As a rule of the thumb the chances of financial problems increase as the independent variables increase.
For example, the EB-5 (immigrant investor) program, all by itself, is full of casual regulation and clever sharpsters.
Similarly, charter schools are lightly overseen in many states, such as Arizona, increasing the financial risks.
So the combination (the witches' brew?) of EB-5 money and its middlemen, and the charter schools and their middlemen, would seem to promise more financial adventures than either of the components separately, and that was exactly what we discovered when we researched the subject two and a half years ago.
We examined a couple of dozen situations with this mix and selected six partially EB-5-funded schools with "unusual financial reports". They were all in the South and the Southwest: two in South Carolina and one each in Arizona, Florida, Georgia, and Texas.
We found that the greatest debt of the six (mostly in non-EB-5 funds) was held by American Leadership Academy (ALA) in Chandler, Ariz. It was in the hole by $88.4 million, more the other five put together. The financial report, despite the huge debt, showed no interest being paid, and when it came to expenditures, there were just two numbers: administration $1,285,405, and instruction and operations (combined) $20,023,283.
So when I heard that Arizona Republic investigative reporter Craig Harris had written about a different mix — charter schools and their troubled accountant — I paid attention.
An Arizona Board of Accountancy investigative panel last month concluded Joel Huber [the CPA] had not correctly performed audits and failed to provide certain disclosures related to ALA and another charter school.
Harris’ story, one of a series, was about charter schools and CPAs; hopefully he will write about charter schools and EB-5 in the near future.