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Local charter school accused in audit of alleged misappropriation of $2.7 million

August 30, 2010 |  5:01 pm

The former principal of a San Fernando Valley charter school allegedly misappropriated $1.6 million, according to an audit released Monday by the inspector general’s office of the Los Angeles Unified School District. Auditors also have questioned more than $1 million dollars in other expenditures at the NEW Academy Canoga Park charter school.

In a statement, L.A. schools Supt. Ramon C. Cortines said he would begin proceedings that could result in shutting down the school. Charters are public schools that are managed by their own boards and are exempt from some rules that govern traditional schools. In 2008, L.A. Unified renewed the school's charter for five years.

The charter school’s board agreed with auditors’ recommendations for improving financial management without specifically conceding wrongdoing. “This matter is the subject of a continuing investigation which may reveal additional relevant information,” the school wrote in response to auditors. In a public statement, school officials took credit for launching the district audit in response to their own concerns.

The school could survive if district officials are convinced that it deserves to remain open despite serious management issues. The school has registered strong gains in test scores in recent years.

"I recognize the school's academic achievements," Cortines wrote in a letter to the school. But more than "$2 million of misappropriated and unaccounted public funds is egregious .... Students have been inexcusably deprived of funds that were designated solely to further their education."

Among their findings, auditors contend that the school’s former principal, who isn't named in the audit, withdrew cashier’s checks totaling $1,073,700 from school accounts to deposit in an investment account between July 1, 2007, and Sept. 30, 2009.

“The former principal claimed that funds deposited into his personal Ameritrade account were not withdrawn, but were deposited and repeatedly lost,” the auditors wrote.

District sources confirmed that the administrator in question is Edward Fiszer, who could not be reached for comment and who has apparently left the state.

A second account, called Friends of NEW Academy Canoga Park, also was used to deposit funds intended for the school but allegedly was not used for that purpose, according to auditors.

One cost questioned by the auditors was $62,247 paid to a company called Burgundy Bunny for science enrichment for fourth- and fifth-graders over a six-week period: “We performed an Internet search to verify the validity of the vendor,” auditors wrote. “We noted that the address and phone number were invalid. The address shows as a vacant lot. In addition, the business entity name does not exist.”

Auditors also allege that the principal paid a former teacher — who at some point married the principal — $129,450 for services as a grant writer, although a company already was being paid for grant writing.

The handling of the audit was complicated because the school system’s interim inspector general sits on the board of directors of the charter’s founding organization. Jess Womack is the board secretary of New Economics for Women, whose acronym, NEW, is part of the school's name. Womack, a retired attorney for L.A. Unified, recently rejoined the school system as inspector general. Womack recused himself from dealing with the audit of the charter school, district officials confirmed.

The charter also has its own board of directors separate from New Economics, but there remains overlap between the organizations.

A spokeswoman for the L.A. County district attorney's office said the audit had not been referred to them for possible prosecution. But district sources said that law enforcement has been aware of the district's inquiry for some time.

The charter opened in fall 2005. The school becomes the second Valley charter facing allegations of financial impropriety. The founders of Ivy Academia face felony charges of illegally commingling private and public accounts. They have denied wrongdoing.

-- Howard Blume