Did This Charter School Learn From Its Last Financial Scandal?

“It should be noted that this is an operational/staffing matter, in which the Board would normally not involve itself.”
- Scott Silverstein, Board Chair

Prior to 2011, El Camino Real High School (ECRCH) was a public school operating under the umbrella of the Los Angeles Unified School District (LAUSD). While other schools struggled in the massive district, El Camino thrived and was considered to be a “stellar” school. In 1998 it was named by Los Angeles Magazine as one of the ten best schools in the district in an article noting that 72% of the school’s seniors went on to college, “well above the district average of 52%.” The California Department of Education named El Camino a California Distinguished School in 2009. The school had also “won the Academic Decathlon competition multiple times.”

Despite all of this success, El Camino used a law created to allow parents to privatize “underperforming” schools. The school did so to take advantage of state policies that “paid independent [charter] high schools an average of $7,369 per pupil, while unified districts [public school] received $6,417 per pupil.” Additionally, the move allowed El Camino to recapture Title I funds that the LAUSD was redirecting to schools with a higher percentage of students eligible for free and reduced-price lunch. The movement of these funds to El Camino cut the funding available to struggling district schools in poorer parts of the city that were expected to not only educate students but deal with the effects of crippling poverty.

Converting to a charter school also gave El Camino “a lot more freedom in how they spend state money”. This influx of funding also came as the district’s pro-charter school board made sure that oversight from the LAUSD was limited. The results were disastrous.

A Daily News investigation published in May found that El Camino’s Executive Director David Fehte had made numerous lavish charges to his school-issued American Express card, including $15,500 at Monty’s Prime Steaks & Seafood in 2014 and 2015, and several personal expenses, such as first-class airfare and luxury hotel rooms. Fehte’s charges also included more than $6,700 for a four-day trip to the Michigan headquarters of Herman Miller, the designer furniture manufacturer, for himself and two other school employees when there was a showroom 25 miles from the school. Fehte has denied doing anything wrong.

Free from LAUSD controls, the school’s principal, David Fehte, was able to divert school resources to uses that benefited him personally. This included an $885.96 payment on the school credit card to pay a bill addressed to “Mr. David Patrick Fehte/San Antonio Spurs.” This paid for airfare so that Fehte could perform scouting activities as he moonlighted for the NBA team.

The LAUSD Charter School Division eventually caught on to the misuse of public funds and issued a notice to cure. However, this toothless gesture did not result in any action by the district until a whistleblower from the school tipped off the Los Angeles Daily News. The resulting coverage finally led to the district threatening to revoke the school’s charter. This action was avoided with a last-minute deal that forced Fehte from his position. To soften his landing, Fehte received a $215,000 golden parachute taken from funds that were supposed to be used to educate our children.

In issuing the Notice of Violation that nearly closed down the school, the LAUSD noted that “countless expenses were incurred without adherence to any uniform procedure, and without verification of the necessary details.” As a result, there was “an inability to determine how public funds are being used.” The district expressed concern that “fatal flaws in judgment ... call into serious question the organization’s ability to successfully implement the charter in accordance with applicable law and district requirements.” The district also cited El Camino’s governing board for “improperly conducting public meetings”.

Four years later, there are El Camino stakeholders who are alleging that it “looks like the Board is trying to hide something…again.” Did the governing board learn anything from its near-miss with revocation? Can the public feel assured that their taxes are being spent appropriately by the school? A Notice of Concern issued by the LAUSD on October 10, 2019, and the response by the school’s governing board suggest otherwise.

The Notice of Concern is divided into three parts, two of which are directly related to El Camino’s Chief Information Officer (CIO). The first details $228,960 in payments to two related companies in India for “software development-related service.” According to concerns raised by the school’s Chief Business Officer and former Accounting and Finance Manager, these “services and expenses were not pre-approved”. Nor were purchase orders “generated prior to payment requests by ECRCH’s CIO.” These were part of “multiple violations [that] were caused by ECRCH’s CIO” and this non-conformance with the established fiscal policy was “ongoing.”

The second concern revolved around $301,430 in payments to Novian and Covantia, LLC for “software development and Integration Gateway, business technology, non-instructional consultants, computer/equipment”. These companies were “owned by ECRCH’s CIO and/or a family member of ECRCH’s CIO, which could constitute a conflict of interest for the school.”

The final concern was a potential violation of El Camino’s nepotism policy by school staff and was based on an Assistant Principal possibly being related to an Office Assistant whom according to the whistleblower directly reported to him. According to the notice, this “relationship was not disclosed during the hiring process of the Office Assistant.”

Responding to the district’s concerns, the chairman of the board emphasizes that the school was satisfied with the work of both CRM Maestro and Biztech. He even invites the “CSD to come and inspect the various computer systems and programs created by the various vendors identified in the Notice.” However, this completely misses the point of the concerns expressed by the district. All work should have been approved in advance and the appropriate purchase orders issued prior to the vendors initiating any billable activity. The fact that these basic financial policies were consistently violated should have raised a red flag for the governing board.

The response confirms that Covian and Novantia are owned by the CIO’s father. The chairman also states that the governing board in place at the time knew of these ties at the time the business relationship was started. He says that the issue was discussed by the board in a closed session. What is not detailed is the possible cost to the school for using a supplier who could use an insider to obtain information not available to other vendors. The response also did not mention if the employee directly placed orders with his father on behalf of the school.

The chairman claims that the board has no responsibility for the nepotism case involving the vice-principal as “this is an operational/staffing matter, in which the Board would normally not involve itself.” He does, however, state that “the Board has been advised that this matter was investigated and appropriate actions taken regarding the failure to disclose the nature of the relationship between the Assistant Principal and the Office Assistant at the time the Office Assistant was hired.” In most cases, lying on an employment application is grounds for immediate dismissal. The fact that the vice-principal remained silent through the hiring process is also troubling.

In his response, the Chairman claims “that the nepotism policy is adhered to” because the Office Assistant does not report directly to the Vice-Principal. Instead, there is a middle-man, but this person is overseen by the Vice-Principal. As the chairman admits, this arrangement ensures “that any potential conflict of interest between the Assistant Principal and the Office Assistant is minimized.” However, it is definitely not eliminated.

While the CIO is still employed by El Camino, the Chief Business Officer who alerted the Charter School Division to these issues is not. While this person expressed his concerns in writing to various members of the Governing Board and the school’s leadership team, the response from the chairman complains that “an Internal Complaint Form was never received.” This does not seem indicative of a governing board that welcomes the input of those who have witnessed wrongdoing.

Many of these events took place prior to an audit by Oracle Investigations Group that was paid for with $20,000 in public funds. To this date, El Camino still refuses to release this document after multiple PRA requests. The public deserves to know if this investigation also exposed the issues detailed in the Notice of Concern. If it did, why did the board wait until an employee spoke up before taking action?

As voters in LAUSD’s Board District 3 get set to choose between a life-long educator and a charter school employee, this lack of accountability should be at the forefront of the discussion. Incumbent Scott Schmerelson has a proven track record of supporting successful charter schools while holding these publicly funded private schools accountable when they break the rules. The challenger, Marilyn Koziatek, works for Granada Hills Charter, which is also a conversion charter that had an excellent record as an LAUSD school. Instead of looking out for stakeholders, her record shows that she is willing to keep violations hidden from parents. Koziatek’s elevation to the board would guarantee that betrayals of the public trust would continue unabated.

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Carl Petersen is a parent, an advocate for students with special education needs, an elected member of the Northridge East Neighborhood Council, a member of the LAUSD’s CAC, and was a Green Party candidate in LAUSD’s District 2 School Board race. During the campaign, the Network for Public Education (NPE) Action endorsed him, and Dr. Diane Ravitch called him a “strong supporter of public schools.” For links to his blogs, please visit www.ChangeTheLAUSD.com. Opinions are his own.