Skip to content
Link copied to clipboard

Rent by charter school probed

Nonprofit landlord of Northeast high school is now a focus of the federal investigation.

The Philadelphia Academy Charter School has been paying nearly $67,000 a month in rent to an independent nonprofit that is now a focus of an expanding federal criminal investigation, according to records and interviews.

The nonprofit, Philadelphia Academy Community Development Corp., owns the property on Tomlinson Road in Northeast Philadelphia, where the charter's high school is located, and functions as its landlord.

Federal authorities and Philadelphia School District officials began investigating the school and its nonprofit in the spring over alleged mismanagement, nepotism, and conflicts of interest involving Brien N. Gardiner, a former elementary school principal who founded both entities, and Kevin M. O'Shea, the charter school's former chief executive officer.

The charter school's nonprofit, led by O'Shea's wife, Jamie, has received more than $2.4 million in taxpayer funds in rent payments since 2005, state records show.

Investigators have been unable to locate all the nonprofit's records, and the membership of its board is unclear, according to school district sources and those involved with the charter's internal probe. Two people who were listed as being on the board said in separate interviews that they had never served.

The investigators also are looking into the possibility that the nonprofit used proceeds from the rent payments to invest in other properties, according to people familiar with the probes.

Henry E. Hockeimer Jr., a lawyer overseeing the school's internal investigation, said the rent payments to the nonprofit were "certainly an area of interest and concern."

The existence of the independent nonprofit has complicated the broader probe of Philadelphia Academy, which was founded in 1999 and with 1,200 students has become a major publicly funded school in the Northeast.

The Philadelphia School Reform Commission voted June 18 to grant the school a new five-year operating charter on several conditions, including severing all ties to Gardiner, its founder, former CEO O'Shea, their families, and all businesses and entities in which they are involved.

The deadline was Monday, but the nonprofit's status as landlord and the fact that it was created by Gardiner and run by O'Shea's wife have complicated matters. While the SRC has authority over the charter, it has no say over the independent nonprofit corporation.

Kevin McKenna, a lawyer whose firm was hired in May by the charter's board to represent it, said this week, "We believe we have complied with all the conditions that have a June 30 deadline."

Whether Philadelphia Academy and the nonprofit have severed the connections with Gardiner and the O'Shea family is unclear. For now, investigators are trying to track key elements of the corporation, including its current and past leadership. As of this week, there were conflicting accounts of whether Jamie O'Shea was still serving as chairwoman. She did not respond to several attempts to contact her.

According to public records, Philadelphia Academy Community Development Corp. was established in 2002. State records list its sole incorporator as Gardiner, a former principal of the Farrell School in the Northeast who has expertise in special education.

A lease agreement between the charter school and the nonprofit for the high school building dated Feb. 24, 2004, was signed by Jamie O'Shea as president of the board of directors. The lease runs through 2033. The only federal 990 income tax form filed by the nonprofit was signed by Gardiner but listed no board members. That record was for the fiscal year ending June 30, 2005.

The corporation's undated bylaws list Jamie O'Shea as chairwoman; Eileen Katz as vice chairwoman, and Rhonda Anderson as secretary.

Katz, who is deputy general counsel at SEPTA, believes that she is still a board member and that, as far as she knows, Jamie O'Shea is still president. If O'Shea had left the board, Katz said, she had not been notified.

Katz is the sister of Rosemary DiLacqua, the longtime president of the charter school's board, who agreed in May to resign as part of the administrative shakeup to renew the school's charter. Katz said she was cooperating with investigators.

"Everyone would have my complete cooperation," Katz said. "I'm a lawyer, and I have a higher duty than most."

Anderson, one of the nonprofit's original board members, said she left the board shortly before pleading guilty to a single count of mail fraud in U.S. District Court in 2005 as part of the case that sent former City Treasurer Corey Kemp to prison for 10 years for accepting bribes.

When the school district's charter school office began asking questions about Jamie O'Shea's involvement at the nonprofit in the spring, Kevin O'Shea said his wife was no longer president of the board.

In March, Philadelphia Academy sent a document to the district that said that in addition to Katz, the other two board members were Yvonne D'Angelo McGinley and Jack Apsche. Last week, both said they had never been on the nonprofit's board.

McGinley, a financial official at Charter School Choice Inc., a Philadelphia company that handled the finances at Philadelphia Academy for 10 months, said that although Gardiner may have wanted her to join the board, she never did.

Apsche, a clinical psychologist from Bucks County who has known Gardiner since the 1970s and provided training to PACS staff, said he declined when he was asked to join the board by both Gardiner and O'Shea in April. "I was asked right before things hit the fan," Apsche said. "When it hit, I was so glad I said no."

An April 14 letter to the district from the office of Gardiner's attorney, Albert S. Dandridge 3d, again said Aspche was on the nonprofit's board, as well as two other men, Robert Purdy and Gerard Brennan. Neither could be reached. Dandridge declined to comment.

Katz, the SEPTA attorney who believes she still sits on the board, said she had never met Purdy or Brennan, who was shown as having joined the board in 2006. The district began investigating the school in March following complaints of mismanagment, nepotism, and conflicts of interest. In April, the SRC delayed a vote on renewing the school's charter to give the district's inspector general time to complete his investigation.

The decision came a day after The Inquirer detailed the allegations concerning the popular Northeast school, and reported that a web of charter and business entities enabled Gardiner and O'Shea to earn more than most area superintendents. The federal criminal probe began shortly after.

The school's nonprofit bought the high school building and surrounding property at 1700 Tomlinson Rd. for $2.45 million in February 2004 and undertook extensive renovations of a former warehouse for the high school, which opened in September 2005.

A lawyer for Charter School Choice Inc., a financial services company that handled the finances of both the charter school and the nonprofit between September and June 30, said that monthly checks to cover the high school's rent were deposited in the nonprofit's account at Sovereign Bank. The nonprofit's mortgage payments for the property were automatically made through electronic transfers.

Tom Hogan, Charter School Choice's attorney, said that only the nonprofit's board had any other access to the funds. He said as far as the company knows, those board members are Jamie O'Shea, Eileen Katz and Rhonda Anderson.

It's not uncommon for charter schools in Pennsylvania to establish separate nonprofit corporations to own their buildings. When officials at Philadelphia Academy decided to set one up, they relied on the advice of the school's previous attorney, Robert W. O'Donnell, a former Democratic state representative from Philadelphia and former speaker of the House. O'Donnell said this week that he no longer represented the nonprofit and was not sure who did.

.