Suit accuses charter school founders of fraud

PORTLAND — Two men who started a chain of taxpayer-funded charter schools across Oregon have been accused of cheating the state out of $17 million.

The state Department of Justice filed a legal claim in Salem against Tim King and Norm Donohoe, accusing them of racketeering and money laundering between 2007 and 2010, The Oregonian newspaper reported Saturday.

The state wants the men to reimburse the $17 million and pay another $2.7 million for breach of contract plus attorney fees and other costs.

King and Donohoe opened a Clackamas-based nonprofit called EdChoices and operated at least 10 charter schools, most under the name AllPrep. They existed under agreements with the school boards in Estacada, Sisters, Baker City, Sheridan, Burns and Marcola, but students from across the state were enrolled in online programs.

Prosecutors allege that King and Donohoe submitted false records about how many students were enrolled and how they spent state money.

Donohoe told the newspaper the accusations are not true, but declined to go into more detail. Donohoe said he doesn't know how to reach King, who resigned shortly after the state launched its investigation in spring 2010. King and his wife filed for bankruptcy in 2011.

The state provided startup grants of up to $450,000 per charter school. The state Department of Education also paid about $6,000 a year for each student enrolled, relying on the charter school operators to document the number. The state says those records were “erroneous, false and misleading.”

Though the schools did educate some students, the state wants the men to repay all the money their schools received in grants and per-student funding, on the grounds that all of it was obtained under false claims.

Some of the EdChoices charter schools have stopped operating while others continue under new auspices.

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Information from: The Oregonian, http://www.oregonlive.com