Two Newport Beach men are at the center of a conspiracy that defrauded millions of dollars from the state using a network of 13 so-called virtual charter schools that funneled funds directly into their private bank accounts.

From January 2016 to April 2018, Sean McManus and Jason Schrock charged 13 charter schools, which they own, $83.3 million to manage the schools through their other company A3 Education, according to a federal indictment obtained by the L.A. Times. At least $10 million of that could be traced directly into personal accounts and property owned by McManus and Schrock.

Included among the conspiracy is Valiant Prep which operates two virtual charter schools under authorization by districts in Los Angeles and San Diego counties.

Charter schools operate in a nebulous territory between private and public education, and have increasingly come under scrutiny and backlash from unions and political leaders. They are ran privately using tax pay dollars and usually with authorization from a public school district. Supporters of charters say operating outside these lines creates a better learning environment. Critics of charter schools say they operate without proper vetting or regulation.

In the A3 Education case, a total of eleven people were indicted May 17 on charges ranging from grand theft to the illegal use of public funds. The alleged conspiracy also included the inflation of enrollment and buying report cards from students not actually enrolled in the charter schools. More student enrollment meant that the state would give the charter schools more money, which in turn would be siphoned off into A3, according to the allegations.

The Valiant Academy of Los Angeles operates under a charter from Acton-Agua Dulce Unified School District in the Antelope Valley. Valiant Academy of Southern California operates with permission from Dehesa School District in El Cajon. The state has ordered both schools permanently closed as of June 30.

In a statement published on Valiant’s Facebook page, Valiant Prep Chairman Robert Sikma said the network of schools offered to “cooperate fully” upon learning of the investigation launched by the San Diego District Attorney. “The District Attorney’s Office declined Valiant’s offer,” Sikma said.

Valiant’s “Head of School” Justin Schmitt was also indicted in the conspiracy.

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