New York Times

By STEPHANIE SAUL

Published: June 5, 2012

A group of three publicly financed charter schools in Georgia run by followers of Fethullah Gulen, a prominent Turkish imam, have come under scrutiny after they defaulted on bonds and an audit found that the schools improperly granted hundreds of thousands of dollars in contracts to businesses and groups, many of them with ties to the Gulen movement.

The audit, released Tuesday by the Fulton County Schools near Atlanta, found the schools made purchases like T-shirts, teacher training and video production services from organizations with connections to school officials or Gulen followers. Those included more than $500,000 in contracts since January 2010 with the Grace Institute, a foundation whose board has included school leaders. In some cases the awards skirted bidding requirements, the audit said.

“I would just question how those vendors were selected when price in many instances wasn’t part of the decision making,” said the Fulton County superintendent, Robert Avossa, who criticized the schools for conflicts of interest. “And those are public dollars.”

Gulen followers run more than 120 charter schools nationwide, making the loosely affiliated network one of the nation’s largest public charter school operators. Despite clear connections, the schools generally deny any affiliation with the Gulen movement, a powerful religious and political force in Turkey whose leader, Mr. Gulen, views establishing schools as part of his mission. While some of the charter schools have been praised for their academic performance, their business practices have raised questions.

The New York Times reported last year that the group’s 36 Texas schools had granted millions of dollars in construction and renovation contracts to firms run by Turkish-Americans with ties to the movement, in some cases bypassing lower bids from firms with no connections to the movement. The Texas schools also awarded deals for cafeteria food, after-school programs and teacher training to organizations affiliated with Gulen followers.

The Georgia audit, posted to the Fulton County Schools Web site Tuesday evening, focused on the Fulton Science Academy Middle School in Alpharetta, Ga., a 500-student school that was recently denied a renewal of its public charter. The school, which had received $32 million in public funds over the past 10 years, said it would operate as a private school. While the audit does not lay out all of the relationships between contractors and the movement, a chart shows connections between the people running the schools, some of the vendors and Gulen-connected groups.

Dr. Avossa said that the audit’s findings had raised concerns about the group’s two other public charter schools in his district: Fulton Science Academy High School and Fulton Sunshine Academy, an elementary school.

He said a full audit would be conducted of those schools “to gauge whether similar wrongdoing is taking place.”

The three schools have enrolled 1,200 students representing a cross section of students in the Fulton County district.

Wells Fargo Bank, trustee of a $19 million bond issue by the schools, told investors on May 15 that the three schools were in default on those bonds. The bank said the default was caused by the group’s failure to disclose in its bond offering last year that its middle school charter renewal might have been in jeopardy. “The failure to disclose the ongoing concerns with Fulton Science Academy’s charter renewal petition constituted an omission of material facts in the public statement,” Wells Fargo said.

A default gives the bondholders the right to demand immediate payment, possibly requiring a liquidation of some school assets. The bonds are trading at about 70 percent of face value.

Concerns about governance and transparency were partly behind the district’s rejection of the Fulton Science Academy Middle School’s demand for a 10-year charter renewal. The school was named a “blue-ribbon” school last year by the federal government for its performance and appealed unsuccessfully to the state.

Kenan Sener, the school’s principal, said that the audit contained significant inaccuracies and that the school would issue a statement on Wednesday, after fully reviewing the document.

Nationwide, the charter schools have pursued an aggressive expansion plan, much of it financed by public bond issues, with the Texas schools borrowing more than $200 million through bond offerings.

In Texas, the group’s spending has been the focus of investigations by the State Legislature and the Texas Education Agency. The federal Department of Education is also investigating the Texas schools, apparently focusing on allegations of discrimination against Hispanic special education students in enrollment. The schools have denied wrongdoing.

One criticism of the schools involves their reliance on teachers imported from Turkey while teacher unemployment in the United States remains high. The audit said the Fulton Science Academy Middle School had paid $75,000 in immigration-related expenses for such employees.

Although the schools are inspired by Mr. Gulen and teach Turkish language and culture, they do not teach religion.

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