Geoffrey Canada Wages War On Traditional Public Schools

In case you missed this, charter school operator and real estate magnate Geoffrey Canada declared war on traditional public schools yesterday.

The quote comes from a Times story about Michaelle Rhee's education reform group starting a New York chapter called StudentsFirstNY with plans to raise $50 million dollars to help close down schools, fire teachers and promote standardized testing.

The article notes that many parents and students actually don't want the policies promoted by this group, but Geoffrey says that's just too bad because this is war and his side intends to win:

“Folks are genuinely looking for opportunities to make peace and not war,” Mr. Canada said. “And I think that’s terrific. But someone has to make war.”

Of course Geoffrey Canada and the millionaire education reformers backed by the Billionaire Boys club intend to win - they've got the money, the press, the resources, and the political access and power.

Even though parents and students (let alone teachers) don't want what they're pushing, as shown by a poll of Swing State voters released by the College Board yesterday:

•A majority of the voters surveyed—55 percent—would actually be willing to pony up an additional $200 a year in taxes to improve education systems. And 78 percent of the voters surveyed say that increased funding for education is necessary, while just 21 percent say it's not necessary.

•So where should the funding go? Voters' top priority is making sure schools can provide arts, music, and physical education classes to all students. In fact, 59 percent say that's extremely important. College affordability is another biggie. Voters want to see any extra money go to holding down tuition at state colleges, universities, and community colleges, with 56 percent of respondents saying that's extremely important.

•Voters don't necessarily place a priority on the issues that the Obama administration has steered money to. Just 31 percent want to see funding go to expand school options, such as charters. And just 24 percent place a priority on merit-pay bonuses for teachers. School choice doesn't seem to register much either—just 17 percent of voters want to see money for vouchers to help low-income parents pay for private schools.

So at the very least, voters in Swing States don't want the school closures, merit pay, teacher firing policies being promoted by the education reform movement and the Obama administration and happily touted by a shill like Geoffrey Canada when he goes on NBC's Education Nation or helps Mayor Bloomberg overturn term limits to run for a third term

Given the battles we have had in New York City over Bloomberg's policies of school closures, charter co-locations and Endless Testing and the high unpopularity of those policies in poll after poll, you can be sure New York parents and students don't want what the corporate education reformers are selling either.

But that won't stop these billionaire-backed corporate education reformers from trying to get their way on EVERYTHING.

As Mr. Canada said, this is war and they intend to win with their scorched earth policy.

So far, it's worked.

But clearly they're worried that once Bloomberg goes, they wont win every battle anymore.

Not to fear - with the corporate media, the corporate politicians and a governor with a suitcase full of hedge fundie/education reformer cash, I suspect not much will change come 2014.

Parents and students STILL won't want the policies these people are promoting - but they will be getting them anyway.

But that won't matter - you see, in 21st Century America, it's one billionaire, all the votes.

And that's one other policy these reformers are selling - a vision of America where the rich, the powerful and the connected make all the decisions and if you don't like it, it's just too damned bad.

You see, this is war.

City Councilwoman: Harlem Children's Zone Looks Like "Crunchy, Earthy White Liberals"

The Harlem Children's Zone was the subject of scrutiny and criticism in the City Council:

A nationally celebrated Harlem non-profit whose founder was held up as a powerful education reformer in the documentary "Waiting for Superman" was called into question Monday during a City Council hearing on a study that questioned its effectiveness.

Harlem Children's Zone, which is run by Geoffrey Canada, did about the same as other Harlem charter schools in terms of academic achievement from 2007 to 2009, according to a study released by The Brown Center on Education Policy at the Brookings Institute last year. The City Council held a hearing Monday to discuss its effectiveness.

The Zone funds and operates what founder Canada calls a "pipeline" of social services for low-income families in about a 100-block area. It spends an average of $5,500 per child, thanks to generous funding from corporations (Canada is featured in American Express ads). It also runs two charter schools.

Given HCZ's prominence in New York and President Obama's call for similar "Promise Neighborhoods" around the country, Brooklyn City Councilman Al Vann said he wanted to hold a hearing over concerns raised in the Brookings study.

...

There was an awkward moment when Bronx councilwoman Helen Foster asked how many staffers at the Harlem Children's Zone come from its local community. Shoemaker told her 50 percent of her staff is locally hired.

"I'll be very honest," Foster responded to the all-white panel. "When I walked in and looked at the room I thought maybe I misunderstood because Harlem Children's Zone, I thought maybe there would be someone talking to me who looked like the kids and the families that we're saving. And that is still most shocking to me. Because right away I then have to put down my guard of the crunchy, earthy white liberal that's going to come save us from ourselves, and 'Look what we've done.'"

Foster went on, choosing her words carefully, to say "it would be very interesting to have heard from someone that is black or Latino that either has or has not come out of the cycle of poverty talking about a program that I think, an operation, that I think is very important and has results."

Two interesting points about For Profit Geoffrey Canada's HCZ:

First, given all the money that they've raised (including $20 million from Goldman Sachs) and given all the money they spend, their results are no better than other charter schools in the neighborhood.

Maybe For Profit Geoffrey isn't the genius he and his p.r. people and the shills in power say he is?

Second, it is interesting that the HCZ didn't have one person of color on the panel at the City Council hearing.

The HCZ says 50% of staff is locally hired.

Perhaps.

But to do what?

Clearly not to do the kinds of things that get you on a panel to defend organization at a City Council hearing.

NY Times: Private Schools Dump Problem Students

I am shocked, shocked to find out that the NY Times is reporting that private schools throw problem children out of school rather than find ways to help them:

Thousands of parents trying to get their children into private schools are now busy mailing thank-you cards to admissions offices and biting their nails while waiting for word back.

But for a small number of parents who prevailed through this gantlet in the past, this time of year brings another kind of notice — that their child is on thin ice — as an even more painful process begins: the “counseling out” of students who are not succeeding.

Not discussed on schools’ tours or in their glossy pamphlets, counseling out is nonetheless a matter of practice at many private schools. Unlike the public school system, private schools are not obligated, and often not set up, to handle children having trouble keeping up.

“There are some kids that we’re not going to renew,” said Pamela J. Clarke, the head of the Trevor Day School in Manhattan, “either because they can’t do the work and we’re not serving them, or generally, that might be combined with behavior issues we can’t win.”

“That means he or she needs a different school,” Ms. Clarke said.

Schools do not publicize how many students they remove this way, but the number is generally a small portion of the enrollment. But some Web sites for parents have offered the suspicion that schools remove lagging students to protect another statistic that schools do publicize: their students’ admissions rates to top colleges.

Gee - massaging stats by getting rid of the "laggards" who will hurt the overall numbers.

That's just what the charter schools do!

Traditional public schools, on the other hand, actually try and help students even when they may be harming the overall stats of the schools:

Bennett Allen, now 28, said he was asked to leave the Dalton School a month before the end of eighth grade for disciplinary problems like buying and sharing cigarettes and for falling behind in some classes.

“I was very young, and I was testing the limits,” Mr. Allen said. At the Beacon School, the public school he ended up in, teachers took him more firmly under their wing, he said, and helped him channel his rambunctiousness. “Dalton was kind of like that parent who rather than play with their kid and encourage and grow their curiosity, brings it to the doctor and gets them Adderall instead,” he said.

Dalton, asked about its counseling-out practices, said only: “Together with families, Dalton works to serve the students’ best interests, so they may thrive and be successful.”

Mr. Allen acknowledged that he was better off having transferred to a school that met his needs, albeit in a less prestigious setting. “It was the biggest favor they ever did for me,” he said of Dalton’s move. He went on to Columbia University and is now an investigator for the United States Labor Department.

He says he bears no grudges toward the school. Well, maybe one. “I still get their letters asking for donations,” he said. “I’m not giving them a cent.”

The dishonesty of so many in the charter industry and the private school industry over "student dumping" and "counseling out" bothers me to no end.

That the media doesn't call them on the hypocrisy is the bigger problem, however.

Kudos to the Times for calling some private schools on this.

Now the Times should take a VERY close look at the Harlem Children's Zone, Harlem Village Academies, KIPP and others and expose how they massage their stats by dumping all the problems into traditional public schools (usually right around test time.)

If Class Size Doesn't Matter...

...than I guess Geoffrey Canada will be raising class sizes at his Harlem Children's Zone schools from 15 to 38?

Just saying.

Goldman Sachs, Dirty Money and the Harlem Children's Zone

Goldman Sachs gave a $20 million grant to the Harlem Children's Zone through it's charity wing, Goldman Sachs Gives.

According to Geoffrey Canada, founder of the HCZ, that money will enable the organization to build a new school, among other things.

Isn't that wonderful!

But how much of that money Canada and the HCZ is receiving from Goldman Sachs was made from human misery and/or criminal activity?

In April, Goldman Sachs was charged by the S.E.C. with fraud in the structuring and marketing of a CDO (collateralized debt obligation) tied to subprime mortgages.

Goldman settled that case in July, agreeing to pay $550 million dollars in the settlement. Goldman did not admit wrongdoing, but did agree to pay the fine for "marketing materials for Abacus 2007-AC1 that contained 'incomplete information.'"

In other words, they lied to the people they were selling their financial product to. They made believe the product had some value when they knew that it was essentially worthless (full of mortgages that were in danger of default.) In fact, Goldman even made side bets AGAINST Abacus 2007-AC1.

Here is how Bloomberg News described the transactions:

April 17 (Bloomberg) -- From July 2004 through April 2007, as credit markets boomed, Goldman Sachs Group Inc. created 23 financial transactions called Abacus, the word for a relatively crude counting tool involving the shuffling of beads.

Yesterday, the Securities and Exchange Commission sued the bank for securities fraud in what would be the penultimate offering in the series, according to Bloomberg data.

The bank used the deals to off-load the risk of mostly subprime home loans and commercial mortgages to investors, either as hedges for similar positions or to bet against securities itself. While the data show New York-based Goldman Sachs issued at least $7.8 billion of Abacus notes, the risk passed to investors was multiples higher.

The Abacus transactions are so-called synthetic collateralized debt obligations, which marry two financial innovations that contributed to the worst collapse in financial markets since the Great Depression.

The financial tools, often called technologies, are credit- default swaps, used to transfer the risk of losses on debt, and securitization, used to slice the risk in a pool of assets into various new securities.

Abacus deals were filled with default swaps that offered payouts to Goldman Sachs if certain mortgage bonds didn’t pay as promised, in return for regular premiums from the bank.

Some of the cash needed for the potential payouts to Goldman Sachs would be raised upfront, and essentially placed in escrow, from sales of Abacus CDO notes with varying ratings. The grades were tied to how many of the underlying securities needed to default before the CDO classes would.

Such securitization enabled debt with the lowest investment-grade ratings to be transformed, in part, into AAA securities that turned out to not be as safe as that ranking suggested. At least $5 billion of Abacus slices now carry junk ratings, below BBB-, from Standard & Poor’s, or have defaulted, Bloomberg data show.

The SEC said that Goldman Sachs created and sold Abacus 2007-AC1 without disclosing that hedge fund Paulson & Co. helped pick the underlying securities and also bet the CDO would default. Paulson was proved correct, and his hedge fund eventually turned a $1 billion profit and CDO investors lost a similar amount, according to the SEC.

So Goldman made money both coming and going - they sold a worthless financial product that was guaranteed to go belly up to their customers without telling them it was worthless, then made MORE money by betting against that very product themselves.

Ingenious - no wonder they call these guys Masters of the Universe!

But that's not the only fraudulent way Goldman Sachs makes money.

Goldman Sachs also owns Litton Loan Servicing - a company that has been sued numerous times for all kinds of fraudulent business practices.

Back in 2005, customers of Litton Loan charged the company with fraud in a class action lawsuit:

The Nationwide Class alleged claims based on violations of the Real Estate Settlement Procedures Act ("RESPA") relating to Litton's improper actions in imposing late fees or treating payments as late during the 60-day grace period following the effective date of loan transfer if a borrower sends a payment to his or her old servicer on time. The California Subclass alleged claims based on violations of California law relating to Litton's unfair business acts and practices with respect to the servicing of loans.

Litton Loan settled that case in 2009, but since the court found that the plaintiffs had not "established the elements needed to determine predominance or superiority on their claim for actual damages," statutory damages were capped at $500,000 for the entire Class.

This class action lawsuit was far from the only complaints against Litton Loan Servicing. Here is a whole host of complaints at Consumercomplaints.com (66 pages of them!) against Litton.

Here is one complaint about Litton from that site:

PATRICIA of CHICAGO, IL September 20, 2009

In December 2005/January 2006, without our knowledge or consent, our mortgage was sold to Litton Loan. Before we knew what hit us, our home was foreclosed. In January 2007, we read in the daily newspaper that our house was being "sold" and actually went to the "foreclosure sale." We were directed to the offices of Pierce & Associates -- the equally atrocious bulldogs who are rubber-stamping case-after-case amassing exorbitant attorney fees and court costs in the Foreclosure Court on behalf of Litton Loan. Finally, an agent of Litton sent a fax through Pierce with a Forbearance Agreement; and DESPERATE to keep our home, we made lump sum and monthly payments over the next 10 months in excess of 47,000.00 (I have copies of the cashiers checks). During this time, we attempted to contact Litton Loan hundreds (maybe even thousands) of times. Either the voicemail box was full and we couldn't leave a message, or the voicemail indicated the agent was helping another customer and would return our call in 72 HOURS. On occasion, we were fortunate enough to connect to a "live" person, they were clueless as to our situation, some became rude and condescending, and more often they said we needed to speak to a supervisor because according to their records, our home was foreclosed. EVERY TIME IT WAS A DIFFERENT AGENT, WITH THE NAME OF A "NEW" SUPERVISOR. Guaranteed they have a HUGE EMPLOYEE TURNAROUND!

To date, we have no evidence that our OVER 47,000.00 was ever applied to our mortgage loan. In January 2007, we retained a foreclosure firm who called off the dogs and ATTEMPTED but FAILED to negotiate with any one Litton officer. They would come to terms, and Litton was penalized on more than one occasion, but then the Litton player would change, and we were right back to square one. Well, the Sheriff's Officers came to the door with battering rams to evict us. They gave us ten (10) days. A week later, a Notice of Eviction was served on THE WRONG PARTY! They didn't even have our names on the complaint. We looked like fools in the eviction court, and refused to be under the jurisdiction of the Court. Simultaneous, we hired an attorney to file a complaint in the Foreclosure Court, and on October 14, 2008, the Circuit Court of Cook County, Illinois ordered: This cause coming to be heard on Defendant's Motion to Quash Service of Summons, upon due notice, and the Court being fully advised: It Is Hereby Ordered: That the Defendants having met their burden of proof, the Motion to Quash Service of Summons is granted, and all orders and the issued deed are void ab initio.

THEREAFTER, WE CONTACTED LITTON A HUNDRED MORE TIMES, EACH TIME WE WERE TOLD OUR HOME WAS SOLD! WE TRIED TO SECURE A MORTGAGE FROM SEVERAL OTHER LENDERS, BUT WERE TOLD OUR CREDIT HAD THE FORECLOSURE AND THEY EITHER COULD NOT NEGOTIATE WITH LITTON BECAUSE THEY WERE NO LONGER THE LENDER, OR LITTON DID NOT RETURN THEIR CALLS. Last month, the attorney that handled the motion to quash service sent a letter stating that ONE WEEK following the hearing, Litton claims to have served us with foreclosure papers; and the house was again foreclosed! LITTON NEVER GAVE US A CHANCE TO SECURE A MORTGAGE FROM THEM OR ANY OTHER LENDER AFTER WE PREVAILED IN THE FORECLOSURE COURT. The attorney wants another 3,600.00 to go through the same process in Court and reverse the foreclosure. WE WERE NEVER SERVED ON OCT 27 2008. Not only do we want to sue the process server, LITTON LOAN, and their agents, but more importantly we WANT TO SECURE A REVERSE MORTGAGE FROM A LENDER!!! PLEASE HELP US!

There are lots of other outrageous complaints against Litton there, many as heartbreaking as the one above. Litton Loan Servicing is creating lots of misery in the world, much of it because they just don't seem to care about details, circumstances, ethics or even the law when it comes to dealing with their customers.

And unfortunately the way Wall Street works these days, you can become a Litton Loan customer without intending to if your original mortgage company sells your mortgage to them, as has happened to hundreds of thousands of people.

Also as we can see from this NY Times article on October 13, 2010, Litton Loan Servicing isn't exactly hiring "professionals" to do its business either:

At Litton Loan Servicing, an arm of Goldman Sachs, employees processed foreclosure documents so quickly that they barely had time to see what they were signing.

“I don’t know the ins and outs of the loan,” a Litton employee said in a deposition last year. “I’m not a loan officer.”

And yet this employee was doing loan officer work.

So Litton is using amateurs to process its foreclosures, throwing tons of people out of there homes without cause, charging fees they shouldn't be charging for loan payments that weren't actually late, and claiming people are in default on their mortgages even when they aren't.

And they're getting away with this, as is the company that owns them, Goldman Sachs.

Goldman also owns a substantial part of for-profit education company Art Institute which according to Bloomberg News peddles degrees for up to $100,000 that students later find are "worthless."

So here is this company that has sold toxic financial products that it knew was worthless to customers without telling them while shorting those very same products, owns a loan servicer that is scamming hundreds of thousands of people all across this country and owns a 38% stake in a for-profit education company that offers worthless degrees for as much as six figures that leave students in debt up to their eyeballs but without gainful employment.

Let me ask the question again, how much of the $20 million that Geoffrey Canada and the Harlem Children's Zone received from Goldman Sachs was made from human misery and/or criminal activity?

How much of that money came from somebody who fraudulently lost their house to Litton Loan or had to pay late fees for mortgage payments that weren't actually late?

How much of that money came from students who paid for a worthless degree from Art Institute and are working as strippers or grocery clerks to pay off their loans?

How much of that money came from investors who bought into a Goldman financial product that Goldman knew was worthless and who lost their shirts in the Housing Bubble collapse?

And what does it say about both Geoffrey Canada and the Harlem Children's Zone that they're happy to take the money made from shady foreclosures, fraudulent mortgage fees, garbage college degrees at diploma mill universities, and worthless collateralized debt obligations that were hawked to naive investors as something of value?

The old saying goes that you are what you eat.

The same can be said for non-profit organizations that claim to be doing good in the world.

They are where they raise their funds from.

Given how Goldman Sachs makes its money, Geoffrey Canada and the Harlem Children's Zone ought to be ashamed that they have taken even one cent from Goldman and should give back the entire grant.

Sure Canada can build a new school with that money.

But how many people have had their lives destroyed by Goldman Sachs, lost their homes or their savings to these crooks, in order for Mr. Canada and the HCZ to build that school?

Charter Schools: The Most Accountable Entities In The Western Hemisphere

The NY Post has been running a series the past few weeks called "War on Charters."

The gist of the series is that the valiant folks running charter schools are up against big, powerful, wealthy forces trying to destroy them.

Today's article is typical - charters are wonderful, they have smaller class sizes, the buildings and facilities are nicer than regular public schools, the kids are engaged in learning, parents are involved - why would anybody want to be opposed to the charter school movement?

Here's my favorite quotation:

"Anyiha goes to a school where classrooms are small, her parents are involved in her homework, she studies violin and piano -- she's engaged, and she wants to learn. This is what we all should have, and it's needed, especially in black communities," Mcbean said.

Indeed, it is what we should have in every school, especially in the black community, and yet we don't.

Of course charter advocates say it is the big bad teachers unions that are the problem - just bust the unions and destroy their stranglehold on public education and every school will be just like the one little Anyiha attends.

But on the face of it, that's laughable. If the powers that be wanted every public school to look like the one little Anyiha attends, they would actually FUND them.

But they don't. Because they're not looking to actually improve the quality of education, they're looking to bust the union and privatize public education (as they have privatized and deregulated every other major part of American life since the Reagan 80's - from the way we fight our wars with Halliburton running things to the way quarterly results on Wall Street seem to be the only gauge of success these days.)

So let's bust some of those myths the Post has been running with the past few weeks and in the process explain just why Rupert Murdoch and other charter advocates are so scared by any outside accountability of the charter school movement (and they must be terrified, actually, because Murdoch ran 8 pro-charter, anti-union stories on the same day State Senator Bill Perkins held hearings on charters.)

First off, charter schools are not tiny powerless entities up against big powerful wealthy forces. Quite the opposite - they are the big powerful wealthy forces, backed by the hedge fund industry and Wall Street, with access to hundreds of millions of investment dollars across the country.

Next, they have some very powerful political advocates looking out for their needs (unlike the regular public schools.) Here in NYC, charter school managers like Eva Moskowitz have direct access to Schools Chancellor Joel Klein and can get him to do things like close other public schools to give the charters more room or invite him to poker tournament fund raisers with all the hedge fund managers and Wall Street execs taking some time off from shorting the mortgage market to help raise some cash for charter schools.

Let us also not forget that the mayor, the governor, the president and the secretary of education are all huge fans of charter schools and have been doing all they can to spread the movement far and wide while also doing all they can to hurt unionized teachers (think Central Falls, Rhode Island.)

Finally, let us remember that the reason charters have so many motivated children with motivated parents or guardians is because the movement ONLY accepts motivated children with motivated parents. Show yourself to NOT be motivated and you get counseled out of your charter school really, really quickly (and you disappear from the state stas on schools too.)The same goes for scoring well on tests - score low consistently and the charter school will counsel you out (or have enough non-motivated students with low test scores - like one year at the Harlem Children's Zone - and they may just close down an entire grade. Helps with the overall statistics, you know.)

So the Post can say war has been declared on charter schools and the big bad teachers unions are out to destroy the tiny powerless intrepids just trying to give small classes, good teachers and state of the art facilities to underprivileged kids of color all they want.

But of course it is all jive. What they really want to do is bust the unions and open up public education to private enterprise and for-profit school management companies like Imagine Schools.

The Times ran a four page article on Imagine Schools and found that the charter management company

has elbowed the charter holders out of virtually all school decision making — hiring and firing principals and staff members, controlling and profiting from school real estate, and retaining fees under contracts that often guarantee Imagine’s management in perpetuity.

The arrangements, they say, allow Imagine to use public money with little oversight. “Under either charter law or traditional nonprofit law, there really is no way an entity should end up on both sides of business transactions,” said Marc Dean Millot, publisher of the report K-12 Leads and a former president of the National Charter Schools Alliance, a trade association, now defunct, for the charter school movement.

“Imagine works to dominate the board of the charter holder, and then it does a deal with the board it dominates — and that cannot be an arm’s length transaction,” he said.

Imagine is a private for-profit company that calls itself non-profit and runs schools with public money - making millions in the process.

Imagine charges exorbitant rates to its schools for "rent" - according to the Times article, a charter school in Nevada called 100 Academy pays 40% of the $3.6 million it receives from the state to Imagine Schools for rent.

That's an awful lot of rent money, isn't it?

In addition, they charge a fee to "manage" the school, leaving very little left over to actual run the school and educate the children.

How's that for leaving no for-profit charter school management company behind?

In Philadelphia, a city controller's report found after a year-long investigation

repeated examples of complex real estate arrangements in which charters leased or rented facilities from related nonprofit organizations, excessive salaries for chief executive officers, compliant boards whose members are handpicked by school chiefs, and rampant conflicts of interest.

The controller also concluded that the Philadelphia School District had failed to monitor charter schools, leaving it and taxpayers "extremely vulnerable to fraud, waste, and abuse."

Here is New York City, politicians found charter schools and move them to land owned by political donors, even if that means sticking the kids in trailers on barren, undeveloped land near the ocean.

Or charter operators pay themselves close to $400,000 dollars to "manage" three charter schools with fewer than 1000 students - a much higher salary than principals in regular public schools make. In fact, it is a higher salary than the schools chancellor makes or the secretary of education makes.

Or charter operators dole out the nepotism and conflicts of interest to family and friends as the Daily News reported on this week:

At some New York City charter schools, it's a family affair.

A Daily News investigation has found some charters hiring wives, husbands and children of school officials and board trustees as vendors, teachers aides and consultants.

Employees of public schools face penalties and suspension for even minor conflicts of interest, such as the teacher fined $1,250 last week for lending her parking permit to her husband.

But at some charters - which are publicly funded but privately run - there's little worry about bringing family members on board.

At the hearing on charter school financing held by Bill Perkins this week, charter advocate and New York Charter Schools Association Policy Director Peter Murphy said that charter schools are the "most accountable entities in the Western hemisphere."

Given the financial improprieties found in charters all across the nation, the test score manipulation schools like the Harlem Children's Zone engage in by getting rid of an entire class of students when the test scores aren't high enough, the financial predation of the charter school management companies, and the nepotism and conflicts of interest so many charter operators engage in, charter schools are actually the LEAST accountable entities in the Western Hemisphere.

Only the derivatives markets and hedge fund industry seem to be less accountable than charter schools these days.

And look at the mess they've created.

Another Wall Street Crook (and Charter School Supporter)

That would be Dick Fuld, former Chief Crooked Officer at Lehman Brothers.

It is the Wall Street equivalent of a coroner’s report — a 2,200-page document that lays out, in new and startling detail, how Lehman Brothers used accounting sleight of hand to conceal the bad investments that led to its undoing.

The report, compiled by an examiner for the now-bankrupt bank, hit Wall Street with a thud late Thursday. The 158-year-old company, it concluded, died from multiple causes. Among them were bad mortgage holdings and, less directly, demands by two rivals, JPMorgan Chase and Citigroup, that the foundering bank post collateral against loans it desperately needed.

But the examiner, Anton R. Valukas, also for the first time laid out what the report characterized as “materially misleading” accounting gimmicks that Lehman used to mask the perilous state of its finances. The bank’s bankruptcy, the largest in American history, shook the financial world. Fears that other banks might topple in a cascade of failures eventually led Washington to arrange a sweeping rescue for the nation’s financial system.

According to the report, Lehman used what amounted to financial engineering to temporarily shuffle $50 billion off its books in the months before its collapse in September 2008 to conceal its dependence on leverage, or borrowed money. Senior Lehman executives, as well as the bank’s accountants at Ernst & Young, were aware of the moves, according to Mr. Valukas, a partner at the law firm Jenner & Block, who filed the report in connection with Lehman’s bankruptcy case.

Richard S. Fuld Jr., Lehman’s former chief executive, certified the misleading accounts, the report said.

“Unbeknownst to the investing public, rating agencies, government regulators, and Lehman’s board of directors, Lehman reverse engineered the firm’s net leverage ratio for public consumption,” Mr. Valukas wrote.

Mr. Fuld was “at least grossly negligent,” the report states. Henry M. Paulson Jr., who was then the Treasury secretary, warned Mr. Fuld that Lehman might fail unless it stabilized its finances or found a buyer.

Lehman executives engaged in what the report characterized as “actionable balance sheet manipulation,” in addition to “nonculpable errors of business judgment.”

The report draws no conclusions as to whether Lehman executives violated securities laws. But it does suggest that enough evidence exists for potential civil claims. Lehman executives are already plaintiffs in civil suits, but have not been charged with criminal wrongdoing.

Not yet, at any rate.

But hopefully Fuld and the rest will be taken to the cleaners in civil court.

Just the way taxpayers were taken to the cleaners by Lehman and Bear Stearns and the rest.

And of course Fuld is another one of those Wall Street hot shots who helps finance charter schools.

In his case, the Harlem Children's Zone

Or at least he did, before the collapse of Lehman.

Those were the days when he used to say things like "Look, I'm pissing thousand dollar bills these days. And I drink a lot of water. So I make a lot of piss. Whatever you need, you got."

Hank Greenberg of AIG also gave money to HCZ.

Ahh, American philanthropy - stolen money handed out to charter schools in order to subvert the "public" part of the public education system and help socialize children to become good, compliant, obedient corporate employees.

It's the American way.

Harlem Children's Zone-Berkeley College Update

In response to this post here, Marty Lipp, the Communications Director at the Harlem Children's Zone says HCZ has no "business relationship" with Berkeley College or any other for-profit college.

Lipp says high school juniors and seniors at the HCZ programs are given a menu of colleges to apply to and Berkeley College just happens to be one of the choices on that menu. The menu also contains CUNY and SUNY schools as well as non-profit colleges and universities like Columbia and NYU.

He also says students are directed to apply to the SEEK program at CUNY schools, the EOP program at SUNY schools and the HEOP program at non-profit institutions if students fit the academic and financial criteria.

Lipp says the majority of HCZ students attend CUNY schools, though there are some at SUNY colleges and universities, a few at non-profit institutions, and a few at Berkeley College.

He says the students at Berkeley College are "doing well." When I asked what "doing well" meant, he said the contact that students at Berkeley have had with staff at HCZ has not raised any "red flags" that there are problems.

I am heartened to hear Mr. Lipp say that Harlem Children's Zone has no "business arrangement" with Berkeley College.

I am also heartened to hear that the staff at the HCZ counsel students to apply to CUNY, SUNY and non-profit schools and suggest the specialized SEEK, EOP, and HEOP programs when applicable.

And yet, something troubles me about the presence of Berkeley College on the menu of school choices made known to students.

Berkeley College is a non-profit institution that charges a little less than $30,000 a year for classes in a Bachelor's Degree program. So a Bachelor's Degree from Berkeley College will cost just under $120,000.

Now $120,000 is a lot of money for a college degree from even a reputable school, but from a proprietary school like Berkeley College, it is ridiculously overpriced. And while Berkeley College does not have notoriety of Interboro, Katherine Gibbs, or other scam schools, current and former students do not rank the school very high in their estimation and overwhelmingly say they would not attend there again if they could do their schooling all over (see here and here for some student reviews of the school.)

Berkeley offers nothing that the much cheaper and more reputable CUNY and SUNY 2-year and 4-year programs offer, so I don't understand why the Harlem Children's Zone has Berkeley College on it's list of schools for students to apply to when they're high school seniors.

If the goal of the Harlem Children's Zone is to, as they say on the website, use their "'whatever it takes' attitude when it comes to helping children to succeed," and "evaluate and track the results of their work" in order "to take corrective actions if they were not," they might want to track the outcomes from the students who attend Berkeley College or any other for-profit post-secondary school that they offer as options on their college lists.

What are the graduation rates of students who attend those schools? What is the debt level? Do they work in their chosen fields when they graduate and if so, for how long? More importantly, could they have worked in those chosen fields without the dubious credential they paid either $60,000 or $120,000 to receive? And finally, do the students who graduate from these institutions make a livable wage that enables them to pay off the loans they had to take out in order to attend these for-profits.

The reality is that the typical student who attends the Harlem Children's Zone programs would go to CUNY for free + receive money for books and expenses from the federal Pell Grant program, the state TAP program, and perhaps even the SEEK or College Discovery program. That same student would perhaps have to take out a $5,000 loan a year to attend a SUNY school where tuition, room, and board is about $17,000 (Pell, TAP, and EOP grants usually cover the rest.) Non-profit institutions like NYU and Columbia can be much more expensive, but if the student is academically eligible for the HEOP program, they can go for a fraction of the cost of the tuition and receive a very reputable education and valuable credential (and some schools cover almost all of the cost for HEOP students - I have had half dozen students attend Syracuse University in the HEOP program for as little as $2,000 a year after receiving federal, state and campus-based aid.)

The reality for students who attend Berkeley College at about $30,000 a year is $15,000-$20,000 a year in loans even after they receive the Pell grant, TAP, and the campus-based aid Berkeley College offers to financially-qualified students.

A low income student who receives a Bachelor's Degree from a 4-year CUNY will complete her/his schooling with little-to-no student loan debt.

A low income student who graduates from a SUNY 4-year school will be carrying some loan debt, but it will be mitigated by the value of the diploma (many of the 4-year SUNY schools are quite good and some, like Binghamton and Stony Brook, are world class.) If the student was part of the EOP program, the loan debt will be pretty small, relative to what colleges cost these days (perhaps about $20,000 in loan debt for all four years.)

But a low income student who graduates from Berkeley College will graduate with $60,000-$80,000 of loan debt.

That's an awfully big debt to start out your adult life with, but especially so if you took it on getting a degree from a school like Berkeley College.

So just checking in with former HCZ students now attending Berkeley College to see if there are any "red flags" isn't doing enough for them.

I meet with every senior I teach in the fall semester to talk about their college plans, their financial situations, etc., and when I saw that every student I had in my class who was also in the Harlem Children's Zone had Berkeley College on their lists of colleges to apply to, I grew concerned. When I called one of the sites back in the fall, I was told by one of the coordinators that HCZ had a "business arrangement" with Berkeley College, which is why students were given that college to put on their list of prospective schools. I asked for more information about this arrangement and was told I would hear back from somebody about this, but never did. I called again last week about this concern, again was told I would hear back from somebody at HCZ, but never did.

It wasn't until I blogged about my concerns that suddenly the HCZ was concerned about my concerns. Mr. Lipp told me that the person I talked to earlier who noted a business arrangement between HCZ and Berkeley was "not authorized to speak for the organization" and was uninformed about the subject.

Perhaps that is so. But when I spoke to another site coordinator this week, I was told that a group from Harlem Children's Zone including this person had just toured Berkeley College. So while I will take Mr. Lipp at his word that Harlem Children's Zone does not have a business arrangement with or receive any money from Berkeley College, I would also note that they're not exactly warning kids about the dangers of the for-profit schools when the staff is also getting a tour of the facilities there.

I will assume nothing nefarious goes on here, that the Harlem Children's Zone folks do not see proprietary schools with the same skeptical eyes that I do. Having heard from too many students who had been suckered in by the sales pitches at Berkeley College, Art Institute, Laboratory Institute of Merchandising and elsewhere who were left with somewhere between $30,000 and $80,000 dollars in debt and either useless credentials or college credits that wouldn't transfer to any reputable school, I believe students need to be made aware of the dangers and track records of these schools.

This doesn't mean that CUNY, SUNY and non-profit institutions do not have their problems, only that they are nowhere near as pronounced and troubling as the ones I see at the for-profits schools.

Geoffrey Canada and the For-Profit Colleges

Geoffrey Canada, CEO of the Harlem Children's Zone, is the darling of the education "reform" movement.

I will leave the skepticism about Canada's "Harlem miracle" to others for now (see here and here for that) and focus on something else about Harlem Children's Zone that concerns me.

I teach in NYC and my seniors who belong to an after school program run by the HCZ all talk about wanting to go to Berkeley College (not the the California university, the for-profit one.)

Many of these are students in need of remediation, many of whom will be the first in their families to attend a post-secondary school. So they are desperately in need of good guidance and counseling.

I suggest either CUNY or SUNY schools, which are much cheaper than Berkeley College (Berkeley costs nearly $30,000, CUNY $4,000, tuition at SUNY is just over $5,000) and where the quality of education is so much better.

In fact, Berkeley College is barely a college. It's really more of a diploma mill - the kind where they brag about job placement rates rather than graduation rates because so many of their students drop out of school and never complete their degrees.

And while those students may not complete their degrees at Berkeley College, they do have to complete paying for the loans Berkeley loads them up with per year. Proponents of for-profit schools argue that drop-out rates at for-profit schools are no worse than at public 2-year and 4-year schools, and while that may be true in some cases, most public universities are not charging the kind of money Berkeley College is charging per quarter.

For example, a student who attends York College, a CUNY school, who drops out has paid a little less than $4,400 a year for the school. Even if that student was not eligible for a Pell grant, a TAP grant or any other free aid, the amount of loan debt the student would have from the CUNY school would be pretty minimal compared to the almost $30,000 he/she might incur at Berkeley College per year.

Now I suppose there are worse post-graduation choices a student could make than attending Berkeley College and paying $60,000 for an Associate's Degree in criminal justice or $120,000 for a Bachelor's Degree in the same field, but there are certainly many better choices he or she could make - like attending John Jay and receiving an Associate's Degree in criminal justice for $8,800 or a Bachelor's Degree in the same field for just under $17,000

So why is the Harlem Children's Zone, a program that purports to pride itself on academic excellence and high standards, pushing low-income kids to an expensive diploma mill like Berkeley College where an education will cost between $60,000 and $120,000 when more reasonable and more reputable colleges in the SUNY or CUNY system are available?

When I called HCZ, I was told that they have a "business arrangement" with Berkeley College, which is why they suggest students attend there.

I have tried to get more information from HCZ about this "business arrangement" but have been rebuffed since.

So, let's get this out there on the blogosphere. Does anyone know what kind of "business arrangement" Harlem Children's Zone has with Berkeley College that has them pushing kids toward this for-profit school when cheaper and better public universities are available?