Charter operator misdirected $12 million, audit finds

The executive director of a Santa Ana charter school that left students scrambling when it closed last year funneled more than $12 million in state funds to several businesses owned by him, his supposed wife and their friends, according to an audit unveiled Tuesday night.

Financial irregularities were among several questionable acts at the Albor Charter School, which primarily served Latino immigrants and received $25 million in state funds from 2002 until 2006. The audit findings have been turned over to the Orange County district attorney’s office and the California Department of Education for further review, said Wendy Benkert, assistant superintendent of business services at the county Department of Education.

“These things have all been turned over to the district attorney, who has subpoena power, and they will investigate this further,” she said after presenting the audit to the Santa Ana Unified School District Board of Trustees.

Charter schools are independently run public schools freed from some rules and constraints that apply to traditional public schools. Santa Ana Unified trustees approved Albor’s charter in 2002. The school offered a flexible schedule that included evening classes and child care. The audit found that the school district’s oversight of the charter was diligent.

In 2005, allegations of questionable spending, fiscal mismanagement and conflicts of interest led the district to revoke Albor’s charter. A legal battle allowed the school to stay open the next school year. But founder and executive director Emilio Vazquez abruptly closed Albor in March 2006 -- without giving notice to students or staff -- after its state funding was severely reduced by a change in state law that no longer provided funding for students older than 22.

When charter schools close, they are supposed to perform financial accounting that lists their liabilities and assets. Because Albor failed to do so, and because of concern about potential fraud and misappropriations of funds, the county Department of Education called in a state team to perform an “extraordinary audit.”

The 118-page report found that Vazquez had delegated administrative operations of Albor and funneled more than $12 million in state funds to MI-Vocational School, a business he also controlled. Some of this money was then given to Vagabond Entertainment, EMPE Inc., A&E; Financing Inc. and other companies controlled by Vazquez, his supposed wife, Astrid Reibe, and their associates Pedro Sole, Martin Ramirez and Edgar Villagomez.

Benkert said it was unclear what these companies did or how the money was spent. “They didn’t seem to be related in any way, shape or form to educating students at Albor Charter School,” she told the board.

The audit also found that although Albor was purportedly a high school, it appeared in reality to be a vocational school for adults. Brochures mentioned certified nursing assistant, medical assistant and computer technology programs, with little, if any, description of high school classes.

“Although it is acceptable to offer elective classes in high school settings, in this case it appears that the high school course offerings were more than likely used to derive state apportionment to pay for a vocational school for adults and other business enterprises controlled by Mr. Vazquez and his close associates,” the report says.

Additionally, students may have been charged fees to attend, which is illegal at a public school, the report says.

When Albor closed, no transcripts were available to ease student transfers to another high school because no one was around to provide them. Additionally, full credit was not given for some courses taken, since the school was never accredited and the curriculum could not be verified.

“Many students who thought they were at the junior or senior grade level were placed back in ninth grade and given no credit for the classes that were taken at Albor or that were in progress at the midterm closure of the school,” the audit says.

The audit makes several legislative recommendations that the county Department of Education plans to push in Sacramento, including strengthening conflict-of-interest laws related to charter schools, prohibiting charter schools from contracting with companies or corporations owned by the schools’ operators and requiring public disclosure of financial transactions.

Board member Audrey Yamagata-Noji expressed frustration that, even though the district grew suspicious of Albor’s operations, it was largely hamstrung by existing state law from pursuing its concerns.

“It shows the handicap public school districts are in [when dealing] with charter schools,” she said.

“Some may work and be great, and others can just be a rip-off of the public.”

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seema.mehta@latimes.com