A Jacobin investigation finds widespread corruption at one of the nation’s largest charter school networks.

by George Joseph

Over the summer, FBI agents stormed nineteen charter schools as part of an ongoing investigation into Concept Charter Schools. They raided the buildings seeking information about companies the prominent Midwestern charter operator had contracted with under the federal E-Rate program.

The federal investigation points to possible corruption at the Gulen charter network, with which Concept is affiliated and which takes its name from the Turkish cleric Fetullah Gulen. And a Jacobin investigation found that malfeasance in the Gulen network, the second largest in the country, is more widespread than previously thought. Federal contracting documents suggest that the conflict-of-interest transactions occurring at Concept are a routine practice at other Gulen-affiliated charter school operators.

The Jacobin probe into Gulen-affiliated operators in Texas, Arizona, Utah, Nevada, and California found that roughly $4 million in E-Rate contract disbursements and $1.7 million in Department of Education Race to the Top grantee awards were given to what appear to be “related parties.” Awarding contracts to firms headed by related parties would seem to violate the FCC’s requirement that the school’s bidding process be “competitive” as well as “open and fair.”

Unlike most charter schools networks, the Gulen charter network has received significant scrutiny in the US press, primarily because of the international profile of its Islamic cleric leader and xenophobic fears of “education jihad.” Such coverage distracts from what appears to be systemic corruption at the public’s expense, a predictable consequence of the US charter school model. This has nothing to do with Fetullah Gulen’s religious teaching and everything to do with the private management of public education dollars.

Like most big-time charter operators, the Gulen charter network has developed a growth model more reminiscent of a Fortune 500 company than a public school district. As the sociologist Joshua David Hendrick told Jacobin, the Gulen charter school movement links “private Turkish capital with a shared sub-economy that builds upon an initial educational venture and then expands from there.”

Armed with startup capital from Turkish foundations, the charter school network has quickly grown to over 130 schools in twenty-five states while employing the same business strategy: invest in lawmakers to win charter school contracts, import Gulen adherents to staff schools on H-1B teaching visas, and award school contracts to education resource firms led by former employees.

The cycle can then repeat itself as enriched former school employees donate to the plethora of Turkish foundations, securing political influence for individual charter school operators.

A Suspect Bidding Process 

Records indicate that Gulen charter schools nationwide may be regularly violating federal competitive-bidding laws by disbursing contracts and grants to firms owned by other Gulen schools or former Gulen school employees.

In August, the Chicago Sun Times reported that in Chicago alone Concept management may have engaged in nearly a million dollars worth of related-party transactions with E-rate contractor Core Group, Inc. An analysis of Core Group’s E-Rate program disbursement shows their only successful bids have come from Concept charter schools across the Midwest and that these fifty-eight bids amount to over $3.2 million.

More obviously suspect are the contracting deals sometimes crafted between Gulen chains. Apex Educational Services, for example, presents itself as a stand-alone education technology firm, but a 2013 IRS file from a Chandler, Arizona, branch of the Gulen-affiliated Sonoran Science Academy chain lists Apex Educational Services, Inc. as one of its properties.

Hence it is no surprise that nearly all of Apex’s forty-eight E-Rate bids have gone to Gulen-affiliated chains across California, Nevada, and Utah, and all four of Apex’s successful bids have come from Magnolia Science Academies, one of the country’s largest Gulen charter chains. To date, Apex has earned about $114,000 from Magnolia’s E-Rate disbursement.

Ties between other Gulen-affiliated chains and their E-Rate providers may also violate the FCC’s competitive-bidding requirements.

There appears to be an intimate relationship, for example, between Harmony Public Schools, a Gulen-affiliated Texas charter chain, and the telecommunications firm Brighten Technologies, which from 2010 to 2014 earned roughly $670,000 off of twenty-three Harmony’s E-Rate contracts. Set up and staffed by former Harmony computer-science teachers, Brighten Technologies exists almost exclusively for Harmony contracts (94 percent of Brighten Technologies’ E-Rate applications have been for Harmony Public Schools).

In an email to Jacobin, Harmony denied these practices constitute a conflict of interest, claiming that their contracting approach to federal grants is “fair and open.” Nonetheless, despite being unaware of their close relationship, the Universal Service Administrative Company — the independent agency responsible for reviewing E-Rate applications — has rejected thirteen of Harmony’s applications to contract with Brighten Technologies for failing to prove it had a competitive-bidding process.

Regarding their contracting with Brighten Technologies, Harmony officials wrote, “A range of factors, including price, product availability, and demonstrated ability to deliver are evaluated in selecting vendors, and all the criteria for ‘best value’ have to be met, not just low price.”

Such a response is telling; rather than simply explaining why no conflict of interest exists with Brighten, Harmony officials stressed twice to Jacobin that “low price” is not their only contracting criterion, a line they used to justify what appeared to be overly generous contracts to Turkish-owned construction firms three years ago.

Additionally, federal data does not support Harmony’s claim that Brighten Technologies offered any “better value” in lieu of its overcharging. In fact, most of Brighten’s applications were rejected for failing to provide basic planning standards. To date, only twenty-six of Brighten’s ninety-eight applications have been accepted. Had Brighten been competent enough to meet USAC’s basic requirements when applying for Harmony contracts, it could have netted well over $5 million from past applications alone.

But Harmony’s apparent competitive-bidding violations go beyond the E-Rate program. In February 2014, Harmony’s school newspaper announced that the Cosmos Foundation had secured a $29.8 million Race to the Top grant from the Department of Education to purchase Google Chromebooks for over 16,000 students.

Brighten Technologies received a roughly $905,000 Department of Education Race to the Top grant, secured for them by Harmony Public Schools — another potential federal violation of Race to the Top grant rules, which stipulate that recipients must foster “full and open competition” when contracting for goods and services.

Further analysis of the same Race to the Top grant shows that Harmony also awarded $805,000 in contracts to the Gulen-affiliated Texas Gulf Foundation for various consulting and instructional services. But as the New York Times reported in 2011, the foundation, like Brighten Technologies, was started by former Harmony employees and used to have its offices on a Harmony campus.

Harmony officials denied that this contract award violated competitive-bidding guidelines; Brighten Technologies has not returned Jacobin requests for comment.

Building Influence, Building Schools

Gulen-affiliated chains have grown most rapidly in the Midwest, Texas, Arizona, and California, where, as in Chicago, stories abound of Gulen-affiliated charter officials appealing to state authorities to override the contracting decisions of local school districts.

In Illinois and Texas, Gulen-linked Turkish cultural foundations have invited lawmakers on numerous trips to Turkey, and consistently fund the campaigns of those in a position to expand their fast-growing network. When the Chicago Public Schools declined Concept’s offer to build two more schools, for example, Concept appealed to the Illinois State Charter School Commission, an agency formed by Illinois Democratic Chairman Michael Madigan, among others. The commission overturned the school board’s decision and approved Concept’s expansion.

Madigan had taken four trips to Turkey that were hosted by the Niagara Foundation, whose honorary president is none other than Fetullah Gulen. From 2010-2012, the Niagara foundation paid for at least thirty-two sojourns for Illinois lawmakers.

In New Orleans, two members of the Louisiana Board of Elementary and Secondary Education traveled to Turkey at the invitation of the Gulen-affiliated Pelican Foundation. The trips prompted local rumors of a quid pro quo when one of these members was the sole dissenting vote against revoking Pelican’s right to operate Abramson Science and Technology Charter School, despite shocking stories of alleged mishandling of sexual-abuse cases.

Similarly, the Houston-based Turquoise Council of Americans and Eurasians, which a Stratfor email leaked by Wikileaks described as “definitely a nonprofit related to the larger Fethullah Gulen movement,” has been called into question for its lavish trips for Texas lawmakers. Prominent members of the nonprofit have close ties to Harmony Public Schools, Texas’s largest charter chain, and its 2012 IRS 990 form alone lists nearly $1.9 million in travel expenses.

The founder of Harmony Public Schools, Yetkin Yildirim, is also the Austin branch representative of the Turquoise Council of Americans and Eurasians, a position from which he regularly lobbies local politicians.

And their influence may extend beyond their regional bases. On February 9, 2010, Kemal Oksuz, the president of the Turquoise Council, and Yildirim, the founder of Harmony Public Schools, both attended a White House “Briefing for Turkish American Leaders.” In a statement to Jacobin, Harmony Public Schools claimed to have no affiliation with the Turquoise Council of Americans and Eurasians and denied any connection to the Gulen movement, despite several investigative reports that have linked the two.

Additionally, Buzzfeed reported this summer on the tens of thousands of dollars that Gulen adherents were pouring into Texas races, particularly to that of US Representative Sheila Jackson Lee. School officials denied these donations were part of a centrally coordinated influence-building effort. Nonetheless, in July, Harmony CFO Erdal Caglar admitted that Jackson Lee was helping the chain expand to a location in DC.

Education or Immigration?

Despite the financial success of many Gulen schools, several sites have driven themselves to bankruptcy, spending enormous amounts of public funding on immigration fees for fellow Gulenists. As the Atlantic recently reported, Utah’s Beehive Academy, a Gulen school, spent “about 50 cents to pay the immigration costs of foreign teachers for every dollar that it spent on textbooks.” This eventually caused the school to be temporarily shuttered.

In California, Magnolia Science Academies, a Gulen-affiliated chain, recently made headlines for allegedly misusing $3 million in public funds to cover the immigration costs of six non-employees. The Los Angeles Unified School District ordered the closure of two Magnolia schools, citing financial mismanagement, but a July court order reversed the decision.

For Gulen, it goes beyond financial impropriety. Gulen chains appear to use H-1B slots for teaching positions to facilitate immigration and further business expansion, rather than to improve teaching quality. According to Canadian consular officials, teachers being brought from Turkey to teach in Gulen schools on H-1B visas are often not credentialed. “While the H-1B petitions were for teaching positions at charter schools in the United States,” wrote one Canadian official, “most applicants had no prior teaching experience and the schools were listed as related to Fethullah Gulen.”

Records indicate that from 2001–10, Cosmos Foundation, the charter operator of Texas’s Harmony Public Schools, filed 1,157 H-1B visa applications and brought in 731 employees — higher than all other providers of secondary education combined.

In a statement to Jacobin, Harmony officials explained “the national shortage of math and science teachers” had pushed them to hire a “small percentage of international teachers” whose qualifications were “based primarily on academic professional credentials.”

The story of Brighten Technologies, the telecommunications provider closely linked to Harmony, illustrates how Gulen schools use H-1B visas not only to guarantee American residency to fellow Gulen adherents, but also to create in-house companies to profit off of federal and state grants.

Take Joseph Duzgun, the founder of Brighten Technologies, who came to the states sometime around 2002. According to his LinkedIn page, Duzgun studied mathematics at Ondokuz Mayis University in Samsun, Turkey, though his profile does not include any information regarding teacher training.

Nevertheless, Duzgun served a short teaching stint at Harmony Schools from as early as 2004 to at least 2006. Two years later, he started Brighten Technology Solutions (later called Brighten Technologies), which has benefitted from numerous publicly financed contracts from his former employer, Harmony Public Schools.

Likewise, Turkish immigrant Gökhan Sancar was a computer teacher and technology instructor at Harmony Science Academy Lubbock from 2008–9 and at the Harmony School of Ingenuity from 2009–10. He joined Brighten Technology Solutions in 2010. He currently lists his position as Brighten’s VP of Sales. Neither Duzgun nor Sancar responded to Jacobin requests for comment.

Brighten Technologies exemplifies the Gulenist corporate expansion strategy. School officials bring over fellow Gulenists on H-1B teaching visas, keep them in Harmony schools for a few years, then organize them to found companies — which are guaranteed a profit from providing services to Gulen schools, often at inflated costs.

A Charter to Steal

Harmony’s E-Rate and Race to the Top programs federal grants have netted Brighten Technologies over $1.57 million in dubiously legal related-party transactions. Such transactions appear to violate many federal grant application rules, and also occur at the state level, where such nepotistic practices are often even more difficult to regulate.

In Texas, where Harmony has quickly grown to become the largest charter school chain, nine regulators oversee the operations of 671 charter school campuses — a number that hasn’t changed since 2011, according to Texas Education Agency spokesperson DeEtta Culbertson. This regulatory force is so inadequate that in 2011, even Greg Richmond, president of the National Association of Charter School Authorizers, admitted, “They don’t have the capacity at the state level to do the job.”

From 2009–11, Harmony awarded thirty-five contracts worth a total of $82 million to Turkish construction firms with close links to school officials. Despite offering substantially lower bids for the same jobs, competitor firms were shocked to find out they’d lost.

Investigation into Harmony Public Schools’ contracting practices from 2009-2013 indicates that tens of millions in public dollars have continued to flow to closely associated Turkish firms. Since 2009, TDM Construction has brought home over $45 million, Solidarity Construction over $45 million, and Atlas Construction over $3 million, totaling well over $95 million from Harmony contracts alone.

To finance their massive construction projects, Harmony Public Schools has also issued hundreds of millions in bonds, which will rely heavily on public financing to pay off. A 2012 New York Times report, for example, found that Harmony has been granted $200 million in bonds since 2007, making it Texas’ largest charter school bond issuer by far. Last July, the city of Houston alone issued Harmony a $101,555,000 bond to build two more schools, renovate four existing ones, and refinance some of Harmony’s existing debt.

Harmony’s plan to finance their overall debts is projected to cost nearly half a billion dollars over the course of twenty-nine years, a plan which could come back to haunt taxpayers, given that in the last five years the Texas Education Agency has shut down eleven Harmony schools. And unfortunately for the people of Texas, the state’s permanent school fund will guarantee the principal and interest of these bonds, thus exposing Texas higher education funding to considerable risk.

While these sweetheart deals, guaranteed windfalls, and potential financial collapses are troubling, they are endemic to the charter school movement nationwide. The widespread corruption at Gulen charter schools is not due to the religion of Gulen charter school executives, but rather because doling out millions in public funding to private education operators with little to no oversight protects and encourages such fraudulent practices.

Indeed, despite the FBI raids this summer, Chicago’s Board of Education authorized Concept to expand to two more sites just one month later.

The move came as a shock to many Chicagoans, still recovering from the Chicago Board of Education’s historic move to shut down fifty schools last year, mostly in working-class black and Latino neighborhoods. As Chicago NBC reporter Mark Anderson lamented, “a federal raid on a company doesn’t seem to mean much anymore, especially if that firm is a politically connected charter school operator ready to take millions in taxpayer dollars to stay in business.”

The contracting practices of Gulen-affiliated charter schools appear to be not just nepotistic, but illegal. Such corruption, however, must not be ascribed to the ideologies of the Gulen movement, but rather to the structure of the charter school sector, which it has successfully gamed.

In addition, the Gulen expansion strategy should be viewed not as an outlier within the charter school movement, but as its most successful example. Gulen foundations invest in politicians to win charter contracts, and use the resulting public funding to import Gulen adherents on H-1B teaching visas. Though these employees do not necessarily have teaching credentials, they are often qualified to form education resource firms, which consistently earn generous contracts from Gulen schools across the country. The cycle then expands as employees of these firms give back to the very foundations that initiated the process.

It’s a process that enriches private actors and hurts students. But as long as US lawmakers push for private control over public education, the corruption and public plunder that Gulen schools exemplify will only continue.