In three weeks the ten year anniversary of the California Charter Academy indictment will be marked. A decade after the two defendants, Charles Steven Cox and Tad Honeycutt, were indicted in 2007 on a combined total of 117 felony charges of misappropriation of public funds, grand theft, tax evasion and filing false tax returns, they have yet to go to trial. Cox faces 56 counts of misappropriation of public funds, 56 counts of grand theft and a single count of failing to file a tax return. If convicted, he could received a maximum sentence of 64 years in state prison. Honeycutt is charged with 15 of the same counts of misappropriation of public funds leveled against Cox, 15 counts of grand theft which were likewise filed against Cox, three counts of failure to file a state tax return and a single count of filing a false tax return. He faces up to 20 years in prison.
Offering gullible parents the promise of an educational alternative that would allow their children to be educated in a wholesome and Christian environment free of the liberal claptrap espoused by teachers under the sway of the state’s teachers’ unions, Cox and Honeycutt signed up enough students to attend the California Charter Academy that they were able in the course of four years to skim some $23 million in public money off the top and channel it into overseas banking institutions, other business ventures, into the their own pockets and accounts and the pockets and accounts of their family members, friends, associates and friends, all the while treating themselves to luxury automobiles and vacation getaways.
There is no guarantee that the case, which has been strung along by one extraordinary delay after another, will come before a jury anytime soon.
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, in 2000 successfully ran for a position on the Hesperia City Council, in time acceding to the position of mayor, to work with the California Charter Academy. Honeycutt was a member of a High Desert political dynasty. His father, Theron, preceded him as a councilman in Hesperia from 1991 to 1995. His mother, Kathleen Viera Honeycutt, represented the 34th Assembly District from 1993 to 1994.
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.
Cox made $5.5 million in payments to Honeycutt’s for-profit subsidiary without a vote by the academy board to approve the disbursements. Cox’s take was more substantial, around $17. 5 million.
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, 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, along with the corrosive pull of political influence prevented the criminal case against Cox and Honeycutt from being fast tracked from the start.
Honeycutt, through his parental connections as well as his affiliation with Bill Postmus, was active in Republican politics, and was involved in raising money that was used by a number of officials, including judges, to get into office. Several judges at the Victorville Courthouse declined to hear the case involving Honeycutt or any of Postmus’ political allies, recusing themselves.
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.
The trial timetable suffered a setback in November 2010, when Cox’s attorney, Earl Wade Shinder, committed suicide. That was more than six years ago, however, and the delays continue. Attorney Grover Porter has represented Honeycutt for more than nine years, and Geoff Newman, Cox’s fifth lawyer, are sufficiently up to speed on the case to proceed to trial. More than two years ago, Porter made a motion to withdraw as Honeycutt’s attorney of record. That motion was denied by Judge Jon Ferguson, who said there was no legal basis for the withdrawal.
There are roughly 52,000 pages of discovery and 459 anticipated trial exhibits. Some 80 witnesses testified before the grand jury, including Postmus, his successor as supervisor Brad Mitzelfelt, Hesperia School Board Member Eric Swanson,and then-Victorville Councilwoman Joanne Almond.
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 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. Fermin has deferred a number of the district attorney’s office’s appearances in the case to 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. There have already been 35 pretrial hearings held.
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, who served two terms in the California Assembly.
Eight 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.
One difficulty for the district attorney’s office vis-à-vis Postmus was that he was a central witness in another high profile criminal case, the political corruption, extortion and bribery prosecution pertaining to the 2006 vote by the board of supervisors to confer a $102 million settlement on the Colonies Partners Development Consortium to settle a lawsuit that company had brought against the county over flood control issues at the Colonies at San Antonio residential and Colonies Crossroads commercial subdivisions in northeast Upland. Postmus was charged in 2010 with taking $100,000 in bribes from the Colonies Partners in exchange for being one of the three members of the board of supervisors to approve that settlement. He initially pleaded not guilty to those charges but in 2011 pleaded guilty and agreed to turn state’s evidence against four others in the case – his one time board colleague Paul Biane, who voted with him to support the settlement with the Colonies Partners; Mark Kirk, the chief of staff to the other member of the board, Gary Ovitt, who supported the settlement; Colonies Partners managing partner Jeff Burum, who is accused of furnishing bribes to Postmus, Biane and Kirk in the form of campaign contributions; and former sheriff’s deputies’ union president Jim Erwin, who was accused of assisting Burum in extorting Postmus and Biane through blackmail and threats prior to the vote on the settlement. That case went to trial in January and has yet to conclude, with closing statements scheduled to begin next week and the case to go to the jury for deliberations perhaps as early as August 26. Postmus testified for the prosecution in May. Nevertheless, the San Bernardino County District Attorney’s Office does not want to initiate the trial in the California Charter Academy case until after the verdicts are in for the Colonies case because of the possibility that defense attorneys in that matter will make an attack on Postmus’ credibility, word of which might reach the jurors in the Colonies case, and impact their deliberations and ultimate verdict.
A sidelight on the California Charter Academy prosecution is the consideration that two years after the indictment of Cox and Honeycutt, Cox, in league with several others, replicated what he had carried off with the California Charter Academy, albeit not on as large of a scale.
In 2009, the Postmus Political Machine was in its last throes, its leader having been exposed as a drug addict, a revelation which resulted in his February 2009 resignation as county assessor. But those who had manned that machine were yet angling for money, even as political power was slipping from their grasp.
Cox, working as a quiet adviser functioning from the shadows, put together another charter proposal, this time selling the idea to the Adelanto School District. Participating in the free-for-all were Cox; Postmus; Postmus’ one-time chief of staff, Brad Mitzelfelt, who had succeeded him and at that point remained as First District supervisor; Dino DeFazio, a friend of Postmus and the owner of D & D Real Estate and other real estate businesses, including Tri-Land, Inc, in which he was a partner with Postmus; Jessie Flores, a former field representative for Postmus and a then-field representative for Mitzelfelt; Adam Aleman, who was formerly one of Postmus’s field representatives and later one of Postmus’s assistant assessors, occupying the third highest ranking position in that office despite his relative youth, 23 years, and lack of experience, until he was arrested in 2008 and then convicted by a plea admission in 2009, the circumstances of which precipitated Postmus’ subsequent arrest, removal from office and conviction; Hesperia Unified School District Trustee Anthony Riley, a Postmus political ally; Sentry Home Loans owner and Boys and Girls Club President Helene Harris and her husband Hendon Harris; Mitchel E. Pullman, a principal in Arrowhead Properties, IV, LLC; and Peggy Baker, Charles Steven Cox’s sister-in-law.
After Cox prepared the articles of incorporation, the Adelanto Charter Academy was chartered by the Adelanto School District on August 19, 2009. Functioning on a model not very different from that used by the California Charter Academy but on a less grand scale, Cox, Postmus, Mitzelfelt, DeFazio, Flores, Aleman, the Harrises, Pullman and Baker utilized the position of trust they had been vouchsafed to funnel money to themselves or the companies they controlled. In the roughly 15 months the academy was running without any oversight, they managed to loot the operation of more than $2 million that should otherwise have gone toward the education of students but instead was diverted to activities, purchases and disbursements having no conceivable academic application, such as the provision of limousines to the participants by Flores, the owner of Diamond Limousine. The Adelanto Charter Academy contracted with Professional Charter Management, Inc. to have the latter perform administrative services in return for 15 percent of all Adelanto Charter Academy revenues.
According to the California Secretary of State, Professional Charter Management, Inc. was a corporation with Jessie Flores as its chief executive officer and Dino DeFazio in the capacities of chief financial officer and secretary and Kari Murdock as agent for service of process. Kari Murdock is the the niece of Charles Steven Cox.
In December 2010, Jessie Flores filed, under penalty of perjury, a certificate of dissolution for Professional Charter Management, Inc. Records, however, show that Professional Charter Management, Inc. continued to receive payments from the Adelanto Charter Academy after that dissolution.
According to records obtained by the Sentinel, the Adelanto Charter Academy contracted with Educational Development, Inc. to perform administrative services in return for 5 percent of all Adelanto Charter Academy income from September 1, 2009 until June 30, 2014. It is not clear whether or how the administrative activities carried out by Educational Development, Inc. either meshed, or conflicted, with the administrative services provided by Professional Charter Management, Inc.
In November 2010, an audit cataloging significant shortcomings in the school’s operations was released, showing the academy had diverted some $2.2 million from educational purposes to the coterie of Postmus’ one-time political hangers-on. On May 17, 2011, the Adelanto School District revoked the charter it had granted to the Adelanto Charter Academy. The Adelanto Charter Academy immediately appealed the decision to the San Bernardino County Superintendent of Schools, who upheld the Adelanto School District’s decision on August 1, 2011. The Adelanto Charter Academy appealed that decision to the California Department of Education and continued to operate until notified on April 17, 2012, that “your administrative remedies are exhausted” and “any further appeal of revocation must be sought in a court of local jurisdiction.”
Recognizing that moving the matter into such a forum might well lead to further indictments, those behind the operation threw in the towel, having diverted somewhere in the neighborhood of $3.1 million to their own pockets and bank accounts.
The brazenness with which those involved acted is further illustrated by Honeycutt’s seemingly nonchalant behavior in the aftermath of the indictment, as well.
In 2012, a half decade after his indictment but with the case remaining in interminable limbo, Honeycutt sought to again exploit the loopholes in California’s charter school regulations to recreate what had been the most lucrative run of his life. Changing the vowel in his first name from a to e, and adopting his mother’s maiden name, Viera, Honeycutt founded Innovative Academies, billing it as “a learning network platform for private schools in the USA to globalize and connect to students throughout the world.”
Under the guise of “Ted Viera,” and assuming the modest titles of manager and then director of field operations, Honeycutt did not hesitate to think big and go beyond the confines of California to cash in.
“We are actively seeking key ‘Sister School’ partnerships globally with schools, tutoring centers, student recruitment firms, and other education organizations,” he wrote in making his pitch.
The company had 17 employees and was actively pursuing partnerships with schools in mainland China and Taiwan, arranging to accredit students for classes taken in venues outside of the country where the academic institution they were attending was located.
The company offered, Vierra told his prospective clients, specialized academic services such as a “dual diploma program, globalization, education management, and English learning.”
Students signing up with Innovative Academies could access the institution’s “Learning Network Platform,” its website claimed, and through it students could earn “a second high school diploma from an elite private school in the United States.”
The company’s website, InnovativeAcadamies.org, is no longer functional. –Mark Gutglueck