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NM Charter School CEO Steals Public Money for 15 Years. How’s That for Oversight?

December 24, 2017

On December 23, 2017, KOB.com (Albuquerque) published an article concerning the survival of the Southwest Aeronautics Mathematics and Science Academy (SAMS), one of a group of New Mexico charter schools that suffered the effects of massive fraud perpetrated by its founder/ administrator, David Scott Glasrud, over a 15-year period (2000-2014).

glasrud  David Scott Glasrud

Glasrud founded the first school, Southwest Secondary Learning Center, in December 1999. He later opened an additional three schools, including SAMS. According to his own admission, within a year, Glasrud “devised and executed a scheme to defraud,” and as the US Attorney’s Office continues in its case against Glasrud, he “misrepresented, concealed, and omitted material facts, and breached duties that he owed to the schools as an administrator and employee.”

In October 2017, Glasrud pleaded guilty to numerous charges, as noted in this October 25, 2017, press release from the US Attorney’s Office, District of New Mexico:

Founder and Former Administrator of Group of Public Charter Schools in Albuquerque Pleads Guilty to Federal Theft, Fraud and False Statements Charges

David Scott Glasrud of Southwest Learning Centers Pleads Guilty under Agreement Recommending Sentence within the Range of 48 to 63 Months of Imprisonment
.

ALBUQUERQUE – Acting U.S. Attorney James D. Tierney and Special Agent in Charge Terry Wade of the Albuquerque Division of the FBI announced today that David Scott Glasrud, the former administrator of Southwest Learning Centers in Albuquerque, N.M., has pleaded guilty to federal theft, fraud and false statement charges arising out of a 15-year scheme to defraud millions of dollars from the group of public charter schools he founded.

During this morning’s proceedings, Glasrud, 50, entered a guilty plea to a nine-count felony information charging him with two counts of theft from programs receiving federal funds, three counts of wire fraud, two counts of mail fraud, and two counts of making false statements.   Glasrud entered the guilty plea under an agreement that recommends a term of imprisonment within the range of 48 to 63 months.  Glasrud also will be required to pay restitution in an amount to be determined by the court.

According to the felony information, Glasrud established the public charter school Southwest Secondary Learning Center in Albuquerque in Dec. 1999, and later established three other public charter schools in Albuquerque:  Southwest Primary Learning Center, Southwest Intermediate Learning Center, and Southwest Aeronautics, Mathematics & Science Academy.  The four schools collectively are known as the Southwest Learning Center Schools (Charter Schools) and operate with public funds, including federal funds.

Glasrud served as the Head Administrator for, and exercised financial oversight over, the Charter Schools until Aug. 2014.  As the Head Administrator and an employee of the Charter Schools, Glasrud had a duty to use his best efforts on behalf of the Charter Schools in all matters of trust and confidence, and not to act for his own benefit at the expense of the Charter Schools.  In his plea agreement, Glasrud admitted violating this duty of trust repeatedly over the course of 15 years by engaging in an ongoing series of schemes to defraud the Charter Schools for his personal benefit.  Glasrud also acknowledged making false statements to FBI Special Agents who were investigating his criminal conduct.

The felony information alleges, and Glasrud has admitted, that from Nov. 2000, Glasrud was doing business in his personal capacity as Southwest Educational Consultants, which he incorporated as Southwest Educational Consultants, Inc. (SEC) in March 2002.  Glasrud served as SEC’s registered agent, director and President, and his personal expenses were paid out of an SEC bank account.  Glasrud used SEC to facilitate his schemes to defraud the Charter Schools.

For example, from Nov. 2000 through Aug. 2014, Glasrud devised and executed a scheme to defraud that involved leasing a building at 9904 Montgomery Blvd. NE (Building) in Albuquerque to one of the Charter Schools (Charter School 1) by misrepresenting, concealing and omitting material facts from Charter School 1, and by breaching duties that he owed to Charter School 1.  In Nov. 2000, while doing business as SEC, Glasrud leased the entire Building.  Days later, on Dec. 1, 2000, still acting as SEC, he subleased the Building to Charter School 1 twice the rent that SEC was paying and without disclosing this material information to Charter School 1.  As part of his scheme, by 2007, Glasrud had arranged for SEC to sublease a majority of the square footage of the Building to a tenant, with whom Glasrud had a close familial relationship.

Glasrud admitted that as part of his fraudulent scheme, Charter School 1 paid more than double the rent that SEC paid to lease the entire Building, but occupied less than half the Building.  Glasrud also admitted causing Charter School 1 to pay SEC approximately four to five times as much as the other tenant for use of less than half of the Building it was sharing.  When the New Mexico Public Education Department (PED) raised concerns about Charter School 1’s sublease, Glasrud caused a school representative to misrepresent to PED and the school board the amount of profit that SEC was realizing off the sublease.  In his plea agreement, Glasrud admitted that SEC, his personally owned business, made more than $700,000 in profits as the result of this scheme.

During today’s proceedings, Glasrud also acknowledged devising and executing a series of other schemes to defraud the Charter Schools.  In pleading guilty to one of the three wire fraud charges, Glasrud admitted that in Feb. 2004, he and SEC created a bogus business called Media Learning Solutions (MLS) with an “office” address at a mail drop in Las Vegas, NV.  Thereafter, Glasrud caused the Charter Schools to pay capital outlay money to MLS based on fraudulent proposals and invoices.  Most of the money MLS received from the Charter Schools was not spent on the items for which it was intended or for the benefit of the Charter Schools, and instead was used for Glasrud’s personal benefit.  For example, in 2009 and 2010, the Charter Schools paid MLS approximately $265,000, which Glasrud expended as follows:  $199,000 to pay down his personal line of credit; $50,000 transferred into his personal bank account; $12,000 for personal items; and $4,000 spent at a casino in Las Vegas, NV.

Another of Glasrud’s fraudulent schemes began in Dec. 2002 and continued until Aug. 2014, and involved Charter School 1’s Extended Learning Program (ELP).  The ELP offered students the opportunity to earn school credits using online, computer-based courses.  Students paid to receive official school credit from Charter School 1, and Glasrud diverted almost all of the payments into an SEC bank account he controlled.  Glasrud admitted that from 2007 to 2014, more than $1,000,000 in payments for the ELP that should have gone to Charter School 1 was deposited into a bank account for SEC, Glasrud’s personal business.

These three schemes are examples of the fraudulent schemes that Glasrud perpetuated over the 15-year period during which he served as the Head Administrator of the Charter Schools and by which he betrayed the trust and confidence placed in him.  Glasrud admitted devising and executing each of these three schemes as well as the other schemes described in the felony information and the plea agreement when he entered his guilty plea this morning.

Glasrud was released pending sentencing under pretrial supervision and other conditions of release.  A sentencing date has not yet been scheduled.

The case was investigated by the Albuquerque Division of the FBI with the assistance of the U.S. Department of Education, Office of Inspector General.  Assistant U.S. Attorneys Fred J. Federici and Holland S. Kastrin are prosecuting the case.

One can read Glasrud’s actual, 27-page plea agreement here.

Now, here’s the rub in this supposed age of *greater accountability for greater autonomy of charter schools*:

On December 22, 2014, the chief of staff of the State of New Mexico Office of the State Auditor sent a pointed, scathing letter to New Mexico Public Education Department (NMPED) deputy secretary of finance and operations, Hipolito (“Paul”) Aguilar, for failing to adequately audit Glasrud in a timely, competent manner in the first place (instead of attempting to bypass the state auditor and scrambling in August 2014– when the FBI began investigating Glasrud– to patch together some means of damage control).

The state auditor’s letter dated December 22, 2014, is the last in a series of 33 pages of correspondence between the auditor and NMPED regarding Glasrud.

Some excerpts from the auditor’s December 22, 2014, letter:

In the past, your Department ignored red flags, audit findings, and was unwilling to crack down on Dr. Scott Glasrud’s unlawful profiteering that has harmed the charter schools and their students. Now, in the face of revelations that Dr. Glasrud potentially embezzled millions in public education dollars, PED’s recent actions [of trying to contract for a belated review of Glasrud’s schools without approval of the state auditor, as required by law] exhibit a continuous pattern of evasiveness designed to mislead stakeholders and circumvent scrutiny for its own oversight failures. …

…The reasons why you deliberately shut the State Auditor out of the required process are left to speculation. The good faith aim of our regulatory efforts has always been to remedy your Department’s delay in “immediately” auditing the charter schools, as required by [law], and ensure that you strictly follow Audit Rule procedures which provide for an independent review of the forensic engagement’s scope of work. Your opinion that these requirements are “needless bureaucratic machinations” and “non-existent, bureaucratic nits” sends the wrong message to the schools, students and parents who have themselves been victimized by unlawful acts. …

Moving forward, PED must demonstrate a sincere willingness to respect the rule of law and be accountable for its actions. The credibility and integrity of your Department in responding to this crisis hangs in the balance.

Included in the 33-page correspondence is information dating back to 2012 concerning state auditor findings of “red flags” associated with Glasrud’s fiscal dealings, with the auditor noting, “PED either neglected or was unwilling to take meaningful oversight actions to address the problems.”

The state auditor continues:

At the end of fiscal years 2012 and 2013 collectively, Dr. Glasrud’s private company, SEC (Southwest Educational Consultants, Inc.), was paid a total of $666,573 under his contracts with the charter schools to lease aircraft and the building on Montgomery Blvd. in Albuquerque.

It is unclear why PED deliberately refused to take adequate oversight action after multiple financial audit and program evaluation findings indicated improper conflicts of interest and violations of law related to Dr. Glasrud’s lucrative contracts with the charter schools.

An excellent point.

Fifteen years of fraud, and NMPED just. Couldn’t. Seem. To. Address. It.

Surely NMPED should answer for its ineptness. To date, there is no direct evidence that NMPED has itself been held accountable– which makes it seem that other Glasruds could be living large on public money supposedly overseen by NMPED.

In March 2015, Aguilar applied for the position of Albuquerque school superintendent but did not get the jobIn March 2016, three NMPED officers resigned. Aguilar was rumored to be resigning, but he did not and remains in his position with PED as of this writing.

Hanna Skandera is no longer New Mexico education commissioner. In June 2017, NM governor, Susana Martinez announced Skandera’s resignation. It is not clear whether Skandera’s exit is connected with NMPED’s lack of charter school oversight.

As for Glasrud: As of this writing, it seems he has yet to be sentenced. Following his August 2014 resignation, Glasrud taught special education at Bloomfield High School (New Mexico) (August 2016 to October 2017). Bloomfield High School now posts Glasrud’s position as vacant. However, his Linkedin bio makes it appear that he continues to teach at Bloomfield High and that his 15 years as a NM charter school CEO simply never happened.

money to burn

____________________________________________________________________________________________

Want to read about the history of charter schools and vouchers?

School Choice: The End of Public Education? 

school choice cover  (Click image to enlarge)

Schneider is a southern Louisiana native, career teacher, trained researcher, and author of two other books: A Chronicle of Echoes: Who’s Who In the Implosion of American Public Education and Common Core Dilemma: Who Owns Our Schools?. You should buy these books. They’re great. No, really.

both books

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From → Charters

4 Comments
  1. These crimes keep happening because State and Federal Legisraiders have more in common with the criminals than they do with the public interest and they do not care where the money goes so long as it doesn’t go to public schools and so long as they get their cut.

  2. I wonder how much of this the new Sec. Of Education Mr. Ruszkowski – Husband of BESE member Kira Orange-Jones Ruszkowski – both Teach for America alums – knew when taking that position. As for how long it took for action to be taken against this guy, not surprised based on the lack of action our own AG and Legis Auditors’ offices have taken in response to complaints and requests for forensic audits. I am hearing more frequent stories about N.O. Charters and their Title 1 spending practices and yet they seem to be able to stay under the radar. What does it take for these shysters to be held accountable?

Trackbacks & Pingbacks

  1. New Mexico: Charter Leader Steals Millions for 15 Years with NO Oversight | Diane Ravitch's blog

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