SEC probing UNO
Thursday, Oct 17, 2013 - Posted by Rich Miller
* Uh-Oh.
Sun-Times…
Federal authorities are investigating possible securities violations involving the state’s largest charter-school operator, the scandal-scarred United Neighborhood Organization.
The federal Securities and Exchange Commission requested documents last month from the clout-heavy Chicago group, according to a letter obtained Wednesday by the Chicago Sun-Times. […]
A top UNO executive, Miguel d’Escoto, resigned in February, days after the Sun-Times reported the group gave $8.5 million of business to companies owned by two of d’Escoto’s brothers with money from $98 million in state school-construction grant funding.
The SEC is looking at how UNO raised more than $37.5 million on Wall Street in 2011 through state-approved bonds, the letter shows. […]
Quinn’s move to restore funding allowed UNO to finish construction of the state-funded UNO Soccer Academy High School on the Southwest Side.
Ald. Edward M. Burke (14th), a major Quinn campaign fund-raiser, had urged the governor to restore the funding, believed to be the largest government subsidy nationwide for a charter operator.
So far, the state has given UNO $83 million of the promised $98 million.
UNO also gets tens of millions of dollars a year from the Chicago Public Schools, which it relies on to run its schools and repay money it has borrowed.
* Tribune…
The SEC sent a June 26 letter to the state’s economic development agency asking for documents, meeting summaries and other communications related to the grants. The Tribune obtained that letter through an open records request.
Rangel, a co-chairman of Emanuel’s 2011 campaign, took some responsibility in May for the financial troubles at UNO as he stepped down as board chairman. He said he had failed to exercise the proper oversight during a time UNO experienced rapid growth. Rangel, however, remains the organization’s CEO, a $275,000-a-year job.
- wordslinger - Thursday, Oct 17, 13 @ 10:30 am:
Based on the UNO experience, how can Rauner and Emanuel keep pursuing aggressive expansion of charters?
It’s not about the children, it’s about money and contracts.
- hisgirlfriday - Thursday, Oct 17, 13 @ 10:38 am:
Wish Quinn had kept that spigot of state taxpayer dollars to UNO turned off as it should be permanently. But this is a reminder of why Quinn appearing at an anti-Rahm rally isn’t the worst idea.
Also would be curious if Bruce Rauner has any commentary on his fellow travelers in the clouted corporate ed charter movement? Is this indicative of the Juan Rangel he knows from serving with him on the steering committee of World Business Chicago?
And boy it appears UNO raised red flags when they had a hedge funder as their chairman involved in getting state and city bond business at the same time he was securing taxpayer dollars for his for-profit charter schools. Hmm that doesn’t remind me of anyone.
- bmcosti - Thursday, Oct 17, 13 @ 10:44 am:
“It’s not about the children, it’s about money and contracts.” The exact same thing can be said about the public schools.
To make schools about children, the money should follow the children. No more public school monopolies.
- Cheswick - Thursday, Oct 17, 13 @ 11:04 am:
If charter school operator venture capitalists can’t get something on the take, why else would they want to be in the game?
- hisgirlfriday - Thursday, Oct 17, 13 @ 11:06 am:
Public school monopolies? If you want to home school your kid and get permission for that or if you want to send a kid to private school that’s allowed too. Hardly a monopoly.
What we need are community/neighborhood centered schools that are part of the solution of fixing broken neighborhoods and communities where they exist rather than letting more hucksters with political connections siphon off tax dollars for education into for-profit ventures with no demonstrated positive results over public schools.
We need an elected Chicago school board now.
- 47th Ward - Thursday, Oct 17, 13 @ 11:19 am:
The SEC is looking into this because a lot of bonds that were sold on UNO’s behalf are involved. The SEC is no joke, this isn’t some rinky dink IG investigation and UNO is what the feds would call a “target rich environment.”
They might find a lot of stuff as they look into whether the bonds are at risk. The replacement chairman who took a walk might be the smartest guy in the room.
A “difference in philosophy and vision” is code for “I’m not following these guys to jail.”
- Wumpus - Thursday, Oct 17, 13 @ 11:39 am:
Soccer Academy High School? Anyway, let’s investigate questionable funding wherever it may pop it’s ugly head. This just shows me that the CTU and CPS are perfect.
- reformer - Thursday, Oct 17, 13 @ 11:51 am:
The next time Rauner touts charter schools as the answer to education, I hope Joe Walsh asks him about the state’s largest charter school operator.
- wordslinger - Thursday, Oct 17, 13 @ 12:03 pm:
–“It’s not about the children, it’s about money and contracts.” The exact same thing can be said about the public schools. –
Charter schools are public schools.
- Sinister - Thursday, Oct 17, 13 @ 12:06 pm:
UNO + HDO 2.0 + Feds = Checkmate
- Kwark - Thursday, Oct 17, 13 @ 12:11 pm:
I mentioned these dodgy municipal bond issuances (through the Illinois Finance Authority) back in February …. https://capitolfax.com/wp-mobile.php?p=17563&more=1
Disclosure of “related party transactions” by UNO Charter Schools was pretty skimpy in the bond prospectus, not to mention subsequent disclosures. This is surely one of the areas the SEC will be looking into.
Underwriters were Robert W. Baird and Cabrera Capital Mkts, trustee/registrar was Amalgamated Bank, bond counsel was Kutak Rock.
- Jake From Elwood - Thursday, Oct 17, 13 @ 1:05 pm:
UNO sounds more like Monopoly.
Do not pass go. Do not collect $200.
- Kwark - Thursday, Oct 17, 13 @ 3:08 pm:
I love it that the guy who was brought in to “clean up” UNO’s operations–Martin Cabrera–is the owner of one of the firms (Cabrera Capital)that was on the underwriting syndicate for UNO’s bonds issued in 2011. That means they took a commission on the bonds, and then played a role in allocating the bonds to preferred buyers. This is a good person to clean up a self-dealing scandal?
And let’s not forget all of the outstanding coverage the Sun-Times has done on Cabrera Capital. http://www.suntimes.com/news/watchdogs/22475968-452/out-as-would-be-uno-reformer-exec-with-ties-to-ald-ed-burke-still-an-insider.html
According to the Sun-Times’ Dan Mihalopoulos, two of the top execs at Cabrera Capital previously worked for Bill Cellini and were involved with a real estate business partly owned by Janis Cellini, Jim Edgar’s patronage capo.
But no red flags here, people. Move along.
- Arthur Andersen - Thursday, Oct 17, 13 @ 4:44 pm:
Kwark, I commented last time that UNO & Co. seemed to be playing fast and loose with competitive procurement practices, too.
Not as sexy as Eddie Burke or self-dealing, but not good nonetheless.
I just glanced at that bond prospectus. Not a model of transparency, but I’ve seen worse. That probably helped them snag that BBB- rating.
- Arthur Andersen - Thursday, Oct 17, 13 @ 4:44 pm:
Kwark, I commented last time that UNO & Co. seemed to be playing fast and loose with competitive procurement practices, too.
Not as sexy as Eddie Burke or self-dealing, but not good nonetheless.
I just glanced at that bond prospectus. Not a model of transparency, but I’ve seen worse. That probably helped them snag that BBB- rating.
- Just The Way It Is One - Thursday, Oct 17, 13 @ 7:25 pm:
Seems to me the SEC inquiry is overdue and a good thing. It’ll be quite interesting to see if it reaps anything noteworthy, and, if so, what the fallout is and where (or who) it lands (on) and how hard it is…!
- Some people call me Maurice - Thursday, Oct 17, 13 @ 8:22 pm:
Wait a minute people….Burke being a MAJOR contributor to Quinn in his campaign against Hynes, ” called Quinn and urged him to restore funding? Hello? Pay to play at work… Rangels operation is big in Burkes Ward.. Burkes kid worked for Uno… Burke calls Governor..Governor restored…mama Mia…
- Capital M - Friday, Oct 18, 13 @ 12:02 am:
And all the kings horses couldn’t put humpty together again ! They should be looking into UNOs crack legal team and their robust contracts. who was reviewing the conflicts of interest?