Agora Cyber Charter under investigation, sources say

A cyber charter school founded by Dorothy June Brown is part of the widening federal criminal probe of area charter schools, according to sources with knowledge of the investigation.

The Agora Cyber Charter school in Devon has received a federal grand-jury subpoena for all financial records, and federal agents have spoken to Brown twice since May, the sources said.

Agora is at least the fourth charter school caught up in the federal investigation launched after The Inquirer reported in mid-April that the Philadelphia School District's inspector general was investigating allegations of fiscal mismanagement and nepotism at the Philadelphia Academy Charter School in the Northeast.

Brown's name surfaced early in the federal inquiry as a result of her business ties to Brien N. Gardiner, Philadelphia Academy's founder and former chief executive officer, the sources said.

But Brown said she knew nothing about a federal subpoena and did not remember speaking to federal agents.

"I don't recall talking to one," she said in a brief telephone conversation.

Brown, who founded three traditional charter schools in Philadelphia, said she could not imagine why an agent would want to talk to her.

"I'm a consultant," she said. "That's all I do with the [Agora] school." She declined to comment further.

Brown owns Cynwyd Group L.L.C., an education management company that has a contract with Agora and owns its headquarters on Chestnut Street in Devon. Brown is Cynwyd's senior consultant to Agora and an ex-officio member of the charter's board.

The federal investigation of Agora began months before Brown and Cynwyd Group sued six Agora parents and the Agora Parent Association for slander, libel, and civil conspiracy. The lawsuit was filed last month.

The subpoena for Agora's records was delivered in May; the talks with Brown were in the early summer and around October, sources with knowledge of the investigation said.

Howard Lebofsky, Agora board chair, wrote in an e-mail that he was not on the board in May. "I am not aware that Agora received a grand jury subpoena in May or at any other time."

Patricia Hartman, a spokeswoman for the U.S. Attorney's Office, said the office did not confirm or deny investigations.

Agora provides online instruction to 4,000 students in kindergarten through high school across the state.

Three traditional charters Brown founded in Philadelphia are being investigated by the district's inspector general, sources said.

Those schools are the Laboratory Charter School in Northern Liberties and Overbrook; Ad Prima in Overbrook; and Planet Abacus in Tacony.

Brown had been CEO of Laboratory and Ad Prima. She stepped down after the state legislature changed the law in July to bar charter administrators from collecting salaries from more than one school or from companies doing business with charter schools.

Brown and Gardiner founded the Cynwyd Group in November 2005, state records show. Two years later, the company paid $1.9 million for a property at 60 Chestnut Ave. in Devon, which houses Agora's headquarters.

Under the nine-year lease, Agora pays $25,000 per month for approximately 12,000 square feet and is responsible for utilities, insurance, and maintenance. Brown and Gardiner signed the lease in December 2007.

Gardiner cut his ties to the Cynwyd Group in May.

His attorney, Albert S. Dandridge III, who also has represented Cynwyd Group, declined to comment on whether the firm had received a federal subpoena.

Brown's suit against several Agora parents was an outgrowth of their efforts to obtain information about Agora's operations, including the school's financial relationship with Brown and Cynwyd.

According to Agora's 2008 annual report filed with the state, Cynwyd was hired to manage and operate Agora's administrative and educational facilities.

Cynwyd subcontracted with K12 Pennsylvania L.L.C. to provide some services, including curriculum, computers, and learning materials, the report said. K12 Pennsylvania is a subsidiary of K12 Inc., a for-profit education company in Herndon, Va.

Under the May 2006 management agreement Agora's board signed with Cynwyd, Brown's company receives a management fee of 7 percent of the school's total revenues.

Agora board chairman Lebofsky said Cynwyd performed many duties, including providing "expert advice and guidance in all areas of school operations" and serving "as the board's 'eyes and ears' regarding school operations, educational programs, academic performance, and other important matters."

K12's agreement says it receives fees of 15 percent of revenues for administrative services and 7 percent for technology.

The state has not reported how much in public money Agora received during 2007-08, when more than 4,000 students were enrolled.

A year earlier, the school got $8.4 million for 1,177 students.

But it remains unclear how much money went to K12 and to Cynwyd. Agora's 2006-07 federal nonprofit tax form does not mention either company but shows Agora spent $1.2 million on external management fees; $565,727 for consultant/oversight; and $565,727 on tech support.

In her suit against the Agora parents, Brown alleges that parents falsely claimed that Gardiner had cofounded Agora. The suit says Gardiner "had no role in founding Agora and his name does not appear in Agora's application for a charter or in subsequent organizational documents."

However, Agora's 2007-08 handbook described Gardiner as cofounder, and the Agora Web site also had listed him that way. Gardiner's name was removed from the site in May after he became the subject of the federal probe and was fired from his consultant's post at Philadelphia Academy Charter School.

An internal investigation of Philadelphia Academy by attorneys for Ballard, Spahr, Andrews & Ingersoll last year found several examples of that school's financial ties to Agora and Cynwyd.

For part of 2006 and 2007, Agora operated out of Philadelphia Academy's high school, and the investigation found no record that Agora paid rent.

Philadelphia Academy paid a $5,150 roofing bill for Agora's headquarters in Devon on Feb. 29, 2008. PACS also was billed $5,700 for plumbing work for a kitchen sink, ice maker, and coffee outlet for a Bala Cynwyd office used by Agora and Cynwyd Group, the internal probe found.

Two days after The Inquirer's first article about Philadelphia Academy was published in April, Gardiner wrote the school a $15,137 check from Cynwyd Group as a reimbursement for "roofing work."

And the attorneys reported that in March 2008, Gardiner submitted bills to Philadelphia Academy seeking reimbursement of $3,328 for round-trip airfare for himself and Brown to travel to New Orleans for "New Orleans support." The report notes that in 2007 Gardiner had hired an architectural firm to design a prototype building for the Recovery School District in New Orleans. Philadelphia Academy paid the $735 bill.

Paul Vallas, former chief executive of Philadelphia schools, who left in June 2007 to head the Recovery District, said nothing came of Gardiner and Brown's visit.

"They came down because they were interested in doing charter schools here," Vallas said. "But we didn't want to do business with them."

Besides Philadelphia Academy and Agora, the federal probe has spread to Northwood Academy, another school founded by Gardiner, and Germantown Settlement Charter School, sources said.