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$50 million in state funds reportedly stolen in charter school scheme

Posted at 12:45 PM, May 29, 2019
and last updated 2019-06-08 14:59:40-04

SAN DIEGO (KGTV) -- An Australian national and his Long Beach business partner are accused of siphoning more than $50 million from the State of California in a years-long charter school scheme.

According to the San Diego District Attorney, the pair sought out small school districts with limited experience in oversight and proposed they start online charter schools to earn more public funds.

Sean McManus, 46, and Jason Schrock, 44, the CEO and president of A3 Education, along with nine other people named in the case have been indicted in San Diego County.

Criminal counts include conspiracy, misappropriation of public funds, paying for student information and conflict of interest.

A year-long investigation uncovered a massive scheme in which McManus and Schrock told subordinates and co-defendants to open a total of 19 charter schools in both San Diego County and statewide, according to the DA.

The charter schools are listed below:

  • Valiant Academy San Diego
  • Valiant Academy Los Angeles
  • Valiant Academy Santa Barbara
  • CA STEAM San Bernardino
  • CA STEAM Sonoma
  • CA STEAM Sonoma II
  • CA STEAM Santa Barbara
  • Uplift California Monterey
  • Uplift California North
  • Uplift California South
  • Uplift California Santa Barbara
  • California Academy of Sports Science
  • California Academy of Sports Science Fresno
  • California Vanguard Fresno
  • University Prep
  • University Prep Fresno
  • University Prep San Bernardino
  • California Prep Sutter K-7
  • California Prep Sutter 8-12

“These defendants engaged in a devious, systematic public corruption scheme on the backs of students, their parents and the public that over time diverted millions of taxpayer dollars into their own pockets,” District Attorney Summer Stephan said. “Our team of investigators and prosecutors uncovered widespread misappropriation of public funds that extends across the state.”

Co-defendants in the case who worked under McManus and Schrock at the charter schools reportedly failed to disclose their relationship with the men when starting the schools, claiming to be the schools’ leaders.

McManus is charged with 64 counts and is facing more than 40 years in prison if convicted. Schrock is charged with 62 counts and also faces more than 40 years in prison, Stephan said.

On top of creating the charter schools, both McManus and Schrock are accused of running another scam that paid athletic organizations for student information.

The pair reportedly paid pre-existing youth programs as little as $25 per student for enrollment documentation and would then enroll the students into a charter school during the summer, collecting roughly $2,000 per student from the state.

McManus and Schrock are then accused of transferring more than $50 million in public charter school funds into companies the pair own or control. Instead of spending the money on education, once the money was in private bank accounts, both men are accused of using the funds for themselves and their families.

According to authorities, McManus and Schrock used the money to invest in startup companies, real estate, and wired money directly to themselves or family members. Most of the money obtained from the state ended up in the pockets of McManus and Schrock, the District Attorney's office said.

San Diego's District Attorney held a news conference Wednesday morning. Watch the conference in the player below: