A federal grand jury in Pittsburgh has indicted the founder and former CEO of the Pennsylvania Cyber Charter School.
Nicholas Trombetta, 58, is accused of diverting more than $8 million in taxpayer money from Pennsylvania school districts through PA Cyber and several other organizations and into his own hands.
The 11-count indictment, unsealed on Friday, includes charges of mail fraud, theft or bribery concerning a program receiving federal funds, tax conspiracy, and filing false tax returns.
PA Cyber receives funding from the school districts in which its students reside and from the Pennsylvania and United States Departments of Education.
In a news conference Friday, U.S. Attorney David Hickton explained how Trombetta allegedly used the nonprofit National Network of Digital Schools (NNDS) to funnel money to Avanti Management Group, a for-profit company owned by four straw partners.
“Trombetta made all of (Avanti’s) decisions," Hickton said. "You may liken Avanti to Trombetta’s savings account or his intended retirement account."
NNDS was founded in 2006 with the purpose of providing curriculum and online course materials to cyber schools. Trombetta founded Avanti in 2008 as an education management consulting firm.
“Keeping in mind that PA Cyber is a public entity funded by local, state, and federal revenues, Mr. Trombetta controlled and diverted corporate funds to purchase and manage real estate, airplanes, and to funnel money to himself and to others,” said Akeia Conner, special agent in charge of the IRS-Criminal Investigation in the Philadelphia Field Office.
These purchases include two houses, a $933,000 condominium in Florida and a $300,000 personal aircraft, investigators allege.
The indictment also alleges that Trombetta had employees from PA Cyber and NNDS perform work for at least two out of state companies: Ohio-based Buckeye Online School for Success (BOSS) and New Mexico-based Wingspan. Payments for this work were deposited into the account of an entity known as One 2 One, according to authorities.
“If Avanti served as Trombetta’s retirement account, the entity known as One 2 One, founded in 2006 by Nick Trombetta and his sister Elaine, operated as Trombetta’s checking account for his day-to-day expenses,” Hickton said.
Trombetta is also accused of falsifying tax returns from 2007 to 2011. He allegedly concealed his true income by shifting more than $8 million to the tax returns of colleagues and family members, including his four straw partners and his sister Elaine. Trombetta surrendered to authorities Thursday night.
Trombetta’s accountant, Neal Prence, was charged with one count of tax conspiracy related to these activities.
“As alleged in the indictment, Mr. Trombetta and Mr. Prence knowingly and willfully abused their positions of trust for personal gain and did so at the expense of students. That is unacceptable,” said Steve Anderson, special agent in charge of the U.S. Department of Education Office of Inspector General’s Mid-Atlantic Regional Office.
Trombetta and Prence will be arraigned on August 28. If convicted, Trombetta could face up to 100 years in prison and a $3.2 million fine. Prence could face up to five years in prison and a $250,000 fine.
More than 11,000 K-through-12 students are currently enrolled in PA Cyber.