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Justice News

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

FOR IMMEDIATE RELEASE
Thursday, March 30, 2017

Former Director Of Oakland Charter Schools Charged In Grant Application Fraud, Money Laundering Scheme

Defendant accused of requesting more than $2.5 million of federally funded grants in violation of conflict of interest rules

SAN FRANCISCO – Benford Chavis, the former director of three Oakland charter schools, collectively known as the American Indian Model Schools, was charged with mail fraud and money laundering in connection with the schools’ applications for federal grant funds, announced United States Attorney Brian J. Stretch, Federal Bureau of Investigation Special Agent in Charge John F. Bennett, and Internal Revenue Service, Criminal Investigation, Special Agent in Charge Michael T. Batdorf.  Chavis was apprehended this morning in North Carolina and has been ordered to appear in Oakland to face the charges in the Northern District of California. 

According to the indictment, unsealed today, from early 2006 through May of 2012, Chavis, 59, from Lumberton, North Carolina, and others devised and implemented a scheme to defraud the California School Finance Authority by causing three charter schools to request federally funded grants in violation of federal conflict of interest regulations.  At times between 2000 and 2012, Chavis served as the director and in various additional capacities for three Oakland charter schools – the American Indian Public Charter School, the American Indian Public High School II, and the American Indian Public High School – as well as the schools’ umbrella organization, the American Indian Model Schools (AIMS).  The indictment alleges Chavis caused the schools to apply for more than $2.5 million in competitive federal grant funds for the purpose of paying the costs of leasing facilities that Chavis owned or controlled through his companies American Delivery Systems and Lumbee Properties, LLC.  Chavis allegedly concealed his interest in the facilities in the grant applications.  The indictment further alleges that the schools obtained more than $1.1 million in federal grants as a result of this fraud, and that Chavis used fraud proceeds to promote the fraud scheme as to each school.  In sum, Chavis is charged with three counts of mail fraud, in violation of 18 U.S.C. § 1341, and three counts of promotional money laundering, in violation of 18 U.S.C. § 1956(a)(1)(A).

An indictment merely alleges that crimes have been committed, and all defendants are presumed innocent until proven guilty beyond a reasonable doubt.  If convicted, the maximum term of imprisonment for mail fraud is 20 years and the maximum term of imprisonment for money laundering is 10 years for each count.  Additional periods of supervised release, fines, and special assessments also could be imposed, however, any sentence following conviction would be imposed by the court only after consideration of the U.S. Sentencing Guidelines and the federal statute governing the imposition of a sentence, 18 U.S.C. § 3553.

Chavis was released on a personal recognizance bond and was ordered to make his initial appearance in the Oakland Courthouse of the Northern District of California before the Honorable Haywood S. Gilliam, U.S. District Judge, on or before April 14, 2017.

Assistant U.S. Attorney Hartley West is prosecuting the case with the assistance of Claudia Hyslop, Maryam Beros, and Patricia Mahoney.  The prosecution is the result of an investigation by the Federal Bureau of Investigation and Internal Revenue Service, Criminal Investigations.

Topic(s): 
Financial Fraud
Updated April 3, 2017