A U.S. district judge handed prison terms Friday to the founder of a Northwest Philadelphia charter school and its former chief executive for stealing $522,000 in taxpayer money to prop up a restaurant, a health-food store, and a private school they controlled, and for defrauding a bank.
Hugh C. Clark, a lawyer who helped found New Media Technology Charter School and served for many years as its board president, was sentenced to 24 months in federal prison.
Ina Walker, a career educator and the charter school's former chief executive officer, was sentenced to six months in prison.
Judge Jan E. DuBois also ordered the pair to jointly make restitution totaling $861,000. In addition to returning the money they stole from New Media, Clark and Walker were told to repay the Wilmington Savings Fund Society $339,000 they obtained by submitting fraudulent documents to secure a loan to buy a building for their failed Black Olive restaurant.
In April, shortly before Clark was scheduled to go to trial, he pleaded guilty to all 28 criminal counts, including conspiracy, wire fraud, and theft from a federally funded program.
Walker had pleaded guilty to the same charges several months earlier and had agreed to testify against Clark if he went to trial.
Neither Clark, 65, nor Walker, 59, had a prior criminal record.
Clark, who has an undergraduate degree from Harvard University and law degree from the University of Pennsylvania, apologized for his actions Friday and took full responsibility for his crimes.
"I was the person who was in charge," he said. "I was the person who was making the decisions."
He also apologized to Walker and said he directed her to do the things that landed her in court.
When it was Walker's turn to address the judge, her voice sometimes trembled.
"I would just like to say I truly regret and take responsibility for my role in the offenses that have been addressed today," said Walker, who has a doctorate in African American studies from Temple University. "To sum it up, I have made grave mistakes, and I used poor judgment during the period of being a CEO."
Both were indicted by a federal grand jury in April 2011 - nearly two years after The Inquirer reported allegations of fiscal mismanagement and conflicts of interest at New Media.
Assistant U.S. Attorney Joan Burnes described Clark as an Ivy League lawyer "who stole funds intended for the public-school children of Philadelphia. No amount of money was too large or too small for defendant Clark to steal."
The thefts included bogus $25,000 "loan" checks made out to the private Lotus Academy, which Clark controlled, and automatic withdrawals of $500 per month to pay bills of Clark's failed Internet company. The crimes took place over a period from May 2005 to June 2009.
The government said that during those years, more than 25 percent of Lotus Academy's bank deposits consisted of checks from New Media.
Former New Media teachers testified Friday that money was so scarce at the charter school that students lacked textbooks and supplies, some employees' checks bounced, and the school failed to make required payments to the state pension system.
Clark helped found Lotus Academy, a private school in West Oak Lane, in 1974. He also helped establish New Media in 2004. He presided over the boards of both the charter school and Lotus.
Burnes said money diverted from New Media was funneled through Lotus to pay other enterprises that Clark and Walker were involved with, including the former North by Northwest Restaurant in Mount Airy.
The bank-fraud charge stemmed from a loan, obtained in Walker's name, that was used to buy a commercial property at 22 E. Mount Airy Ave. for the Black Olive.
The two admitted providing to the bank fake lease agreements that featured overstated rental revenues and "false or forged signatures" of renters; misrepresenting income and cash flow of a rental property owned by Walker and occupied by Clark; and submitting a false tax return misrepresenting Walker's finances. Walker later defaulted on the loan.
Burnes argued for a prison term of 33 to 41 months for Clark to reflect the seriousness of the crimes and to deter other potential violators, especially those connected to other taxpayer-funded charter schools.
She backed a shorter sentence for Walker because Clark was the mastermind of the schemes and because Walker's cooperation had been instrumental in Clark's decision to plead guilty.
Clark's lawyer, James Clark, who is not related, argued for leniency on the grounds that New Media's former board president had no prior record and that his admitted frauds were an aberration in a "lengthy and exceptional history of public service to the community and children of Philadelphia."
In a presentencing document, he called Clark "a sincere man who made a profound mistake for which he already is being severely punished." He has surrendered his law license is no longer able to practice law.
The attorney also said that Clark had not used the money to enrich himself but had been trying to save the financially struggling Lotus.
Thomas A. Bergstrom, who represented Walker, asked the judge to sentence her to probation with a community-service component instead of sending her to prison.
But DuBois said the crimes were so serious that Walker deserved some time in prison.
He said the sentences he crafted reflected the gravity of the offenses and would deter others from similar acts, but also took into consideration the pair's prior exemplary careers and letters of support submitted to the court.
After listening to friends and backers attest to the pair's good works and otherwise sterling characters, DuBois said: "This case is a puzzlement to me."
The judge said he remained baffled why Clark and Walker had risked everything to commit such crimes.
He told Clark: "You had to know eventually you would be caught."
Both were ordered to surrender Aug. 27.
Once their prison terms are complete, both face five years of probation. Walker also was ordered to perform 100 hours of community service.
New Media, which is based in the Stenton neighborhood, has 450 students in grades five through 12. It continues to operate under new leadership.
Contact Martha Woodall at 215-854-2789 or firstname.lastname@example.org