Probe questions what charter school did with grant money

HARRISBURG - State investigators conducting a probe of the Agora Cyber Charter School learned that the school's founder had obtained a $205,500 federal grant for the Devon-based school, but they could find no record that the check was deposited in any of Agora's bank accounts.

Keith Miller, a state audit manager, discussed the implementation grant Agora had received during the second day yesterday of a state Department of Education hearing that could lead to Agora's losing its operating charter.

Dorothy June Brown, Agora's founder, signed the grant application and the grant contract as chief executive officer, Miller said.

The accountant who conducted a probe of Agora's operations for the Department of Education said he was able to determine that the check had been issued on April 6, 2007, to help the school recoup its start-up costs. But he said it was never deposited into Agora's accounts at Wachovia Bank or any other bank account under the control of the school's finance director, Kevin Corcoran.

Corcoran is employed by K12 Pennsylvania L.L.C., one of two management companies that provide services for the school.

John J. Cunningham IV, one of Agora's attorneys, declined to comment on the check or the substance of Miller's comments.

During Miller's daylong appearance on the stand at the Department of Education's offices, he also reported that during 2008, Agora received two federal subpoenas seeking the school's financial records as part of a criminal probe.

Financial documents were provided, Miller said, after the school received the first subpoena.

"They were produced . . . but whatever happened with the production and the delivery of those documents did not satisfy the federal government," he said, noting that a second subpoena was issued.

Cunningham objected to the testimony on the subpoenas because the documents had not been mentioned in the state's list of exhibits.

Debra K. Wallet, a Camp Hill lawyer who was serving as the hearing officer, halted further testimony on the topic yesterday. She directed Jack Gruenstein, an attorney for the Education Department, to delay presenting additional evidence on the subpoenas until the hearing resumes Sept. 14. She said she had concerns about disclosing federal grand jury subpoenas during a public hearing.

The Inquirer reported in February that in May 2008, Agora received a federal subpoena for all its financial records, and that federal investigators had spoken to Brown at least twice in connection with a widening criminal probe of area charter schools.

Brown's name had surfaced in the early days of the federal investigation of another school - Philadelphia Academy Charter School - because of her close business ties with that school's founder, the late Brien N. Gardiner.

Gardiner and Brown had established Cynwyd Group L.L.C., an education management company that has a contract with Agora and owns its headquarters in Devon. Gardiner severed his ties with Cynwyd in May 2008 as the federal probe was getting under way.

Agora's contract with Cynwyd is one of the main reasons the Department of Education is seeking to revoke the operating charter. Agora received its operating charter from the state in June 2005 with the understanding it would not use a management agreement.

During Monday's session, Miller said his investigation found little evidence that Cynwyd had performed work for the $4.5 million it has billed the school.

Because of the appeals process, the state has said Agora is expected to operate during the next school year even if Wallet decides the charter should be revoked. The Education Department oversees the state's 11 cyber charter schools.

Agora, which opened in 2005, enrolls 4,400 students statewide from kindergarten through 12th grade who receive online instruction at home.

Miller, who is the leadoff witness for the education department, will continue his testimony next month in what is expected to be a protracted proceeding.