Sunday 16 January 2022

Former Obama Adviser Pleads Guilty To Wire Fraud — Connected To Scheme To Steal From School Network


Seth Andrew, a former Obama White House advisor, has pleaded guilty to one count of wire fraud.

It was an alleged scheme to steal $218,000 from a school network.

The Hill reported:

A former White House adviser to former President Obama pled guilty to wire fraud on Friday in connection to an alleged scheme to steal $218,000 from a school network that he helped create.


“Seth Andrew, a former White House advisor, admitted today to devising a scheme to steal from the very same schools he helped create,” Southern District of New York U.S. Attorney Damian Williams said in a statement. “Andrew now faces time in federal prison for abusing his position and robbing those he promised to help.”

The 42-year-old founded Democracy Prep Public Schools in New York City in 2005, and left the position to work for the Department of Education (DOE) in 2013.

According to the DOJ, Democracy Prep Public Schools each had to maintain “escrow accounts” that were only meant to be accessed if the school dissolved. Andrew, according to the statement, had access to these accounts, and closed them out when he left the school system. He then placed the money in different accounts that the department labeled “fraud” accounts.

The DOJ says that Democracy Prep Public Schools had to maintain “escrow accounts.” These accounts were only meant to be used if the schools dissolved.

However, Seth Andrew closed these accounts when he left the school system.

The DOJ press release explains how the fraud took place:

School Network-1’s New York based charter schools must maintain an “escrow account” that may be accessed only if the school dissolves. Three such escrow accounts, for three New York City based-School Network-1 schools, were opened by ANDREW and other School Network-1 employees, at “Bank-1” in 2009, 2011 and 2013. As to each of those three accounts ‑- Escrow Account-1, Escrow Account-2 and Escrow Account-3 — ANDREW was a signatory and had access to the funds in them. However, pursuant to the charter agreement, the funds in the Escrow Accounts were reserved in case the school dissolved, and the funds could not be moved by ANDREW, or anyone, without proper authorization.

After he severed his relationship with School Network-1, on March 28, 2019, ANDREW entered a Bank-1 branch in New York City and closed both Escrow Account-1 and Escrow Account-2. Bank-1 provided ANDREW a bank check in the amount of $71,881.23 made payable to “[School Network-1] Charter School” (“Check-1”) and a second bank check in the amount of $70,642.98 to “[School Network-1] Harlem Charter” (“Check-2”).

The same day that ANDREW closed Escrow Account-1 and Escrow Account-2, ANDREW entered a Manhattan branch of a different FDIC insured bank (“Bank-2”) and opened a business bank account in the name of “[School Network-1] Charter School” (“Fraud Account‑1”). To open that account, ANDREW misrepresented to a Bank-2 employee that he was a “Key Executive with Control of” School Network-1 Charter School and supported that misrepresentation with emails sent to the Bank-2 employee. ANDREW then deposited Check-1 into the account. Five days later, on April 2, 2019, ANDREW used an ATM machine in Baltimore, Maryland to deposit Check-2 into Fraud Account‑1.

One count of wire fraud carries a maximum of 20 years in prison.

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