First, here's the story:
Three city charter schools are on the hook for thousands of dollars in interest payments to a for-profit management company.
Victory Schools Inc. charges charter schools between $2,000 and $2,700 a student for back office support and help with curriculum planning and hiring.
But if the schools can't pay up, they get socked. The company charged more than $100,000 in interest payments to three of its schools last year alone, using rates ranging from 6% to about 15% if a school pays late.
By comparison, the averagecredit card interest rate wasabout 11% last year, Bankrate.com says.
"No school should be using tax dollars to cover interest payments, especially at credit card rates," said city Public Advocate Bill de Blasio.
Merrick Academy charter school in Queens has paid $85,464 in interest for a loan from Victory over the past three years. The management group charged a 9.85% interest rate, which a spokesman called "competitive."
"This is cash loaned to the school when the school cannot find any other lender," said James Stovall of Victory Schools.
Audits show that the South Bronx Charter School for International Cultures and the Arts was charged $74,050 in interest over two years and was in hock to Victory for $1,132,206 as of last June.
Last year, the New York City Charter High School for Architecture, Engineering and Construction Industries in the Bronx was charged more than $19,000 in interest.
Victory asserts that it has not collected the money from the two Bronx schools, even though the money is listed as part of the schools' expenses.
"It's something [that's] in there because we've made a business decision that there should be an interest fee," said Stovall, "but where we have good relationships, we don't collect it."
Why would there be any shock or surprise that Victory Schools Inc. (I wonder if the crooks who run the company get the Orwellian/1984 irony to their name?) is squeezing the charters it supports for every dime.
That's what for-profit companies do.
It's like saying, I can't believe that shark attacked that swimmer in the wetsuit that made him look like a yummy dolphin.
Makes no sense.
If you want companies like Victory to stop squeezing schools, then stop privatizing the school system.
Otherwise you're going to have lots of parasites and predators looming about taking all that they can.
This is also not the first controversy involving Victory Schools Inc. this year. Juan Gonzalez detailed that back in January:
Hours after rebuffing parents and voting to shut 19 public schools, education officials announced plans to end most programs at Alfred E. Smith High in the Bronx and replace them with a charter school.
That charter school, however, has its own troubled history.
It's called the New York City Charter High School for Architecture, Engineering and Construction Industries (AECI), and it has been in operation fewer than two years.
Last June, a Manhattan federal grand jury charged its founder and chairman, Richard Izquierdo Arroyo, with stealing more than $200,000 from a nonprofit South Bronx housing organization.
Prosecutors say Izquierdo spent the money on designer clothes, fancy restaurants and trips to the Caribbean for his grandmother, state Assemblywoman Carmen Arroyo, and his aunt, City Councilwoman Maria del Carmen Arroyo.
Another board member of the school, Margarita Villegas, an employee of the housing group, was indicted with Izquierdo. Both have pleaded not guilty. They immediately resigned from AECI's board and from the board of the South Bronx Charter School, where Izquierdo was chairman.
Virtually all the teachers who began at AECI when it opened its doors in September 2008 resigned within the first year.
This month, 17 of the 19 new staff members at the school filed a state labor petition to have the United Federation of Teachers represent them.
The angry teachers claim that Victory Schools Inc., the for-profit management company hired by AECI to administer their school, is charging an exorbitant management fee.
Meanwhile, DOE has posted little information on the academic performance of AECI students.
James Stovall, the executive at Victory in charge of AECI, did not respond to a request for comment. Neither did Irma Zardoya, the retired DOE administrator who replaced Izquierdo as chair of AECI's board.
None of these problems seem to trouble the educrats at Tweed.
One day soon, our city will wake up to discover that Bloomberg's mad rush to create hundreds of independent charter schools has unleashed bigger financial scandals than in the bad old days of community school boards.
So Klein and the eduwankers at Tweed wanted to close down a school and replace it with one run by Victory Schools Inc. - the very company charging interest on its support fees to schools.
Klein says he has to lay off senior teachers because they make too much money at the very same time he is paying interest money out to usurious school support/management companies and doing business with gangsters who run mobbed up bus companies.
Something is rotten at Tweed and in Klein's office and it isn't just the education policy.
There is an awful lot of money being pushed into the hands of the wrong people by Klein and his cohorts.
It is time for John Liu to look into this.