Former CEO of Charter School Pleads Guilty to Fraud

PHILADELPHIA—Ina Walker, 59, of Philadelphia, pleaded guilty today to conspiracy, wire fraud, and theft from a federally funded program in connection with a scheme to defraud the New Media Technology Charter School (“New Media”) and bank fraud in connection with the property that alter housed the Black Olive Restaurant. Walker, who is the former CEO of the school, was indicted with Hugh C. Clark, the former president of the board for New Media, who is awaiting trial. Sentencing for Walker is scheduled for April 27, 2012. She faces a substantial period of incarceration.

New Media is a charter school funded with federal tax dollars. Walker, allegedly with Clark, improperly used approximately $522,000 in New Media funds for her own enrichment to (a) pay expenses at a small private school, Lotus Academy (b) advance her personal business ventures, including the Black Olive health food store and the Black Olive restaurant, and (c) pay personal expenses. At least $309,000 was fraudulently diverted from New Media to Lotus Academy, often disguised as prepaid rent or bogus security deposits. Once the funds were deposited into Lotus Academy bank accounts, the defendants allegedly spent the money on the expenses of their private school, and on their personal and business ventures.

Walker used New Media funds to hire and pay a contractor for the purpose of creating and preparing the Black Olive health food store for opening. Although the contractor had an office at the New Media middle school, the contractor did not teach students or have any legitimate function in the New Media middle school. Walker also paid a marketing contractor with New Media’s funds.

As a result of the improper and fraudulent payments, New Media failed to meet legitimate expenses including, but not limited to monthly employee withholdings and quarterly employer contributions to the Pennsylvania School Employees Retirement System. PSERS is the defined benefit retirement plan for public school employees of the Commonwealth of Pennsylvania. From October, 2006 through November, 2008, New Media carried a past-due balance with one of its primary textbook vendors, it is alleged. On several occasions, there were allegedly insufficient funds in New Media’s bank account to cover employee payroll checks. According to the superseding indictment, in Spring of 2009, coaches for New Media’s athletic teams remained unpaid or partially paid.

The bank fraud scheme involved defendant Ina Walker, allegedly acting at the direction of defendant Hugh Clark, purchased 22-24 East Mount Airy Avenue On July 14, 2006, after having submitted false information to the lender. That location eventually housed the Black Olive Restaurant when it opened in 2008; it also has an upstairs apartment. The sales price was $450,000 and the loan from Wilmington Savings Fund Society (“WSFS”) was $357,500. As described in the superseding indictment, the lender relied on income from three fake leases submitted by the defendants when valuing the collateral and determining Walker’s ability to repay the loan. Defendant Ina Walker failed to make the required loan repayments to WSFS and defaulted on the loan for an amount of approximately $339,000 due and outstanding.

The total loss under the plea agreement is $861,000.

The case was investigated by the United States Department of Education-Office of Inspector General and the Federal Bureau of Investigation. The School District of Philadelphia’s Office of Inspector General provided assistance in the investigation. It is being prosecuted by Assistant United States Attorney Joan E. Burnes.