Former charter school officials charged with fraud

The U.S. Attorney's office today charged the former chief executive officer and the former board chairwoman of the Philadelphia Academy Charter School with defrauding the Northeast Philadelphia school.

Kevin M. O'Shea, 50, a former city police officer with a high school diploma, and Rosemary DiLacqua, 51, until recently a Philadephia police detective, were charged with mail fraud and honest-services fraud, U.S. Attorney Michael L. Levy announced.

O'Shea and the late Brien N. Gardiner, another former CEO of the school, are alleged to have made approximately $34,000 in undisclosed payments to DiLacqua. While receiving the money, she approved a series of salary increases for both men and authorized a 20-year consulting contract for Gardiner that would have paid him more than $100,000 annually for performing no more than 90 days of work, the U.S. attorney's office said.

O'Shea is charged with stealing more than $500,000 from the school and filing a false tax return.

The announcement came exactly seven weeks after Gardiner, 64, Philadelphia Academy's founder, died of a self-inflicted gunshot wound in the parking lot of the Bethayres Train station in Lower Moreland.

The charges were described in a document known as an "information," which generally signals defendants are going to plead guilty and sometimes means they are cooperating with federal authorities, legal authorities said.

The federal investigators launched their probe shortly after the Inquirer reported in April 2008 that the Philadelphia School District's inspector general was investigating allegations of financial mismanagement, nepotism and conflicts of interest at Philadelphia Academy, and that a web of charter and business entities enabled Gardiner and O'Shea to earn more than most area superintendents.

In a subsequent internal probe conducted at the request of the charter's board, lawyers said that more than $700,000 was missing from a school account and that they had uncovered "substantial evidence" that Gardiner and O'Shea had systematically looted the school for personal gain and the benefit of their other businesses.

"Charter schools were an innovation to improve education and were never meant to be a source of personal enrichment for those running them," Levy said in a statement released today. "Even more troubling is the fact that the defendants both had law enforcement backgrounds. We hope this case awakens board members of charter schools to their obligation to safeguard the funds of these schools."

If convicted of all charges, O'Shea faces up to 35 years in prison and DiLacqua up to 20 years in prison.

"The alleged actions of O'Shea and DiLacqua were motivated by greed and the ultimate victims in this case were the students of the charter school," said Don Fort, Special Agent-in-Charge of I.R.S. Criminal Investigation.

"This investigation necessitated following an intricate web of financial transactions devised to conceal the alleged wrongdoings. We are pleased to have had this opportunity to work closely with the United States Attorney's Office and the other law enforcement agencies involved in the investigation, whose dedication and perseverance brought this case to a successful resolution."

O'Shea rose from the ranks of parent volunteer at the charter school to director of operations and ultimately CEO.

In the aftermath of The Inquirer's reporting, the Philadelphia School Reform Commission forced the school to overhaul its operations to obtain a new operating charter.

The commission required Philadelphia Academy to replace its board and sever all ties with Gardiner, O'Shea, their relatives, and their business entities.