A former Barack Obama adviser was arrested Tuesday for stealing over $200,000 from U.S. schools to fund his lavish lifestyle.
Seth Andrew, founder of Democracy Prep, was arrested in Manhattan on wire fraud, money laundering and false statement charges.
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Attorney Michael Yaeger said Andrew, 42, is set to plead not guilty.
“We’re reviewing the papers that were just unsealed this morning,” Yaeger said in an email.
Dailymail.co.uk reports: Andrew awaited an initial appearance in Manhattan federal court.
US Attorney Audrey Strauss said in a release that Andrew stole $218,000 ‘from the very same schools he helped create’.
She said he then used the money to obtain a better interest rate on a mortgage for a $2.3million Manhattan apartment that he shares with his wife and CBS News anchor, Lana Zak.
Andrew was a founder of Democracy Prep when it started in New York City in 2005. Democracy Prep expanded to 21 schools across multiple states, serving 6,500 students.
It later expanded across the US, flourishing after its methods helped raise test scores for economically challenged children in Harlem.
According to a criminal complaint, Andrew left his role as a superintendent in his schools network in the spring of 2013 and began working in the US Department of Education and as a senior adviser in the Office of Educational Technology at the White House until November 2016.
A year later, Andrew is said to have severed his relationship with Democracy Prep.
On March 28, 2019, authorities said in a statement that Andrew closed two of the three of the school’s escrow accounts that were to be accessed only if the school dissolves.
For the first closed account, he allegedly received a bank check in the amount of $71,881.23 made payable to Democracy Prep Charter School. The second bank check was for the amount of $70,642.98 and was also made payable to Democracy Prep Harlem.
On the same day, Andrew allegedly entered a Manhattan bank and opened a business bank account in the name of Democracy Prep.
To open that account, Andrew communicated to a bank employee that he was a ‘key executive with control of’ the charter school network, which ‘was a lie’. He deposited the $71,881.23 check into the account but not the second.
On April 2, 2019, Andrew allegedly used an ATM machine in Baltimore, Maryland, to deposit the second check. Authorities said it appeared that he ‘waited to deposit Check-2 because it was made payable to’ Democracy Prep Harlem and not Democracy Prep Charter School.
Had he tried to deposit the second check when he opened the ‘fraud account’ it would not have been honored by the bank, prosecutors said.
In court papers, authorities said Andrew tried to make it appear that the money he took from the schools came from a civic organization he controls.
They said he used the money to qualify for a half-per cent interest rate reduction – the largest his bank allowed – on his purchase with his spouse of a Manhattan residence in August 2019.
The couple obtained a $1,776,000 mortgage with an interest rate of 2.5 per cent, the complaint said.
‘Today Andrew himself is learning one of life’s most basic lessons – what doesn´t belong to you is not yours for the taking,’ said William Sweeney Jr, head of New York’s FBI office.
But the alleged activity didn’t stop there. On October 17, 2019, Andrew closed the third escrow account and received a check made payable to Democracy Prep Endurance in the amount of $75,481.10, authorities said.
Four days later, he is said to have deposited that check into an account that he opened at a different bank.
About a month later, Andrew obtained a check for the total of $144,473.29, which constituted the funds allegedly stolen from two of Democracy Prep’s escrow accounts.
He then deposited those funds into the same account where the $75,481.10 was deposited.
Authorities allege that within the same week Andrew rolled the funds in the account ‘into a certificate of deposit’.
‘That certificate of deposit matured on May 20, 2020, which earned Andrew $2,083.52 in interest,’ the statement reads.
The statement continued to say that he ‘then transferred the funds from the certificate of deposit – including the funds stolen from the escrow accounts – into a bank account held in the name of a particular civic organization that Andrew currently controls, thereby concealing the money’s association’ with Democracy Prep and depositing the stolen money into an account under his ‘complete control’.
Democracy Prep CEO Natasha Trivers sent an email to families Tuesday morning informing them of Andrew’s arrest.
‘I am sorry at this time to write to inform you of the arrest of the Founder of Democracy Prep, Seth Andrew, earlier this morning by the FBI. Seth was arrested for the unauthorized withdrawal of Democracy Prep funds,’ the email began.
Trivers assured the families that the ‘network’s finances remain strong, and at no time did any of the activity by Seth Andrew have any adverse effect on our scholars or the functioning of our schools’.
‘Our number one priority is to always ensure that our scholars have what they need to receive the highest quality education we can provide and to assist them to become responsible citizen scholars who will change the world. We are writing to let you know that we are steadfast in our mission for your children,’ she added.
Andrew has been charged with one count of wire fraud, which carries a maximum sentence of 20 years in prison, one count of money laundering, which carries a maximum sentence of 20 years in prison, and one count of making a false statement to a bank, which carries a maximum sentence of 30 years in prison.
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