Court Documents Allege Concept Schools Defrauded Federal Grant Program

Concept Schools is a Chicago-based for-profit company which operates about 32 charter schools around the country, including the three Math & Science Academies located in Indianapolis. In June 2014, federal investigators raided several charter schools operated by Concept Schools, including the Math & Science Academy's north side location. Newly-released federal court documents obtained by the Chicago Sun-Times accuses Concept Schools of defrauding the federal government out of $5 million by failing to abide by competitive bidding rules for its E-rate technology grants. The search warrant applications accused Concept Schools of funneling more than $5 million of the grant money to insiders away from the charter schools it operates.

The alleged wrongdoing dates all the way back to 2007 according to the court documents. The E-rate technology grants allow qualified schools to obtain discounted telecommunications, Internet and internal network services. The grants in question are funded by universal service fees all telecommunications users pay for their telephone service. The federal government has conducted a number of investigations across the country in recent years involving fraud with the grant program. In some cases, the money is misused to buy computer equipment.

According to the search warrant applications, Concept Schools President Sedat Duman signed all of the schools' E-rate certifications of compliance for the grant program. Stephen Draviam, an Ohio computer consultant, told federal investigators he was picked to do work under the program without ever submitting any written bids. Concept Schools' Chief Information Officer Huseyin "Shane" Ulker allegedly established an invoicing scheme with Draviam's consulting company in which funds were passed through to three firms tied to Ulker, who allegedly made wire transfers from one of the firm's accounts to a bank in Turkey. The Bank of Asya in Turkey was founded by followers of Muslim cleric Fethullah Gulen, who now lives in Pennsylvania but is wanted in Turkey on charges of trying to overthrow the government. Concept Schools is controlled by followers of the so-called Gulen Movement.

Concept Schools cut its ties to Ulker in 2009, but it continued to award E-rate contracts with other firms federal investigators describe as "related entities." Core Group, which is owned by Ertugral Erbuz, received the bulk of work Concept Schools awarded using E-rate funds. Witnesses told federal investigators Concept Schools wanted to use insiders even though they charged more for their work than other companies.

The Chicago Sun-Times raises questions about Illinois House Speaker Mike Madigan's ties to Concept Schools. The Chicago-based Niagara Foundation, which has close ties to Concept Schools, has hosted Madigan and other Illinois lawmakers on junkets to Turkey. This is the same group that has taken many Indiana politicians on junkets to Turkey. Madigan has visited Chicago area charter schools operated by Concept Schools and his son, Andrew, does business with the schools through Mesirow Insurance, his employer. No formal charges have been filed yet in the ongoing investigation.