What’s behind the federal raids on Celerity?
Mike Szymanski | February 22, 2017
Questions about Celerity Educational Group, a Los Angeles charter school management organization now under federal investigation, and its relationship with affiliated nonprofit entities have been probed by LA Unified for nearly a decade, according to public documents and school board meetings, and the concerns are widely thought to have prompted last month’s highly publicized raids by seven federal agencies.
The nature of CEG’s relationship with one of those entities, Celerity Global Development, has come under scrutiny by LA Unified officials since at least 2013, when district staff said they knew nothing about Global and had no documentation on it, yet it was showing up in charter application paperwork and was involved in various aspects of the group’s charter school operations, including licensing curriculum and hiring and firing. LA Unified officials noted in a report that they “identified potential conflicts of interest and the commingling of financial transactions between CEG and other separate, but affiliated, legal entities, such as Celerity Global.”
Other issues involve questionable credit card expenses for travel to Florida, Ohio and Louisiana and construction done by an affiliated Celerity entity on the homes of a Celerity board member in Studio City and Celerity’s founder. Some of CEG’s own paperwork show a blurring and overlap of responsibilities for Celerity schools, which are publicly funded.
Over the past month since the raids, LA School Report talked with more than a dozen past and present parents, teachers, and students both on and off the record. Most of the parents and students remain supportive of the schools, but some are seeking alternatives. Most of the teachers were surprised that management questions were not brought earlier.
Many of the teachers spoke about putting in their own money — as much as $2,000 a year — to pay for classroom supplies, even while attending lavish parties Celerity threw for the teachers. Others said that when Celerity was being questioned by the district about low test scores at one school, they were instructed to “teach to the test” and to monitor the progress of students and teachers every week. Celerity teachers, who are non-union, earn salaries comparable to district teachers.
“It was like you’re training a robot,” said Priscilla Longoria, who taught sixth grade at two Celerity schools from 2010 to 2014. “I can teach a monkey to pass a test, it’s not teaching the children to be self-sufficient. It was a horrible way of teaching and creating lifelong damage to the children.”
Another teacher who asked not to be named said she felt guilty going to the fancy holiday parties held at private houses in the Hollywood Hills or restaurants in Silver Lake. “I remember wondering whether the money could be used for a trampoline for the school or something else that we needed.”
IMPACT ON SCHOOLS
Meanwhile, at one LA Unified traditional school campus where Celerity is seeking to use space, parents are gathering signatures to protest a co-location.
“We don’t want a school that is under investigation on our campus,” said Gabriela Martinez, who has two children at Arminta Street Elementary School in North Hollywood, where Celerity Cardinal is seeking classrooms. She plans to take her children out of the school if Celerity is given space. Parents will hear the proposed co-location plans at a March 1 meeting at the school. “I’m not against all charters, but I’m against a school that’s being investigated and where there may be people who don’t care about kids,” she said.
A Celerity spokesman, attorney Maurice M. Suh of Gibson, Dunn & Crutcher, insisted there is no wrongdoing involving Celerity and its affiliates. He stressed that Celerity has not been found guilty of any charges, and indeed a month after the raids, Celerity remains unclear on what the investigation entails.
“We remain cooperative with any of the questions we are getting or will get, but the warrants remain sealed by the court and that is difficult for us,” Suh said.
He also said the raids have caused a cloud of suspicion that is hurting the organization, its staff and teachers, as well as the families and students. Already, it has cost the charter group from expanding into Nevada, and it could result in schools in Louisiana from pulling away from Celerity, Suh said.
Celerity educators said they worry that the negative publicity is damaging the organization’s ability to educate children.
“There was a much better and more professional way to handle this,” Suh said. “We are prepared to answer all the questions they ask, but coming in and taking our computers and everything like they did put us at a disadvantage and in an unfair light.”
One family has already requested to transfer out of a Celerity school based on the raids, and at least half a dozen others are making inquiries about transferring, Suh said.
“We have been up front with our parents, telling them everything we know and how this doesn’t impact our schools,” Suh said. A letter that went out to parents soon after the raids noted that the administration doesn’t know much about the federal investigation and that the schools will operate as usual. But he added that the annual Celerity fundraiser planned for the end of March could be hurt by the negative publicity.
HISTORY OF INQUIRIES
The LA Unified Charter Schools Division, which assesses charter schools’ applications to the LA Unified School Board, has investigated questions about Celerity and its affiliate companies since 2008. At that time, one Celerity school, Dyad, was struggling to raise low test scores and LA Unified recommended improvements. The district also noted concerns about Celerity encouraging parents to volunteer at least three hours a month, as any such requirement would be prohibited by state law, and suggested more outreach from the governing boards to parents in both English and Spanish.
And, for at least the past two years, the school district’s Office of Inspector General has been conducting its own investigation into Celerity, which is widely believed to be the catalyst for the federal raids. That investigation is ongoing.
The raids didn’t involve any of Celerity’s seven LA-area schools but did involve taking computers, paperwork, and files from two Celerity administrative offices and the home of Celerity founder Vielka McFarlane, where agents arrived with guns drawn.
The agencies included the Office of the Inspector General for the U.S. Department of Education, the FBI, the U.S. Postal Inspection Service, the Department of Homeland Security, U.S. Immigration and Customs Enforcement, the Secret Service, IRS Criminal Investigation and LA Unified’s Office of Inspector General, Thom Mrozek, a spokesperson for the U.S. attorney’s office in Los Angeles, said last month. None of the agencies, nor anyone at LA Unified, would confirm any specific allegations or what is being investigated.
But records show that the school district has been frustrated for at least the past four years with the lack of response or muddled responses to the same questions. A handful of teachers told LA School Report that after they watched an October school board vote that denied renewals to two Celerity schools, they went to OIG investigators to tell them about their concerns, including the lavish parties, being forced to teach to the test and practices the teachers felt constituted mismanagement.
Celerity now has four schools overseen by LA Unified with more than 1,700 students. In October, Celerity Dyad and Celerity Troika were turned down for renewal, and 1,200 students may be forced to seek a new school unless the state authorizes the schools in May. In the past seven years, applications to open six additional schools were turned down.
The four schools still authorized by LA Unified are located on campuses shared with district schools, and all are split across more than one campus, with two of the schools holding classes at three different sites. A seventh Celerity school is in Compton. Celerity had operated a school in Pasadena, but the fire marshal shut it down in 2014.
Celerity is an example of how LA Unified succeeds in weeding out schools that don’t belong in the system, said school board President Steve Zimmer. “Celerity has shown a persistent lack of transparency, and our decisions to reject their charter petitions shows how well our system for charter school scrutiny is working,” Zimmer said in an interview.
Some of the negative publicity goes back to 2008 when questions arose about Celerity Nascent School not achieving high enough test scores. The charter school was given a one-year extension as opposed to the usual five-year renewal, and when the scores improved by 112 points within a year, the school board renewed the petition.
Celerity Nascent, which serves about 600 students in the Crenshaw neighborhood, is the oldest of the group’s schools. It was approved in 2004 by the LA Unified board and opened in 2005.
By August 2013, LA’s charter schools division stated that Celerity had “a track record of expending funds on non-school-related transactions” and was not answering the division’s questions about those transactions. The division’s concerns included credit cards and cell phone use and the source of funds used for expanding the organization to other states.
During a 2015 meeting, when two Celerity schools were up for renewal (and approved) and two new Celerity schools submitted charters (but were rejected), charter division inquiries centered on credit card expenses “in excess of $2,000 for a 20-day stay at the Homewood Suites in Fort Myers, Florida,” without an explanation of how that helped students at the California schools.
Outside of the LA area, Celerity operates only in Louisiana, with four schools. It had operated schools in Ohio but not in Florida.
Charter Division Director José Cole-Gutiérrez said he persistently asked for a clarification of the connection between CEG and Celerity Global Development, which wasn’t adhering to transparency rules but seemed to control some of the public funds for educating students.
“It is not even clear who are the board members of Celerity Global,” Cole-Gutiérrez told the board at a November 2015 board meeting — which he repeated last October when the board denied renewals for Dyad and Troika.
In documents collected before the October vote on Dyad and Troika, letters and emails from CEG’s chief executive, Grace Canada, to LA Unified continued to insist that Global had no direct connection to CEG.
“Celerity Global Development (Global) is a separate, different entity,” Canada wrote in a letter dated Sept. 22, 2016, to the charter division. “Your statement that Global directly controls expenditures of CEG schools is incorrect. … CEG, as a totally independent and separate corporation, does not maintain the records of Global or any other entity. It is disconcerting that you again ask for a copy of the ‘current contract between CEG and the Celerity schools,’ because we’ve discussed many times that the Celerity schools are not separate legal entities with the power to contract.”
Yet Global’s contract contradicts that assertion and states that Global provides “oversight and technical assistance with CEG hiring and firing … administration, licensing development and management of Celerity education curriculum, instructional model, strategies, classroom structure and behavior management methods.”
In the documents presented to LA Unified last fall, Global is listed as a support arm of CEG and raises money for the schools. But CEG also paid Global $699 per student per year for bookkeeping. Emailed letters also show that the charter division was asking about two big chunks of money, $823,000 and $1.4 million, transferred to Global.
“Where did that money go and what did you buy,” asked the charter division’s Robert Perry at the October meeting.
Other questions involved high salary payments to McFarlane and Canada, of nearly $500,000 each. Suh explained that the two administrators did not take a salary the first few years that they worked at Celerity, but when McFarlane was moved from CEG to Global and Canada from Global to CEG, they had to receive their back pay, in accordance with state law, Suh said, but he would not divulge their current salaries nor were those detailed in the documentation last fall.
Questions about restaurant bills, travel and other expenses also came up when Dyad and Troika appealed their LA Unified denials to the Los Angeles County Office of Education, according to Suh.
“There was only one credit card for a number of different expenses, and some were Global expenses that all reimbursed,” Suh said. “This was at a time that Global did not have a separate credit card.”
The county did not act on the renewals, which are now before the state Board of Education.
McFarlane also appeared to be on boards of companies that Celerity did business with such as Orion International Academy, Attenture LLC, and Celerity Contracting Services, a company that helps build schools. The county also questioned whether McFarlane recused herself from votes involving Orion or potential conflicts of interest, Suh said.
Suh noted that McFarlane “did not have financial interests in these companies, and she has not been paid by any of these companies.”
In 2013, Celerity Contracting Services conducted repairs on McFarlane’s house and another board member’s house, Suh said. He said that all the work was paid for directly by McFarlane and the board member.
Suh said Celerity stands by the high test scores and educational improvements of the schools. He noted that nine former Celerity workers have lawsuits against the company and may be disgruntled and have negative things to say about the company. (None of those were sources for LA School Report.)
CEG’s and Celerity Global’s contract note that they are nonprofit organizations created to serve at-risk children, and Suh said that Celerity serves mostly African-American and Latino students, 94 percent of whom are of low socio-economic status and 37 percent are English learners. He noted that recent test scores for all the schools are higher than district averages, and that the schools have a 97 percent attendance, showing that children want to be at the schools.
The schools employ more than 400 people, Suh added, and Celerity schools are accredited by the Western Association of Schools and Colleges and many are California Distinguished Schools.
“Celerity has a record that we are proud of and have produced outstanding students,” Suh said. “We look forward to clearing up any misunderstanding and addressing any concerns in public as soon as possible.”