(June 22) In less than a week there may be indication that the long-delayed criminal case against two of the principals with the California Charter Academy indicted in 2007 on a combined total of 117 felony charges of misappropriation of public funds, grand theft, tax evasion and filing a false tax returns will go to trial sometime later this year.
On July 2, Charles Steven Cox and Tad Honeycutt are to again appear before Judge Jon Ferguson for a pre-trial hearing. There is no guarantee, however, that the case will come before a jury anytime soon.
The delay in the case so far has been an extraordinary one. Cox, a former insurance executive and the founder of the California Charter Academy, used the faith many parents had in the charter school system to create and quickly expand the academy into the largest charter school operation in California, with multiple campuses located throughout the state. Cox chartered the first academy under the auspices of the Snowline-Joint Unified School District, which exists in the High Desert communities of Phelan and Pinon Hills. He then utilized the enthusiasm garnered from that formation to get Snowline to charter another academy. Cox also obtained two more charter sponsorships, one from the Orange School District in Orange County, and one from the Oro Grande School District, located in San Bernardino County’s High Desert.
The California Education Code provides for the formation of charter schools under the aegis of a sponsoring local school district. Charter schools function outside the normal parameters of normal schools and can offer a curriculum and educational smorgasbord unavailable in traditional public schools while meeting the requirements of both special needs students and accelerated scholars.
Simultaneous to his founding of the non-profit California Charter Academy, Cox created Educational Administrative Services Corporation, a for-profit company which was then hired by all four charter schools to manage the day-to-day operations of the charter schools and provide academic supplies such as books, paper, pens, pencils, desks, chairs, projectors, computers, etc. The rates charged by Educational Administrative Services Corporation reflected in the billings were inflated. In some cases, educational materials that were paid for by the charter schools were never delivered.
Cox hired Tad Honeycutt, who later successfully ran for a position on the Hesperia City Council, to work with the California Charter Academy. In turn, Honeycutt created his own set of companies, Maniaque Enterprises and Everything For Schools, which like Educational Administrative Services Corporation delivered educational materials and services to the non-profit charter schools at a profit.
By 2003, teachers at several of the schools were going public with accounts of how students’ educations were being neglected and books and other educational materials were not being provided. In 2004, the superintendent of the California Department of Education, Jack O’Connell, suspecting financial irregularities, launched an investigative audit into California Charter Academy. In August 2004, four years after California Charter Academy’s creation, it ceased operations abruptly, throwing teachers out of work and forcing students to hurriedly matriculate back into public schools, which were overburdened by the influx of unexpected numbers of students. The California Charter Academy’s records and books were in utter chaos. Student transcripts requested by the sponsoring districts were found to be incomplete or entirely unavailable. The California Charter Academy’s creditors and landlords in many cases made off with the academy’s assets.
On April 14, 2005, MGT of America, an auditing firm hired by the California Department of Education, and the state’s Fiscal Crisis and Management Team released their joint financial audit of California Charter Academy, showing $23 million in taxpayer money paid to the private management companies Educational Administrative Services Corporation, Maniaque Enterprises and Everything For Schools was misappropriated. Among the findings were that Cox had hired several of his family members into what were essentially do-nothing clerical and non-productive administrative positions, that Cox, his family members, other Educational Administrative Services Corporation and Charter Academy employees, and Honeycutt were provided with luxury automobiles, and that among the expenses accumulated by the Charter Academy were accommodations in Las Vegas, at Disneyland and the Disneyland Hotel, studio musical recording equipment, spa visits, fishing trips and jet skis.
The audit alleged multiple conflict-of-interest violations, the improper conversion of private schools to public charter schools, and the falsification of documents and claims to receive public funds
“The magnitude of waste of precious education funds outlined in the audit was appalling,” said O’Connell.
In late July 2007, a grand jury was impaneled and began inquiries into the California Charter Academy’s operations. On September 4, 2007, Honeycutt and Cox were arrested after being indicted by that special grand jury for their alleged roles in the collapse of the California Charter Academy. Cox and Honeycutt were indicted on a total of 117 counts, including fraud, misappropriation of public funds and grand theft. Cox’s bail was set at $1 million dollars, while Honeycutt’s was logged at $500,000. Both were able to post bail. Law enforcement officials froze their assets, but little of the missing money that officials thought might be recovered was present in their accounts in local banking institutions. It is known that Honeycutt had made multiple trips to Vanuatu, Spain and Argentina in the early and mid-2000s. Some of the taxpayer money provided to the California Charter Academy was used to fund lawsuits brought by Cox and Educational Administrative Services Corporation against public entities. In one case, Cox and Educational Administrative Services Corporation filed suit against the California Department of Education, contending the state had illegally withheld funding from the California Charter Academy. Cox and Educational Administrative Services Corporation did not prevail in that suit. Cox brought another unsuccessful lawsuit alleging impropriety and political motivation on the part of public officials whose actions led to the closure of the California Charter Academy.
According to Christopher Casey, who had been hired by Cox to run one of the academy’s vocational schools, “Steven Cox started out as if he was interested in improving education. Tad talked up the charter school idea to get more students and more schools, telling everyone charter schools were dedicated to better education. “But when it turned into just a money-making venture, Tad didn’t have the personality or character to handle it and he just went along with everything Cox was doing.”
The California Charter Academy fell crucially short in the provision of key educational materials, Casey said.
Casey said, “With my own money – my credit card – I set up a home builders school in San Bernardino. I had thirty or forty students signed up. We had the class schedule set and I couldn’t get books. I was working with Jim Melton. I asked. We never got one book. I pleaded for the books. I didn’t see any results. I couldn’t get books. They weren’t focused on that. I said to them, ‘These are the texts I need.’ I asked them to provide resources. They never did. They just prolonged it and prolonged it and put it off. I started the school hoping they would be seriously focused on education, but when I found out what they were really doing I lost heart and got out of it.”
It was dishonest and reprehensible, Casey said. “A lot of money went into it,” he said. “They had a tremendous opportunity and instead they just used it to take money out of it. They had some outstanding people who wanted to do the job but their hands were tied.” Part of Cox’s formula, Casey said, was to “get heavy into politics. [Former California Assemblyman] Keith Olberg went to work for the California Charter Academy. [Former San Bernardino County Supervisor] Bill Postmus was their major political asset.”
A series of miscues, procedural and judicial, prevented the criminal case against Cox and Honeycutt from being fast tracked from the start. Cox and Honeycutt came before Judge Margaret Powers for arraignment. The case was then handed over to Judge Eric Nakata. An effort to recuse Nakata ensued, however, and at the intervention of then-presiding judge Larry Allen, the case was transferred back to Powers. Subsequently the case was heard by judges Miriam Morton, John Tomberlin, Jules Fleuret and Arthur Harrison. Eventually the case went to Judge Jon Ferguson in Rancho Cucamonga, before whom the case is now scheduled to go to trial, if indeed it makes it to trial.
The trial timetable suffered a setback in November 2010, when Cox’s attorney, Earl Wade Shinder, committed suicide. That was more than four years ago, however. Attorney Grover Porter, who has represented Honeycutt for more than seven years, and Geoff Newman, who now represents Cox, are sufficiently up to speed on the case to proceed to trial. On April 17, the prospect for the case moving to trial any time soon was threatened when Porter made a motion to withdraw as Honeycutt’s attorney of record. Ferguson, citing no legal basis for the withdrawal, denied Porter’s motion to substitute out as Honeycutt’s attorney.
The case against Cox and Honeycutt is a strong one, with bank records, receipts, hotel and resort registrations, airline ticket records, vehicle registration and multiple witness statements demonstrating that millions of dollars in funding intended for educational purposes was diverted to pay for vacations, vehicles, recording and video equipment, jet skis, lease or pay for real estate acquisitions or cover political campaign expenses.
The prosecutor on the case is Michael Fermin, who was a deputy district attorney when he was assigned to carry it forward in 2007. After the retirements of former assistant district attorneys Dennis Christy and James Hackleman, Fermin was elevated to the position of assistant district attorney overseeing, as the office’s second-in-command, a major portion of the office’s administrative duties, including the budget and human resources. Today, Fermin has only one remaining prosecutorial assignment: the California Charter Academy Case against Cox and Honeycutt. Indeed, the the California Charter Academy case, involving allegations of $23 million intended for educational purposes being diverted to unauthorized, improper or illegal use, is one of the most important cases, if not the most important one, in Fermin’s career as a prosecutor. Nevertheless, of late the district attorney’s office has been represented at court hearings for Cox and Honeycutt by deputy district attorney John Thomas.
For reasons the district attorney’s office has chosen not to clarify, it has delayed again and again and again and again in moving the case to trial, despite its potential for boosting Fermin into the legal stratosphere. Though a pretrial hearing is scheduled for July 2, that is no indication the trial is about to begin, as there have already been 31 pretrial hearings held. At the last two pretrial hearings, time was waived until September 10, meaning trial will not commence at least until that time. At that point, eight years will have passed since the indictments were handed down.
The case originated at a time when there was a much different political lay of the land than exists now. The shift in the political pecking order, and the degree to which the district attorney’s office shielded the now-defunct political dynasty that ruled the roost in 2007 when the case was filed, explicates at least in part the cause for the delay.
By 2004, Bill Postmus had acceded to the position of chairman of the San Bernardino county Board of Supervisors. Almost simultaneously, he had become the chairman of the San Bernardino County Republican Central Committee, exercising control over Republican Party endorsements and the delivery of GOP money to local Republican candidates for political campaigning purposes. In 2006, with two years left on his second term as supervisor, Postmus ran successfully for county assessor against the incumbent, Donald Williamson.
In 2007, while Postmus was yet one of the most powerful political figures in the county, Fermin made a politically driven decision to leave Postmus out of the indictment. Since that time, information implicating Postmus that was then available to the district attorney’s office has become widely known to the public, information which shows Postmus was embroiled in the California Charter Academy Scandal at multiple levels.
Cox emerged as one of Postmus’ major early political supporters, having contributed $25,450 to his political war chest when Postmus was running for supervisor in 2000, utilizing California Charter Academy money to make those donations.
Postmus was appointed by Cox to serve as a member of two of the boards of the charter schools functioning under the aegis of the California Charter Academy. Postmus then used his status as a charter school board member as a feature in his resumé when he first ran for supervisor.
Action Postmus took, based upon his actual authority as a board member or carry-over authority as a former board member and close affiliate of Cox, became the focus of the grand jury that was impaneled in 2007 and which indicted Cox and Honeycutt. Irrefutable evidence emerged to show Postmus made efforts to ensure that members of his family as well as his political supporters were rewarded with jobs or contracts at or with the California Charter Academy.
Evidence was produced to show that Postmus directed Cox or otherwise arranged, both while he was a charter academy board member and afterward, for money to be diverted to Brad Mitzelfelt, who was Postmus’ chief of staff when he was supervisor, and Keith Olberg, a former state assemblyman who was a key Postmus political ally, in the form of questionable or illegal payments. Postmus worked as district director in Assemblyman Keith Olberg’s High Desert office from 1995 until 1999.
In 2002, Postmus was provided with an all-expenses paid trip to Florida by Cox, who used California Charter School funds to pay for the trip, accommodations and spending cash, which totaled more than $17,000. No explanation of what the trip was for was ever provided.
In 2001, Bill Postmus Sr., the father of Bill Postmus the supervisor, went to work for Cox as the director of/lead instructor in the academy’s criminal justice and leadership program. While Bill Postmus Jr., had assiduously abstained from voting as a member of the board of supervisors on matters impacting the California Charter Academy, he broke from that pattern in June of 2004 as the state was withdrawing funding from the California Charter Academy and his father was in danger of being thrown out of work. At that point, Bill Postmus, Jr. voted to have the county forward a $77,000 Workforce Investment Grant to the California Charter Academy in an effort to keep the school where Bill Postmus Sr. was the principal in session.
At supervisor Bill Postmus’ insistence, Cox hired former California Assemblyman Keith Olberg and had the Charter Academy and Educational Administrative Services Corporation pay him more than $375,000 over three years, ostensibly to develop an “Honors Program” for the academy’s schools. Olberg, according to the audit, did virtually nothing on that project and the so-called honors program was never instituted.
Postmus similarly insisted that Cox endow political action committees he and Mitzelfelt controlled with money to support Mitzelfelt’s future political candidacies as well as those of another Postmus ally, Anthony Adams.
Five years ago, Postmus fell from grace, having been downed by drug use, extortion and bribery scandals. In 2011, he pleaded guilty to 13 felony corruption in public office charges unrelated to the California Charter School case, along with a single misdemeanor narcotics violation.
The district attorney’s office has declined to comment on reports that it is delaying the prosecution of Cox and Honeycutt because of emerging questions about Postmus’s involvement in that scandal and indications that political considerations rather than a cold hard analysis of guilt or innocence entered into the prosecutor’s office’s decision about who would be charged in the California Charter Academy matter.