Now we’re getting somewhere

I’ve been following a lawsuit filed against White Management. White Hat Management is a for-profit charter school management company that operates in Ohio and Florida.

The case began in May of 2010:

A group of Cleveland and Akron charter schools is in open rebellion against the for-profit management firm that runs the schools. An unusual lawsuit brought Monday by 10 governing boards of Hope Academies of Cleveland and Akron and Life Skills Centers of Cleveland and Akron alleges that a 2006 state law passed by majority-party Republicans is unconstitutional and gives the for-profit company unchecked authority.

Charter schools are publicly funded but privately operated. In the case of White Hat Management, 96 percent of the state funding flows to the company. The governing boards say that White Hat’s interest in making a profit conflicts with the schools’ goal to educate. The suit, filed in Franklin County Common Pleas Court, says that the boards are “virtually impotent to govern the schools.”

They say that White Hat has refused to provide detailed financial information such as unaudited quarterly financial reports required under the management agreement with the schools. White Hat has also refused to provide details on grants received and also failed to spell out what funds were used to purchase school property and equipment since 2004, the suit charges.

And this month, we (the people) got a good ruling on a discovery request:

Although charter school operator and GOP donor David Brennan has long maintained that he does not have to show how his charter schools spend the millions they receive in taxpayer money each year, a Franklin County judge disagreed and ordered Brennan to open his books.

The ruling is a remarkable victory for open and accountable government and for parents who have been struggling to learn why schools run by White Hat Management have consistently had abysmal academic records.

White Hat gets 96% of all state funds provided to the complaining charter schools but has long maintained that how it spends the public’s money is not the public’s business.A Franklin County judge disagreed: Ohio law “clearly and unambiguously requires operators of community schools to provide their governing authorities with a detailed accounting of how public funds were spent,’’ according to a Wednesday ruling by Franklin County Common Pleas Judge John Bender.

White Hat has control of 96% of state funding, but they also have control of 100% of federal funding, with oversight by a community board where the members of the board themselves state in the complaint that they are “virtually impotent to govern the schools”.

The linked article is a little breathless. It’s not a “remarkable victory”. They won some and they lost some, and keep in mind this is a just a ruling on a discovery motion in an ongoing lawsuit. This whole thing could get interesting when we finally, finally get a peek at White Hat’s books.






56 replies
  1. 1

    I’ve been following a lawsuit filed against White Management.

    Shh! Don’t tell them about the liberal reparations agenda!

  2. 2
    Villago Delenda Est says:

    OK, so this guy claims that he doesn’t have to account for tax monies he’s given for a specific purpose.

    Are you sure he wasn’t one of the on the ground “experts” that the deserting coward shipped off to manage the “reconstruction” of Iraq?

  3. 3
    Zifnab says:

    This whole thing could get interesting when we finally, finally get a peek at White Hat’s books.

    I wouldn’t hold my breath. This decision will get appealed and dragged out endlessly.

  4. 4
    kay says:

    @reflectionephemeral:

    I was going to go down there and look around. Just fascinating. How in the hell did the community board get themselves into this mess?

    Since 2004 they’ve been asking for records. Good God. How long could it take?

  5. 5
    Marc says:

    Records of political contributions could be…enlightening.

  6. 6
    The Republic of Stupidity says:

    Indeed… IF… we ever get a look at those books…

    In the old days, there would have been a mysterious fire in the middle of the night…

    Now days… servers crash… hard drives fail… shite happens…

  7. 7
    kay says:

    @Marc:

    White Hat actually provided a voter guide in 2010. John Kasich was their headliner.
    We lost the AG in Ohio, so I think we can forget about any state action, unless the abuses are 1. too egregious to ignore and 2. heavily covered by media.
    Brennan’s a huge GOP donor, and he’s tied to everyone from Kasich to Blackwell.

  8. 8
    NonyNony says:

    Okay I don’t get this:

    for parents who have been struggling to learn why schools run by White Hat Management have consistently had abysmal academic records.

    If the school consistently has an abysmal academic record, why are you sending your kids there? I’m missing a piece of this puzzle, because either this school is performing better than the local public schools and better than the other charter options, or the parents involved here somehow have no choice in where they can send their kids. Because continuing to send your kid to a school where you’re struggling to learn why the school sucks sounds like lunacy to me.

    I live in Columbus, and this is a Franklin County judge ruling on this, so if anyone knows what districts this covers (I assume Columbus City Schools, but that may be a bad assumption) I’d appreciate a link.

  9. 9
    gnomedad says:

    I’ve been following a lawsuit filed against White Management.

    Best type evah!
    It’s a typo, isn’t it?

  10. 10
    Svensker says:

    How is this not out and out crookism and why aren’t there pitchforks? I just don’t get it.

  11. 11
    Amir Khalid says:

    @The Republic of Stupidity:

    Now days… servers crash… hard drives fail… shite happens…

    In that case, wouldn’t White Hat Management be asked to produce the records from their backup storage?

  12. 12
    Martin says:

    The free market will solve this!

  13. 13
    Villago Delenda Est says:

    @Amir Khalid:

    In that case, wouldn’t White Hat Management be asked to produce the records from their backup storage?

    Backup storage? Wut’s that?

  14. 14
    jcgrim says:

    Here’s another charter v charter story in PA. A secretive millionaire charter school owner wages creepy, unsubstantiated lawsuits against political rivals of his preferred candidates.

    http://www.phillymag.com/artic....._now/page1

  15. 15
    Mattminus says:

    @Amir Khalid:

    “OOPs backups were misconfigured, all the tapes are blank. Sorry”

  16. 16
    Martin says:

    @Amir Khalid: Backups? Yeah, you see, we had outsourced our backups to this other company and it turns out they messed up and didn’t keep them for as long as required.

    Hey, if ‘losing’ emails is good enough for the White House, it’s good enough for everyone else.

  17. 17
    Villago Delenda Est says:

    On the subject of “backup storage”:

    A friend of mine used to work as the IT consultant to some title management firms in Washington State. He told them they needed off site backup of their data, and provided a list of several providers and how much they charged.

    Instantly, he was told that was “too expensive” and that they didn’t really need backups off site anyways.

    When mission-critical data was lost through some mishap, and the data had to be recreated from paper records, suddenly management, confronted by the much more expensive in both precious money and precious time costs of NOT having off site backup, learned their lesson.

    For now.

    Until they hire some new MBA fuckwit who, in the ongoing effort to maximize profit, does the same short sighted thing, again.

    Oh well. Someone has to keep data recovery guys in clover.

  18. 18
    kay says:

    @NonyNony:

    If the school consistently has an abysmal academic record, why are you sending your kids there?

    I think you’re misreading that. By “parents” they mean generically. AKA “taxpayers” or “interested parties”. The assumption behind that is all parents are interested parties because it’s public education funds.

  19. 19
    Captain Goto says:

    They are foaming at the mouth to give these assholes the keys to the PA education system, too. And with the lege and the governorship in Gooper hands, I don’t see anyone stopping them. AAAARRGGHH!!!

  20. 20
    kay says:

    @Svensker:

    It has gotten national attention. Gail Collins put White Hat in a column months ago, and she’s syndicated. I just think it has to wind its way thru the gears, slowly.

  21. 21
    The Snarxist Formerly Known as Kryptik says:

    @Villago Delenda Est:

    But, but, but, but, long term planning and investment is SOSHULIZT! The GOP told me so!

    And ugh….god, fucking for-profit education. Empirical data proves they don’t outperform, or even match, public schooling with comparable funding…but that just provides the impetus to give them MORE MONEY and replace ALL schools with for-profit. More fucking failing upward, and we’re all too powerless to fucking change the ass-backwardsness of it all.

  22. 22
    kay says:

    @The Snarxist Formerly Known as Kryptik:

    I keep saying this, and it’s slippery slope, but they’ve made such huge gains in such a short time I see us begging for a public option in education at some point. Counting Senators.

    Once they’re ensconced and donating heavily, we’re screwed.

  23. 23
    The Snarxist Formerly Known as Kryptik says:

    @kay:

    It just tears my hair out to see bankrupt policies and philosophies fail upwards almost precisely because they’re totally bankrupt, until the point that they’re the only accepted policies and philosophies allowed to be discussed in the mainstream. And seeing them make such absurd gains in such a short period of time like you said makes me feel like it’s almost pointless to try. Especially when the more you try, the more you’re outright shunned for daring question the almighty awesome successes of trickle-down/charter schools/abstinence only/private health care/telecom consolidation/etc.

  24. 24
    Zifnab says:

    @The Snarxist Formerly Known as Kryptik:

    It just tears my hair out to see bankrupt policies and philosophies fail upwards almost precisely because they’re totally bankrupt, until the point that they’re the only accepted policies and philosophies allowed to be discussed in the mainstream.

    They’re not succeeding because they’re bankrupt. These “ideas” making a few people quite a bit of money. The problem is that a fair portion of this money gets channeled into a propaganda campaign to convince people that they’re getting a good deal. They’re a thousand little Pravdas. Cut your vodka ration, then tell you how brave the leadership is for doing it and how they’ve saved you from a much worse fate.

    It’s a very deliberate, sustained, top-down attempt at controlling the narrative that has worked marvelously well for decades.

  25. 25
    zmulls says:

    The governing boards say that White Hat’s interest in making a profit conflicts with the schools’ goal to educate.

    Um, yes. Indeed. (Heh). This is sort of the reason many of us are skeptical of the whole notion of for-profit education….

  26. 26
    B W Smith says:

    Kay, I am a bit confused about their federal grants. I managed a federally funded job training program under JTPA. We were audited constantly. Our contract explicitly stated exactly what records we were to keep, what records would be audited and the time frame of the audits. We were audited quarterly by our local board, twice a year by the state, and annually by the feds. How is it they have gone since 2004 without producing their books for audits? I knew things had gotten lax under Bush, but shouldn’t there have at least been some type of mandatory audit going on. Someone needs to look at their federal contracts which should be available via request to the funding agencies.

  27. 27
    Ohio Mom says:

    This story is a great illustration why all those who claim charters are “public schools” are purposely lying, or at best misinformed. A PUBLIC school has to follow open records laws and make its books available to the PUBLIC to examine, and its governing body is elected by and accountable to, the PUBLIC. The highest paid staff position, the school’s superintendent, is hired and can be fired by that governing body. None of this is true for White Hat or any other charter.

    White Hat is at the other end of the state from me so I don’t get all the details all the time, but I often imagine that one day it will be included in history textbooks as the example of the kind of graft that ran rampent during the privatization era. One of the questions at the end of the chapter will be “Compare and contrast Boss Tweed and David Brennan.” At least that’s what I imagine when I’m feeling optimistic.

  28. 28
    Litlebritdifrnt says:

    Speaking of court cases Orly Taitz just got her Moldovian arse kicked out of court again. LOLZ

  29. 29
    kay says:

    @B W Smith:

    It’s a good question. Remember, though, this isn’t a state action. It’s a dispute between the management company and the community board that hired the management company. They’re interpreting both a contract and Ohio law regarding oversight of charter schools.
    The original complaint was two-fold: that the community board could not provide effective oversight because the management company had control of records, and that the management company (under Ohio law) may remove the community board.
    White Hat may or may not be complying with federal reporting. The problem is the scheme was (supposedly) set up so that there would be oversight (community board members), and there isn’t any effective oversight, because White Hat won’t (willingly) reveal anything to the board charged with oversight.
    Can you imagine if a public school administrator refused to provide information on ANY moneys expended from ANY source to a local school board? They’d take him out of there in handcuffs. WTF?

  30. 30
    Xenos says:

    @kay: That is pretty amazing… is this how the legislation set up the system, or how White Hat just feels like operating?

    Given the systemic corruption and the way that republican build this into the political system, the best approach might be to just organize boycotts against White Hat. Accuse them of corruption, and let them sue you. If that does not open up some discovery, I don’t know what would.

  31. 31
    The Republic of Stupidity says:

    I’ve been thru a pretty nasty accounting scandal, involving some nationally known people in the entertainment business… if it had spiraled out of control, it could have brought down a major US media corporation…

    Suffice to say, it can be very hard to detect fraud on the books… it is almost impossible to see it just looking at a top sheet, like a P&L… and computerized accounting has made it so much easier to do (engage in fraud)… accounting staffs are smaller now than in the old days, so its easier to keep secrets… and when its so easy to download a P&L into Excel and then tweak the figures…

    When a company has say, tens of millions of dollars (I know… I know… that’s actually pretty small by today’s standards…) flowing thru its books in a year, you have to bore down pretty far and look pretty carefully to find what you’re looking for, and if you don’t know exactly what you’re looking for… good luck w/ that…

    Back when Enron, Tyco, & Adelphia were all in the headlines, I’d just read those stories and giggle, ’cause I could understand how Fastow, Kozlowki, & Rigas were ripping off their own companies…

  32. 32
    David in NY says:

    One might think that the Attorney General of Ohio, and, to the extent Federal funds are involved, of the United States, might be on the side of the plaintiffs. And intervene. But I guess not.

  33. 33
    ThatLeftTurnInABQ says:

    @Zifnab:

    It’s a very deliberate, sustained, top-down attempt at controlling the narrative that has worked marvelously well for decades.

    How long does this go on before we conclude that the people affected don’t deserve anything better than what they are getting? That’s not a rhetorical question, it is a real one and one which I don’t know the answer to. But it seems to me that over the long haul propaganda only works on a population that wants to lied to. The question is: how long is ‘long haul’ in this instance? How many more decades does this have to go on?

  34. 34
    B W Smith says:

    @kay: Thanks for your answer. I see where the main problem lies. I’m in Georgia and I know each state’s laws vary. In Georgia (back in the 90’s under a Democratic governor)the federal funds came as a block grant to the state and then were parceled out to the community service boards. The boards sent out the RFP and controlled the funds. This appears to be backwards. The funds went to White Hat and the board was almost an after-thought to simulate some community control. This is what comes from the worship of the magical, invisible hand of the free market.

  35. 35
    Duckest Fuckingway: Ask not for whom the Duck Fucks. . . says:

    Banner fuckin’ year at the Bender houshold!

  36. 36
    kay says:

    @Xenos:

    is this how the legislation set up the system, or how White Hat just feels like operating?

    This is how legislation set up the system. One of the plaintiff’s issues is that it is unconstitutional in Ohio to have a system like this. That’s the claim.

    Worse, at the start of this year, Republicans in the statehouse tried to vastly loosen standards and oversight. They dropped it, but only after it got the attention of newspapers. They had set it up so tangible items (property) purchased with public funds then became the property of the for-profit management company. It was absolutely amazing. Just a straight-up transfer of public assets to a private company:

    Majority House Republicans proposed sweeping changes to state charter-school law that would make Ohio the only state in the nation to allow for-profit charter schools with no sponsors, but no one is rushing to take credit for the revolutionary plan.
    More of the state’s biggest school-choice supporters sharply criticized the plan yesterday. It was added to the budget last week by House GOP leaders who have not yet offered substantial reasons for wanting to give a major power boost to for-profit charter school operators such as David L. Brennan, an Akron businessman and major Republican donor who runs White Hat Management.
    A spokesman for Brennan acknowledged yesterday that White Hat sought several provisions to reduce oversight and lift restrictions, but he also refused to take sole credit for the changes.

    Sincere charter school proponents objected. They said Ohio would become a “laughingstock” as far as oversight and accountability.

    What’s interesting about this lawsuit is the board members are, of course, charter schools proponents. This wasn’t brought by the feared and dreaded Evil Teacher’s Union folks. This was brought by the people who pushed charter schools in the first place.

  37. 37
    sb says:

    And somewhere, in a perhaps darkened and lonely room, Matt Yglesias pours himself a stiff drink.

  38. 38
    fuckwit says:

    Where I come from, funneling government funds into private hands is called “corruption” and “graft”.

    I guess in Ohio it’s called “charter schools”, and elsewhere “privatization” and “public-private partnerships”.

    It’s still graft and corruption though. And theft, don’t forget theft.

  39. 39
    NonyNony says:

    @kay:

    What’s interesting about this lawsuit is the board members are, of course, charter schools proponents. This wasn’t brought by the feared and dreaded Evil Teacher’s Union folks. This was brought by the people who pushed charter schools in the first place.

    If it weren’t for the facts that a) kids are getting screwed by these charter schools and b) it’s my tax dollars that are getting Hoovered up by these crooks, I might find this worthy of some Schadenfreude. Charter school proponents wanted to take the easy way out – instead of working to fix their public schools they pushed to have the ability to take their kids out of the public schools and put them into private schools at the taxpayer expense.

    Well you got what you wanted – and NOW you have to put that effort into fixing the private schools.

    If they’d put 1/10th the effort into working to fix their public schools that they did into trying to get out of the public school system at the taxpayer expense, perhaps the outcomes might be a wee bit different.

  40. 40

    @The Republic of Stupidity:
    White Hat had better hope nothing happens to any records the judge decides they’re legally required to produce. Judges are used to dealing with sleazy operators and have all kinds of penalties available to punish litigants whose vital records mysteriously disappear after they’ve been requested in discovery. They’ve been known to do things like telling a jury that they can assume the destroyed records included damaging information or declaring summary judgment against the party who can’t produce them. Unless the fix is in- and if it were there would be no need for disappearing records because the judge would have denied discovery in the first place- White Hat is probably best off producing the requested records. The only way they’re better off failing to produce is if the information would be so damaging it would lead to prosecution if it leaks out. Even in that case, they’re probably best off settling immediately rather than risk drawing further attention by losing their records.

  41. 41
    MikeJ says:

    @Roger Moore:

    They’ve been known to do things like telling a jury that they can assume the destroyed records included damaging information or declaring summary judgment against the party who can’t produce them.

    Oh boo hoo. Wouldn’t that be awful. Then they’d just have to have the state give them more money.

    Unless officers of the company start doing hard time, they won’t give a shit.

  42. 42
    kay says:

    @NonyNony:

    I might find this worthy of some Schadenfreude

    I really don’t. It’s sad. I do wonder how many times we have to try this before we get it, though. At the end of the day it’s the same old conservative line: deregulation and the magic of markets = SUCCESS!
    Ohio has reams of sunshine laws and reporting requirements on public funds for a reason. Because some people are crooks, and they’ll steal from kindergartners.
    I don’t know: how many times do we have to learn that? Every 20 years? Can we maybe sort of accrue some knowledge here? Just put a stake in this? I feel like I’m going to be reading about Round 57 of this old idea when I’m 80. T

  43. 43
    Dennis SGMM says:

    @kay:

    The original complaint was two-fold: that the community board could not provide effective oversight because the management company had control of records, and that the management company (under Ohio law) may remove the community board.

    What? The management company can remove the board charged with its oversight? What the hell kind of bassackwards thinking led to that bit of law?

  44. 44
    Dollared says:

    @MikeJ: This. And the threat of hard time might be the best thing of all, because then these slime buckets will just move on into investment banking or no bid military contracts, and get away from our children.

  45. 45

    The American public appears to have almost no interest in monitoring the massive transfers of tax payers’ money to corporations. So long as the money isn’t being handed out to the hated ones, African-Americans, immigrants, poor people, etc., they do not care what happens to the money.

    How many Americans care about the money wasted in Iraq and Afghanistan? Or the whole Homeland Security scam? When was the last time a defense contractor was investigated? Or corporate prisons?

  46. 46
    Dennis SGMM says:

    @James E. Powell:

    When was the last time a defense contractor was investigated? Or corporate prisons?

    Hahahahahaha! Try finding data on clinical outcomes for HMO’s. Welcome to the United States of America, Inc.

    Edit: Or try finding the difference in recidivism rates between corporate prisons and state run one.

  47. 47
    kay says:

    @Dennis SGMM:

    R.C. 3314.026 allows an operator of a community school to, with the approval of either its sponsor or the state board of education, replace its governing authority with one the operator selects. Once the operator does so, the new governing authority assumes all powers that the Revised Code grants, including the power to replace the sponsor. The governing authorities claim this statute allows operators to replace independent governing authorities and sponsors with their own people, which eliminates any oversight of how they run community schools with public funds

    “Operator” here is White Hat, “sponsor” is the school system the charter came out of, and “governing authority” is the community board.

    I used to believe they didn’t think it through, but I don’t believe that anymore. Now I think they set it up look like there was a “community board” with oversight authority, but they knew the for-profit operator would end up with all the power, because the statute runs in circles.

  48. 48
    iriedc says:

    This supporter of DC public charter schools is VERY happy to see this development. One of the reasons I fear a GOP captured Congress is that they might force a change to charter school law that would bring the corrupt practices embedded in OH and FL law to DC. Thanks for helping me stay educated about this Kay.

  49. 49
    Dollared says:

    @James E. Powell: There were a number of defense investigations after Iraq, probably the most corrupt period in the history of the US. A few people went to jail.

    But by and large, the massive corruption in our system is now, well, systematic.

  50. 50
    Svensker says:

    @NonyNony:

    If they’d put 1/10th the effort into working to fix their public schools that they did into trying to get out of the public school system at the taxpayer expense, perhaps the outcomes might be a wee bit different.

    And you know that they didn’t try that, how?

    Anecdotal response: In Hudson Co., NJ, the school systems were controlled by the mob. The poor people’s kids went to the public schools, the mobster’s kids went to Catholic schools, and mobster relatives were (mostly) the teachers and staff. The mayor of Hoboken proudly said that his schools were the 3rd worst in the State, not the worst! (I kid you not — he was proud of this back in the 80s.) Families who wanted to use public schools rather than send their kids to private schools tried to get the school board and the school to change. For years. One friend who ran for the school board herself had her 2 young boys followed home from school by grown men who told the kids what would happen to them if mom didn’t back off. Finally, parents who were fed up decided to try the charter route and they eventually succeeded in getting two charter schools up and running. One did meh, but the other one took off and started attracting enough kids that the “regular” public school felt threatened. It also attracted families to the area who wanted to go to that charter school and that again put pressure on the public schools. Eventually enough pressure was brought that some changes have started taking place in the regular schools and in the school board.

    Long anecdote to say that you can’t always know what’s going on in other people’s communities. Maybe their situation is different from yours and maybe you should know what you’re talking about before calling them out for being so stupid as to not agree with you.

  51. 51

    i like the way they don’t even bother to brand themselves as an education company. “White Hat Management” just reeks of nurturing and pedagogy, doesn’t it? even for a corporate consultancy it’s a moronic and offensive name – is it supposed to be a cartoonish metaphor for the idea that they they ride into town and wipe out the bad guys?

  52. 52
    ThatLeftTurnInABQ says:

    @Hillary Rettig:

    I have a principle that when folks start putting positive adjectives in a proper name, it is a tipoff that they are lying to you about the positive qualities implied. “White Hat Management” pretty much screams “We’re eeeeevil, and we know it too”. The only part they left off was a “Bwahhaahaahaa” flourish at the end.

  53. 53
    honus says:

    @Zifnab: Maybe not. Discovery motions are generally interlocutory orders and not appealable. And judges can get awfully testy when they order disclosure and it is not forthcoming. The discovery rules have the severe penalties for failing make required disclosure, and unlike a lot of sanctions, most judges aren’t shy about imposing them..

  54. 54
    Hungry Joe says:

    Also in Ohio, private contractors run a lot of the BMV (motor vehicle) offices and likewise refuse to open their books; they get paid a certain sum by the state (read, taxpayers), then keep whatever is left over at the end of the year. How much is left over? Well, that’s none of the taxpayers’ business, apparently. (There’s been some push-back in recent weeks, though.)

  55. 55
    David in NY says:

    @honus: What you say is certainly true in Federal courts, and many states, but not necessarily all. And this case was filed in Franklin County Common Pleas Court, so Ohio law, whatever it is, applies. Lots of interlocutory stuff is appealable in New York, though, actually, I doubt that discovery is. So you’re probably right, but not certainly. Unless you actually know Ohio law, in which case you could be certainly right.

  56. 56
    honus says:

    I’ve litigated some pro hac vice in Ohio, mostly mechanic’s lien cases. So I could be right, I mean, anything can happen. I suspect it isn’t but I really have no idea if a discovery motion is appealable in Ohio.

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