Houston charter school leaders accused of embezzling $2.6 million meant for kids

920x920Five years ago, congratulatory letters poured in from politicians after the Varnett charter school in Houston won a federal “blue ribbon” award for its academic record. It was a standout among schools serving mostly poor, minority children.

Marian Annette Cluff was the school’s founding and longtime superintendent. Her husband, Alsie Cluff Jr., was the facilities and operations manager.

The once-heralded couple now faces potential prison sentences and fines after a 19-count indictment, announced Thursday by federal prosecutors, accused them of operating secret bank accounts and pocketing more than $1 million from parents for field trips and school fundraisers. The Cluffs are accused of embezzling more than $2.6 million intended to benefit the impoverished students they enrolled.

The couple and their son and daughter earned more than $626,000 combined from Varnett in the 2013-2014 school year, according to state records, and the Cluffs own a south Houston home appraised at $1.7 million.

“Those in positions of public trust must and will be held to higher standards,” FBI special agent-in-charge Perrye K. Turner said in a statement.

The Cluffs, who resigned from The Varnett Public School in August 2014, are expected to surrender and appear this week before U.S. Magistrate Judge Nancy Johnson, the statement said.

Dan Cogdell, a Houston attorney representing the Cluffs, said the couple was aware of the federal investigation and has repaid a “significant” amount of money to the school.

“There were certainly errors in judgment made,” Cogdell said. “They’ve acknowledged that, but at the end of the day they’re going to do everything they can to make the situation correct.”

According to a 2014 report Varnett submitted to the Texas Education Agency, $1.5 million had been recovered from the former superintendent as of Jan. 8. It remained in a trust account under an agreement with the U.S. Department of Justice.

Varnett’s three campuses, which served about 1,600 elementary-aged children last year, are continuing to operate and receive taxpayer funds. The TEA proposed revoking Varnett’s accreditation in September 2013 after an agency investigation found millions of dollars in questionable spending, but the administrative process is ongoing, the agency said.

Federal authorities allege that the Cluffs schemed to personally profit, opening four “off-books accounts” kept secret from their office manager, external accountant and tax preparer, according to the statement from the U.S. Attorney’s Office. The indictment, returned late Wednesday, covered actions since 2007.

The couple hid money from vendors, insurance companies and federal agencies, authorities alleged, and evaded nearly $852,000 in federal income taxes.

In addition, authorities said, Annette Cluff deposited more than $115,000 into her personal bank account thanks largely to her orchestrating false invoices from the school’s maintenance and landscaping contractor. She then ordered the contractor to lie to the FBI and say the money was for a loan she repaid in cash, authorities said.

Facing up to 20 years

The Cluffs are charged with conspiracy, mail fraud, tax evasion and obstruction of justice. If convicted of mail fraud or obstruction of justice, each faces up to 20 years in person. The other charges carry a five-year federal prison sentence. The couple could face a $250,000 fine.

Varnett has operated as a state-funded charter school since 1998. The Cluffs started it as a private school in 1984 – inspired while seeking a good preschool for their son.

In 2007, Cluff was honored by the Texas House with a resolution sponsored by Rep. Harold Dutton, D-Houston, after she won the Audrey Lawson Impact Award for her service. She was featured on the cover of “Who’s Who in Black Houston” in 2011.

The Houston Chronicle reported in 2012 that the Cluffs had prospered while putting their relatives on the payroll and starting companies to run buses for and rent facilities to the school. Varnett’s 2011 audit said the school paid the two companies $2 million in one year.

Texas Education Agency investigation of Varnett

An investigation by the Texas Education Agency, released in August 2013, found that school funds were used to reimburse the Cluffs for numerous questionable charges.

They included more than $132,000 for hotels, cruises and travel packages; nearly $44,000 at restaurants; and more than $3,000 on tickets for Broadway, Las Vegas and Disney on Ice shows, the report said.

Cluff reported to the Texas Education Agency that her salary as superintendent and any bonuses totaled $264,600 for the 2013-14 school year. The state records listed Alsie Cluff Jr.’s salary as $182,172; their son earned $104,375 as assistant operations manager and their daughter earned $74,941 as a director.

Varnett’s new superintendent, Margaret Stroud, thanked parents for trusting the charter school with their children.

“We are disheartened to learn of the allegations; however, we are moving forward and will focus on the four principles of our core beliefs: high student achievement, safety, respect, and common decency,” she said in a statement.

“We are proud of our students’ and employees’ accomplishments over the past school year, and we are excited to continue our successes in the 2015-2016 school year.”

Stroud retired from the Houston Independent School District in 2005.

Exempt from some rules

Charter schools are funded by taxpayers, but unlike traditional school districts, they are not overseen by publicly elected boards and are exempt from various state regulations.

State lawmakers have tightened rules for charter schools over the years as financial scandals have surfaced, and in 2013 passed legislation intended to increase accountability.

“We are saddened by this latest allegation of financial misconduct by the charter’s founding leader and her family,” David Dunn, executive director of the Texas Charter Schools Association said in a statement Thursday.

“If true, these indicted school officials abused their position, violated the trust of the students and families depending on them for quality education, and harmed the reputation of all other public charter schools.”

Indictment against the Cluffs

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