A3 charter school ringleaders plead guilty to massive fraud scheme that siphoned millions in state funds

Two men accused of crafting an elaborate statewide charter school scheme to funnel tens of millions of public school dollars into their own pockets pleaded guilty this week to felony conspiracy charges.

Sean McManus and Jason Schrock, creators of the now-defunct A3 charter school network, each pleaded guilty in San Diego County Superior Court on Friday to one count of conspiracy to commit theft of public funds. A3 Charter Schools operated 19 online-only charter schools across California.

In addition, McManus pleaded guilty to another count of conspiracy to commit theft of public funds, and Schrock pleaded guilty to conflict of interest.

As part of their plea agreement, the two men agreed to return more than $210 million in cash, 13 houses and shares in third-party companies that they obtained through the A3 scheme, San Diego County Dist. Atty. Summer Stephan said.

Sean McManus, A3 Education defendant.

(San Diego County district attorney’s office)

“With these guilty pleas, the defendants now admit they engaged in a devious, systematic public corruption scheme on the backs of students, their parents and the public that diverted millions of taxpayer dollars into their own pockets,” Stephan said in a statement. “This is one of the largest fraud schemes targeting education dollars for K-12 students in the nation. Unraveling this complex scheme came as a result of over a year of persistent and dedicated work by our team of prosecutors and investigators, who specialized in public corruption.”

The guilty pleas come a year and nine months after they and nine other people were indicted by a San Diego County grand jury for their involvement in the alleged A3 scheme.

The San Diego County district attorney’s office had accused McManus and Schrock of creating a network of online charter schools that fraudulently obtained at least $400 million in state school funds from 2016 to 2019. Three of those schools were in San Diego County.

Prosecutors accused A3 leaders of buying children’s personal information to falsely enroll them into the schools and providing incomplete education services, while taking tens of millions of dollars for personal use. A3 leaders also manipulated enrollment across their schools to receive more state funding per student and manipulated school attendance reporting to get more money for time that children were not spending in A3 schools.

Charter schools are public schools run independently of school districts.

McManus and Schrock admitted in court that the purpose of their conspiracy was to get public funds through the A3 charter schools and transfer that money to their own private companies under the promise that they would provide educational services. In reality, they did not provide those services.

McManus, an Australian national who had gone on the run when the charges were filed, is now cooperating in the case. He appeared in court virtually Friday, wearing a suit and sitting slightly slouched in a plain black office chair at a law firm in Australia.

Both McManus and Schrock agreed to cooperate with prosecutors in getting back as much of the state’s money as possible. Judge Frederick Link, who has been presiding over the A3 case for more than a year, said if they continue to cooperate, he will take that into consideration at their sentencing.

McManus and Schrock, who face up to four years in state prison, also agreed to testify in court if called upon.

Their sentencing is scheduled for June 18.

Of the nine others charged in the case, three have pleaded guilty: Troy Kukahiko and Nyla Crider, who were accused of helping A3 schools to falsely enroll students, and Richard Nguyen, who prosecutors said helped with finances.

The A3 network has become one of California’s largest cases of charter school fraud and has brought attention to how weaknesses in charter school oversight can allow such fraud to occur.

In the aftermath of the indictment, prosecutors have also pursued school districts that were supposed to hold the A3 schools accountable and private vendors that received public school dollars from A3 to act like schools for the charter network.

Prosecutors are still trying to recover state funds that were paid to those school districts, including San Diego County’s Dehesa Elementary, to oversee the A3 charter schools. That litigation is pending.