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Justice News

Department of Justice
U.S. Attorney’s Office
Western District of Pennsylvania

FOR IMMEDIATE RELEASE
Tuesday, July 24, 2018

Pennsylvania Cyber Charter School Founder Gets 20 Months in Prison for $8M Tax Scheme

PITTSBURGH - The founder and former CEO of the Pennsylvania Cyber Charter School has been sentenced in federal court in Pittsburgh to 20 months in prison on a charge of tax conspiracy, United States Attorney Scott W. Brady announced today.

Nicholas Trombetta, 63, of East Liverpool, Ohio, was sentenced today by Chief United States District Judge Joy Flowers Conti.

"Protecting the public trust is a top priority of our Office," stated U.S. Attorney Brady. "School districts across the Commonwealth sent funds to the Pennsylvania Cyber Charter School to educate their students. Over $8 million of those funds were diverted by Trombetta to other companies he covertly controlled, including a portion which went to a company in his sister’s name to hide the fact that he was the ultimate recipient. In the course of the scheme, he defrauded the IRS of $437,632 by shifting his income to the tax returns of others. The sentence imposed today should serve as a reminder that violating the public trust has serious consequences for public officials."

"This money should have been going to educate our children," said Assistant Special Agent in Charge Chad Yarbrough. "Parents put their kids and their trust in this school and its leaders. Instead, Mr. Trombetta funded his own lavish lifestyle. The FBI and our law enforcement partners will always hold those accountable to abuse their positions for their own personal profit."

"Mr. Trombetta’s complex, fraudulent scheme to enrich himself and evade income taxes is unfair to every taxpayer who obeys the law and pays their fair share," said Guy Ficco, Special Agent in Charge of IRS Criminal Investigation for the Philadelphia Field Office. "The Special Agents of IRS CI will continue doing everything we can to hold individuals accountable to the same tax laws that they are subject to, ensuring that our tax system is fair to everyone."

"Mr. Trombetta not only abused his position of trust for personal gain, but did so at the expense of the very ones he promised to serve – school children. Now he will be held accountable for his actions," said Geoffrey Wood, Special Agent in Charge of the U.S. Department of Education Office of Inspector General Eastern Regional Office. "The OIG and our law enforcement partners will continue to aggressively pursue those who misappropriate education funds for their own purposes. America’s students and taxpayers deserve nothing less."

The court was advised that Trombetta was the founder and Chief Executive Officer of the PA Cyber Charter School. Trombetta created a series of connected for-profit and not-for-profit entities to siphon taxpayer funds out of PA Cyber and to avoid federal income tax liabilities. Trombetta funneled approximately $8,000,000 from PA Cyber through an entity then known as NNDS and finally to a company called Avanti Management Group, where Trombetta had free access to the funds.

At the sentencing proceeding, Judge Conti also imposed a three-year term of supervised release on Trombetta. She also ordered that he perform community service upon his release from prison.

Assistant United States Attorneys Robert S. Cessar, Stephen R. Kaufman and James R. Wilson are prosecuting this case on behalf of the government.

The Federal Bureau of Investigation, the Internal Revenue Service - Criminal Investigations and the U.S. Department of Education - Office of Inspector General conducted the investigation leading to the prosecution of Trombetta.

Topic(s): 
Tax
Updated July 24, 2018