R. BARCLAY SURRICK, District Judge.
Presently before the Court is Defendant Joan Woods Chalker's Motion to Dismiss Wire Fraud Counts 15 through 37 (ECF No. 74) and Defendant Dorothy June Brown's Motion to Dismiss Counts 1 through 37 of the Superseding Indictment or in the Alternative, Motion to Strike the Conflict of Interest Allegations and/or Motion for a Bill of Particulars (ECF No. 75). For the following reasons, Defendants' Motions will be denied.
On January 22, 2013, a federal grand jury returned a sixty-seven count Superseding Indictment against Dorothy June Brown, Joan Woods Chalker, Michael A. Slade, Jr., Courteney L. Knight, and Anthony Smoot. (Superseding Indictment ("Indictment"), ECF No. 47.) These charges arise out of an alleged scheme perpetrated by Brown to defraud three separate charter schools out of over $6.7 million.
The Indictment charges Brown with fifty-two counts of wire fraud, in violation of 18 U.S.C. § 1343 (Counts 1-52), one count of conspiring to obstruct justice, in violation of 18 U.S.C. § 371 (Count 53), ten counts of obstruction of justice, in violation of 18 U.S.C. § 1519 (Counts 54-59, 63, 65) and § 1512(c)(2) (Counts 61-62), and one count of witness tampering, in violation of 18 U.S.C. § 1512(b)(3) (Count 67).
Chalker is charged with twenty-five counts of wire fraud in violation of 18 U.S.C. § 1343 (Counts 15-37; Counts 51-52); one count of conspiring to obstruct justice, in violation of 18 U.S.C. § 371 (Count 53); and seven counts of obstruction of justice, in violation of 18 U.S.C. § 1519 (Counts 55-57, 65-66) and § 1512(c)(2) (Counts 61-62).
On March 18, 2013, Brown and Chalker each filed Motions to Dismiss. (Chalker's Mot., ECF No. 74; Brown's Mot., ECF No. 75.) On April 22, 2013, the Government filed a response to Brown's Motion (Gov't's Resp. to Brown, ECF No. 88), and a response to Chalker's Motion (Gov't's Resp. to Chalker, ECF No. 89). On May 8, 2013, Chalker and Brown each filed a reply to the Government's Response. (Chalker's Reply, ECF No. 99; Brown's Reply, ECF No. 100.) We heard argument on these Motions on June 20, 2013. (Min. Entry, ECF No. 107.)
A. Agora Charter School
Counts 1 through 14 of the Indictment relate to Brown's scheme to defraud the Agora Charter School, a public cyber charter school established by Brown in Philadelphia, Pennsylvania. (Counts 1-14.) Brown submitted her first application for Agora's charter to the Pennsylvania Department of Education ("PDE") on October 1, 2004. (Counts 1-14 ¶ 8.) Eventually, PDE granted a charter to the Agora Board of Trustees on June 29, 2005. ( Id. at ¶ 12). In November 2005, after PDE granted Agora's charter, Brown and "Person No. 1" formed the Cynwyd Group, LLC ("Cynwyd"), a private, educational management company. ( Id. at ¶¶ 2, 7, 18.) In May 2008, Brown became the sole owner of Cynwyd. ( Id. at ¶ 2.)
As part of the application process, Agora was required to submit bylaws to PDE which would govern the operation of the school. ( Id. at ¶ 14.) Agora's bylaws included a provision that provided that "[a]n affirmative vote of a majority of the Board of Trustees of the charter school... shall be used to take action on... [e]ntering into contracts of any kind where the amount involved exceeds $200." ( Id. at ¶ 16.)
The Government alleges that after the Agora charter was approved in June 2005, Brown and Person No. 1 falsely represented that the Agora Board of Trustees had entered into a management contract with Cynwyd (the "Agora-Cynwyd Contract"). ( Id. at ¶ 19.) The Agora-Cynwyd contract entitled Cynwyd to receive 7% of the "Qualified Gross Revenues" of Agora. ( Id. at ¶ 19.) In reality, the Board never held a vote to approve the Agora-Cynwyd Contract. (Counts 1-14 ¶ 19.)
In order to perpetuate the fraud, Brown and others created a variety of fraudulent documents to make it appear as if the Agora Board had voted to enter into the Agora-Cynwyd Contract. ( Id. at ¶ 20.) One of those fraudulent documents included a signed management contract entered into between Agora and Cynwyd dated May 10, 2006, signed on behalf of Cynwyd by Brown and Person No. 1. ( Id. ) The Government alleges that Anthony Smoot forged the signature of Smoot's cousin, Person No. 6, in order to make it appear that Person No. 6 had signed the Agora-Cynwyd Contract on behalf of Agora's Board. ( Id. ) In addition, Brown caused the forgery of Smoot's sister, Person No. 7, in order to make it appear as though Person No. 7 had signed the Agora-Cynwyd Contract on behalf of the Agora Board of Trustees. (Counts 1-14 ¶ 20.) Brown purportedly directed others to fabricate Board minutes and Board resolutions to create the impression that the Board had discussed and voted upon entering into the Agora-Cynwyd Contract, when in fact it had not. ( Id. )
Agora's bylaws also contained conflict-of-interest provisions, which provided that:
No Trustee shall as a private person engage in any business transaction with the charter school of which he or she is a Trustee, be employed in any capacity by the charter school of which he or she is a Trustee, or receive from such charter school any pay for services rendered to the charter school. ( Id. at ¶ 15.)
In order to circumvent the conflict-of-interest provisions, Brown ordered the creation of false Board meeting minutes, which represented that in July 2005, Brown had stepped down from her leadership position with Agora. ( Id. at ¶ 23.) Brown also ordered the fabrication of Board minutes, which made it appear as though Agora's affairs were being managed and conducted by an independent Board of Trustees. ( Id. at ¶¶ 23-24.) As part of this scheme, Brown asked Person No. 5, an employee of another charter school founded and controlled by Brown, to serve as the President of the Agora Board of Trustees. ( Id. at ¶ 24(a).) In reality, Person No. 5 was not a member of the Board, let alone the President. Brown also created false Board minutes indicating that Person Nos. 8, 9, 10, and 11 were members of the Agora Board when in fact these individuals were not Board members. Brown asked Person No. 13 to serve as Agora's Chief Executive Officer, but in reality Person No. 13 served in name only, having no actual responsibilities and receiving no compensation. ( Id. at ¶ 24(d).)
On May 11, 2006, Brown, on behalf of Cynwyd, entered into another management contract with K12 Pennsylvania, LLC ("K12") (the "Cynwyd-K12 Contract"). ( Id. at ¶ 27.) According to this Contact, K12 was to "perform all business aspects and day-to-day management" of Agora. ( Id. ) Cynwyd agreed that K12 would receive 15% of Agora's "Qualified Gross Revenues." ( Id. ) The Government claims that after execution of the Cynwyd-K12 Contract, Brown and Cynwyd provided little to no services to Agora, but continued to collect millions of dollars in management fees, depriving Agora and its students of the use of these funds for educational purposes. ( Id. at ¶ 29.) Between December 2007 and February 2008, the Government alleges that Brown submitted invoices to K12 causing Agora to pay approximately $2, 637, 073 to Cynwyd in fraudulent management fee payments. ( Id. at ¶ 30.)
Eventually, in the Spring of 2009, PDE conducted an audit of Agora as a result of complaints from parents of Agora students. ( Id. at ¶ 31.) PDE advised Agora that it would no longer fund Agora. On June 22, 2009, the PDE issued a notice of revocation of Agora's charter, alleging that Agora's payments to Brown and Cynwyd created conflict-of-interest issues, and that there was no clear and credible evidence that Cynwyd rendered any services to Agora. ( Id. ) As a result of the notice of revocation, and to prevent PDE and K12 from stopping payments to Cynwyd, Brown and Cynwyd filed a federal lawsuit in this District (hereinafter the "Cynwyd Litigation"). ( Id. ) The Government alleges that as a part of that suit, Brown and Cynwyd falsely claimed that the Agora Board of Trustees had considered and voted on the Agora-Cynwyd Contract at a special Board meeting on May 6, 2006, when in fact no such vote had occurred. ( Id. ) The Government claims that on October 20, 2009, based on Brown's false representations regarding the Agora-Cynwyd Contract, the parties agreed to a settlement, with K12 and PDE agreeing to pay Cynwyd $3, 000, 000 for management fees arising out of the Cynwyd-Agora Contract. ( Id. at ¶ 32.) After the settlement, Brown and Cynwyd ceased contact with Agora. ( Id. at ¶ 33.) All told, the Government alleges that from December 2007 through October 2009, Cynwyd received approximately $5, 637, 073 in fraudulent management fees. ( Id. at ¶ 18.)
B. Planet Abacus Charter School
Counts 15 through 37 of the Indictment charge Chalker and her co-Defendant Brown with wire fraud in connection with a scheme to defraud Planet Abacus and the School District of Philadelphia. (Counts 15-37 ¶ 25.) As part of that scheme, Brown and Chalker, allegedly caused "Planet Abacus to make approximately $705, 561.62 in fraudulent payments" to Brown, and a private educational management company operated by Brown. ( Id. at ¶ 26.)
Planet Abacus was a charter school founded by Defendant Brown on July 1, 2007 in Philadelphia. ( Id. at ¶¶ 19, 22.) At Brown's request, Chalker served as the Chief Executive Officer of Planet Abacus. (Counts 15-37 ¶ 22.) The Planet Abacus bylaws provided that the Board of Directors "shall have full power to conduct, manage and direct the business and affairs of [Planet Abacus] and all powers of [Planet Abacus] are hereby granted to and vested in the Board of Directors." ( Id. at ¶ 23.) The bylaws further provided that "no Director shall maintain substantial personal or business interests which conflict or which may be seen as conflicting with those of [Planet Abacus]." (Counts 15-37 at ¶ 24.) The Planet Abacus charter also required that the school maintain certain records on site at the Planet Abacus facility for inspection by the School District. (Counts 15-37 ¶ 30.) These records included Planet Abacus Board meeting minutes. ( Id. )
In June 2007, Brown established AcademicQuest, LLC ("AcademicQuest"), an educational management organization. ( Id. at ¶ 26.) Brown was the sole owner of AcademicQuest. ( Id. ) After approval of the Planet Abacus charter, the Government alleges that Brown falsely represented that the Planet Abacus Board of Directors had entered into a management contract with AcademicQuest when in fact the Board had never voted on the contract. ( Id. at ¶ 27.) The management contract entitled AcademicQuest to 15% of the "Qualified Gross Revenues" of Planet Abacus and an additional 2% of "Qualified Gross Revenues" if a percentage of the students' test scores increased by a certain amount. ( Id. ) The Government alleges that rather than diverting significant resources or funds from her private company, AcademicQuest, Brown directed employees of the other schools she controlled to provide services to Planet Abacus. ( Id. at ¶ 36.)
Brown and others created two fraudulent management contracts between AcademicQuest and Planet Abacus, both dated March 5, 2007. ( Id. at ¶ 28.) The first management contract was executed by Brown, on behalf of AcademicQuest, and Person No. 17, an individual purportedly serving as the President of the Planet Abacus Board as of the date of the Contract. ( Id. ) Brown's personal secretary, Person No. 12, was a witness to the execution of the Contract. ( Id. ) Brown and Person No. 17 executed a second management contract with Smoot signing as a witness. ...