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Georgia file connects Twin Cities charter school, fraud scheme

Posted by: Steve Brandt under Politics and government, Public records Updated: March 22, 2013 - 5:27 PM

 

Eric Mahmound in school

Eric Mahmound in school

When the news broke last summer that charter school entrepreneur Eric Mahmoud had entered a guilty plea to a mortgage fraud charge in Georgia, Mahmoud had a ready comeback for the Minneapolis school district, under whose authorization he was opening another charter school.

“I assure you that this was a personal, residential matter in Georgia and had nothing to do with Seed Daycare, Harvest Prep or any other educational institution,” Mahmoud told Sara Paul, the district’s liaison with charter schools, in an Aug. 16 e-mail.

In that case, Mahmoud has some explaining to do.

According to an investigative file compiled by Georgia authorities, there are at least two connections involving the school with the deal.

First, one participant in the real estate deal that led to the charges against Mahmoud told Gwinnett County police investigators that he met twice with Mahmoud in his office, weeks before the fraudulent deal was to close. The purpose was for the purported buyer to supply financial data for the deal. When that buyer noticed that the loan information on a completed application was misleading, the man told investigators, Mahmoud and his associate assured him that the deal was legal.
   
The second school connection is even more explicit.  Days before the planned closing, a letter was sent on Seed Academy and Harvest Preparatory School  letterhead. The letter presents a demand for payment of $350,000 to Mahmoud from the planned real estate closing.  The letter over the signature of Aretta-Rie Johnson said that she had been retained by Mahmoud to make the payment demand.

Johnson said that she has no specific recollection of the letter but that she worked for Mahmoud’s school during that school year on contract. “When you’re an administrative person, you just do what people tell you to do,” she said. She has also served on Mahmoud's Seed, which provides services for the schools.

Mahmoud said he would not comment on the evidence. There is no evidence that his schools stood to profit from the attempted deal.

The Minnesota Department of Education said through chief of staff Charlene Briner:: “It appears the state cannot prohibit a public school from hiring an individual with a criminal background, nor can the state be considered responsible for criminal activity that may take place in a school, particularly when that criminal conduct is not related to educational matters. “

“That said, the use of school letterhead and the fact that a school employee was involved with, or asked to facilitate a transaction appears to warrant further review.  MDE is assessing the need, if any, for additional action based upon this information.”

 

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