Category Archives: Education

Founder of school academy charged in financial conspiracy

Richard Rose, the founder and Superintendent of Zoe Learning Academy has been indicted on 18 counts on charges of conspiracy, mail fraud, theft of government funds, money laundering and false bankruptcy declarations.



Zoe Learning Academy was an open enrollment charter school and was based in the Greater Third Ward area of Houston. It also had a campus in Duncanville, a suburb of Dallas.  The school started in 2001 and operated until it abruptly closed in September 2017.

Rose is alleged to have diverted funds from the charter school to fund personal expenses such as settling a personal lawsuit, paying personal legal expenses and buying a timeshare in Honolulu, Hawaii.

Rose was also the pastor of Life Tabernacle, a church on Cullen Boulevard. In 2013 Mr Rose was sued by a financial investor for not making payments on a $2.8 million real estate loan for the church. Mr Rose settled for $75,000 and allegedly used funds from the charter school to pay it. He also used $30,000 from the school to pay his legal expenses.

According to the indictment, Rose failed to disclose to the Texas Education Agency that the school paid more than $1 million for bus services to a company owned by Rose’s brother. He also failed to disclose payments to his wife of $60,000.

When Rose filed for Chapter 7 bankruptcy in October 2017, he stated that the Academy’s revenue was $263,000, when, in fact it was in excess of $2.8 million. He also stated that the Academy had not made any payments to insiders in the year prior to the Academy filing for bankruptcy.

Rose indictment

Houston sports manager to plead guilty in college admissions bribery scheme

Martin Fox has agreed to plead guilty to one count of conspiracy to commit racketeering in connection with his role in the Rick Singer college admissions bribery case. The case also ensnared actresses Felicity Huffman and Lori Laughlin.

[Update 11-15-19 Mr Fox has now pleaded guilty]

The prosecutors will recommend a sentence at the low end of the sentencing guidelines (range is 21-27 months). Mr Fox could have received up to 20 years in prison. He will also face a fine and restitution.



The bribery scheme

Fox introduced Rick Singer to Michael Center, the tennis coach at the University of Texas in Austin, who facilitated the admission of a student to UT as a purported athletic recruit in exchange for a bribe. Singer paid Fox $100,000. Fox also arranged two similar bribes with a coach at the University of San Diego. He was paid $100,000 for one and $10,000 for the other (the second student ended up not going to USD).

Center has pled guilty and will be sentenced in February 2020.

Adidas Grass Roots Director

Mr Fox is described by the Federal Government as a former President of a private tennis club. He may have been that, but is primarily a sports money man/entrepreneur.  His twitter feed (before it was made private) was full of pictures of Fox with famous sporting figures. In 2011, Sports Illustrated had described Fox as an “Adidas ‘Grass Roots Director of Houston’ (in that article they estimated that Fox had lost $249,000 in the Ponzi scheme run by Houston money manager, David Salinas).

Fox’s name turned up late last year in court proceedings concerning the college basketball corruption trial involving two Adidas officials and aspiring agent. The defense lawyers in that trial had argued that $40,000 of the money paid to Kansas basketball players, came, not from Adidas but from Martin Fox (who didn’t directly work for Adidas). No wrongdoing was alleged against Fox in that trial. The defendants were found guilty after a three-week trial.

SAT administrator

The other Houston-based defendant is Lisa ‘Niki’ Williams. She was a Teachers Assistant at a high school in Houston. She was also an administrator for the ACT and SAT exams which were held in the same school.  Fox introduced Williams to Singer. The case against her is still pending.

Weatherford

There is a third defendant with Houston connections. John Wilson lives in Lynnfield, Massachusetts but was arrested at George Bush airport in Houston. He is a Harvard business school graduate who runs a financial services firm, Hyannis Port Capital. He is also a former CFO at Staples.

Mr Wilson was one of the lead McKinsey management consultants involved in trying to turn around Weatherford before it filed for bankruptcy. Wilson allegedly paid Singer $1.5 million to facilitate his daughter’s admissions to Stanford and Harvard. The case against Mr Wilson is still ongoing.

https://www.justice.gov/usao-ma/pr/former-president-private-tennis-academy-agrees-plead-guilty-college-admissions-case

Two Houston residents indicted in college admissions bribery scheme

Federal prosecutors charged 51 people including actresses Lori Loughlin and Felicity Huffman with using bribes, bogus entrance-exam scores and fake athletic achievements to get their children admitted to college. Two Houston residents, Martin Fox and Lisa ‘Niki’ Williams were also charged.

The ringleader of the scheme was Rick Singer, of Newport Beach, California, who ran a college prep business. Mr Singer has pleaded guilty to the charges so it doesn’t look good for the other defendants. Most of the defendants and the colleges involved are based in California. The scheme ran from 2011 to February 2019.

Cheating on ACT test

Mr Singer allowed students to cheat on their SAT or ACT exams in exchange for bribes by arranging for a third party, generally Mark Riddell, 36, of Florida to take the exams in place of the actual students.

Niki Williams was a Teachers Assistant at an un-named high school in Houston. She was also an administrator for the ACT and SAT exams which were held in the same school.



In one example in the indictment, Singer got a donation of $50,000 from one parent and arranged for Riddell to correct the son’s answers after he took the ACT. Unfortunately, the son fell ill a couple of days before the test and was unable to take it. Riddell flew from Tampa to Houston, and took the test instead, sitting in a hotel room. Williams allegedly delivered the exam and picked it up afterwards. According to the indictment she was paid $5,000.

Fox is not just a Tennis Academy President

Williams was introduced to Singer by Martin Fox. In the indictment, Mr Fox is described, rather coyly as ‘the President of a private tennis academy and camp in Houston’. He may be that, but in practice he is a well-heeled sports money man/entrepreneur. His twitter feed (before it was made private) was full of pictures of Fox with famous sporting figures. In 2011, Sports Illustrated had described Fox as an “Adidas ‘Grass Roots Director of Houston’ (in that article they estimated that Fox had lost $249,000 in the Ponzi scheme run by Houston money manager, David Salinas).

Bribery involving UT Tennis Coach

In 2015 Fox introduced Singer to Michael Center, the head tennis coach at the University of Texas for the purpose of facilitating the admission of a student to UT as a purported athletic recruit. According to the indictment, Singer paid the coach and Fox $100,000 each. UT placed Center on administrative leave after the indictment.

Fox also allegedly received $100,000 for facilitating the admission of a student to the University of San Diego in a similar manner.

Fox associated with College Basketball corruption trial

Fox’s name turned up late last year in court proceedings concerning the college basketball corruption trial involving two Adidas officials and aspiring agent. The defense lawyers in that trial had argued that $40,000 of the money paid to Kansas basketball players, came, not from Adidas but from Martin Fox (who didn’t directly work for Adidas). No wrongdoing was alleged against Fox in that trial. The defendants were found guilty after a three-week trial.

Williams and Fox are facing racketeering charges. The Justice Department is also seeking forfeitures of $5,000 against Williams and $429,300 against Fox.

https://www.justice.gov/usao-ma/investigations-college-admissions-and-testing-bribery-scheme

 

Aggie Research Foundation pays $750,000 to settle allegations of improper charges to federal grants

The Texas A&M Research Foundation (TAMRF) has agreed to pay the US government $750,000 to resolve claims that the Foundation submitted improper charges to federal grants under the False Claims Act.

TAMRF is an independent non-profit service organization focused on facilitating R&D within the Texas A&M University System. It receives grants from various federal agencies such as the Department of Energy, NASA and the National Science Foundation.

Two whistleblowers (presumably Longhorn fans!) employed by the Foundation in its compliance department, sued in 2013. They alleged that the Foundation overcharged salaries to grants, shifted costs between projects, violated salary caps and improperly charged grants for expenses not incurred or covered.

No claims were brought against Texas A&M itself because it is a State agency and not subject to suit under the False Claims Act.

The US Attorney’s Office investigated the allegations and found that TAMRF submitted improper charges from 2007 to 2016. The Research Foundation agreed to settle, without a determination of liability.

The whistleblowers will share a reward of $142,500.