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San Diego county gets more than $18M in restitution from Charter School fraud scheme

San Diego County received $37.5 million in fines in part of a Superior Court judgment in connection with the A3 Charter School corruption scandal that defrauded public schools from tens of millions of funds.
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San Diego County received $37.5 million in fines in part of a Superior Court judgment in connection with the A3 Charter School corruption scandal that defrauded public schools from tens of millions of funds. 

The scandal leads to criminal charges against 11 people, including Sean McManus, the CEO, and president of A3 Education. He was convicted and sentenced to four years in prison for swindling $50 million in public funds, the San Diego County District Attorney's office announced Wednesday. 

Superior Court Judge Fredrick Link ordered McManus to pay $18.75 million in fines on May 16. Prosecutors say this is a portion of the previous $37 million ordered to be jointly paid by McManus and codefendant Jason Schrock.

The San Diego County Board of Supervisors passed a resolution earlier this year to earmark and exclusively dedicate the imposed fines to programs that directly serve the needs of kindergarten through 12th-grade students in San Diego County. 

According to prosecutors, McManus and Schrock directed subordinates to open up 19 "A3 charter schools" in San Diego County and across the state, and collected state funds by alleging students had enrolled in programs run by the schools. Prosecutors say the men paid for student information to enroll students into summer school programs at their online campuses. Some parents were unaware their children were enrolled in a charter school. 

“The case is one of the nation’s largest fraud schemes targeting taxpayer dollars intended for primary education,” the District Attorney’s Office wrote in a statement. 

The schools earned as much as $4,000 per student despite not providing full educational services, with the defendants transferring millions of those funds to private companies they owned, according to the DA's Office. 

An additional $14 million in restitution were paid to victims in kindergarten through the 12th grade. The San Diego Foundation is holding those funds in a trust. Prosecutors said $95 million has been recovered and distributed to the California State Treasury, with up to $90 million more to be distributed at the conclusion of the receivership. 

A grant program has also been established, which will provide funds recovered in the case to community-based organizations looking to establish or expand programs aimed at improving educational outcomes and reducing inequities and disparities for youth.

Proposals for the K-12 Youth Services Community Grant must focus on one or more of the following areas: educational equity/acceleration of learning; behavioral health needs; housing, food stability, poverty; mentorship.

Organizations interested in applying for a K-12 Youth Services Community Grant must apply by 5 p.m. Friday. Grants are expected to range from $50,000 to $250,000 to be utilized for up to a 12-month period. Additional information is available here.