District severs ties with nonprofit run by Gardiner, O’Shea

The Philadelphia School District has severed ties with a nonprofit connected to two former top administrators at Philadelphia Academy Charter School who are under federal criminal investigation.

The district is not renewing a $2.1 million special-education contract with the nonprofit controlled by Brien N. Gardiner, the founder of Philadelphia Academy Charter School, and Kevin M. O'Shea, the charter's former chief executive officer.

District spokesman Fernando Gallard confirmed that Philadelphia Academy Services Inc. was told last week that its contract to provide special-education services to district students who are hospitalized or in other alternative settings would not be renewed for the 2008-09 school year.

"The district has no intention of contracting their services," Gallard said. "We are not going to go into the reasons."

District sources, however, said the Philadelphia School Reform Commission decided to stop doing business with all entities connected to Gardiner, O'Shea and their families after investigators for the district and the school uncovered evidence of fiscal wrongdoing. The district has provided information from its probe to federal authorities.

The Philadelphia Academy Services contract expired June 30.

The district has had annual contracts with the nonprofit since shortly after Gardiner founded it in 2002 to provide educational and mental health services to district students. In August of that year the SRC awarded the nonprofit a contract for up to $825,000 to provide therapeutic support for approximately 50 district students with severe emotional and behavior problems.

Albert S. Dandridge 3rd, Gardiner's attorney, declined to comment today.

The district's formal notification about the contract's nonrenewal was sent one week after lawyers from Ballard Spahr Andrews & Ingersoll L.L.P released a report saying their internal probe of the charter found "substantial evidence of wrongdoing" by Gardiner, a former public school principal who founded the popular charter in Northeast Philadelphia, and O'Shea, a former police officer who replaced Gardiner as CEO in 2007.

As The Inquirer reported in April, a web of charter and business entities enabled Gardiner and O'Shea to earn more than most school superintendents in the region.

In addition to salaries they received from the charter school, the men also were paid by Philadelphia Academy Services. As president and CEO, Gardiner was paid $70,000 in 2005-06, according to the nonprofit's most recent 990 tax filing. O'Shea, the vice president, received $34,000 that year. And Jamie O'Shea, Kevin O'Shea's wife, was paid $110,000 as director of program operations.

Ballard Spahr lawyers also alleged in their recent report that Gardiner and O'Shea improperly used charter school funds to benefit other businesses, including Philadelphia Academy Services. They found evidence that Jamie O'Shea, who also was president of a separate nonprofit that owns the charter's high school building, authorized a wire transfer of $710,000 of rent proceeds last summer to help Philadelphia Academy Services buy a $1.4 million building at 6632 Bustleton Ave.

During the school year just ended, the district contracted with Philadelphia Academy Services to provide services to up to 139 special education students at five locations, including hospitals. The nonprofit hired certified teachers and assistants to provide special education services and behavioral help for students, some of whom were hospitalized for mental health reasons.

Gallard said PAS had been assigned to work with 108 students. Parents were sent letters Thursday notifying them that the district has arranged for other special-education providers to serve those students.

Sources who are familiar with the operations of Philadelphia Academy Services said Jamie O'Shea had overseen the program in rented facilities on the campus of Friends Hospital in the Northeast. Last week, she told the staff of approximately 25, including 11 teachers, to start looking for new jobs, sources said.

Jamie O'Shea could not be reached for comment.