Amsterdam & Partners LLP has written an open letter to the California State Superintendent of Public Instruction Tony Thurmond to highlight the alarming pattern of abuses taking place at Magnolia Public Schools, which is part of the nationwide network of controversial charter schools linked to cult leader Fethullah Gülen.

The full text of that open letter is below:

Dear Superintendent Thurmond,

I am writing to you express urgent concern regarding potential abuse and misappropriation of coronavirus stimulus funds by a charter school operator acting in bad faith.

While the pandemic has brought out the best in some, others are choosing to treat this crisis as a chance to profit from the panic and chaos created by the virus. Among these opportunists is Magnolia Public Schools, a foreign operated charter school with a history of scamming taxpayers and mistreating minorities and special needs students seeking to siphon even more funding from a vulnerable public education sector.

Magnolia has a well-documented history of misusing money from Californian taxpayers. In October 2016, the LA Times reported that three Magnolia schools could be shut down, “largely because of their practice of bringing in teachers from Turkey.” Magnolia was found to have applied to recruit 138 teachers from abroad, almost all from Turkey; while 97 of the applications were approved, Magnolia covered the cost of each one, at an estimated cost between $3,000 and $5,000 per application. In our independent investigation, we found that between 2001 and 2016, Magnolia filed 457 visa applications, spending between $126,000 and $200,000 in fees covered by taxpayer money.

Abuse of the H-1B visa system was not the only concern. Reviews of the school’s tax returns found that Magnolia had large contracts with affiliated vendors and numerous overlapping connections between Magnolia’s employees and board of directors. Nepotistic awarding of contracts with public funding creates illegal conflicts of interest and an insidious culture of self-dealing and malfeasance within the schools.

In light of the nationwide conversation taking place with regard to racial injustice and systemic inequality, Magnolia’s conduct has been overlooked for far too long.

We have received horrific reports from whistleblowers about the schools purposefully recruiting low-income students to receive additional government funding, then enforcing a system of “forced expulsions” once the school year commences and the funds are received – which is done to keep the grade averages artificially high. Endemic discrimination against students of color within the schools prompted the California chapter of the National Association for the Advancement of Colored People (NAACP) to pass a resolution urging federal, state, and local authorities to conduct forensic audits of both the schools and their management organizations. The NAACP singled out Magnolia Science Academy (CA) as one chain within the umbrella organization that intentionally targeted African American and Hispanic communities.

The corruption and discrimination within Magnolia Public Schools is not an isolated incident. Magnolia is part of a national network of charter schools affiliated with controversial Turkish cleric Fethullah Gülen. Our firm was appointed by the Republic of Turkey to investigate the unlawful and harmful activities of this group. What our investigation has revealed is a pattern of abuse and exploitation within these schools, as well as a culture of secrecy, dishonesty, and intimidation around the schools’ operations and connection with Gülen. These are not qualities that should be associated school choice in California.

How has Magnolia gotten away with so much for so long? The former CEO of Magnolia is Caprice Young, also a former head of the California Charter Schools Association, and eventually President of the Los Angeles Unified School District. Young accepted a free trip to Turkey in 2007 along with other educators and community leaders. The trip was paid for and sponsored by the Pacifica Institute, a cultural organization whose honorary president is Fethullah Gülen.

As CEO of Magnolia schools, Young was able to defend Magnolia schools after an audit conducted by the LAUSD found “fiscal mismanagement, including lack of disclosure of debts, weak fiscal controls over the principal’s use of debit cards and questionable payments for immigration fees and services.” Young used her relationships and influence to convince County Office of Education to ignore LAUSD’s findings – and students, families, and taxpayers are still paying the price.

California’s authorities must take action to ensure accountability for bad actors like Magnolia Public Schools and protect students and families who urgently need federal and state support – especially while dealing with the impact of the coronavirus pandemic.

In March 2020, the United States Government passed the Coronavirus Aid, Relief and Economic Security (CARES) Act. The CARES Act established an education stabilization fund, setting aside just over $30bn for elementary and secondary schools, as well as an additional $3bn for state governors to disburse through grants to school districts. A broad coalition of education experts have agreed that the fund is simply not enough; with most school doors closed for at least the rest of 2020, schools across the country need every dollar to stay afloat.

While the National Alliance of Charter schools has insisted charter schools be regarded as public schools and eligible for emergency aid in the education stabilization package, the organization simultaneously advised charter schools to apply for federal rescue funds for small businesses that have been impacted by the pandemic. These funds include the $349 billion Paycheck Protection Program, a short-term loan program designed to help businesses cover payroll expenses.

Public school advocates have released a comprehensive list of businesses that have applied for the PPP loans to keep track of any charter schools that may be “double dipping” from various COVID relief packages to profit from the pandemic response.

In California, NBC7 investigated charter schools in San Diego County, finding that the schools have received more than $15.8m in PPP loans, on top of the CARES Act funding that went to all public and charter schools in the district. The largest recipient of the PPP loans was Magnolia Public Schools, which operates two charter schools in San Diego County, received $5.6m.

As education historian Diane Ravitch notes, “Charters claim to be ‘public schools’ when that’s where the money is, but when the money is available for small businesses, they claim to be small businesses.”

Amsterdam & Partners LLP urges the California Department of Education to follow the recommendation of the NAACP and Public Education Advocates to conduct a forensic audit of Magnolia’s finances, investigate the schools’ hiring and firing policies, and verify how $5.6m of COVID-19 relief funding is being spent.

These schools have been engaging in unacceptable corrupt behavior for years, and we refuse to watch them take from the pockets of American taxpayers at a time when so many are in need.

Sincerely,

Robert R. Amsterdam

Founding Partner, Amsterdam & Partners LLP

This material is distributed by Amsterdam & Partners LLP / the Republic of Turkey. Additional information is available at the Department of Justice, Washington, DC.

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