If it looks like a duck, sounds like a duck, and walks like a duck.. then most likely it's a duck. An issue created by the just show me the money crowd is the apparent ponzi or pyramid scheme being employed by specific charter groups. "A Ponzi scheme is a form of fraud in which a purported businessman lures investors and pays profits to earlier investors using funds obtained from newer investors... The basic premise of a Ponzi scheme is to "rob Peter to pay Paul". A pyramid scheme is a form of fraud similar in some ways to a Ponzi scheme, relying as it does on a mistaken belief in a nonexistent financial reality, including the hope of an extremely high rate of return." Both Ponzi schemes and pyramid schemes are illegal, but there are differences - * In a Ponzi, the schemer acts as a "hub" for the victims, interacting with all of them directly. In a pyramid scheme, those who recruit additional participants benefit directly. (In fact, failure to recruit typically means no investment return.)... Pyramid schemes explicitly or implicitly assert that new money will be the source of payout (bonuses) for the initial investments. A 'pyramid scheme' typically collapses because it requires exponential increases in participants to sustain it. Illegal pyramids generate revenue by continually recruiting new members (students). "The promoters may offer merchandise or services for sale - or may not - but the only significant revenues come from recruitment. Though a pyramid-style compensation plan is not illegal, it is illegal to run a business in which recruiting new people generates funds.
Many traditional public school advocates believe that corporate charter schools operate illegal pyramid schemes because all participants, knowingly or unknowingly, can be identified in the charter pyramid operation. One example: EPIC Virtual Charter Schools...
Promoters - Owners (who call themselves superintendents) nationwide and a "registered agent" for Community Strategies Inc., a profitable non-profit. The "promoters" at the top of the pyramid receive $millions of Oklahoma tax dollars, while those participants underneath receive the trickle-down.
Investors / Victims - "Oklahoma tax-paying citizens" who believe they are investing in an education service. (The tax dollars invested in the charter schools comes from our traditional public schools.)
Recruiters - "Teachers and other EPIC employees" who must continually recruit new students in order to profit. Teachers walk the hallways of traditional public schools recruiting students for enrollment. If an EPIC teacher can entice 100 students to enroll in the charter, then the teacher will have 100 students and can potentially earn a six-figure salary. In addition, if the teacher "recruits" only good students, they can potentially earn $thousands in bonus money.
Services provided to investors - "Public Education" which is provided to students. Oklahoma tax-payers will "invest" over $50 million in EPIC this coming year as this is its "state aid" package. Some of the $50 million will go to EPIC's superintendent, some of it will be paid to the registered agent, and very little of it will go to teachers and other employees. Some of the $50 million will also be provided to students for such "educational items" as private dance or voice lessons, private golf or tennis lessons, and approved educational field trips.
Enablers - "Lawmakers and other elected state officials who introduce and pass favorable 'Pyramid' legislation or are willfully blind. Those elected officials accept monetary gifts (campaign contributions) from the promoters in order to support the favorable legislation. This is the most critical aspect for "legalizing" the pyramid scheme - legislative funding and the acquisition of public funds. As an example, our "elected" state superintendent of schools has been the recipient of over $50,000 in campaign funds in order to protect and promote the charter school pyramid, and can be seen re-paying the contribution on the EPIC website.
The only difference in participants of a private Ponzi or Pyramid scheme and a public one, is that in a public Ponzi scheme - the Enabler is added to the mix. When tax-payer dollars are used for funding the pyramid (instead of personal monies and investments) - the pyramid must have the buy-in, literally, of publically elected officials. To acquire the "buy-in" of specific officials which can be bought - the promoters (registered agents and superintendents) must literally purchase them by providing $thousands for state campaigns. In this way, every single participant (students, parents, teachers, administrators, corporate managers, registered agents, superintendents) gets a "piece of the pie". Everyone makes money except the Oklahoma tax-payer victims.
Epic claims the provided services to the Oklahoma taxpayer is the public education that students receive. It also claims the purchased product for our tax-paying citizens, whether they have children in school or not, is a well-educated public school student. Oklahoma taxpayers have a vested interest in the products, as measured by "student success", they are purchasing from our public schools - both traditional and charter. A look at the accepted measuring sticks for purchased products reveals that:
* EPIC Charter High School had a 25% graduation rate for the 2015-2016 school year. This cohort graduation rate only led two other charters, Harper at 15% and OK Virtual at 22%. Of the 500+ public high schools in Oklahoma, EPIC was third from bottom. (Most traditional public schools had graduation rates ranging from 70% to 100%).
* EPIC Charter High School received 0 points for its College Entrance Exam category, which included 65% for performance and 19% for participation (2015-2016). One would think that the ACT participation rate would be higher for EPIC since a higher education institution sponsors the school.
* EPIC Charter School reported 100% student attendance during the 2015-2016 school year. This statistic alone is amazing, since EPIC has over 8,000 students enrolled. What makes it even more eye-popping is that only 25% of its cohort (grades 9 through 12) students graduated and only 19% of its eligible students participated in College Entrance Exams (even though sponsored by Rose State College).
These three products or services are examples of what Oklahoma taxpayers have received for their investment into the virtual pyramid scheme...
The promoters of the EPIC pyramid scheme have thus far avoided legal prosecution because they say their pyramid involves the sale of merchandise or services, which makes it "all perfectly legal". What makes a pyramid scheme illegal is when recruiting new participants (students and teachers) generates the revenue. I'm no legal expert, so I have some questions: Is it not "recruiting" when EPIC teachers are payed bonuses for "walking the halls" of traditional public schools in order to entice students to enroll in EPIC. Is is not "recruiting" when EPIC students are paid bonuses to "refer" traditional public school students? Is it not "recruiting" to actually deposit money into an EPIC student's "education fund" for buying private music or sports lessons? If the answer to each of these questions is "yes", then many Oklahomans would like to see the responsible parties prosecuted. If the answer is "no recruiting has occurred", then the state of Oklahoma will soon be broke. Just like when the "corporate welfare schemes" of the 1920's and '30's almost ruined Oklahoma (generous federal subsidies were provided to corporate farmers from the east, which caused the Dust Bowl), when the last dollar is squeezed out of our tax-payers, only then will the corporate school reformers flee.
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