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Indictment clouds appointment at Dolores schools

District stands by new dean, charged in $50M embezzlement case
San Diego District Attorney Summer Stephan is flanked by her team of prosecutors and investigators on May 29 for what they say was a statewide charter school scheme that used more than $50 million in public funds.

The new secondary dean of students in Dolores School District Re-4A is facing embezzlement charges by the San Diego District Attorney’s Office, but school administrators hope he will be exonerated soon and have expressed full support of his hiring.

Justin Schmitt, 36, is one of 11 defendants in a case involving a $50 million charter school fraud. His attorney Eric Beste emphasized that Schmitt was a salaried employee and not an owner of the company, and that no one has yet been convicted in this case.

Schmitt began working for Re-4A on Aug. 12, replacing outgoing dean and athletic director John Marchino, who now works for the Mancos School District Re-6. There were nine candidates for the position, five of whom were interviewed, according to Doreen Jones, finance director with the district.

Superintendent Lis Richard said Schmitt went through a thorough vetting process that included legal consultation, background checks, an interview committee and board approval.

She told parents in a letter dated Sept. 26 that he is “an extraordinary administrator.”

“I promise you that we are aware of anything you may have heard and we stand by him in full support,” Richard wrote in the letter. In an email Wednesday, she reiterated those points, adding that he is “the right person for our secondary dean of students position. His passion, dedication and wisdom are exemplary.”

She encouraged parents who had questions about Schmitt to visit her.

Efforts to reach Dolores School Board President Kay Phelps were not returned.

Schmitt declined to comment for this article, citing his attorneys’ advisement. According to the indictment, he faces about a dozen criminal charges, including conspiracy to commit a crime and misappropriation of public money. He could face a maximum sentence of 11 years in custody.

The case in question involves two alleged ringleaders – Sean McManus and Jason Schrock – who opened 19 online charter schools and allegedly used them to embezzle $50 million from the state of California, according to a statement released by the San Diego District Attorney’s Office.

The other nine defendants worked under McManus and Schrock at the different charter schools, collectively known as the A3 Charter School network – short for Academics Arts & Action Charter Academies. Four of them are listed as charter school employees, one an accountant, one with the charter school registrar, one a consultant contractor, one the head of Prodigy Athletes, and the other was the superintendent of the Dehesa School District in east San Diego County.

Schmitt is listed as a charter school employee in the district attorney’s statement. According to a motion filed by his attorneys, he worked for and held leadership positions in online charter schools for several years, including in what would ultimately be called “Valiant Academy,” purchased by A3 in 2017.

San Diego DA press release
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The 235-page indictment was handed down by a grand jury May 17 after a yearlong investigation by the district attorney’s office. Overall, it lists several criminal counts, including conspiracy, misappropriation of public funds, paying for student information and conflict of interest.

Much of the alleged fraud involved falsifying enrollment counts in order to secure additional state funding, according to the statement released by the San Diego District Attorney’s Office. The indictment charges the defendants with seeking out small school districts and proposing they authorize online charter schools, in order for A3 to earn more public funds in the form of oversight fees.

Additionally, the indictment states, they paid pre-existing athletic programs for enrollment documentation and then enrolled students in a charter school during the summer, collecting about $2,000 per student from the state of California.

Other components of the alleged scheme involved backdating student enrollment information, dually enrolling students from private schools to the charter schools, and transferring students from one school to another, again to collect additional state funding, which is partially determined by average daily attendance.

The indictment alleges that Schmitt was involved in several components of the fraud and accuses him of multiple counts of conspiracy to commit a crime and misappropriation of public money.

On one count, it alleges that he “committed two or more related felonies” related to “the taking and resulted in the loss by another person and entity of more than five hundred thousand dollars.”

His attorney, Eric Beste, working for Barnes & Thornburgh LLP of San Diego, said he could not comment on much of Schmitt’s case because of the ongoing litigation, but he emphasized that Schmitt was a salaried employee and not an A3 business owner.

“There’s been some comments in the media about people making millions and millions of dollars in this business,” Beste said. “There may be other people who fall into that category, but that’s not Justin.”

He said Schmitt pleaded not guilty.

Schmitt is a product of Dolores High School himself, according to his online bio. After graduating from Fort Lewis College, he served as a teacher and then an administrator in both physical and online schools, according to a motion filed by his attorneys on July 15.

Schmitt is the nephew of former Superintendent Phil Kasper, who is currently running for a seat on the Dolores school board.

He held leadership roles with Mosaica Online Academy, which ran into financial difficulties. Many of the management contracts for Mosaica’s online schools were purchased by Foundation Learning, which retained Schmitt to continue operating some of the schools.

The online schools were eventually renamed “Valiant Academy.” A3 purchased the Valiant schools in California in early 2017, according to the motion. Schmitt became involved in the operation of A3 schools and in September 2018, he was promoted to Chief Operations Officer and given an annual salary of $150,000. He officially resigned from A3 as of May 31, after his arraignment.

According to Montezuma County voting records, Schmitt was living in Cortez as of December 2018.

The July 15 motion sought financial restitution for Schmitt, who was “looking for employment” but unemployed at the time it was filed. His attorneys stated that because the DA’s Office had restrained A3’s assets, Schmitt hadn’t received his May paycheck or been reimbursed for travel expenses incurred between February and May.

They argued he should be compensated for these expenses and back pay, for a total of $16,818.70.

“There is no possibility that the payment of Justin’s back pay and modest travel expenses will dissipate the assets of A3,” the motion states. “But it is a virtual certainty that the continued restraint of his money will cause significant financial harm to Justin, his innocent spouse, and his three minor children.”

The motion also states that “Justin has no prior criminal record, no arrest record, and prior to this case, no allegation of criminal wrongdoing against him.”

The San Diego district attorney has charged 11 defendants – some of whom are employees and some of whom are just associates, Beste said.

“Everybody’s under pleas of not guilty,” he said. “No one has admitted anything; no one’s been convicted of anything yet.”

Beste is contesting the allegations and is in conversations with the San Diego District Attorney’s Office, he said. The DA’s Office is aware of Schmitt’s new post in Dolores and has raised no objections, he added.

The next proceedings in this case are scheduled at 9:30 a.m. Oct. 30 in the San Diego Superior Court, Central Division, Central Courthouse.

Leadership changes in Dolores

The Dolores School District has experienced a tumultuous few years in terms of leadership changes. In May 2018, Scott Cooper resigned as superintendent of the district to take a job as assistant superintendent of Mesa Valley County School District 51 in Grand Junction.

Phil Kasper assumed the job of interim superintendent a few months later, and Lis Richard, hired in May for the post, began working for the district July 1. Prior to coming to Dolores, Richard served as superintendent in the Creede School District.

In other leadership changes, the district also lost both elementary and secondary principals in recent months. Elementary Principal Gary Livick announced his resignation late February, and Secondary Principal Jen Hufman just a few weeks ago – her last day was Sept. 30.

Richard addressed the recent changes, in particular the resignation of Hufman, in her letter to parents. “We do not plan to put anyone in place as an interim principal,” she wrote. “We currently have staff that can fill in and cover needed areas until we hire a new principal. There have been many interested in the position and we begin interviews the week of October 7.”

She added too that Schmitt has applied for the principal position. “He will be considered in a fair and non biased manner as all of the candidates will,” she wrote.

Dolores also has a school board election coming up this November. At a candidates forum Wednesday night, parent Molly Cooper asked Kasper about his relationship to Schmitt, and if that could result in a conflict down the line, pending Schmitt’s ongoing litigation.

Kasper responded that he would remain impartial “to the best of my ability in all areas.”

Richard was also present at the forum, introducing candidates and collecting questions from community members, although the official moderator was Matt Margeson, a Dolores parent and assistant district attorney for the 22nd Judicial District. The superintendent pointed out that board members have the ability to recuse themselves from votes if a conflict of interest should arise.

Initially, Richard had asked Cooper to direct the question to herself in private rather than at the forum, but Kasper said he was comfortable answering publicly at the event.

Schmitt Verifed Claim
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ealvero@the-journal.com

San Diego DA press release (PDF)

Schmitt Verifed Claim (PDF)

Candidate forum

A forum featuring the candidates for the Dolores School District Re-4A Board of Education will be from 6 to 8 p.m. Oct. 2 at the Dolores Community Center, 400 Riverside Ave.

Six candidates are running for three open seats on the board.

Two candidates are set to replace departing board members Deanna Truelsen and Vangi McCoy, whose terms are both set to expire this November. The third open seat is currently held by Treasurer Lenetta Shull, who is seeking reelection.

The candidates running are Lenetta Shull, Joe “Spark” Reed, Phil Kasper, Clay Tallmadge, Maegan Crowley and Alex Prime.

Sep 24, 2021
Tallmadge, Crowley, Shull claim Dolores school board seats
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