A grand jury is investigating whether top officials in the District of Columbia broke federal law when they signed a $21 million deal with an investment firm that is now the center of a fraud investigation, sources told The Examiner.
No current or former city official has been targeted by the grand jury, but several have become “people of interest,” sources said, on condition of anonymity because grand jury proceedings are supposed to be secret.
The District still is trying to recover millions that its charter school program invested in Geneva Capital Partners LLC, D.C. finance office spokeswoman Maryann Young said.
The scandal is even more embarrassing to the city because the money came from congressional appropriations that were supposed to go for other purposes. It is against federal law to use appropriated money for anything other than its appropriated purpose.
Under the deal, begun in 2003, Geneva was given the money by a charter school program run by the state education office. Geneva was then supposed to loan the money to operators of the city’s charter schools.
Geneva now is being sued for fraud by the Securities and Exchange Commission as part of a wider investigation. The SEC claims that Geneva’s owner, Silver Spring businessman Eric Westbury, used Geneva’s money to prop up another faltering company he owned.
Geneva already has been targeted by the D.C. grand jury, and it — and Westbury — have surfaced in the criminal and SEC investigations of a third company.
Neither Westbury nor his lawyer responded to requests for comment for the story.
There also is a question of whether someone siphoned public money off for other reasons. Records from the charter school program that invested in Geneva show that the District gave $5 million to Geneva in 2003 and $5.67 million in 2004. But a source familiar with the investigation said the actual amounts were $12 million in 2003 and $8.8 million in 2004.
Internal blame for the scandal apparently has fallen on former charter school official Jennipher Snowden, who managed the District’s charter school program. She left the city more than a year ago after being put on administrative leave. Efforts to reach her for this story were unsuccessful.
Documents obtained by The Examiner show that top officials in the city’s Office of Finance and Treasury signed papers approving the deal.
“It has already been reported that we didn’t monitor the investment closely,” Young told The Examiner. “But we didn’t treat this investment different from any other investment from that office.”
This is at least the fourth grand jury investigation to examine D.C.’s charter schools. Former Board of Education charter executive Brenda L. Belton has beentargeted by a grand jury investigating allegations of misappropriation. And grand juries also are looking into the collapse of two charter schools that took millions of dollars in public money with them.
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