Chicago's Largest Charter School Operator Hit With SEC Complaint For Defrauding Investors

United Neighborhood Organization, an Hispanic community nonprofit organization, is the largest operator of charter schools in Illinois with close political ties to Mayor Rahm Emanuel. In 2011, the organization won $98 million in state-backed loans from the State of Illinois to be funded with a public bond issue to build charter schools in Chicago, but Gov. Pat Quinn cut off funding to the organization after doling out $37.5 million to UNO after learning from a Sun-Times report last year that the nonprofit had awarded contracts to companies owned by close relatives of the nonprofit's top management. Today, the SEC has hit UNO with a lawsuit alleging fraud for misleading investors about conflicts of interest in the awarding of $13 million in construction contracts.

The Sun-Times reports that UNO will enter into a settlement agreement with the SEC under which it agrees to improve its internal procedures and training, including the appointment of an independent monitor. UNO's CEO, Juan Rangel, resigned after the SEC sent a target letter to the organization last December, and it terminated its contractual relationship with the company owned by the relatives of the agency's top management official. According to the settlement agreement, UNO will be required to pay the fees of the independent monitor. Retired federal Judge Wayne Anderson has been tapped to perform the work. Interestingly, the underwriter of the bonds was Cabrera Capital Markets, whose CEO Martin Carbrera served as UNO's board chairman before stepping down last year after the SEC launched its investigation. A copy of the complaint and settlement agreement is posted at the Sun-Times website here.

I wonder how many sleazy contractual agreements like what occurred at UNO are tied to all of these charter schools being built in Indianapolis and around the state of Indiana with the assistance of the State of Indiana? After all, most of our major charter school operators have deep ties to the politicians' biggest campaign contributors, and those folks never seem to do anything in the name of civic virtue. There's always something in it for them.