PBC charter school leader accused of steering money to his own company
Posted: 3:55 p.m. Wednesday, Oct. 14, 2015
By Andrew Marra
Palm Beach Post Staff Writer
One of the nation’s largest operators of online schools is blowing the whistle on a Palm Beach County charter school that it manages, alleging that the school’s chairman improperly steered $60,000 to a company he runs and at least $25,000 more to a business associate.
The allegations against Florida Virtual Academy at Palm Beach County and its sister school, Florida Virtual Academy at Broward County, have prompted school district auditors in both Palm Beach and Broward to open investigations into the schools’ financial dealings.
Now the schools’ chairman, Philip E. Morgaman of Boca Raton, is vowing that most of the money in question will be reimbursed. He insisted, however, that it was spent on legitimate services for the two online schools, which educate about 400 students, and did not directly benefit him.
“It was a pass-through and nothing more,” Morgaman told The Palm Beach Post.
He suggested that the allegations against him were payback from the management company, but added that “we don’t want there to be an appearance of a problem, so it’s rescinded.”
The allegations at the virtual schools echo those made this summer at Wellington’s Eagle Arts Academy, a charter school whose finances are being probed by the school district after The Post revealed that the school’s founder steered school money to businesses he operated.
K12, the Virginia-based company paid to manage the two virtual schools, said that the schools’ board entered into two transactions that troubled it enough to warn the Palm Beach and Broward school districts of its findings.
Last week, K12 took the extraordinary step of sending records to both school districts showing that in April, Morgaman wrote a $60,000 check from a school account to the United Schools Association, a non-profit he runs as chairman and CEO.
In December, records show, Morgaman also wrote a $25,000 check from a school account to the United Schools Association’s Chief Administrative Officer Dane G. Taylor.
In the letter, obtained this week by The Post, K12’s executive vice president warned that the transactions “appear to contravene Florida’s ethics laws.”
Charter schools are financed by public tax dollars but are privately operated and receive little independent oversight. The virtual schools have no physical classrooms. Their students take classes online. The virtual academies’ board pays K12 about $1.5 million a year to operate the schools, Morgaman said.
A K12 spokesman acknowledged the letter but declined to discuss details.
“K12 takes compliance very seriously,” spokesman Jeff Kwitowski said. “We had some serious concerns and we felt it was our responsibility to immediately alert the district, which is the school’s authorizer, so they can review the matter independently.”
But in an interview, Morgaman said that K12 never brought its concerns to him or the board. He called the allegations retribution.
Morgaman said that he and the rest of the school’s board of directors have complained this year about the frequent turnover of K12’s teaching staff and have resisted what he said were efforts by the company to add handpicked members to the board of directors.
“I think we clearly ruffled some feathers with a very large organization,” he said.
The $60,000 paid to United Schools Association was described in school records as a “deposit” for the non-profit to find experts to help boost student enrollment. Morgaman said that much of the money went to marketing and advertising companies, but that the contract prohibited his company from profiting from any of the transactions.
“It was a pass-through and nothing more,” he said. “This was simply one organization trying to help another.”
Though most of the money has been spent, he said the non-profit would return the full $60,000 to the school in the form of a donation. As CEO of United Schools Association, he said he earns a $50,000 annual salary, while he serves as a volunteer chairman on the virtual schools’ board.
Morgaman said that the check he wrote from the schools’ account to Taylor, an employee of United Schools Association, was for Taylor to assist the schools’ board during a time of frequent turnover on K12’s staff. Records indicate Taylor received $25,000 in December and an additional $7,500 in monthly payments.
“He’s frankly the only continuity that we’ve had,” he said.
The Palm Beach County School Board’s inspector general opened a probe of the schools’ finances this week, Inspector General Lung Chiu said. The Broward County School District’s auditing department has also launched an investigative audit, Chief Auditor Patrick Reilly said.
Florida Virtual Academy at Palm Beach County is in its third year, educating roughly 150 full-time students in the county, K12 said.
The school is governed by the non-profit South Florida Virtual Charter School Board, which Morgaman heads and which pays K12 to manage all of its operations.
What The Post found
Charter schools are financed by taxpayers but freed from many rules that bind public schools. In previous stories, The Post showed questionable expenses at a Wellington charter school, the Eagle Arts Academy. Now, spending questions surround a virtual charter school, Florida Virtual Academy at Palm Beach County. Read the Eagle Arts stories at MyPalmBeachPost.com