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School Official Charged: Charter Schools Founder Accused of Tax Fraud, Billing Network for Europe Trip

Ohanian Comment: This is the thug who sent me threatening e-mails after I asked this question. He was notorious for mistreating teachers .

Here's the New York Times opening paragraph:

When state investigators demanded last year to see personal tax returns filed by Eddie Calderon-Melendez, the founder and chief executive of a troubled network of charter high schools in Brooklyn, he produced them. One problem, according to the investigators, was that those state tax returns were falsified and had never been filed.

And here's the kicker: Almost all of the money to operate the three schools came from public financing.

By Sophia Hollander and Aaron Rutkoff

The founder and former chief executive of a troubled charter-school network in Brooklyn was indicted Thursday on charges that he repeatedly failed to pay income taxes, embezzled money from his schools and created phony records.

Eddie Calderon-Melendez, the ex-CEO of the Believe High Schools Network, failed to pay taxes on more than $1.4 million in compensation between 2005 and 2010, prosecutors allege. During that period, Mr. Calderon-Melendez never filed a tax return and failed to pay more than $70,000 in state and city taxes, the indictment claims.

"While earning a six-figure salary funded largely by taxpayer dollars, the defendant robbed the state of New York of much-needed revenue when he failed to pay his taxes for six years in a row," Attorney General Eric Schneiderman said in a statement. "He then compounded his crime by creating false evidence to throw investigators off his trail."

Mr. Calderon-Melendez, who pleaded not guilty at an afternoon arraignment, couldn't be reached for comment. No one answered the door at his Brooklyn home, and his lawyer, Jeffrey Udell, didn't respond to requests for comment.

The indictment handed down in Brooklyn Supreme Court charged Mr. Calderon-Melendez with 11 felony counts, including tax fraud, grand larceny and falsifying records.

Among the accusations, prosecutors allege that in 2009, Mr. Calderon-Melendez charged more than $1,800 in expenses from a personal trip to Europe on a credit card connected to one of the schools.

It was another setback for the three struggling Williamsburg, Brooklyn-based schools that form the Believe network, which Mr. Calderon-Melendez founded in 2009.

In January, education officials announced that they planned to shutter all three schools this summer—which would have been the first time officials closed an entire New York City charter-school network.

Though charter-school closures are generally traced to poor academic performance, in this case officials cited fiscal and governance problems. Mr. Calderon-Melendez was central to many of their complaints, including Williamsburg Charter High School's decision to rehire Mr. Calderon-Melendez as CEO without considering other applicants and failure to address concerns about his leadership.

Some board members accused him of using his school credit card to purchase personal items, including alcohol.

All three schools failed to disclose conflict of interest among its board members and had struggled to recruit board members and students, according to officials. A state audit of the 2009-10 school year found more than $80,000 in overpayments to the network and hundreds of thousands of dollars in mishandled expenses.

After the revocation threats, one school, Northside Charter High School, successfully appealed to have its charter revocation reversed. The school is now on probation.

"They're doing everything that the state Education Department has asked them to do to comply with the charter," said Sharon McCarthy, the attorney for the schools in connection with the attorney general's investigation. "They're very devoted to the children and making sure the kids have a place to go to school in the fall."

The other two schools are still slated to close, but in a letter posted on the website of Williamsburg Charter High School, the board of trustees vowed to challenge the revocation of the charter in court, calling it "heartbreaking news."

Williamsburg Charter High School severed its ties with Mr. Calderon-Melendez in January, Ms. McCarthy said.

Mr. Calderon-Melendez founded Williamsburg Charter High School in 2004 and became the school's CEO. Two years ago, the state approved Southside and Northside to join the newly created Believe High Schools Network, which Mr. Calderon-Melendez also headed. He stepped down from that position in January.

But according to prosecutors, the problems started almost immediately. Mr. Calderon-Melendez failed to file taxes in 2005, they allege, despite earning up to $500,000 a year in salary and consultant fees. After receiving a subpoena, he "produced false New York tax returns" for years 2005 through 2008, the complaint states.

—Lisa Fleisher contributed to this article.

Write to Sophia Hollander at sophia.hollander@wsj.com and Aaron Rutkoff at aaron.rutkoff@wsj.com

— Sophia Hollander and Aaron Rutkoff
Wall Street Journal





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