In One of the Largest Charter School Scams in History, No One Will Serve Jail Time

The story of the A3 online charter school empire is one of the largest charter school scandals in U.S. history. The scam had several angles, the most lucrative of which involved enrolling thousands of students who never took any classes, as Voice previously reported. 

A3’s 19 online charter schools raked in roughly $400 million from the state between 2015 and 2019. Sean McManus and Jason Schrock, the ringleaders, funneled some $80 million of that money into companies they controlled. Nine other people – including key lieutenants, an accountant and two former superintendents – were also charged for playing a role in the scheme to steal public funds. 

Despite such an unprecedented theft, not a single person involved in the A3 case will spend a day behind bars. McManus and Schrock were both sentenced to four years – but both have already been in ankle monitors, on home confinement. They both will get credit for time served. Several other key players had their felonies reduced to misdemeanors and two defendants essentially had their charges dropped for cooperating in the investigation. 

People who commit white collar crime frequently serve less time than those who are busted in street crimes, said Erin Sheley, a professor at California Western School of Law. 

“It’s all a negotiation. Ninety-five percent of cases are resolved through plea bargains,” said Sheley. “What white collar criminals have to their benefit in a negotiation is money. That big disparity comes from the fact that street criminals often don’t have anything to bargain with but time in jail.” 

Prosecutors have a big interest in getting money back and making victims – in this case the state’s public education system – whole, said Sheley. But, she said, the massive disparity in sentencing can undermine public trust, by creating the impression that rich people are subject to a different, less severe set of rules.

A spokesman for the District Attorney’s Office called it “notable” that under state laws “violent crimes generally result in lengthy prison sentences and less incarceration is afforded to white collar crime cases.”

Prosecutors weighed “multiple factors including accountability, restitution and early acceptance of guilt” in resolving the case, wrote Steve Walker, the spokesman, in an email.

Walker called the resolution of the case “just” and pointed to “the unprecedented return of more than $240 million from the hands of the defendants back to those it was originally intended for, helping K through 12 students in the state.”

Here’s a breakdown of the A3 players, their pleas and sentences. 

Sean McManus

McManus worked in the charter school industry for several years before he opened 19 online charter schools with Schrock. A3’s first school was authorized by Dehesa Elementary School District in East County. Dehesa only had around 150 students at the time. And yet McManus and Schrock’s school went onto enroll many thousands of students. That’s because an online charter school can draw students from the county it is located in, as well as each adjoining county. 

The central component of the A3 scam involved enrolling students, who never actually took any classes, into A3 schools. To boost A3’s head count, enrollment workers would approach summer athletic programs. The enrollment workers would get each summer athlete to sign what’s known as a master agreement. That master agreement would un-enroll each student from their normal school and into an A3 school for the summer. For each summer student A3 brought in several thousand dollars. Schrock and McManus paid a commission to each of their enrollment workers and gave a so-called donation, based on the number of players that signed up, as an incentive to each athletic program. 

Another part of the scam involved working with private schools. A3 would approach, for instance, a small Catholic school. The students at the school would be added to A3’s attendance rolls. The state’s public education system would dispense money to A3 for each of those students. A3 would then give some of that money to the private school – some of them were struggling financially – and pocket the rest. 

McManus was charged with multiple crimes that added up to as many as 40 years in prison. In the end he pleaded guilty to two counts of conspiracy to steal public funds and was sentenced to four years in state prison. He waived his rights to any revenue connected to the charter schools or any connected business, paid roughly $19 million in fines and had his 401(k) seized. 

McManus is an Australian and has remained in that country throughout the duration of the legal wrangling that began in the case in 2019. He has been on house arrest, wearing an ankle bracelet, while being monitored from the US. He was allowed to finish out his sentence while on house arrest in Australia and will serve three years probation. 

Jason Schrock

Schrock calls himself an “Educational Business Leader” on his LinkedIn profile. He lists himself as CEO of Learning Re: Defined, “a Christian company of educational leaders and program developers who cultivate and provide training modules and curriculum built to meet client needs,” according to the company’s Facebook page. 

Schrock, who also faced multiple charges with a maximum penalty of roughly 40 years in prison, pleaded guilty to one count of conspiracy and one charge of breaking state conflict of interest laws. He spent 1,506 days in an ankle monitor and was credited with time served. He also paid roughly $19 million in fines and will also serve three years probation.

Robert Williams

Williams served as an accountant to A3, and was closely involved in much decision-making, prosecutors wrote in their initial indictment. Williams led state-certified auditors to believe that much money went to teachers’ salaries, that actually didn’t. This helped A3 cash in on more state funds than it would have been able to otherwise. 

Williams pleaded guilty to one felony count of violating the California Corporations Code, which deals with falsifying records. That count was later reduced to a misdemeanor. He was ordered to pay $150,000 in fines and $150,000 in restitution, according to the District Attorney’s Office. 

Steven Van Zant

Van Zant is the former superintendent of Mountain Empire Unified School District in San Diego County. He was previously convicted of crimes related to charter schools for deals he struck while at Mountain Empire. Van Zant, after he was forced out of public education, went into consulting. That’s where he helped broker a deal for McManus and Schrock to acquire their first charter school, Mosaica Online Academy of Southern California, for $1.5 million. Van Zant earned 3 percent of the sale proceeds, as well as 3 percent of all revenue the school made going forward. Van Zant’s management and consulting company also assisted A3 with much of its bookkeeping. 

Van Zant was the last defendant in the A3 case to take a plea deal. He pleaded guilty to conspiracy to commit grand theft, was sentenced to 180 days in home confinement, three years probation and ordered to pay $500,000 in fines and restitution. 

Eli Johnson

Johnson worked closely with Schrock and McManus, according to prosecutors. He was listed as an administrator at several of A3’s schools. 

At one point, an auditor raised concerns about McManus being listed as CEO of one of the online schools. The auditor thought his position as CEO might be a conflict of interest, since the school appeared to be doing business with some of McManus’s other companies. When that was brought to light, prosecutors say, several of the A3 players conspired to backdate paperwork showing Johnson as CEO. 

Johnson received a deferred entry of judgement. That means when the deferred entry is complete, the charges against him will essentially be dropped. 

Justin Schmitt

Schmitt also worked closely with McManus and Schrock. Prosecutors say he helped run the athletic program that enrolled summer athletes. 

Schmitt pleaded guilty to a felony count of taking money in order to conceal crime. The charge was later reduced to a misdemeanor and Schmitt was sentenced to one year probation. 

Nyla Crider

Crider handled much of the paperwork related to summer athletic programs. Crider received bonuses for continuing to push enrollment numbers higher. At one point, an A3 employee told Crider about a dream she’d had about her. In the dream, Crider was “drinking champagne throwing money everywhere yelling I love bonuses,” according to a text Crider sent McManus. 

She initially faced as much as 11 years in prison. She pleaded guilty to one count of conspiracy to commit grand theft. It was later reduced to a misdemeanor. 

Troy Kukahiko

Kukahiko helped McManus and Schrock enroll summer athletes. He worked directly with summer football programs to sign up athletes. 

He pleaded guilty to one count of conspiracy to commit theft of public funds. He was ordered to pay restitution and cooperate in the DA’s investigation. 

Michelle Kukahiko

Michelle, Troy’s wife, worked directly with Crider, doing administrative work. 

She received a deferred entry of judgement and the charges against her were dismissed after she cooperated in the investigation, prosecutors said. 

Nancy Hauer

Hauer was the superintendent of Dehesa Unified at the time charges were filed against A3. Dehesa, like all other school districts, was eligible to receive fees from the charter schools it authorized. Prosecutors say she knowingly received more money in fees, than Dehesa actually spent in doing the work of overseeing one of the A3 schools. 

Hauer pleaded guilty to one count of “willful omission” to perform a public official’s duties and was sentenced to one year probation. Hauer applied to have her guilty plea set aside, which a judge agreed to, and entered a new plea of not guilty. The charges against her were dismissed and expunged from her record, according to her attorney.

Richard Nguyen

Nguyen worked closely with Crider and others in managing A3’s finances.  

He pleaded guilty to one felony count of conspiracy to commit theft of public funds. It was reduced to a misdemeanor. 

Correction: This story initially misstated the charge Nancy Hauer pleaded guilty to.