Officials with the sponsor for seven charter schools where administrators are accused of stealing more than $2 million told this newspaper they acted as soon as concerns surfaced that money was being misspent.
“It was a learning experience as we went,” said Aaron Kinebrew, assistant director of Educational Resource Center of Ohio.
He said ERCO urged schools such as the Colin Powell Leadership Academy, Arise Academy and Peterson Entrepeneureal Training School in Dayton to oust Superintendent William Peterson and his wife.
This came — ironically, Kinebrew noted — after a tip from treasurer Carl Shye.
“I think Carl was like, ‘You need to take a look at William Peterson,’ ” Kinebrew said. “We did our due diligence and started snooping, and once we began to snoop I guess things started to be revealed.
“When we found out, we said you guys got to sever this relationship, you go to do something to get rid of him,” Kinebrew said. “(He) can’t be the superintendent and own this company over here where you’re trying to provide services to the school.”
The Petersons were let go in October 2007, according to this newspaper’s archives. Kinebrew said Peterson, who had founded the schools, tried to get a separation agreement that would allow him to continue to be paid by the schools for 15 years, which ERCO successfully opposed.
But ERCO, based in Cincinnati, and the board were puzzled that state audits for Peterson’s schools were clean, so they and the board of Peterson’s Cleveland charter requested a special audit. That led to the Petersons being among 10 people and 13 companies indicted in May in a scheme to allegedly steer contracts from the Cleveland school to shell companies owned in part by William Peterson. The total amount pocketed was more than $1.8 million, investigators said.
Then in 2009, ERCO warned its schools that the Dayton Daily News was about to expose problems with Shye’s work as school treasurer. A letter to the schools says Shye did not meet ERCO’s standards, but that school boards were responsible for hiring and firing treasurers.
“We are providing you with this information and requesting that you carefully review, evaluate, and consider both Mr. Shye’s performance as your treasurer and the merit of the allegations and their documentation,” says a May 2009 letter warning the schools of the newspaper article, which ERCO officials said led some schools to drop Shye.
This newspaper continued to document findings in state audits against Shye at charter schools across the state. Shye was charged last May and later pleaded guilty to embezzling $472,579 from schools.
ERCO officials said they caught wind of these issues when someone else brought them to their attention, even though they are tasked with reviewing each schools’ finances every month.
“What we’re not necessarily privy to is the details of the contracts, the scope of services to be provided, and in some cases there have been undisclosed related-party transactions where someone may be in violation of ethics law in the sense that they have a financial stake in one of those contractors,” said ERCO spokeswoman Jodi Billerman.
“But if the board doesn’t catch that, given that we’re in a role where we must respect their autonomy to choose their own provider of service, some of this does not emerge until after the fact.”
ERCO officials said their agency has put policies in place to help catch and prevent the conflicts of interest. Starting next year, administrators will have to report any interest in a company entering into a contract with a school, for example.
And Kinebrew said ERCO is willing to shut down a school if it thinks taxpayer dollars are at risk.
“These are taxpayer dollars, these are everyone’s dollars, and we don’t want money to just fly out the window and be wasted,” he said. “So as a result, yes it hurt ERCO (to close the schools). It may have hurt financially, but that’s OK.”