magnolia complaint - exhibit 23

7/24/2019 Magnolia Complaint - Exhibit 23

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Exhibit 23

Chicago Sun-Times: Charter firm suspected of cheating federal grant program

12/16/2015

Pages 1 4


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N ew s

THE WATCHDOGS: Charter firmsuspected of cheating federal grantprogram

A clout-heavy charter-school firm that operates four taxpayer-funded schools in Chicago

is suspected of defrauding the government by funneling more than $5 million in federal

grants to insiders and away from the charter schools, according to court records

obtained by the Chicago Sun-Times.

No criminal charges have been filed in the ongoing investigation of Des Plaines-based

Concept Schools, which has built a network of powerful supporters, including Illinois

House Speaker Michael Madigan, D-Chicago.

According to the newly obtained court documents filed by law-enforcement authorities,

the company, its contractors and many of its privately run, taxpayer-financed charter

schools across the Midwest engaged in a scheme to defraud a federal program.

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WRITTEN BY DAN MIHALOPOULOS AND JON SEIDEL POSTED: 12/16/2015, 09:00AM

Chicago Math and Science Academy was one of 18 Concept Schools locations raided last year. | Sun-Times file photo

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Chicago Sun-Times |

THE WATCHDOGS: Charter firm suspected of cheating federal grant program | Chicago Sun-Times

2/1/2http://chicago.suntimes.com/news/7/71/1183551/watchdogs-charter-firm-suspected-cheating-federal-grant-...

Exhibit 23, Page 1 of 4


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The misconduct dates to at least 2007 and involves a program to extend Internet access

to schools with low-income students, a U.S. Department of Education investigator wrote

last year to get approval for search warrants from a judge in Chicago.

A spokeswoman for the FBIs office in Cleveland, which is leading the probe, declined to

comment because the investigation is ongoing.

Through a spokesman, Concept officials also would not comment.

Concept has 30 schools in Illinois and five other states, including four Chicago Public

Schools-funded campuses with a total of about 2,200 students. CPS funds them under

school-choice laws that provide for government funding of certain privately operated

schools.

In June 2014, the FBI raided Concepts northwest suburban headquarters and 18 other

sites in Illinois, Indiana and Ohio, seizing records regarding top Concept officials and the

companys participation in the federal E-Rate program, the Sun-Times reported last

year. At the time, authorities would say only that they were investigating a white-collar-crime matter.

The newly obtained search-warrant applications provide the first glimpse of what

investigators suspected that Concept violated the E-Rate programs fair and open

competitive bidding rules. The documents also identify Concept executives and

contractors who have come under scrutiny.

Concept president Sedat Duman signed E-Rate

certification forms for schools, court records

show. They also show Stephen Draviam, a

computer consultant in Ohio, told investigators

he was picked to do grant-funded work for

Concepts schools without having to submit

written bids.

Huseyin Shane Ulker, as Concepts chief

information officer, established an invoicing

scheme involving Draviams company, passing

along E-Rate funds to three businesses found to

be affiliated with Ulker, according to the court

records.

Ulker deposited money into the account of one of the three companies before a wire

transfer of $20,000 was made to a bank account at the Bank of Asya in Turkey, wrote

Geoffrey Wood, the special agent from the federal Education Departments inspector

generals office who filed the search-warrant affidavit.

Founded in 1999 by Turkish immigrants, Concept has ties to the influential Muslim cleric

Fethullah Gulen, who now lives in Pennsylvania and is wanted in his native Turkey after

falling out with that countrys leader.

According to Turkish news reports, Gulens followers founded Bank of Asya and

controlled it at the time Ulker allegedly wired the money in December 2008.

Federal agents raided Ulkers apartment in Schaumburg last year, records show. He no

longer lives there, and his name does not appear on a recent Concept payroll.

Draviam confirmed he cooperated with investigators but declined to comment further.

Concept cut ties with Draviam in 2009 and replaced him with vendors who have

extensive ties to the charter operator, the feds say. The charter company paid more than

$5 million in E-Rate funds to companies Wood described as related entities.

By giving work to related vendors, Concept was able to direct large portions of E-Rate

program money away from the charter schools and the E-Rate program and enrich those

particular vendors, Wood wrote.

The biggest beneficiary was Core Group Inc., which got more than $2.8 million in E-Rate

funding, according to court records. At one point, Core Group relied on Concept for more

than 92 percent of its business, the feds said.

Concept Schools headquarters in Des Plaines. |

Tim Boyle / Sun-Times file photo

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Chicago Sun-Times |





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Agents raided Core Groups offices in Mount Prospect and the Elk Grove Village home of

the companys owner, Ertugrul Gurbuz. His lawyer, Patrick Cotter, declined to comment.

Over the past few years, the charter schools have employed former Concept executive

Ozgur Balsoy as an E-Rate consultant, authorities said in the court records.

Balsoy told the Sun-Times that Concept

followed whatever were the requirements

of the grant program. His home in Mount

Prospect was raided by the FBI, as were the

Schaumburg offices of his company,

Advanced Solutions for Education.

We submitted all the documents they

requested, Balsoy said. I dont know if theyare satisfied.

Balsoy said he hasnt heard recently from

Ulker and thinks hes not in town.

Authorities received a much different

account from another former Concept

official, Mustafa Emanet. He told them the

charter operators leaders wanted to use

companies that had a close relationship to them for E-Rate work even though the

insiders would charge more than an unrelated contractor, according to the court

documents.

Emanet gave investigators an internal email, in Turkish, that they believe represents a

discussion of how Concept could profit from rigging E-Rate contracts for companies they

would set up.

In an interview from his home in Ohio, Emanet said Concept has routinely used taxpayer

money to hire contractors who are involved in Gulens worldwide movement, as are the

charter chains executives.

Thats how they work, Emanet said. They want to open their own companies so they

make money out of it.

A native of Turkey, Emanet told the feds he suffered for severing ties with Concept when

he visited his homeland six years ago.

Emanet has no criminal history in the United States, but in September of 2009, right

after his resignation, Emanet was arrested in Turkey for possession of heroin, the feds

said in the warrant application.

Authorities said Emanet told them the charges in Turkey were in retaliation for his

ideological differences, and dealings with, Concept Schools.

Emanet said he was jailed in Istanbul before being acquitted. They framed me, he said.

Emanet also said he and other Concept teachers and staff visited Gulens compound in

Pennsylvania in 2007 or 2008, before he split with the movement.

The Chicago-based Niagara Foundation, a nonprofit group that lists Gulen as its honorary

president, has hosted Madigan and other state legislators on junkets to Turkey in recent

years, records show.

Madigan and his son Andrew Madigan also have visited Concepts Chicago Math and

Science Academy in Rogers Park, filming testimonial videos for the 600-student school.

And Andrew Madigans employer, Mesirow Insurance Services Inc., has done business

with Concept schools in Chicago.

Concept and other U.S. charter operators linked with Gulen have downplayed their

connections to him. Gulens lawyers boasted of his worldwide school network, though, in

federal court papers in 2008.

In his position as Founder and Head of The Gulen Movement, Mr. Gulen has overseen

the establishment of a conglomeration of schools throughout the world, in Europe,

central Asia and the United States, according to the court filing by attorneys for Gulen,

who was successfully suing at the time to overturn the denial of his bid for permanent

U.S. residency.

That statement was the result of a misunderstanding between Mr. Gulen and his

lawyers, according to Alp Aslandogan, executive director of the New York-based

Alliance for Shared Values. The group is an umbrella body for U.S. organizations affiliated

with Gulen, including thes Niagara Foundation.

Aslandogan said Gulen plays an inspirational role for schools but plays no direct part in

them, adding that Gulen would disapprove of any unethical behavior.

Ozgur Balsoy





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After Gulen fell out a couple of years ago with Turkish leader Recep Tayyip Erdogan,

Turkey has asked Washington to send Gulen there to face charges he and his followers

have plotted to overthrow the government. A court in Istanbul issued an arrest warrant

for Gulen, accusing him of leading an armed terrorist organization.

The charges in Turkey are laughable and politically motivated, Aslandogan said.

Aslandogan once lived in the Chicago area and headed the effort to build a Turkish

cultural center in Mount Prospect, according to records from the suburb.

He got help in

that effort from Salim Ucan now Concepts vice president and two businessmen,

Galip Kuyuk and Ergun Eric Koyuncu, records show.

The FBI has searched the northwest suburban homes and businesses of Koyuncu and

Kuyuk. Koyuncu declined to comment, and Kuyuk could not be reached.

Concepts Chicago campuses

Des Plaines-based Concept Schools, which is under federal investigation for suspected

grant fraud, runs four taxpayer-financed charter schools in Chicago:

Chicago Math and Science Academy, 7212 N. Clark.

Horizon Science Academy Belmont Charter School, 5035 W. North.

Horizon Science Academy McKinley Park Charter School, 2245 W. Pershing.

Horizon Science Academy-Southwest Chicago, 5401 S. Western.

Concept Schools search-warrant application

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magnolia complaint - exhibit 23

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