Posted on 07/02/2004 9:37:55 AM PDT by joesnuffy
July 2, 2004, 12:46AM
Pastor arrested in fraud scheme
Among four accused of misappropriating charter school funds
By HARVEY RICE
Copyright 2004 Houston Chronicle
A pastor who ran a Houston charter school once said to exemplify charter school problems was arrested Thursday along with three family members on charges of misappropriating $3 million in state and federal education funds.
The Rev. Harold W. Wilcox, former head of the now-defunct Prepared Table charter school and pastor of the Greater Progressive Baptist Church, and three relatives were arrested at their homes.
FBI agenst transport Louvicy Wilcox 51, to the federal courthouse
The four are accused of pocketing money from the federal school lunch and breakfast program for poor children, among other programs. Wilcox is accused of using $51,000 in school funds to make a down payment on a house.
"The real victims are the children who went to school and suffered from the services they did not receive," U.S. Attorney Michael Shelby said.
Wilcox's attorney, Andrew Martin, said his client observed the law while running the school. "We are confident that Pastor Wilcox will be exonerated of all charges," Martin said.
FBI agents who made the arrest found Wilcox hiding in a false compartment in a closet at his home with $3,500 in cash, Assistant U.S. Attorney Melissa Annis told U.S. Magistrate Judge Calvin Botley.
Botley set a $150,000 bail for Wilcox and required him to be electronically monitored, remain in Houston and attend Gamblers Anonymous counseling sessions.
Also arrested were Wilcox's wife, Louvicy Wilcox, 51; his wife's daughter, Rochall Frank, 32; and his brother, Anthony Mosley, 42, all of Houston. Mosley also is a pastor at the Greater Progressive Baptist Church.
Botley set bail for the others at $50,000 each and scheduled an arraignment for all four at 10 a.m. Wednesday.
After a court official accused Wilcox of trying to conceal his ownership of a passport, Botley ordered that he surrender it before leaving the courthouse.
Shelby said his office was seeking the forfeiture of $3.3 million in cash and two properties. One, at 20 Thornhill Oaks, is a residential property, and the other, at 9100 Tidwell, is a commercial property, according to county property records.
The Prepared Table charter school was at the center of controversy for several years before the Texas Education Agency revoked its charter in 2002.
The school was found to be inflating enrollment, failing to produce enrollment figures and failing to account for at least $1.3 million during its first two years of operation after opening in 1999.
The allegations of mismanagement led legislators to tighten the rules governing charter schools in 2001, but charter school supporters in the Legislature repealed some of the rules in 2003.
The indictments are indicative of a national trend of allegations of nepotism and financial misdealings against charter school operators, said Luis Huerta, a professor with the Teachers College at Columbia University in New York City.
"The majority of charter school closings that have occurred nationwide have been because of financial misappropriation," Huerta said. "It's seldom that students aren't learning or teachers aren't doing their job."
As a result, many states are beginning to exercise tighter control of charter schools, he said.
"When you have less oversight, you have more wiggle room for abuse," Huerta said. "What's happening now is we're beginning to reconcile the freedoms offered by the charter school movement versus the accountability that's required by the public. States have realized that full autonomy doesn't work."
Wilcox founded the first nonprofit Prepared Table charter school at 9847 Mexa in Houston in 1999 and opened two additional campuses in the fall of 2000 at 600 Charles in Humble and 804A Maxey in Houston.
During its three years of operation, the school received about $2.56 million in federal funds and about $16.76 million from the state, according to the indictment.
The 56-count indictment against the four family members unsealed Thursday came after a two-year investigation of school operations from December 1999 to February 2002, said Annis, the assistant U.S. attorney.
Wilcox was chief administrator and chairman of the board of the charter school, according to the indictment. His wife helped run the school and approved expenditures; her daughter worked in the attendance reporting office; and Mosley ran food services for the school, according to the indictment.
The indictment alleges that all four participated in a scheme in which federal and state money was paid to a sham catering service, DaShawn's Bar-B-Q & Restaurant, with a purported contract to provide meals to the school.
They are accused of having checks issued in the name of the catering service and of depositing the checks in the church bank account.
The four also are charged with misrepresenting attendance figures to the TEA in order to fraudulently obtain about $3 million paid on the basis of attendance.
Harold Wilcox and Mosley are accused of using the tax-exempt status of their church to disguise the source of the money. By depositing the money in the church account, they hid its source and evaded taxes, according to the indictment.
Wilcox is accused of withdrawing money from the church account in amounts of less than $10,000.
The charges in the indictment are conspiracy to commit wire and program fraud, wire fraud, program fraud, conspiracy to launder money, tax evasion and evading reporting requirements in a financial transaction of more than $100,000 while violating the law.
If convicted, they could face a maximum sentence of 20 years in prison and a $500,000 fine or twice the amount of the money taken on each money laundering charge; five years and $250,000 on each wire fraud charge; 10 years and $250,000 on each program fraud charge; 20 years and $500,000 or twice the amount taken on each money-laundering conspiracy charge; and five years and $250,000 on each reporting charge.
Reporter Jason Spencer contributed to this story.
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