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State settles with Oregon charter school operators

BEND (AP) — The Oregon attorney general’s office says most of the $17 million in state aid it alleged that two charter school operators misspent was in fact used properly for education.

In January, the attorney general’s office filed a claim accusing Tim King and Norm Donohoe of racketeering and money laundering through their company, EdChoices, between 2007 and 2010. It sought the $17 million as well as $2.7 million for breach of contract and legal fees. But the Oregon Department of Justice found it was mostly wrong about how the state aid was handled.

“When we were doing our investigation and litigation we discovered that most of the $17 million was not diverted but was spent properly on education purposes, which is why the negotiations led to the settlement we ended with,” said Michael Kron, the department’s government transparency counsel.

Under the settlement, King and Donohoe each are to pay the state $475,000 and refrain from a number of educational activities for four years, The Bulletin newspaper of Bend reported Wednesday.

Kron said it was hard to determine how much might have been diverted given the comingled funds of the enterprise. He said the state was not likely to have been made whole, but the two men have negative net worth and King has filed for bankruptcy protection.

“In any case with contested issues that have a resolution like this, the resolution is made without any stated wrongdoing and is a compromise on the part of all involved,” said Carl Rodrigues, attorney for Donohoe. “What’s fair to say is that everyone is glad the matter is resolved.”

King’s lawyer, Christopher Parker, said he had no comment.

King and Donohoe also agreed in the settlement never to consult with state-funded charter schools for compensation.

Beginning in 2006, King and Donohoe operated 12 charter schools under a company named AllPrep, which paid the Clackamas-based EdChoices for administrative work and online education programs. King was the director of EdChoices, Donohoe president and chief financial officer.

Oregon charter schools get state aid based on enrollment. Money is first sent to the sponsoring district, which takes a portion, before passing the remaining funds to the charter.

Information from: The Bulletin,

Copyright 2013 The Associated Press. All rights reserved. This material may not be published, broadcast, rewritten or redistributed.


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