Can for-profit education rescue Camden's kids?
CSMI, which manages a charter school in Chester, is expanding into New Jersey.

MATTHEW MORALES lives in a bad neighborhood in one of America's most violent cities.
There's an open-air drug market around the corner from his North Camden rowhouse. Dime bags litter the ground. Houses sit boarded up or burned out. Someone's car looks as if it got broadsided while parked at the curb. The public-school system is the worst-performing district in New Jersey.
So Morales sees hope when he looks across narrow Pearl Street at the new Camden Community Charter School, its red buildings surrounded by freshly poured white sidewalks and black faux-iron fences. It used to be a vacant lot.
"With a school here, there's going to be less violence and drama because there are kids around," Morales, 18, said from his porch on a recent afternoon. "You can do your homework, then go to school."
Mangaliso Davis, a longtime community activist in Camden, sees something different from his high-rise apartment overlooking the school.
Davis, 65, sees a wealthy Main Line lawyer and his crew of charter-school managers from Chester-based CSMI crossing the Delaware River with plans to turn a profit with New Jersey tax dollars.
Davis said he believes that "they are in it for the money, not to improve the quality of life for the citizens of Camden."
Both men's perspectives are about to be tested. Yesterday, the sparkling new school at 8th and Linden streets opened to 150 students in kindergarten through fifth grade.
Beyond that street corner, education observers will be watching to see whether a for-profit company that has had mixed results in Pennsylvania will succeed in New Jersey.
Chester to Camden
The Camden school, expected to expand its enrollment to 900 students within four years, is part of an influx of charter schools into New Jersey in recent years. The state took over the failing Camden school district this summer.
The school will be managed by CSMI and modeled on Chester Community Charter School, which the company also manages. The K-8 school educates about 3,200 children in the troubled Chester Upland School District in Delaware County.
The Chester school's motto, posted on a sign out front, is "Empowering students as learners." Inside, that's done with clean hallways, open lockers, cameras in classrooms to discourage misbehavior and interactive Smart Boards instead of chalkboards.
"It's more of a family environment," said Ruschelle Diggs, an administrator and former teacher there. "We need to take care of the whole child, rather than forcing academics down their throat."
The goal is to provide safe learning in Chester, a rough city with struggling public schools and sometimes out-of-control crime - essentially a smaller version of Camden.
In some respects, that formula is clearly working. In July, the Chester charter school announced that 58 students from its class of 2013 had received a combined $1.5 million in academic high-school scholarships - reputable schools, including Cardinal O'Hara in Delaware County, that send graduates off to college.
"We have a sense of community here," said Christine Matijasich, one of the Chester charter school's principals. "We teach students how to behave positively."
But the school - which grew from 97 students in the lobby of a Howard Johnson hotel in 1998 to the largest brick-and-mortar charter school in Pennsylvania today - also has been involved in some controversy.
Last year, the Pennsylvania Department of Education said in a letter that there was "overwhelming evidence of testing irregularities" due to the "very high number of students with a very high number of wrong-to-right erasures in 2009, 2010 and 2011."
The letter, written by then-Deputy Secretary Carolyn Dumaresq, cited a "statistical improbability that students made these erasures themselves," but said that an internal school investigation yielded no "clear conclusions" about the anomalies.
The state did not take disciplinary action against the school, but it sent staffers to monitor future tests and implemented strict testing procedures, including prohibiting school employees from proctoring students alone and requiring that test materials be stored in a locked location monitored by a 24-hour surveillance camera.
Reading and math scores at the school dropped sharply last year with new testing-security measures in place. In a letter to parents, the school attributed the lower scores to budget cuts.
CSMI, the firm that runs the Chester and Camden schools, is a for-profit company founded by Vahan Gureghian, a politically connected Gladwyne lawyer who donated more than $300,000 to Gov. Corbett's gubernatorial campaign and served on the education committee of his transition team.
CSMI has fought to prevent public disclosure of its finances - including how much taxpayer money ultimately goes to company officials. The company has argued that, unlike public schools or some other charter schools, its finances are a "trade secret" or "confidential information," because CSMI is a private company managing a school, and not a school itself.
In 2009, Gureghian attorney Edmond George - listed in public records as a founder of the Camden Community Charter School - sought to silence the Inquirer by asking a judge to order the paper to "refrain from public comments" about the company, the school or Gureghian. The motion was denied. In a separate matter, a CSMI lawyer tried unsuccessfully to bar a reporter from an arbitration hearing in open court.
The school has sued the cash-strapped Chester Upland School District - which was in danger of shutting down last year due to lack of funding - for millions of dollars in disputed payments. The case was appealed up to the Supreme Court but eventually was settled out of court.
A harsh audit
Last month, in an audit report, state Auditor General Eugene DePasquale said the Chester charter school had improperly received nearly $1.3 million in state lease reimbursements - including payments for school buildings that had been owned by Gureghian.
"It's like paying yourself for renting your own house," said DePasquale, who wants the school to return the money.
DePasquale also criticized CSMI for what he called a lack of transparency.
"Minus national security, you should always err on the side of more transparency with taxpayer dollars," he said. "I'm not sure how [CSMI] believes in trade secrets. If they're doing something that's good, that helps kids get educated, please share it."
The school dismissed DePasquale's audit, claiming in a letter to his office that it was "grossly wrong" and was "intended as a political cudgel" as part of a larger "anti-charter agenda." An attorney for the school said the lease reimbursements were appropriate. DePasquale, a Democrat, has received campaign contributions from the state teachers' union.
Chester Community Charter School is hardly the only Pennsylvania charter school being criticized.
Last month, Nick Trombetta, the founder and former CEO of the Pennsylvania Cyber Charter School - the state's largest cyber charter school - surrendered to the FBI on charges that he siphoned more than $8 million from the school through a network of companies he controlled.
State Rep. James Roebuck, Democratic chairman of the House Education Committee, introduced a bill this year that would increase charter-school transparency and oversight. He released a report detailing investigations or problems at 44 state charter schools.
"They're very bad on open-record requirements," Roebuck said of charter schools.
Mystery president
Records obtained by the Daily News list Jake Der Hagopian, CSMI's president since 2010, as the founder of the Camden school.
It's unclear where Der Hagopian, 61, was working before CSMI. The company would not make him available for an interview, disclose any companies with which he has worked in recent years or explain his role at the Camden school.
Ronald Cole, a retired assistant U.S. attorney from the Organized Crime Strike Force, knows Der Hagopian as the former executive vice president of Royale Group, a defunct company that was run by white-collar crook Leonard Pelullo in the 1980s. Cole prosecuted Pelullo, who was indicted in Pennsylvania and three other states and is serving a lengthy federal prison sentence for fraud, racketeering, money laundering and embezzlement. Cole said Pelullo typically liquidated assets before anyone could stop him.
"It would just make you dizzy trying to trace the money," he said.
"I don't know what became of him after he parted company with Pelullo," Cole said of Der Hagopian.
People who know Der Hagopian today say he's a straight shooter and a smart guy. He's married with two sons and lives in Moorestown, Burlington County, where he volunteers as chairman of the township's Economic Development Advisory Committee. He moved there in the mid-1990s and is active with the YMCA, the Salvation Army and Temple University, his alma mater.
Thomas Ford, director of Moorestown's Department of Community Development, said he has worked with Der Hagopian to boost tax revenue and help local businesses.
"He seems pretty on top of everything going on in town," Ford said of Der Hagopian, who he estimated has served on the EDAC for about 10 years.
But when asked what Der Hagopian does for a living, Ford was stumped. "Actually," he said with a chuckle, "I don't know. It never comes up."
Der Hagopian did not respond to requests for comment.
Winning formula?
As the state tries to repair Camden's public-school system, charter schools continue to move in, with nearly one in four of the city's 16,000 students enrolling in 11 charter schools for this school year, including two new ones, the CSMI-managed school and Hope Community Charter School in the city's Liberty Park neighborhood.
But three of the nine already-existing Camden charter schools have been placed on probation by the state Department of Education. They are: D.U.E. Season Charter School, Environment Community Opportunity (ECO) Charter School, and Freedom Academy Charter School. Statewide, 21 of 81 charter schools are on probation for poor performance or have received warning letters from the state.
CSMI says the Camden school will flourish with the benefit of lessons learned in Chester, everything from classroom technology down to the quality of the bathroom tiles. Students will get free computers and Internet access through a partnership between Comcast and the Vahan and Danielle Gureghian Foundation.
Steven Lee, CSMI's chief academic officer, said closing the digital divide and saving kids from a failing public-school system is the first step toward revitalizing urban areas like Camden and Chester.
"This model certainly works," Lee said. "The question that is being asked of these minority children from Chester is not 'Are you going to college?' but 'Where are you going to college?'
"That's what's going to change Chester and Camden and other urban areas that for years have been suffering in terms of education," he said. "These kids can come back and change that."
The Camden school's groundbreaking in March was attended by Mayor Dana Redd, state Sen. Donald Norcross and other officials. More than 450 families have applied to send their children there. Next year, CSMI expects to manage a charter school to be opened in Atlantic City.
But community activist Davis is not convinced that charter schools have residents' best interests in mind when they set up shop in impoverished cities. He'd rather see the money go toward repairing the broken public-school system.
"It ain't about us. It's about business, across the country," Davis said. "I'm skeptical about these things. You're going to come in and save us?"