahm Emanuel's campaign chairman in 2011.  

Chicago's $80-million/year UNO charter scandal, adds significantly to the estimated $200 million which will be lost this year alone to charter school waste, fraud, and corruption. That estimate is only "the tip of the iceberg" according to a report issued last April, by the Center for Popular Democracy and the Alliance to Reclaim Our Schools. It based on a study of only about one-third of the states with charter schools.

According to the report:

The number of instances of serious fraud uncovered by whistleblowers, reporters, and investigations suggests that the fraud problem extends well beyond the cases we know about. According to standard forensic auditing methodologies, the deficiencies in charter oversight throughout the country suggest that federal, state, and local governments stand to lose more than $1.4 billion in 2015.

In 2014, the Federal Securities and Exchange Commission (SEC) charged UNO Charter School Network with defrauding investors in a $37.5 million bond offering for school construction by making materially misleading statements about transactions that presented a conflict of interest. According to the SEC’s complaint, UNO failed to notify the state of two construction contracts totaling $12.9 million with the brothers of one of UNO’s top executives. Additionally, the charter school operator failed to notify bond investors that the state could take the loan that the bond was assured with back for the non-disclosure of the contracts.

Call it the charter corruption tax. We all pay it every year and it's money taken right out of our public school classrooms.

President Obama’s proposed budget for fiscal year 2016 includes $375 million specifically for charter schools (a 48% increase over last year’s actual budget).

Rangel interview paints clearest picture yet of UNO and their machine charter school patrons

Chicago Magazine ran an interview this week with UNO's “Patron 2” Juan Rangel. It paints the clearest picture yet of the corrupt political sewer that is Chicago's system of privately-run charter schools.

Meanwhile, the school network was handing out its own contracts to more familiar names. Monterrey Security, a firm that was previously co-owned by Danny Solis’s brother Santiago, won a $75,000 security contract. Phil Mullins’s wife, Mary Quinn, came away with an HR contract; so did firms that had contributed to Burke and Madigan. Says an UNO insider who spoke on the condition of anonymity: “There was a point where I began to wonder, Is it about the schools? Or are the schools the means to another end?”

Former schools CEO Huberman bellies up to the Chicago charter feeding trough

You might remember Ron Huberman. He was the former CTA chief bureaucrat  who ran the system into the ground and who then replaced Arne Duncan as Chicago schools CEO (why not?) under Mayor Daley and went down aboard Daley's sinking ship.

He is notable for little else besides his "data-driven" reforms -- like claiming he could predict in advance, which CPS kids would likely be murdered and which ones wouldn't. He was also the guy who cut foreign language programs (they weren't on the test) and who called in the police to bust the parent protests to save Whittier School's field house.

Most importantly, Huberman was a dear friend of the city's aspiring privately-run charter networks, like UNO, Noble Street, and Chicago International. And after his dismal tenure at CPS, things began looking up for Huberman. He was able to parlay his school system connections and knowledge of procuring insider contracts into an executive position at Chicago Growth Partners and Prairie Capital. Then he started his own firm, and began reaching for some payback in the form of contracts from some of the same government-financed charter-school operators he championed as Daley’s schools chief.

According to today's Sun-Times:

Huberman, who is a member of Gov.-elect Bruce Rauner’s transition team, founded TeacherMatch LLC in 2011.

The company has since gotten contracts worth a total of more than $200,000 from two of the largest Chicago Public Schools-funded charter operators — the Noble Network of Charter Schools and the United Neighborhood Organization’s charter network — and also has gotten work from some schools in the Chicago International Charter Schools network.

TeacherMatch, which provides software to help schools screen job applicants, reported total revenues in 2013 of more than $286,000, according to school contracting records.
That same year, it got an infusion of nearly $1.9 million from investors, the records show — a sign of confidence in its future growth.

Huberman continues to serve as the company’s executive chairman, though records list its primary owner as Prairie Capital, the Chicago private-equity firm where Huberman has been a top executive since 2011.

In 2013, Huberman lobbied UNO’s then-CEO Juan Rangel and other officials, who say they had reached a “preliminary agreement” with TeacherMatch. But Rangel quit in December 2013 amid a scandal prompted by Sun-Times reports on millions of dollars in government-funded deals given by UNO to two brothers of Rangel’s top aide.

Asked how its charter network ended up doing business with TeacherMatch, an UNO official said, “It is not known who initiated those conversations.” Noble officials and Rangel declined to comment.

Huberman says, Charters “help provide options for families". He might have added the words, "especially mine".

SEC charges UNO with fraud. $37.5M from charter school 'investors"

Once you get past all the rhetoric about "business models" and charters sharing "innovations" with traditional schools, you're left with this.

Everyone in Chicago knows that UNO is too big to jail. But that didn't stop the U.S. Securities and Exchange Commission (SEC) on Monday from filing a complaint against Juan Rangel's UNO cabal, charging the clout-heavy Chicago charter school operator defrauded investors in a $37.5 million bond offering by misleading them about conflicts of interest in giving construction contracts to companies run by relatives of an UNO official.

Only surprise here is that a charter school can even raise $37.5M from "investors." Really?

That's different, I suppose, from the $98M investment in UNO charters made by Gov. Quinn, using taxpayer money. UNO leaders can shrug off the likely SEC fine. It will amount to chump change for them. And with backers like Mayor Emanuel and Boss Madigan, you can bet no one's going to jail on this.

The Ward Room: Chicago charters, "a tangle of insider dealing, cronyism and political favoritism"

NBC's Ward Room report on charters offers an unequivocal assessment.

As charter schools continue to take root, however, one fact is clear: No process this steeped in political cronyism and insider dealing should be allowed to continue.

 The report recounts the way a politically-connected Chicago charter school operator, Concept Schools, Inc. (owned by Turkish billionaire Fethullah Gulen) used it's clout to receive approval and funding to open two schools in Chicago after being turned down by the Chicago Public Schools.

CPS said the charter’s current school, Chicago Math and Science Academy, wasn’t doing a good enough job to warrant expansion. So the company appealed to the Illinois State Charter School Commission, an agency created with the help of House Speaker Michael Madigan, a firm backer of charter schools in general and Concept in particular. Madigan is already implicated in the UNO charter scandal.

Concept is getting 33 percent more funding per pupil than other charters. The agency board included a retired chief executive of Caterpillar, Inc., who serves as president of the board of a Peoria school that’s managed by Concept. Politicians, including Madigan, took foreign trips as guests of an organization tied to the schools. More than half of the state charter commission’s budget has come from private contributions, including powerful corporations that back charter expansion.

The report concludes:

 The whole story is a tangle of insider dealing, cronyism and political favoritism, played out against a backdrop of massive transfer of public education funds from public to private schools in Chicago and across the state.

It's $20 million no-bid for Supes-to-Nuts with Gary Solomon in Chicago

The men who run Supes have, shall we say, a somewhat questionable track record. And all this in a city where major, well-respected universities already train principals, where 49 schools have shut down and others are losing teachers, classroom aides, clerks, lunch ladies and other workers and programs right and left, to the tune of $68 million in cuts -- or $82 million, depending on whose math you believe. -- Lorraine Forte at Huffington

A few principals attending the Chicago Supes training now in progress are texting me, telling me what a joke it is. It's not that the sessions are all that bad. It's that the principals themselves have taken it over. They are running it -- "sharing stories," they text me.

"Inmates have taken over the asylum," says one south-side principal. The joke is that BBB has given huckster Gary Solomon and his team a $20 million no-bid contract to run this thing. Supes, she says, brings nothing to the table. Any one of a number of local groups or university people could have easily facilitated.

Another text: We (the intellectually and skill bereft cohort) are now creating the sessions. 

So why does this Wilmette-based, Broad funded, pro-charter Supes Academy land the largest no-bid contract awarded in years for professional development?

Well, that's an easy one.  Byrd-Bennett worked for the company as a coach up until the time she came on board at CPS as a consultant. According to Catalyst, "There’s also conflicting information about Byrd-Bennett’s involvement with another company owned by the same individuals who run the Supes Academy."

Writes Catalyst's Sarah Karp:

Up until April 2012, Byrd-Bennett worked as a consultant to the Supes Academy. At that time, she was brought on at CPS as the chief education advisor to then-CEO Jean-Claude Brizard, a contract position for which she was paid $21,500 a month.

In addition, Byrd-Bennett is listed as a senior associate for a superintendent search firm called PROACT Search, in documents dated August 2012—four months after taking the position with CPS. PROACT is run by the same individuals who lead Supes: Gary Solomon, the executive director, and Thomas Vranas, the president. (Another Supes founder listed on its website, Tim Quinn, is managing director of the Broad Foundation; Byrd-Bennett worked as an executive coach for Broad through this past April.)

Byrd-Bennett is one of four contacts listed in the proposal for services submitted by PROACT in its bid to do a superintendent search for the Norwalk, Connecticut, school district. She has an e-mail address listed in the proposal. When PROACT won the contract, an official for the company was quoted in the local newspaper touting that Byrd-Bennett, who by that time had been named as Chicago’s CEO, was a contractor with the firm.

You can read the rest yourself. I'll defer to the new federal prosecutor to determine the legality of all this. But if the $96 million UNO charter deal was legal, and the Zimmerman shooting was legal, then this is probably legal also. Most of our cynical and corruption-hardened citizenry might just shrug offKarp's excellent Catalyst expose as just more-of-the-same, to go along with UNO charter chicanery, pension demagogy, TIF-type slush funds, and Rahm's DePaul basketball swindles of the taxpayers. And of course they'd be right.

But there are a few things I found unusual in this latest boondoggle. One, is the response by UIC's Steve Tozer, quoted in the article. You would think that UIC's ed school (of which I am a proud grad and former employee) would be upset that they didn't get the contract and that BBB went out of town to bring in her old cronies. Instead we have principal trainer Tozer saying things like $20 million “is an okay price to pay if Chicago can produce good leaders.”

Tozer says the University of Illinois, which has a well-regarded training program for urban principals, would have looked into bidding on the contract had the process been open. Tozer had not heard of Supes until the organization had already been hired. 

But Solomon has been hustling business here for years. He's a Broad guy who also worked with Paul Vallas and ran his Synesi consulting company which has been trying to get back into the city ever since Mayor Daley sent Vallas packing off to Philly.

Solomon ran Vallas' consulting company

The $20 million contract is the fourth awarded to Supes since October of 2012. The three other contracts include two for $2 million each and a third for $225,000 for consulting services. In 2011-12, the Chicago Public Education Fund paid for training of Chiefs of Schools and Network Chiefs.

Karp writes:

Solomon went on to be a sales associate and then a vice president for the Princeton Review, a test preparation company, and counted CPS as one of his clients.
In 2005, he ventured out on his own and created two companies, one focusing on consulting and the other on web development. In Philadelphia, he marketed the consulting company as using the “Paul Vallas method of school reform.”

Maybe Tozer is just being a team player, hoping UIC gets a subcontract down the road. After all, it doesn't look like Supes has the talent to handle this by themselves.

They could end up like the dog that caught the bus.

Cross-posted from Mike Klonsky's Blog

UNO charter hustlers have Wall Streeters' undies in a twist

The scandal involving the UNO charter school hustlers has Wall Street investors worrying. Today's Sun-Times reports: 

Now under investigation by two state agencies, the United Neighborhood Organization is also facing tough questions on Wall Street from investors who lent tens of millions of dollars to help pay for the rapid expansion of UNO’s charter-school network. The questions were prompted by Chicago Sun-Times reports on $8.5 million in state grant funds paid to companies owned by two brothers of Miguel d’Escoto, a top UNO executive.

As the largest charter-school operator in Illinois, the United Neighborhood Organization depends largely on City Hall and Springfield. It also borrows money — from banks and on Wall Street — to pay its bills.


Steven Levy, an executive with Prudential Financial in Newark, N.J., has been all over UNO boss Juan Rangel about the d’Escoto brothers’ deals. Levy says he's worried about the teachers union being able to exploit UNO corruption to kill millions in state grant money to pay for the group's real estate deals. Investors are losing confidence in the group's ability to pay back millions in loans.

“From what I understand, they are able to pay debt service — certainly in the near term, in the next year or two,” says Carlotta Mills of Standard & Poors. “Right now, I want to see if they are able to get the money from the state.”

Machine pols like Ald. Eddie Burke and Mayor Emanuel are putting the screws on Gov. Quinn in order to get him to turn the money spigot back on again to keep the Wall Streeters happy.

I'm pretty sure he will. When Wall St. speaks, Chicago politicians listen.

"Slow Eddie" Burke wants the UNO tap turned on again. Gee, I wonder why?

From left, Gov. Pat Quinn, UNO CEO Juan Rangel, House Speaker Michael Madigan and Ald. Edward Burke at the July 2012 groundbreaking on the Southwest Side for the UNO Soccer Academy High School.

Back in the Harold Washington days, they called him "Slow Eddie" Burke to distinguish him from "Fast Eddie" Vrdolyak, as a leader of the racist cabal of 29 Chicago aldermen who stood in opposition to the city's first black mayor.

Vrdolyak is out of prison and back plying his trade in nearby Cicero. But Ald. Ed Burke is still with us and still pulling the same shenanigans. On Wednesday, Burke asked his pal Gov. Quinn, to turn the the money spigot back on for the UNO charter hustlers.

Last month, as investigations swirled, Quinn suspended the remaining payments from a $98 million state school construction grant to UNO after it was found that millions were funneled to companies owned by two brothers of Miguel d’Escoto, a top UNO executive who resigned following the reports. Quinn, worried about his own connections to UNO, asked the clout-heavy group to clean up it's mess before he would turn the spigot back on. That clean up would likely include a leadership shuffle with UNO political boss Juan Rangel stepping down.

Burke has five UNO schools in his ward and UNO helped his brother Dan defeat progressive Rudy Lozano in a close 2010 election. Burke’s daughter-in-law, Jacqueline Burke, has worked for UNO since 2009, according to UNO payroll records. Also, about $1.67 million from the state grant to UNO went to Windy City Electric, which was operated by top Burke precinct captain Anthony Burke, to help build the charter elementary school that UNO operates next to the future Soccer Academy High School.

Burke has also raised a ton of money for Quinn who needs Slow Eddie's backing if he has any chance of being re-elected in the upcoming governor's race. And so it goes. The ties that bind.

According to the Sun-Times:

Burke — who attended the school’s groundbreaking last July, along with Quinn and House Speaker Michael Madigan — called himself a “big fan” of Juan Rangel, UNO’s chief executive officer, who also co-chaired Mayor Rahm Emanuel’s mayoral campaign. Burke called Rangel a “man of honesty, integrity and good purpose.”

All this, just as Pres. Obama was turning National Teacher Appreciation Week into “National Charter Schools Week" and calling privately-run charters, "learning laboratories". I'm sure Slow Eddie's family, Rangel, the d'Escoto brothers, Madigan and Rahm will all be joining in the celebration.

Pritzker nomination causing problems for Obama

The Wall Street Journal reports that the nomination of Penny Pritzker as the next commerce secretary would threaten to divide President Barack Obama's political coalition, pitting women's advocates against labor leaders angry about the treatment of workers at her family's hotel chain.

Last July, a group of labor leaders, including Obama ally and AFL-CIO President Richard Trumka, joined Unite Here at a news conference in Washington, where Unite Here called for a global boycott of Hyatt Hotels.

How can you say you support women while supporting Pritzker too?

What WSJ misses, as do some women's groups (the National Organization of Women is part of the national coalition supporting UNITE and the Hyatt workers), is the fact that Pritzker's Hyatt Hotels are most oppressive to the hotel chain's largely female and immigrant workforce. Female immigrant workers are the backbone of the hotel industry. Not only that, Hyatt chain is a global company and labor opposition to the chain and disdain for the Pritzker name is also global. Her appointment could create even more widespread opposition to the pick than anticipated.

And let's not forget the thousands of women teachers who have to deal with Chicago's anti-teacher, corporate "reform" policies being pushed by Pritzker and the rest of Rahm Emanuel's hand-picked school board.

It's doubtful, says WSJ, that union opposition to the Pritzker pick will sink Obama's choice. More likely,  union leaders will try and use their influence on the selection of the new Labor Secretary who will be replacing the do-nothing Hilda Solis. The good news for Chicagoans is that a Pritzker pick will get her out of Chicago and off of the school board.

More UNO problems for Rahm

The Sun-Times recent expose of UNO's charter school profiteers has Rahm ducking for cover. If there's a major investigation of UNO corruption it's bound to implicate Rahm and his ties with UNO boss Juan Rangel. This becomes a major problem for Rahm especially because City Hall lawyers are currently hard at work trying to get Chicago out from under the Shakman Decree which strictly prohibits politically based hiring, firing, promotions, and other job actions. A perfect description of UNO's MO.

Fran Spielman writes in the Sun-Times:

Emanuel was clearly troubled by the Chicago Sun-Times disclosure that more than one-fifth of the $25 million in taxpayer money spent on the UNO Soccer Academy Elementary Charter School went to four contractors owned by family members of UNO’s political allies and a top executive of the group. The fact that Emanuel is a huge proponent of charter schools and that UNO CEO Juan Rangel is the mayor’s former campaign co-chairman and a mayoral appointee to the Emanuel-chaired Public Building Commission adds to the political embarrassment.

"Who'd we get today?"

Best Rahm quote:

It comes from John Kass' Trubune column on the Obama drone strategy:

"Who'd we get today?" was the famous question asked repeatedly by Chicago Mayor Rahm Emanuel, when he was the pro-drone Obama White House chief of staff, according to Bob Woodward's book "Obama's Wars."Emanuel's was a gleeful question, full of bureaucratic malice, asked by a man with his loafers on safe White House carpets. Those same carpets still caress Obama's shoes.

Where are the federal prosecutors? Are Rahm, Rangel too big to take down?

UNO Soccer Academy Elementary Charter School 

The Sun-Times is doing all the heavy lifting on this one. Another expose of the sickening blend of school and City Hall corruption that is driving Chicago's so-called "school reform." Closing possibly hundreds of the city's neighborhood schools and handing them over private charter school prifiteers like UNO's Juan Rangel has become the centerpiece of Rahm Emanuel's citywide gentrification plan.

S-T reports:

More than one-fifth of the taxpayer money spent on the Soccer Academy Elementary project went to four contractors owned by family members of UNO’s political allies and a top executive of the group, records show...The state money that UNO got is powering the organization’s rapid expansion and helping solidify its growing political might at a time the city school system is facing a budget crisis and talking about closing schools. 

Here's the comple list:

See original chart

It's what happens when you put a patronage-minded mayor of America's most corrupt city, in charge of the public schools and turn public education into a wing on City Hall. There has never been a city more in need of an elected school board.

And where are the federal prosecutors on this one? Are Rangel and UNO too big to fall?

How Sen. Steans greased the UNO charter deal

Steans

Greg Hinz has a great post on his Crain's blog today. It's all about the $35 million grant given to UNO, operator of a Chicago chain of privately operated charter schools tied into the old Daley political machine and now with connections to Mayor Rahm Emanuel. UNO Board Chairman Juan Rangel  recently served as finance chairman of Emanuel’s mayoral campaign The $35 million is as much as Chicago Public Schools gets for the entire city.

The money came from Springfield, through the back door, as part of an amendment to Sen. Bill 24 introduced by Senator (and billionaire heiress) Heather Steans. She and her sister Robin Steans have been active statewide in promoting privately-run charters, trying to grab the pension fund,  and opposing collective bargaining rights for teachers.

Hinz says Steans "was handling it at the request of somebody upstairs" [read, House Speaker Mike Madigan]. He says he was tipped off to the shady UNO deal by Parents United for Responsible Education (PURE). Good going, Julie W.!

Hinz writes:

 So it goes in our fair capital city. Education money is short, and CPS is talking about shutting schools. But those with friends have their ways. Welcome to the great state of Illinois.

And don't forget the City that Works -- Chicago.