The former chief executive of the Los Angeles-based charter school network Celerity Educational Group has been charged with conspiracy to misappropriate and embezzle public funds — money that was intended for students at Celerity’s schools but was used for lavish travel and the purchase of a property in Ohio, according to court papers.
In a 23-count indictment filed Thursday, a federal grand jury accused Grace Canada, 45, of participating in the scheme with Celerity’s founder, Vielka McFarlane, to unlawfully direct millions of public education dollars for outlays such as first-class plane tickets, fine dining, custom bikes and a Beverly Hills shopping excursion.
Canada was also charged with making false statements to federal investigators during an interview last summer about paying for the Columbus, Ohio, building — a purchase that executives hoped would expand Celerity into a national charter education brand.
McFarlane pleaded guilty earlier this month to one count of conspiracy to misappropriate and embezzle public funds, a charge that carries up to five years in federal prison. As part of her plea agreement, McFarlane, 56, admitted to much of the conspiracy that Canada is now accused of joining.
Reached by phone late Friday, Canada did not comment on the indictment. She left Celerity in 2017 and is now a principal at an elementary school in Compton. An attorney for Canada could not be reached.
Los Angeles Unified School District first noticed something amiss with the finances of Celerity around 2012. The charter network submitted credit card statements to the school district with some expenditures redacted, ultimately sparking an investigation by L.A. Unified’s inspector general. Later, federal agents launched an inquiry and seized computers and other records from Celerity’s offices in early 2017.
The network of charter schools, however, will not face criminal charges.
Celerity Educational Group, now known as ISANA Academies, reached a non-prosecution agreement in 2017 and is cooperating with the federal investigation. ISANA Academies runs six charter schools in L.A. and Compton.
In court papers, McFarlane admitted that she relied on public money meant for the charter schools network to underwrite her personal life and launch a charter school in Columbus. Her plea agreement outlined how the organization’s credit card paid for $3,347 of goods from Salvatore Ferragamo in Beverly Hills, $914 at the Arroyo Chop House in Pasadena, and $7,742 for round-trip airfare to Washington for President Obama’s 2013 inauguration.
According to Canada’s indictment, she and her spouse joined McFarlane and others on the trip to Obama’s second swearing-in, with plane tickets purchased on Celerity’s dime.
The indictment alleges that Canada conspired in the misappropriation scheme from 2009 until 2017, a period when she was a senior national vice president and, starting in 2015, CEO of Celerity Educational Group.
The majority of the funds, more than $2 million, went toward purchasing and renovating an office building in Ohio for a new Celerity school.
The charging document alleges that McFarlane and Canada conspired to complete the sale, first by transferring more than $1.4 million intended for students to buy the building.
The purchase depleted Celerity’s accounts, and they obtained a $1.5 million loan that was meant for the property but was instead used to cover payroll and other operating expenses, according to the indictment.
At one point, Canada told McFarlane in a text message that another Celerity executive’s name should go on the Ohio charter school’s paperwork so they could avoid “rais[ing] an[y] flags,” according to the indictment.
The next year, Canada asked Celerity board members to retroactively approve a loan between two Celerity-related entities. Prosecutors allege that this was part of a scheme to conceal from the board how public funds were used to buy the building in for the Ohio charter school, which has since closed.
At the meeting, McFarlane described the loan as a “cleanup operation” that ensured Celerity didn’t “get nailed with an audit.”
Time staff writer Anna M. Phillips contributed to this report.