“Nearly $1 million from charters went to firms named in FBI probe”

Chicago Sun-Times on August 18, 2014 released the following:

By: DAN MIHALOPOULOS

“Contractors facing scrutiny in an ongoing federal investigation of Concept Schools have been paid nearly $1 million over the past three years for work at three Chicago Public Schools-funded campuses run by the Des Plaines-based charter operator, records show.

In June, the FBI raided 19 Concept Schools locations in Illinois, Indiana and Ohio, including the group’s Des Plaines headquarters. Search warrants showed they were seeking records concerning Concept’s use of the federal “E-rate” program and companies hired under that program, which helps pay for high-tech upgrades.

The agents also were looking for records regarding top Concept officials, the Chicago Sun-Times reported last month.

No one has been charged. The FBI has said only that the investigation is a “white-collar criminal matter.”

The CPS-funded work done by the contractors named in the FBI search warrants has ranged from selling Concept computers and uniform polo shirts to organizing professional-development seminars.

Concept operates three schools in Chicago. All rely almost entirely on public funding.

Concept’s Chicago Math and Science Academy in Rogers Park — one of the schools the FBI raided June 4 — was approved by CPS officials 10 years ago.

The charter operator’s Horizon Science Academy McKinley Park at 2845 W. Pershing Rd. and Horizon Science Academy Belmont at 5035 W. North Ave. have been open for a year after being initially rejected by CPS because of questions regarding student performance at CMSA.

Concept appealed to the Illinois State Charter School Commission, which overrode CPS, ordering them to finance the two schools with tax dollars.

The three Chicago Concept schools have paid more than $283,000 since the start of 2011 to Advanced Solutions in Education of Schaumburg, records show. The company and its founder and former chief executive, Ozgur Balsoy, were named in FBI search warrants served at

Concept’s headquarters and at its schools in Rogers Park and Peoria.

ASE was a consultant for Concept on its applications for federal E-rate funding. The company also was hired to do other work for Concept, including organizing seminars for school administrators and teachers.

Balsoy previously was an administrator at a Concept school in Columbus, Ohio. He formed ASE in Ohio in 2009, expanding to Illinois in 2011. ASE listed him as “sole owner” until 2012. He’s now listed as vice president.

ASE’s president, Erdal Aycicek, formerly served was treasurer of the Niagara Foundation, based in downtown Chicago. Like Concept and many of its contractors, the foundation was founded and continues to be led by Turkish immigrants, many of them with ties to the global Gulenist movement led by Muslim cleric Fethullah Gulen, who now lives in Pennsylvania.

Two other ASE executives — Huseyin Alper Akyurek and Esat Albulut — also previously worked for Concept as administrators at schools in Ohio.

ASE executives did not return calls seeking comment.

Another company listed in the search warrants, Core Group Inc. of Mount Prospect, has been a major contractor for Concept’s schools in Chicago. The three schools have paid more than $550,000 to two Core subsidiaries for goods including computers and polo shirts with school logos on them.

Core’s president, Ertugrul Gurbuz, who was named in the search warrants, also founded Quality Builders of Midwest Inc., a Concept construction contractor whose work included building a gym addition at CMSA at 7212 N. Clark St.

Gurbuz referred questions to attorney Patrick Cotter, who said Friday the company is “in the process of complying” with a grand-jury subpoena it got as part of the FBI probe. Cotter declined to say what Core was asked to turn over.

A Core subsidiary was cited in a 2012 audit, done for Fulton County, Georgia, school officials, that questioned why a Gulen-affiliated charter school in that state bought polo shirts from Core Design & Production when “there were cheaper prices to be obtained.” The principal of the Georgia school told auditors he looked online for a polo shirt vendor and found Core — though the auditors said they found no mention of polo shirts on the company’s website.

Core was started in 2005 by Guclu Koseli, who was a founding board member for Concept in Illinois.

Another contractor named in the FBI search warrants — Signature Maker Inc. of Hoffman Estates — has been paid more than $112,000 by Concept’s Chicago schools, Concept records show.

Signature Maker owner Ergun Koyuncu, who was also named in the search warrants, would not comment.

Concept’s vice president, Salim Ucan, also declined to comment, citing the ongoing FBI investigation.

The federal E-rate program requires competitive bidding in hiring contractors in an effort to ensure taxpayer dollars are spent wisely. There’s no such requirement, though, imposed on charter schools by either CPS or the state charter commission, even though the privately run schools depend almost entirely on tax dollars and CPS requires competitive bidding for its own schools.

Nor do they require charter operators to report to officials who their vendors are or how much they are paid.

None of the deals that Concept’s Chicago schools made with Core or ASE was awarded via competitive bidding.”

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Douglas McNabb – McNabb Associates, P.C.’s
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The author of this blog is Douglas C. McNabb. Please feel free to contact him directly at mcnabb@mcnabbassociates.com or at one of the offices listed above.

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