Charter leader resigns

Kevin M. O'Shea, the recently demoted chief executive officer of Philadelphia Academy Charter School in the Northeast, has resigned, his lawyer announced yesterday.

O'Shea submitted his resignation effective at the close of business on Wednesday, said Ronald H. Levine, his attorney.

Levine declined to say why O'Shea was leaving, but his exit comes days before the district's inspector general is expected to report that charter officials may have miused taxpayer funds, including using school credit cards for personal items. The month-long probe is also expected to reveal that school employees may have helped build a summer house on property O'Shea bought in Beach Haven last July for $1.1 million, according to sources close to the investigation.

The report is expected to go to the School Reform Commission next week.

The commission could refer the inquiry to law enforcement for possible criminal prosecution.

John F. Downs, the district's inspector general, did not return phone calls yesterday.

The charter school's own inquiry is also winding down, officials said.

Three weeks ago, the School Reform Commission delayed a vote on renewing the school's operating charter to give the inspector general time to investigate the allegations of financial impropriety, nepotism and conflicts of interest that have rocked the Philadelphia Academy Charter School (PACS) during the past month.

The SRC action came a day after The Inquirer disclosed allegations of financial wrongdoing.

The allegations came from parents while the district was reviewing whether to renew the school's operating charter for another five years.

District officials' concerns grew after charter representatives denied the inspector general's staff access to documents during an unannounced visit to the school in late March.

Megan Snyder Galo, one of the parent whistle-blowers, last night called O'Shea's resignation "a step in the right direction for the school." She added, "I hope that it helps in the healing process for the PACS family."

In addition to the district's probe, lawyers hired by the charter school's board have been conducting their own inquiry since April 17 - two days after The Inquirer first reported that the district was investigating the charter and that O'Shea and Brien N. Gardiner, the charter's founder, were being paid more than most superintendents in the region.

"We were hired to conduct a full investigation into potential misconduct at the charter school," said Henry E. Hockeimer Jr., a member of Ballard Spahr Andrews & Ingersoll's white-collar litigation group who is overseeing the board's inquiry.

He said the results and recommendations will be presented to the charter board at a public meeting at 7 p.m. Wednesday. He declined to reveal the findings yesterday.

"This is a preliminary report, but it will include significant findings and recommendations," he said.

He said the board's attorneys have worked closely with the inspector general's staff and district auditors.

"We have been in full cooperation with their investigation," Hockeimer said. "I'm sure there was significant overlap in terms of the two investigations."

Three weeks ago the board suspended - with pay - O'Shea and Gardiner, who had remained at the school as a paid consultant after he retired July 1, 2006.

Hockeimer said one of the recommendations would deal with Gardiner's status at the school.

Albert S. Dandridge 3d, Gardiner's attorney, declined to comment. Dandridge heads the securities group for Schnader Harrison Segal & Lewis in Center City.

Levine, who is representing O'Shea, is a former chief of the criminal division in the U.S. Attorney's Office. He now heads the national white-collar defense practice at Post & Schell in Center City. He said he had been retained personally by O'Shea.

"Mr. O'Shea is very proud of the achievements of the charter school and of his contributions both as a parent-volunteer, his appointment to the board, and as director of operations and as board-appointed chief executive officer," Levine said. "He very much hopes the school district will renew the charter."

In other cases, the school district has referred information gathered in charter-school investigations to federal officials for possible prosecution.

A spokeswoman for the Inspector General's Office at the U.S. Department of Education could not be reached for comment late yesterday afternoon.

Levine said he knew of no criminal investigation under way.

In 2006, the district turned results of its audit of a charter school then known as Raising Horizons Quest over to the U.S. Department of Education.

Last month, a federal grand jury indicted Martha Russell, the founder and former head of Raising Horizons Quest and her sister, Viola Bush, the former chief financial officer, on charges of conspiracy and altering records.

Russell, of Blue Bell, and Bush, of Lansdale, have pleaded not guilty.

As The Inquirer reported last month, Gardiner and O'Shea - and family members - were being paid with taxpayer funds through a web of charter and business entities.

Gardiner collected a total of $224,500 in salary in 2005-06 from Philadelphia Academy and Northwood Academy, another charter he opened. In addition, he received $70,000 from a nonprofit he established to provide special-education services to the district.

The same year, O'Shea made $102,700 as director of operations and $34,000 from the nonprofit, which this year has a $2.1 million contract with the district.

Gardiner quietly retired from the charter in the summer of 2006 and remained as a paid consultant. O'Shea, a former city police officer with a high school diploma, was promoted from the post of chief operating officer to chief executive officer. He drew a salary of $206,137 as CEO during the 2006-07 academic year, charter salary records show.

In all, the Gardiner and O'Shea families took home $541,200 in salaries from the charters and related companies in 2005-06. The next year, they collected at least $494,120.

When state and federal funds are added, the charter's operating budget was close to $14 million, according to the 2007 annual report filed with the state Department of Education.

Founded by Gardiner in 1999, Philadelphia Academy Charter School has been among the district's most successful charter schools. It enrolls 1,200 children from kindergarten through twelfth grade. Its elementary school is at 11000 Roosevelt Blvd.; the high school is at 1700 Tomlinson Rd.

Last month, the board first demoted O'Shea then later placed him and Gardiner on leave with pay.

Larry Sperling, the school's top academic leader, was named acting CEO.

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