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Justice News

Department of Justice
U.S. Attorney’s Office
Central District of California

FOR IMMEDIATE RELEASE
Friday, December 21, 2018

Charter School Founder and CEO Agrees to Plead Guilty in Scheme to Misappropriate Approximately $2.5 Million of Public Education Funds

          LOS ANGELES – The founder and former chief executive officer of Celerity Educational Group, a Koreatown-based non-profit company that owned and operated charter schools, has agreed to plead guilty to a federal conspiracy charge for misappropriating approximately $2.5 million in public-education funds awarded to several Celerity charter schools.

          In a plea agreement filed today in United States District Court, Vielka Maritza McFarlane, 56, of Sylmar, agreed to plead guilty to one count of conspiracy to misappropriate and embezzle public funds.

          McFarlane admitted in the plea agreement that she used the money to pay for personal expenses, including first-class air travel, fine dining and luxury goods. The bulk of the misappropriated funds were used to purchase a building for another charter school in Ohio.

          McFarlane is scheduled to make her initial appearance in United States District Court on January 7.

          McFarlane founded Celerity Educational Group in 2004 and served as its CEO until April 2015. Between April 2012 and April 2017, McFarlane also was CEO of Celerity Global Development, a non-profit California corporation, which provided various management services to the Celerity charter schools in exchange for a percentage of the schools’ revenues.

          According to her plea agreement, from July 2009 to April 2017, McFarlane and her co-conspirators caused the Celerity charter schools and Celerity Educational Group to falsely certify to federal, state and local authorities that they were complying with all rules and regulations governing the use of public funds that they received.

          McFarlane admitted in her plea agreement that she used public funds – money that should have been spent on educational purposes at Celerity charter schools in Los Angeles, Compton and Pasadena – for a variety of personal expenses and improper expenditures.

          For example, between 2009 and 2013, McFarlane used credit cards issued to Celerity Educational Groups and Celerity Global Development to make personal purchases, including luxury items from shops in Beverly Hills and Tokyo, customized recumbent bicycles for her and her spouse, and more than $5,000 in leather-making equipment used by a for-profit company in which McFarlane and her family members were partners. McFarlane further admitted that she did not reimburse Celerity Education Group or Celerity Global Development for any of the payments described in the plea agreement prior to the government’s criminal investigation.

          The plea agreement also states that from late 2012 to June 2014, McFarlane conspired to use approximately $2.3 million in public funds – a substantial portion of which came from the United States Department of Education – awarded to Celerity’s charter schools in Los Angeles to purchase and renovate an office building in Columbus, Ohio, where she oversaw the founding of a separate charter school.

          Additionally, McFarlane admitted using public funds awarded to the Celerity charters schools in 2013 to pay $157,957 for the security deposit, monthly rent and renovations at a soundstage and recording studio in Canoga Park, which was rarely used by the Celerity charter schools. McFarlane pursued a proposal to allow a digital-production company to use the studio space in exchange for 200,000 shares in the digital-production company, which would have been issued to a separate for-profit media-production business called The Muse Collective.

          McFarlane admitted in her plea agreement that the payments for her personal use, the Ohio property purchase, and the Canoga Village studio were improper; she lacked authorization to make those payments and expenditures; and the payments violated rules, regulations and laws governing the use of public funds that the Celerity charter schools received.

          “When anyone repurposes public school funds for self-serving reasons, students suffer,” said First Assistant United States Attorney Tracy L. Wilkison. “This case involving the former CEO of Celerity demonstrates our ongoing efforts to protect and safeguard public funds, and to hold accountable those who improperly use those funds for their own gain.”

          “Today’s court filings allege that defendant McFarlane ‘knowingly and willfully’ abused her position of trust to steal funds from the very ones she promised to serve – the children and families of the Celerity schools. That is unacceptable,” said Adam Shanedling, Special Agent in Charge of the U.S. Department of Education, Office of Inspector General, Western Regional Office. “Our Special Agents will continue to aggressively pursue those who seek to enrich themselves at the expense of our nation’s students. America’s students, their families, and taxpayers deserve nothing less.”

          “Defendant McFarlane’s deception went on for years as she continually stole money intended for charter schools and the students who attended them,” said Paul Delacourt, the Assistant Director in Charge of the FBI’s Los Angeles Field Office. “The FBI and our partners will continue to investigate crimes that threaten publicly funded entities and which result in losses suffered by victims for whom funds are intended, including children.”

          “Through deception and manipulation, McFarlane devised a scheme to steal money that should have benefited children for her own financial gain,” said Nichole Cooper, Los Angeles Inspector in Charge, United States Postal Inspection Service. “The success of this investigation serves as an excellent example of the effective partnership between federal law enforcement agencies.”

          “Vielka McFarlane committed a crime that systematically defrauded federal and state governments, the children of Celerity Educational Group, and the taxpaying public,” stated R. Damon Rowe, Special Agent in Charge of IRS Criminal Investigation’s Los Angeles Field Office. “IRS Criminal Investigation will not stand still while criminals line their pockets with illicit proceeds while our community charter school programs go underfunded.”

          Once McFarlane pleads guilty, she will face a statutory maximum penalty of five years in federal prison for the conspiracy charge.

          In June 2017, the U.S. Attorney’s Office entered into a Non-Prosecution Agreement with Celerity Educational Group, now known as ISANA Academies, in which ISANA recognized and acknowledged the misconduct committed by McFarlane, agreed to cooperate fully with the government’s investigation, and agreed to implement certain reforms designed to ensure that similar conduct does not occur again. 

          By entering into the Non-Prosecution Agreement, the U.S. Attorney’s Office recognized that ISANA is responsible for educating thousands of students from underserved neighborhoods throughout Los Angeles County, and has demonstrated a strong commitment to its students and their academic achievement. The reforms now implemented by ISANA should allow it to continue serving its students and communities. The United States Attorney’s Office recognizes the cooperation of ISANA and its board of directors throughout its ongoing investigation.

          This case was investigated by the United States Department of Education, Office of Inspector General; the Federal Bureau of Investigation, the United States Postal Inspection Service; IRS Criminal Investigation, U.S. Immigration and Customs Enforcement’s Homeland Security Investigations, and the United States Secret Service. The Los Angeles Unified School District’s Office of Inspector General was also part of the investigative team and has played an instrumental role in the ongoing investigation.

          This case is being prosecuted by Assistant United States Attorneys Julian L. André and Valerie L. Makarewicz of the Major Frauds Section, and Assistant United States Attorney Saurish Appleby-Bhattacharjee of the Violent and Organized Crimes Section.

Contact: 
Thom Mrozek Spokesperson/Public Affairs Officer United States Attorney’s Office Central District of California (Los Angeles) 213-894-6947
Press Release Number: 
18-214
Updated December 21, 2018