Founder and Former Administrator of Group of Public Charter Schools in Albuquerque Pleads Guilty to Federal Theft, Fraud and False Statements Charges
David Scott Glasrud of Southwest Learning Centers Pleads Guilty under Agreement Recommending Sentence within the Range of 48 to 63 Months of Imprisonment
ALBUQUERQUE – Acting U.S. Attorney James D. Tierney and Special Agent in Charge Terry Wade of the Albuquerque Division of the FBI announced today that David Scott Glasrud, the former administrator of Southwest Learning Centers in Albuquerque, N.M., has pleaded guilty to federal theft, fraud and false statement charges arising out of a 15-year scheme to defraud millions of dollars from the group of public charter schools he founded.
During this morning’s proceedings, Glasrud, 50, entered a guilty plea to a nine-count felony information charging him with two counts of theft from programs receiving federal funds, three counts of wire fraud, two counts of mail fraud, and two counts of making false statements. Glasrud entered the guilty plea under an agreement that recommends a term of imprisonment within the range of 48 to 63 months. Glasrud also will be required to pay restitution in an amount to be determined by the court.
According to the felony information, Glasrud established the public charter school Southwest Secondary Learning Center in Albuquerque in Dec. 1999, and later established three other public charter schools in Albuquerque: Southwest Primary Learning Center, Southwest Intermediate Learning Center, and Southwest Aeronautics, Mathematics & Science Academy. The four schools collectively are known as the Southwest Learning Center Schools (Charter Schools) and operate with public funds, including federal funds.
Glasrud served as the Head Administrator for, and exercised financial oversight over, the Charter Schools until Aug. 2014. As the Head Administrator and an employee of the Charter Schools, Glasrud had a duty to use his best efforts on behalf of the Charter Schools in all matters of trust and confidence, and not to act for his own benefit at the expense of the Charter Schools. In his plea agreement, Glasrud admitted violating this duty of trust repeatedly over the course of 15 years by engaging in an ongoing series of schemes to defraud the Charter Schools for his personal benefit. Glasrud also acknowledged making false statements to FBI Special Agents who were investigating his criminal conduct.
The felony information alleges, and Glasrud has admitted, that from Nov. 2000, Glasrud was doing business in his personal capacity as Southwest Educational Consultants, which he incorporated as Southwest Educational Consultants, Inc. (SEC) in March 2002. Glasrud served as SEC’s registered agent, director and President, and his personal expenses were paid out of an SEC bank account. Glasrud used SEC to facilitate his schemes to defraud the Charter Schools.
For example, from Nov. 2000 through Aug. 2014, Glasrud devised and executed a scheme to defraud that involved leasing a building at 9904 Montgomery Blvd. NE (Building) in Albuquerque to one of the Charter Schools (Charter School 1) by misrepresenting, concealing and omitting material facts from Charter School 1, and by breaching duties that he owed to Charter School 1. In Nov. 2000, while doing business as SEC, Glasrud leased the entire Building. Days later, on Dec. 1, 2000, still acting as SEC, he subleased the Building to Charter School 1 twice the rent that SEC was paying and without disclosing this material information to Charter School 1. As part of his scheme, by 2007, Glasrud had arranged for SEC to sublease a majority of the square footage of the Building to a tenant, with whom Glasrud had a close familial relationship.
Glasrud admitted that as part of his fraudulent scheme, Charter School 1 paid more than double the rent that SEC paid to lease the entire Building, but occupied less than half the Building. Glasrud also admitted causing Charter School 1 to pay SEC approximately four to five times as much as the other tenant for use of less than half of the Building it was sharing. When the New Mexico Public Education Department (PED) raised concerns about Charter School 1’s sublease, Glasrud caused a school representative to misrepresent to PED and the school board the amount of profit that SEC was realizing off the sublease. In his plea agreement, Glasrud admitted that SEC, his personally owned business, made more than $700,000 in profits as the result of this scheme.
During today’s proceedings, Glasrud also acknowledged devising and executing a series of other schemes to defraud the Charter Schools. In pleading guilty to one of the three wire fraud charges, Glasrud admitted that in Feb. 2004, he and SEC created a bogus business called Media Learning Solutions (MLS) with an “office” address at a mail drop in Las Vegas, NV. Thereafter, Glasrud caused the Charter Schools to pay capital outlay money to MLS based on fraudulent proposals and invoices. Most of the money MLS received from the Charter Schools was not spent on the items for which it was intended or for the benefit of the Charter Schools, and instead was used for Glasrud’s personal benefit. For example, in 2009 and 2010, the Charter Schools paid MLS approximately $265,000, which Glasrud expended as follows: $199,000 to pay down his personal line of credit; $50,000 transferred into his personal bank account; $12,000 for personal items; and $4,000 spent at a casino in Las Vegas, NV.
Another of Glasrud’s fraudulent schemes began in Dec. 2002 and continued until Aug. 2014, and involved Charter School 1’s Extended Learning Program (ELP). The ELP offered students the opportunity to earn school credits using online, computer-based courses. Students paid to receive official school credit from Charter School 1, and Glasrud diverted almost all of the payments into an SEC bank account he controlled. Glasrud admitted that from 2007 to 2014, more than $1,000,000 in payments for the ELP that should have gone to Charter School 1 was deposited into a bank account for SEC, Glasrud’s personal business.
These three schemes are examples of the fraudulent schemes that Glasrud perpetuated over the 15-year period during which he served as the Head Administrator of the Charter Schools and by which he betrayed the trust and confidence placed in him. Glasrud admitted devising and executing each of these three schemes as well as the other schemes described in the felony information and the plea agreement when he entered his guilty plea this morning.
Glasrud was released pending sentencing under pretrial supervision and other conditions of release. A sentencing date has not yet been scheduled.
The case was investigated by the Albuquerque Division of the FBI with the assistance of the U.S. Department of Education, Office of Inspector General. Assistant U.S. Attorneys Fred J. Federici and Holland S. Kastrin are prosecuting the case.