Bruce Baker is one of the nation’s foremost experts in school funding. In this post, he lists the five biggest charter school scams.
In The Grift Model I group the ways charter operators route public money into private hands into four repeating types: enrollment inflation (getting paid for students who aren’t really being educated — phantom seats, unverifiable attendance, ghost enrollees); related-party transactions (a school’s own board or executives sitting on both sides of a contract); the company store (a captive vendor a school is required to buy from — curriculum, credentials, back-office services — that happens to be owned by the people running the school); and real estate (buying, or arranging for a related party to buy, the very buildings public dollars already financed, then leasing them back at a markup).
What I hadn’t done before is put the five biggest documented cases — regardless of category — on the same page and rank them by dollar figure. A caveat before I do: these numbers come from different kinds of documents (a criminal restitution order isn’t the same instrument as a municipal bond prospectus), cover different time spans, and in a couple of cases reflect an auditor’s or a prosecutor’s counting choice as much as anyone’s. I’m ranking them anyway, because the comparison itself is the point — and because the single largest number on this list isn’t attached to anyone’s indictment.
Here they are, five to one.
5. White Hat Management, Ohio: about $100 million over a decade
White Hat’s “sweeps” contracts with ten Hope Academy and Life Skills Center campuses in Cleveland and Akron routed roughly 95 percent of each school’s state funding to the management company, which then handled teacher salaries, facilities, and operations with minimal board oversight — company-store logic applied to an entire school’s back office rather than one vendor line. Over a decade that added up to something like $100 million. When several of the nonprofit boards tried to switch management companies, White Hat argued the computers, furniture, and classroom equipment it had bought with that money belonged to White Hat, not the schools — meaning the boards would have to buy back the property their own public funding had already paid for once.
In 2015, a divided Ohio Supreme Court sided with White Hat, 4–3, upholding the buy-back scheme as an enforceable contract term. Justice Paul Pfeifer’s dissent put it about as plainly as a judicial opinion gets: “the contracts require that after the public pays to buy those materials for a public use, the public must then pay the companies if it wants to retain ownership of the materials.” Justice William O’Neill called it, in a dissent The Progressive covered in full, “a fraudulent conversion of public funds into personal profit.” Neither dissent changed the outcome. Nobody broke a law here — a state’s highest court looked at the arithmetic and, on the merits, said it was fine. (Court News Ohio’s case summary has the full procedural history.)