Former official of charter school network reportedly will plead guilty

The former business manager of Dorothy June Brown's charter school network has signaled that he intends to change his plea and admit that he played a role in Brown's alleged scheme to defraud the schools of $6.7 million.

A March 15 change-of-plea hearing has been scheduled in U.S. District Court in Philadelphia for Anthony Smoot, 50, of New Castle, Del.

Smoot, who handled finances for Brown's taxpayer-funded schools for several years, has not worked for any of them for more than a year.

James J. McHugh Jr., a public defender representing Smoot, could not be reached Wednesday for comment.

Smoot pleaded not guilty July 24 when a federal grand jury charged him with conspiracy to obstruct justice and obstructing justice.

His charges were part of a sweeping, 62-count indictment that accused Brown and three other administrators of engaging in a scheme to defraud four charters she founded in the Philadelphia area.

Brown and her codefendants have pleaded not guilty. Trial is scheduled for Oct. 21.

The notice of Smoot's change-of-plea hearing was filed Friday, three days after the U.S. Attorney's Office announced a superseding indictment with five additional charges against Brown and three codefendants, including more counts of wire fraud.

No additional charges were filed against Smoot last week.

City Controller Alan Butkovitz on Wednesday released part of a charter school report his office prepared in 2010 that dealt with Brown's three schools in the city.

Butkovitz's office had withheld the findings on the charters in April 2010 at the request of the U.S. Attorney's Office because of the federal criminal probe.

The 13-page appendix Butkovitz provided to The Inquirer detailed numerous examples of apparent financial irregularities involving Brown's schools and firms she created that did business with them. In some cases, her management and consulting firms had contracts entitling them to be paid 15 percent of a school's total revenue.

The controller's report also said Brown and Joan Woods Chalker, an administrator who is now one of Brown's codefendants, had received charter payments totaling $214,095 in 2009 for accrued leave to which they may not have been entitled.

Last week's superseding indictment charged that Chalker and Brown committed fraud to obtain that money and persuaded other administrators to fabricate documents to try to justify it.

"This was something we developed over three years ago . . . which has now formed the basis of the superseding indictment," Butkovitz said. "There's a lot of content there that was taken very seriously by federal prosecutors."

Last week's news release from the U.S. Attorney's Office about the new charges credits the Controller's Office with providing assistance.

Now that those charges have been added, prosecutors said, they would no longer object to releasing the part of the 2010 report about Brown's charters, Butkovitz said.

Assistant U.S. Attorney Anthony Kyriakakis, who is prosecuting the case, said the Controller's Office had assisted but declined to comment further or discuss the 2010 report.

Butkovitz's office began its special investigation into the School District's oversight of charter schools and to probe possible fraud at 13 city charters shortly after The Inquirer in April 2008 reported allegations of financial mismanagement and conflicts of interest at the Philadelphia Academy charter school. Two former administrators pleaded guilty to fraud charges and were sentenced to federal prison.

The city controller's 2010 review found repeated examples of complex real estate arrangements in which charters leased or rented facilities from related nonprofit organizations; cases in which charter officials signed leases as both tenant and landlord; and excessive salaries paid to chief executive officers.

The office also found cases of charters improperly operating for-profit businesses, rampant conflicts of interest, and compliant charter boards whose members were handpicked by CEOs. Butkovitz's investigators even uncovered a West Philadelphia charter that operated a nightclub on weekends.

At the time, Butkovitz criticized the loopholes in the state's charter school law for providing opportunities for fraud and limiting oversight.

His report helped spark legislative hearings aimed at tightening the charter law to reduce the chances of fraud. But those efforts sputtered, and the legislature never approved the amendments.

Butkovitz said Wednesday: "There's a lot of unfinished business on charter accountability."