Two Philadelphia residents were charges Monday, July 6th, with mail fraud, honest services fraud, theft from a federally funded program and filing a false tax return in connection with their roles in defrauding the Philadelphia Academy Charter School (“PACS”).
The information charges that Kevin O’Shea, the former CEO of PACS, made approximately $34,000 in undisclosed payments with and an accomplice called BG who died prior to the filing of these charges to both Rosemary DiLacqua, the PACS board president and a Philadelphia police detective. While receiving this money, DiLacqua approved a series of salary increases for O’Shea and BG and entered into a twenty-year consulting contract with BG that would have paid him in excess of $100,000 annually for no more than 90 days of consulting. DiLacqua did not disclose these payments on her mandatory statement of financial interest form or to the other board members.
O’Shea is also charged with stealing at least $500,000 from PACS and filing a false tax return. He began working at PACS in 1999 and focused primarily on facilities management. He is a former police officer with a high school diploma and no prior experience in school administration.
The information alleges that around September 2002, BG hired O’Shea to be PACS’s director of operations for approximately $60,000 per year. O’Shea soon began to receive significant raises and increased responsibility at PACS. In or about September 2007, at BG’s urging, the board promoted O’Shea to replace BG as the PACS CEO. By the time defendant O’SHEA left PACS in May 2008, he was earning in excess of $200,000 in salary from PACS, with defendant DiLacqua’s approval.
O’Shea, along with BG, abused his position through a variety of frauds, the information alleges, including: (1) using approximately $710,000 in PACS’ funds to purchase a building in the name of their purported non-profit business with the aim of flipping the building to another charter school for a $1 million profit; (2) demanding kickbacks from PACS vendors; (3) having lavish offices built for themselves at PACS, including flat screen televisions, executive bathrooms and granite countertops, at a cost of approximately $145,000 to PACS; (4) submitting for reimbursement at least $40,000 in fraudulent invoices for personal meals, entertainment, home improvements, and gas and telephone bills; (5) having approximately $50,000 worth of home repairs improperly billed to PACS; (6) collecting approximately $34,000 in rent from entities using PACS facilities; (7) hiring a computer firm in an attempt to destroy computer evidence to obstruct this investigation; and, (8) filing a false tax return for 2006.
“The defendants in this case, in their positions of trust with the Philadelphia Academy Charter School, were responsible for ensuring that the students of the school received the very best education available through the charter school program,” said Special Agent in Charge Janice K. Fedarcyk of the Philadelphia Division of the FBI.
“[T]he defendants defrauded Philadelphia students and taxpayers in a deliberate, methodical, and exhaustive way,” said Mary Mitchelson, acting Inspector General of U.S. Department of Education.
“The alleged actions of O’Shea and DiLacqua were motivated by greed and the ultimate victims in this case were the students of the charter school,” said Don Fort, Special Agent-in-Charge of I.R.S. Criminal Investigation.
If convicted of all charges, O‘Shea faces up to 35 years in prison and DiLacqua faces up to 20 years in prison.