Jury in charter fraud trial hears of excess

Posted: November 28, 2013

PHILADELPHIA Jurors in Dorothy June Brown's federal fraud trial heard Tuesday about multiple salaries paid to Brown and money she received from management firms she controlled.

Brown is accused of defrauding the four charter schools she founded of $6.7 million and then conspiring with two former administrators to obstruct justice by orchestrating a cover-up.

Francis L. Gizaza, an accountant who began preparing tax returns for Brown's schools in 1998, reviewed several years of nonprofit tax forms for the schools. Assistant U.S. Attorney Joan E. Burnes asked him to highlight Brown's salaries.

In the fiscal year that ended June 30, 2006, Brown was paid a total of $472,483 from three of her schools: $186,929 as the chief executive of the Laboratory Charter School; $108,554 as CEO of Ad Prima Charter School; and $177,000 as executive director of Main Line Academy, a small private school for students with special needs she established in Bala Cynwyd.

Laboratory has campuses in Northern Liberties, Overbrook, and Wynnefield. Ad Prima is in Overbrook and Frankford.

Brown stepped down as CEO of both charters in 2008 after the state law was changed to bar charter administrators from collecting salaries from more than one school.

After Brown helped found the Agora Cyber Charter School in Devon in 2005, she cofounded the Cynwyd Group L.L.C., which got a management contract that paid it 7 percent of Agora's gross revenues.

Gizaza said the partnership documents showed that Brown received 72 percent of Cynwyd's revenues while her business partner, Brien Gardiner, got 28 percent.

Prosecutors contend that Agora's board never approved the Cynwyd contract and that Brown fabricated the document.

Gizaza said Cynwyd's revenues were $323,273 in the fiscal year ended June 30, 2008.

He said Brown bought out Gardiner's share in May 2008. Gardiner, who founded the Philadelphia Academy Charter School in Northeast Philadelphia, committed suicide in May 2009, shortly before the federal fraud charges were announced at that charter school.

By 2009, Gizaza said, Cynwyd had a net income of $2.36 million from its contract with Agora and from rent for Agora's headquarters, which Cynwyd owns.

Barbara Ann Browne, testified that she had worked for Cynwyd as Brown's executive assistant from July 2008 until the fall of 2009. Browne said she and Brown were Cynwyd's only employees.

Browne told jurors that many of her Cynwyd paychecks were drawn on the account of Laboratory. She said she was later listed as a Lab employee, although she never did any work for that school.

Also Tuesday, an auditor from the Inspector General's Office of the U.S. Department of Education described $138,000 in questionable credit card expenses from 2006 to 2011 that Brown's schools had paid for codefendant Michael Slade, Brown's great-nephew.

Michael B. Janney said Slade, who became CEO of Laboratory, had credit cards in his name from that school, Ad Prima, and Main Line Academy.

The credit card tally included $14,700 for fuel; $1,195 for car washes; and $26,614 for food. The top food tab was $750 from a restaurant on Aug. 31, 2011.

Under cross-examination by Slade's lawyer, Andrew J. Bellwoar, Janney acknowledged he had not discussed the bills with Slade and did not know if that restaurant bill was for a back-to-school event for Lab's teaching staff.

The trial resumes Monday.


martha.woodall@phillynews.com

215-854-2789

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