Charter Industry Poised for Financial Collapse?

The League has closely followed some for-profit charter school management company business practices.  We have reported interrelated companies that profit excessively from various management fees and real estate practices.

The former President of the Senate, Don Gaetz, has called for an end to the ‘self dealing’.  There are other reasons to call for reform.

In this analysis of charter business practices, a paper soon to be released in the Indiana Law Journal, presents evidence that Enron-like related-party transactions to defraud charter schools.  Read the abstract.  This is serious, especially for Florida where the for-profit charter sector is so large.

In this article, we discuss how some charter school officials have engaged in Enron-like
related-party transactions to defraud charter schools. We also identify several measures that can
be taken to strengthen the ability of charter school gatekeepers to protect against this danger.
This article is divided into four parts.

  • Part I describes how Fastow used his management of Enron and the SPEs to obtain illegal profits contrary to the interests of the former company.
  • Part II discusses why the gatekeepers in the financial sector failed to stop the related-party transactions between Enron and the LJM entities.
  • Part III provides examples of how individuals in the charter school sector are benefitting from their control over charter schools and their affiliates in a manner similar to Fastow.
  • Part IV analyzes, inter alia, pertinent statutory and regulatory provisions that apply to state and federal gatekeepers. We perform this task to identify the steps that legislators and policymakers can take to increase the gatekeepers’ ability to protect against harmful related-party transactions.

The entire report can be accessed here.  Send it to people who can help make change.

Posted in Charter School Management, Facilities, Funding.

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