Your donation will help us produce journalism like this. Please give today.

*UPDATED

Seven federal agencies united in a raid Wednesday in Los Angeles of a charter school network that oversees high-performing schools but had come under scrutiny for its financial and management practices.

The raid of Celerity Educational Group, first reported by the Los Angeles Times, came after an investigation by LA Unified’s own Office of Inspector General as well as reports by the district’s charter schools division concerning fraud, fiscal mismanagement and misuse of public money meant for schoolchildren. The concerns date back to 2015 but shot into the open at a contentious school board meeting in October when two Celerity schools were denied renewal.

A major issue cited at that meeting by LA Unified Charter Division Director José Cole-Gutiérrez was an umbrella nonprofit corporation, Celebrity Global Development, that had been added to the bylaws of Celerity Educational Group and had major oversight of the schools.

“We don’t have the full picture of their relationship,” Cole-Gutiérrez told the school board when asked why the two schools had been recommended for denial. “We have severe concerns with regard to their lack of transparency. We are not even clear who the board members are.”

Those concerns and an internal LA Unified investigation led to search warrants served Wednesday at several locations of Celerity administrative offices, though not at any school sites. 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, said Thom Mrozek, a spokesperson for the U.S. attorney’s office in Los Angeles. He added that the search warrants are under seal and he couldn’t speak to the scope or nature of the investigation.

The confiscation of computers and documents did not occur at any of Celerity’s seven LA-area school sites. Six are in LA Unified, and all are located on campuses they share with district schools. All six are also split across more than one location, with two of the schools each holding classes at three different sites. A seventh school is in Compton. Celerity had operated a school in Pasadena, but the fire marshal shut it down in 2014.

Celerity’s schools are expected to remain open during the federal investigation, an LA Unified spokeswoman said, and that could take months or even years. But the two schools that were denied renewal in October face possible closure at the end of the school year. The spokeswoman said LA Unified would have no further comment.

One Celerity parent said Thursday morning that families had not yet been notified, although a letter later was sent.

“When I dropped the boys off today everything was fine, the children don’t know what is going on,” said Paul Girard, whose twin boys are in first grade at Celerity Troika in Eagle Rock, which was denied renewal by the school board in October along with Celerity Dyad in South Los Angeles. He said a flyer explaining the situation went home Thursday.

A parent volunteer at the school for the past two years, Girard spoke at the October meeting about how his boys were thriving with the teachers at the school, but he will be looking at possibly moving them to another school next year. “We would love to stay at the school because the teachers are phenomenal, but with this mess, we need to figure out an alternative in case the schools aren’t there anymore. Any parent would do that to be prepared.”

Celerity appealed the school district’s decision to the Los Angeles County Office of Education, but the county didn’t act on the appeal. The schools were planning to seek state Board of Education approval in May, according to Girard. The state approved an appeal of two new charter schools for Celerity after LA Unified denied them last year.

“Maybe some of the families know there are some issues, but I don’t think most do,” Girard said about Celerity. “I don’t think that the umbrella administration has their act together in terms of clearly articulating what they’re doing and how they’re doing it, and they have probably inherited some mismanagement, it seems.”

Stefan Friedman, a spokesman for Celerity, issued a statement following the raids. “Celerity has been informed of this investigation and looks forward to cooperatively addressing any concerns raised by the investigating agencies. Regardless, Celerity will continue to pursue the high educational standards of which it has always been proud.”

The California Charter Schools Association, which had advocated in October for the two schools to remain open, issued a statement Thursday:

“CCSA consistently advocates for charter schools being held to high levels of accountability for academic performance as well as adherence to all applicable law. At this point, we have no details about the investigation and we are pleased that Celerity is cooperating. We do know that Celerity’s schools in Los Angeles continue to provide an excellent education for their students, including many from historically underserved student populations. Whatever the outcome, we hope this process takes the schools’ strong academic performance into account, as our foremost concern is, above all, that students receive a high-quality education.”

The two schools’ achievement levels led to the protracted discussion at the October board meeting, as board members sought to understand why they had been recommended for denial.

According to statistics presented by Celerity and confirmed by the district, the Dyad and Troika schools had test scores higher than the neighborhood district schools in both English and math. Their scores also improved between 2015 and 2016. More significantly, they had higher scores than the district for minority students, English learners and socio-economically disadvantaged students. They were both also named California Distinguished Schools, awarded to schools that have demonstrated significant gains in narrowing the achievement gap. Dyad has an 81 percent Latino and black population with 69 percent of students low-income, and Troika has a 99 percent Latino and black population with 96 percent low-income.

“We serve high-need students and have among the strongest academic record in the state,” Nadia Shaiq, the Celerity educational group director of school services who joined the organization in 2006, said at the October meeting.

At that meeting, Celerity CEO Grace Canada said she understood “the need for transparency and cooperation” with LA Unified. She said, “Celerity has revised fiscal policies to ensure transparency of how public dollars are spent.”

LA Unified Charter Division Administrative Coordinator Robert Perry told the board, “Global does not comply with the state Charter Schools Act.”

He said that CEG, not Global, must comply with the public records act and other state transparency laws.

“At one point nearly $1.5 million was transferred from CEG to Global, where did that money go?” Perry told the board in October. “What did you buy, it was with public money from the students?”

LA Unified officials said the bylaws were changed to include Global without telling the district and that Global had veto power and oversight of the charter school board members. As recently as Sept. 7, the district had asked for a list of board members of Global but had not yet received it, Perry said at the October meeting.

School board President Steve Zimmer noted at the meeting that Celerity had had a year and a half to deal with the district’s questions.

“They had time to deal with our concerns  and I guess I wonder why those concerns weren’t addressed?” Zimmer asked. “We have had a transparent and positive relationship historically with them.”

Superintendent Michelle King also said at the meeting that Celerity’s lack of cooperation made it more difficult to work out a compromise. She said, “We cannot oversee what we cannot see. We are operating in the dark in terms of our responsibility.”

Ref Rodriguez, who has co-founded charter schools and represents the district where Celerity schools operate, said in October, “I know the schools well, but I too have problems with the structure that is described.”

Board member Mónica Ratliff said at the meeting that said her biggest concern was the lack of transparency because of the change of the bylaws, and that is why she voted against the Celerity renewals. The vote was six against the renewals of the schools, with Rodriguez abstaining.

Board member Mónica García hesitatingly voted against the renewals. She pointed out, “These are achieving schools and it causes me great concern.”

Celerity executives, including Canada and founder Vielka McFarlane, donated to García’s upcoming election campaign. About $3,800 in donations came from Celerity employees for García’s campaign.

At an Education Writers Association panel on charter schools in Los Angeles with education writers from around the country, UTLA President Alex Caputo-Pearl said late Thursday there’s “a rising number of scandals” surrounding charter schools and pointed to Celerity and the “raid on the offices around some pretty funny business going on around money how the school is governed, who’s got what positions, etcetera.” 

Board member Rodriguez, who was on the same panel as Caputo-Pearl, was asked about his vote to abstain in the Celerity decision in October. 

“That was a difficult situation because they were in my board district. … Those schools are high performing, but I also suggested there be an opportunity for the schools to break away from their mother organization as a way of keeping those schools alive,” he said.

He said the district staff had proposed that to Celerity, but the organization declined to do so. 

He said he abstained because he thought they could have worked a separation out. 

“I also turned around and said, ‘Charters, you’ve got to be good partners in this,'” he said Thursday.

When asked if he was feeling vindicated, he said, “I think oversight is not consistent.” 

He added, “We only get the public documents in terms of how we make decisions. That document is so convoluted I’m supposed to make a decision about a school and I don’t even understand what I’m reading because it’s so convoluted. We need consistency.”

On Thursday, Speak UP, a grassroots parent organization, issued this statement: “Celerity’s convoluted finances and governance structure threaten to undermine the whole organization, putting its students at risk. Celerity and its leaders must be held accountable for these practices that lack transparency, which, despite the schools’ academic performance, end up harming rather than putting kids first.”

Celerity Schools opened its first charter in 2005, in Los Angeles, and now operates seven schools in the LA area. It also operates four schools in Louisiana, though they are not listed on Celerity’s website.

Celerity was also in the process taking over a failing school in Nevada, but that state’s Department of Education pulled the application in light of Wednesday’s raid.

Celerity’s website states that it operates 26 schools, but none besides the 11 in LA and Louisiana could be verified.

As of October, Celerity indicated it had expanded to Ohio and Florida and displayed those states on its website, but now none are listed among those states’ charter schools.

Celerity’s first school to open in Ohio closed two years later, in 2015, never reaching its goal of serving students in grades K-8. Celerity Tenacia opened in an office building near a water park in Columbus in 2013. The school was paying rent to the parent company, according to an investigation by the Akron Beacon Journal.

---

Reporter Sarah Favot contributed to this report.

*This article has been updated to add reaction from Ref Rodriguez and Alex Caputo-Pearl, to add that Celerity sent parents a letter Thursday, and to correct that Celerity did not end up taking over a Compton school through a parent trigger but instead moved to a different location.