ST. LOUIS — The former head of a St. Louis charter school has pleaded guilty to $2.4 million in fraud.
Michael Malone, 44, of St. Louis pled guilty to three counts of wire fraud connected to a scheme to obtain funds through the operation of St. Louis College Prep Charter School from 2011 through 2018.
During its final school year, from 2018-2019, the school served students in grades six through 12. As a charter school, it was tuition free and funded by Missouri and federal education funds. The school received its state funding through Missouri’s Department of Elementary and Secondary Education (DESE) based upon its reported student attendance, according to a press release.
Malone founded the school and served as executive director from the school’s inception in 2011 until he resigned in November 2018. He was actively involved in the day-to-day management of the school, had an office in the primary school building and was responsible for reporting student attendance numbers to DESE.
As part of the scheme, Malone falsely inflated students’ average daily attendance in his reports, the release stated.
For example, during the 2013-14 school year, Malone reported average attendance of 220, when the actual enrollment was 191 students. During the 2016-17 school year, Malone reported average attendance of 326, when the actual enrollment was 290 students.
The falsely inflated numbers reported to DESE resulted in increased state funding for the school, the release said.
The school operated on a year-long schedule and an extended school day with no summer school or remedial classes. But Malone inflated student attendance numbers by falsely claiming regular school days and hours as summer school or remedial hours, which resulted in an increase in state funding from DESE.
Malone also falsely inflated actual student daily attendance. For example, during the 2016-17 school year, he inflated the daily attendance records of 81 out of 333 students, or 24% of the actual student body. Inflated hours totaled 10,044 hours for the 2016-17 school year and 13,255 hours for the 2017-18 school year, the release said.
Malone used the increase in state funding, $2.4 million, to maintain the school’s ongoing operations during a period when costs to operate the school were increasing significantly. He also used the increase to give the school a competitive advantage over St. Louis Public Schools and other charter schools when recruiting students.
“What the former headmaster did through his deception, repeatedly over many years, was take advantage of the Missouri taxpayers, while obtaining an unfair advantage over the St. Louis Public Schools and other area charter schools. This was not a mistake. Evidence proved Michael Malone’s actions were intentional and, unfortunately he got away with it for years,” said U.S. Attorney Jeff Jensen.
"Michael Malone failed more than just students and staff at St. Louis College Prep Charter School," said Richard Quinn, FBI St. Louis Division. "By siphoning $2,400,000 from a finite pool of education dollars, he robbed students at other public and charter schools of additional resources they should have received."
Each charge of wire fraud carries a maximum penalty of 20 years in prison, a fine of $250,000 or both.
In a press release, the Missouri Charter Public School Association said this violation of the law surfaced due to the added layer of sponsor oversight built into Missouri's charter public schools' model.
Bill Mendelsohn, director of Charter Schools at the University of Missouri-St Louis, and his staff identified possible issues with the school’s attendance data and alerted the board of directors and DESE.
“This action on the part of the school’s sponsor quickly led to an internal review, ultimately resulting in the state audit and closure of the school. While a school closure is troubling, it also demonstrates the type of accountability the public demands and deserves,” the association said in the release.
