Tuesday, April 30, 2013 at 2:56 PM
A state audit last week found a total of $1,850,489 to be recovered from former employees and school board members of the Cleveland Academy of Scholarship, Technology and Leadership Enterprise, a charter high school in Cleveland.
Today Cuyahoga County Prosecutor Timothy J. McGinty announced that ten people and thirteen companies are being indicted as a result of the audit's findings.
Charges include corruption, theft and money laundering.
The special audit found that payments were made on behalf of the school to thirteen shell companies, all of which were either owned by or affiliated with school officials and board members.
The payments were all made between July 1, 2004 and June 14, 2010 and were not properly documented.
“The rules are clear -- you can’t be on both sides of the transaction,” Auditor Yost said in a press release last week. “In our schools, the top priority should be the children, not the pocketbooks of the administrators.”
The audit was initially requested in 2010 by Roetzel and Andress, the law firm representing the school board.
The lawyer representing the board, Lewis Adkins, says the school board is happy to hear the special audit has wrapped up.
"The board asked for the special audit and are willing to proceed with whatever issues that need to be addressed as a result of the final audit and the action taken by the prosecutor," Adkins says.
According to a statement from the Cuyahoga County Prosecutor's office, the following people have been indicted:
- William Peterson, 43, of Dayton, was the CEO of CASTLE while at the same time he had an undisclosed ownership and/or financial interest in the following companies: Educational Management Alliance (EMA), Kids 2000, Leadership Training Institute (LTI), Cross Tech EduServe, and 2K2 Technologies. He used these companies to launder approximately $858,000 from CASTLE.
- Thomas Unik, III, 52, of Cleveland, served as CASTLE board chairmen and was partial owner of Sunshine Limited Partnership/Superior Lofts through which CASTLE leased its facilities. From 2004 through 2010, CASTLE paid $478,785 in excess of the stated lease terms with no evidence of additional arrangements or board approval for the excess payments.
- Dennis Stewart, 65, of Dayton, served as a business associate of William Peterson and had an ownership interest in Educational Management Alliance (EMA), Kids 2000, and ELMO. Through these shell companies he laundered and stole $367,344 from CASTLE.
- Stanley Jackson, 38, of South Euclid, served as a CASTLE board member and had an ownership and/or financial interest in Comprehensive Consulting, Juggernaut, and Fiscal Management Services. He was the authorized signatory on the bank accounts for each of these companies. CASTLE issued 30 checks to the companies totaling $200,000 without evidence that goods or services were provided.
- Claudette Williams, 34, of Cleveland, was the president of Comprehensive Consulting and along with Stanley Jackson, withdrew cash from the Comprehensive Consulting Bank account on several occasions.
- Carl Shye, 58, of New Albany, was the treasurer of CASTLE from July 2006 through June 2009. Shye was also treasurer of other schools founded by William Peterson. Shye further maintained the accounting records of Educational Management Alliance (EMA) and Kids 2000. Additionally, he was listed as treasurer for vendor Eagle Eye Services. Through his position as treasurer of CASTLE, he laundered and stole $144,905 from CASTLE.
- Rolando Peterson, 41, of Shaker Heights, is Williams’ brother and served as CEO of CASTLE. During the period of 2004 through 2010, he laundered and stole $8,829 from CASTLE.
- David Lembo, 45, of Solon, was the owner of North Coast Real Estate Management and negotiated the lease for CASTLE with William Peterson. On five separate occasions, Lembo gave kickbacks to Peterson totaling $6,425.
- Dale Qualls, 51, of Dayton, owned Qualls Auto Center and sold a school bus to CASTLE for approximately $20,000. He subsequently gave a kickback of $5,000 to William Peterson.
- Diana Peterson, 44, of Dayton, along with her husband William Peterson, owned Kids 2000. Together, they laundered and stole 33 checks from CASTLE totaling $106,625.
According to the Auditor's office, the Stanley Jackson listed in the indictment is not the same Stanley Jackson who served for a period of time on the State Board of Education. The indicted Stanley Jackson is a lawyer from the Cleveland area, not the former Ohio State football player.
However, the Carl Shye listed is the same Carl Shye who was indicted last year on federal charges for embezzling almost half-a-million dollars through his Dayton area charter school.
You can read the entire Special Audit report below:
[documentcloud url=https://www.documentcloud.org/documents/695029-special-audit-of-castle.html format=normal sidebar=true ]
Note: This post has been updated with a response from the school board, via their lawyer. It's also been updated to reflect the previous indictment of Carl Shye.