The Rheeist Scam Goes Global, Part II
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A few days ago, i talked about Rheeism going global, with Teach for America taking their privatization anti-union schemes around the world. But there’s another side of global Rheeism, which is global capital finding its way to U.S. to profit off of destroying public schools. That’s what is happening in North Carolina, with Chinese investors funding charter schools.
Chinese investors provided $3 million in startup money for Thunderbird Preparatory Academy, a Cornelius charter school that’s fighting for survival.
That’s one of the insights that emerged from last week’s state review of the school’s finances, governance and facilities.
Thunderbird’s network of investors and lenders left Charter School Advisory Board members shaking their heads and palming their faces. “A spider web,” one member dubbed it. “Exceedingly messy and complex,” said board Chair Alex Quigley.
But as North Carolina has opened itself to rapid charter school expansion, a growing number of startup schools are turning to charter-school finance companies to pay for facilities. Some also tap a network of companies and consultants to help them run the schools. That means tax money from North Carolina is flowing across the country and around the globe to repay debts and cover outsourced services.
It’s perfect. Since these charter schools receive public money, when they go under, it’s taxpayers left footing the bill. The article does a very good job at getting into the sketchy finances behind charter schools.
During the first school year, the relationship between Thunderbird and Banyan fell apart. Mojica declined to discuss details, saying the separation agreement prohibits it, and Banyan couldn’t be reached for comment. But the Thunderbird board ended up borrowing $450,000 to pay a penalty for breaking that contract.
It also switched landlords, with Vertex Nonprofit Organization, another Utah-based company that specializes in charter school finance, buying the Thunderbird building from American Charter Development. Vertex leases buildings to charter schools with an option for the school to eventually buy.
The Vertex website says the company charges lease payments that exceed the cost of capital, then returns the excess to the school based on faculty suggestions, “with a focus on maximizing the benefit to students.”
Vertex gave Thunderbird a short-term, no-interest loan of $150,000 to help pay the Banyan penalty, according to reports presented last week. American Charter Development, the former landlord, loaned another $150,000 at 9.5 percent interest.
The rest came from ALK Angel Holdings of Virginia, which gave Thunderbird a $250,000 line of credit, with interest-only payments of $4,167 a month, or $50,000 a year. That’s the one that really raised eyebrows among state officials.
“That just seems like a bad loan,” said Steven Walker, an advisory board member who is also general counsel to Lt. Gov. Dan Forest. Walker pressed Mojica for details about Angel Holdings, including whether any Thunderbird board members did business with general partner Alex Karakozoff.
Mojica said Karakozoff is a venture capitalist with whom he had done business in the past.
All three of the short-term loans were due June 30, the day the advisory board met to reconsider Thunderbird’s fate. Mojica brought letters from all three lenders saying the loans have been extended through June 2018. The Angel Holdings letter says Thunderbird owes $200,000 in principal as of June.
But hey, at least these schools aren’t infected by the evils of teachers’ unions!