Pupils stranded as charter firm fails
Executives at California's largest charter school operator allegedly pocketed millions of dollars of public funds while cutting spending on books and teachers before the company collapsed late last month.
The failure led to the closure of 68 schools, leaving 11,000 students stranded days before the start of term.
Local education chiefs were still scrambling to find schools for displaced students last week as California government officials began a fraud investigation into defunct California Charter Academy.
The collapse has raised serious concerns about oversight of charter schools, which are are independent, publicly-funded institutions with greater freedom to innovate than a standard state school.
The Californian company has taken more than $100 million (pound;55m) from public coffers for its schools since 1999. Founder and board member C Steven Cox's private management firm took an 8 per cent cut of this cash.
Cox profited from another firm, Everything for School.com, that exclusively supplied books and equipment to the schools. It made $679,000 in 2000-2001 alone.
Other executives are also being investigated for possible conflicts of interest.
At the same time, the charter twice had its funding cut for failing to spend enough on books and teachers. It is also being investigated for failing to ensure that its schools were meeting academic standards.
From Victorville, a small town in California's high desert, officers ran a sprawling charter school empire stretching from the Mexican border hundreds of miles north.
Exploiting a legal loophole, they used just four charter school licenses to string together a network of satellite schools.
Legislation outlawing such schools was passed last year in the wake of a 2002 scandal involving another dispersed California charter operator. It has allowed religious preaching in classrooms, claimed funding for fictitious students and hired convicted criminals as teachers.
Officials fined California Charter $6m for illegally opening 10 more satellite schools after the law's enactment.
Supporters of charter schools dismissed the company as one bad apple, but Luis Huerta, professor of education and public policy at Columbia University's Teachers College, said the case raised troubling questions about regulation.
"Some people say the closing of this school operator (demonstrates) market-based accountability. This might be good for a business with private investors, but it is public money that has been lost and state school students who have been affected," he said.
Professor Huerta said more than 300 US charters have closed since they first appeared in the early nineties, "the majority because of financial misappropriation".