The U.S. Attorney's Office has asked the Philadelphia Academy Charter School not to release documents collected in an internal probe of fiscal wrongdoing so as not to harm an ongoing investigation.
Sources with knowledge of the federal criminal inquiry say the investigation is moving at a steady pace and involves several agencies, including the U.S. Department of Education and the IRS.
Federal agents have interviewed some staff members and in May served a subpoena on a Delaware County computer firm hired by the school to replace computer hard drives.
Attorneys from Ballard Spahr Andrews & Ingersoll, who conducted the internal probe for the charter school's board, said they were contacted by the U.S. Attorney's Office on Monday and asked not to release the documents they had used to prepare their report, released last week. That document alleges that Brien N. Gardiner, the charter's founder, and Kevin M. O'Shea, its former chief executive officer, systematically looted the school for personal gain.
"We had been in touch with the U.S. Attorney's Office prior to releasing the report, but the office has requested that we not release the appendices," John C. Grugan, a member of the Ballard Spahr team, said today.
The exhibits, which were referenced in the report's 270 footnotes, had been expected to be released electronically to parents, staff and board members at a board meeting at Philadelphia Academy's high school tonight.
Instead, Ballard Spahr attorneys contacted Joseph F. Resta, acting board president, and recommended that the board "take every step to ensure the confidentiality of the report appendices until further notice from the United States Attorney's Office."
Resta, who is leaving the board at the end of this month, said today that the board would comply with the U.S. attorney's request. He declined further comment.
The five volumes of documents include credit card receipts, invoices and memoranda detailing interviews of more than 30 charter employees, board members and others Ballard Spahr questioned.
The 62-page report, released during the July 17 meeting of the charter school's board, alleges that Gardiner and O'Shea defrauded the 1,200-student school in Northeast Philadelphia and cites "substantial evidence of wrongdoing."
The charter school's board hired Ballard Spahr to comb through records and conduct interviews after The Inquirer reported in mid-April that the Philadelphia School District's inspector general was investigating allegations of financial mismanagement, nepotism, and conflicts of interest at the school.
Federal authorities subsequently launched a criminal probe. The School District, sources say, recently turned over documents. And some charter school staff members, including new CEO Larry Sperling, have been interviewed by the FBI.
Both Ronald H. Levine, who represents O'Shea, and Albert S. Dandridge 3d, who represents Gardiner, today declined to comment on the status of the probe or say whether their clients had received target letters from federal investigators.
Patty Hartman, a spokeswoman for the U.S. Attorney's Office, could not be reached today. She declined to comment last week.
As The Inquirer reported in April, a web of charter and business entities enabled Gardiner and O'Shea to be paid more than most school superintendents in the region.
Two days after the article appeared, the Philadelphia School Reform Commission decided to delay a vote on giving Philadelphia Academy a new five-year operating charter, to give the district's inspector general time to complete her report.
That report has not been issued, but the commission last month voted unanimously to give Philadelphia Academy a new operating charter starting Sept. 1, provided the school meets 20 conditions, including replacing its board and severing all ties to Gardiner, O'Shea, their relatives, and any businesses in which they are involved.