Post a commentCity controller cites charter-school profiteering
City Controller Alan Butkovitz's investigation of 13 Philadelphia charter schools found repeated examples of complex real estate arrangements in which charters leased or rented facilities from related nonprofit organizations.
"The way the charter law is written and not enforced, there is a gigantic loophole through which people can profiteer," Butkovitz said. "This is not supposed to be a vehicle for maximizing profit for operators and related parties."
Butkovitz began his special fraud investigation of charters several months after The Inquirer reported allegations in April 2008 of financial mismanagement and conflicts of interest at Philadelphia Academy Charter School.
His staff has been sharing information with the U.S. Attorney's Office, which is conducting a criminal investigation of at least nine area charter schools, according to sources with knowledge of the probe.
Butkovitz's complete report, which will include findings on the Philadelphia School District's oversight of 67 city charters and recommendations for tightening state law, is scheduled to be released Thursday afternoon.
The charters Butkovitz focused on include Harambee Institute of Science and Technology Charter School in West Philadelphia. He released part of his report March 30 after 6ABC reported that a nightclub operated inside Harambee on weekends.
"The fact there were significant issues at 13 out of 13 raises the likelihood you would see many of these same issues found in a much larger sampling of the schools," Butkovitz said.
Among those 13 schools, four were the subject of extensive focus by Butkovitz for complex real estate maneuvers, apparent conflicts of interest, and salary arrangements for chief executive officers, according to a draft of the report obtained by The Inquirer:
Franklin Towne Charter High School. Franklin Towne, at 5301 Tacony St. in Bridesburg, opened in 2000. After Joseph Venditti, a lawyer, stepped down as board president in 2005, he became the school's chief executive with a $108,173 salary. His salary and benefits rose rapidly, and his total compensation was $236,281 in 2008.
The controller's office found several questionable practices at Franklin Towne in addition to Venditti's more than doubling his compensation in three years.
The charter, with 929 students, owns its building in the former Frankford Arsenal and leases the property to Franklin Towne Holdings L.L.C. Venditti created that for-profit company, which sublets the building back to the school. He signed the lease and sublease as manager of the company and CEO of the school.
The circular arrangement enables the school to obtain state rent reimbursement. Venditti did not respond to e-mail and phone messages seeking comment.
Preparatory Charter School. At 1928 Point Breeze Ave. in South Philadelphia, Prep Charter is a high school known for a program that allows seniors to take classes at Community College of Philadelphia and for its sports teams.
The charter took CEO John Badagliacco off the payroll Sept. 1, 2007, so he could retire and collect his state