Former Obama Administration Adviser Pleads Guilty in $218,000 Theft Scheme

Seth Andrew, 42, pleaded guilty to charges that he had devised a scheme to steal from a network of charter schools he founded. He faces up to 20 years in prison.,

Seth Andrew, 42, pleaded guilty to charges that he had devised a scheme to steal from a network of charter schools he founded. He faces up to 20 years in prison.

A former senior adviser in the Obama administration pleaded guilty on Friday to charges that he had orchestrated a scheme to steal more than $200,000 from a network of charter schools that he founded, prosecutors said.

The former adviser, Seth Andrew, 42, pleaded guilty to one count of wire fraud and will face up to 20 years in prison when he is sentenced on April 14, prosecutors said. He has also agreed to pay restitution to the charter schools he founded, Democracy Prep Public Schools, prosecutors said.

Mr. Andrew was charged last April with stealing $218,000 from the network, which teaches mostly low-income students of color in New York and other states. Prosecutors said last year that he had used the money to get a lower interest rate on a mortgage for a $2 million apartment in Manhattan.

“Seth Andrew, a former White House adviser, admitted today to devising a scheme to steal from the very same schools he helped create,” Damian Williams, the U.S. attorney for the Southern District of New York, said in a statement on Friday. “Andrew now faces time in federal prison for abusing his position and robbing those he promised to help.”

Mr. Andrew’s lawyers, Tim Doherty and Edward Kim, said that their client had, for more than two decades, “worked tirelessly to expand educational, democratic and technological opportunity to disenfranchised communities around the world.”

“Seth’s life has always been motivated by a civic mission and he deeply regrets his past mistakes,” Mr. Doherty and Mr. Kim said in an email. “He has, with courage, accepted responsibility for them. With the help and support of his family and loved ones, Seth looks forward to deepening his commitment to service and innovation in the next chapter of his life.”

Mr. Andrew had been a young and ambitious educator when he founded Democracy Prep in 2005.

He had been inspired, he said, by the education system he had experienced as a teacher in South Korea. Democracy Prep opened its first school in Harlem in 2006 and has expanded since then. It operates 24 schools and a program in New York, New Jersey, Louisiana, Nevada and Texas, educating 7,100 students, according to its website.

Propelled by the network’s success, Mr. Andrew went to work for the U.S. Department of Education in 2013 and later became a senior adviser in the Office of Educational Technology at the White House under President Barack Obama. In the administration, Mr. Andrew worked on educational programs focused on science, technology, engineering and mathematics.

In November 2016, he left the administration, and by the following January he had severed ties with the charter network. But he still had access to school bank accounts, prosecutors said.

Under an agreement with the New York State Board of Regents, the charter network had been required to “maintain an ‘escrow account’ that may be accessed only if the school dissolves,” prosecutors said. Mr. Andrew was a signatory to those accounts and had access to them, they said. The money in the accounts totaled a little more than $218,000.

On March 28, 2019, Mr. Andrew walked into a bank and closed two escrow accounts and walked out with two checks totaling more than $142,000, prosecutors said.

Later that day, he took one of those checks to open a new account at a different bank, prosecutors said. He told the second bank that he was a “key executive with control of” the charter network, which was not true, prosecutors said. Days later, he used an A.T.M. to deposit the second check into that account, prosecutors said.

The bank had offered customers a reduced interest rate on their mortgage “for every $250,000 on deposit, up to a total of $1 million,” prosecutors said. Using the $142,000 from the charter schools enabled Mr. Andrew to receive a reduction in the interest rate of 0.5 percentage points, they said.

In August 2019, Mr. Andrew and his wife, who was not charged, bought a Manhattan apartment for about $2.4 million, prosecutors said. To make the purchase, they had obtained a mortgage of about $1.8 million, taking full advantage of the promotion the bank had offered for favorable interest rates, prosecutors said.

In a statement on Friday, Democracy Prep said: “We are glad that this sad chapter is over and thankful to the authorities for their hard work on this case.”

In a letter to parents last year, Natasha Trivers, the chief executive of Democracy Prep Public Schools, said that although the schools had not been materially affected by the crime Mr. Andrew had been accused of, it was a stark departure from Democracy Prep’s values.

“His alleged actions are a profound betrayal of all that we stand for and to you and your children, the scholars and families that we serve,” Ms. Trivers wrote.

Azi Paybarah contributed reporting.

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