Comptroller Di Napoli and Harry Wilson: where do they stand on fiscal oversight of charter schools and DOE?

New York State Comptroller Thomas Di Napoli has done several highly revealing audits of charter schools, showing their flagrant misuse of public funds. One of his audits revealed that KIPP Academy charter school in the Bronx had spent nearly $68,000 on "staff development" retreats in the Bahamas and the Dominican Republic. His office also released audits of the Western New York Maritime Charter School, showing that big-screen televisions, computer equipment and security devices purchased with public funds were delivered to the homes of school employees; and the Enterprise Charter School, which had a two-year, $60,000 consulting contract with its former CEO.

In 2007, DiNapoli released an audit showing the NYC Department of Education’s lax oversight of charter schools. According to the NY Post,

“The audit, which focused on the 2004-05 school year, found that the DOE doesn't ensure that charter schools provide it with required performance data, and that it lacks a formal process for reviewing the information. It also noted that the DOE doesn't generally require schools that aren't making adequate progress to take corrective measures, although meeting academic targets is essential to charter renewal.”

Di Napoli also did an absolutely scathing audit of the NYC DOE’s use of no-bid contracts, amounting to 291 no-bid contracts in three years. The audit revealed how “vendors often won the no-bid contracts without any proof that avoiding the regular process would save the city money. In some cases, school officials actually destroyed records about the contracting process…” (See this GothamSchools story.)

The charter lobby sued Di Napoli, to block all further audits in a lawsuit financed by the New York Charter Schools Association and the NYC Center for Charter School Excellence, on whose board Joel Klein sits. The Court of Appeals decided that he did not have the authority to audit charter schools. (The home page of DOE’s charter school office still features links to a press release by the charter school lobby, praising the court decision.)

In response, the recent state legislation that lifted the charter cap last spring specifically gave the State Comptroller authority to audit the use of public funds by charter schools – though the charter school lobby has said that will continue to try to block any more audits in court, despite the new law.

Yet this may not be necessary if the GOP candidate for Comptroller wins. His name is Harry Wilson, and he is a former hedge fund operator, who has accused di Napoli of launching “politically motivated” charter audits, and has pledged not to “harass” charter schools by auditing their use of public funds, no matter what the new law says.

Not surprisingly, Harry Wilson is the favored candidate of Mayor Bloomberg, as well as Bryan Lawrence, co-founder of Girls Prep charter, and Whitney Tilson of DFER fame, all of whom have contributed to his campaign. Here is Tilson’s endorsement of Wilson:

Harry is personally close to many in the charter school movement and was considering starting a charter school when he decided to serve in the Obama Administration instead….. DiNapoli engaged in a number of nuisance audits designed to harass charter schools in his early tenure as Comptroller. His attacks were so over the top, that the NY Charter Schools Assoc. sued him and the court agreed, finding that DiNapoli overstepped the bounds of his audit power …However, with the recent passage of legislation to race the charter school cap in the state, one of the provisions that was snuck in grants the Comptroller this same audit power over charter schools.

Want more? Harry Wilson is a close colleague of Steve Rattner, the Mayor’s personal financial adviser. Wilson served with Rattner on Obama’s auto task force, and is portrayed as the “hero” in Rattner’s new book about saving GM. In turn, Steve Rattner is the best friend of NY Times’ publisher, Arthur Sulzberger; and was one of the power brokers who convinced Bloomberg to run for a third term.

A couple of weeks ago, Bloomberg and Sulzberger were the two co-hosts of Rattner’s book party, which was attended by the financial and power elite of NYC, including the head of Goldman Sachs, JP Morgan, Joel Klein etc. This very public celebration of Rattner and his accomplishments occurred just as Rattner was pleading guilty to a “pay to play” kick-back scheme of bribing the former State Comptroller to grant Quadrangle, Rattner’s investment company, millions in state pension funds to invest in 2004 when Hevesi was Comptroller.

Rattner paid $1.1 million in finder fees to Henry “Hank” Morris, Hevesi’s former chief political consultant, and he also agreed that Quadrangle would help finance a B-movie made by the brother of the pension fund manager. Rattner first claimed he had nothing to do with this B-movie deal, but emails apparently reveal that he helped put it together. As a result, he has agreed to pay a fine of $5 million and accept a ban from the securities industry for at least five years. He could also face perjury charges for lying about his involvement in the bribery scheme.

Yet despite this, the mayor not only hosted his book party, but has pledged to keep Rattner on as his top financial adviser, helping to run Willett Advisors, the group set up to invest the mayor’s personal fortune. (The company is named after Thomas Willett, NYC’s first mayor.) As Bloomberg told reporters, “Steve Rattner's my friend, of course I'd keep him on. Why would you not? If he can do anything to help, I value his advice and he's a close friend of mine and you stick by your friends.” (More on the Bloomberg/Rattner connection at Gotham Gazette.)

Here is an excerpt of the NY Times’ endorsement of Wilson for Comptroller:

It is rare for someone of Mr. Wilson’s talents and expertise to compete for one of the most important and least glamorous jobs in state politics. Mr. Wilson went to Harvard Business School and worked for Goldman Sachs, the Blackstone Group and Silver Point Capital. Mr. DiNapoli tries to make that résumé sound tainted, but the investment and management skills exhibited with General Motors are just what are needed for New York’s financial and ethical blight.”

Unmentioned in Times’ endorsement, of course, is the fact that Wilson’s friend and former colleague, Steve Rattner, had bribed the previous holder of the office that Wilson is now campaigning to fill, and who surely participated in that “financial and ethical blight” which the editorial claimed to decry.

Meanwhile, Di Napoli has banned all “pay to play schemes” by prohibiting the pension fund from doing business with any investment adviser who has made a political contribution to the State Comptroller, and has appointed an independent Inspector General to safeguard all the comptroller’s investment decisions. And he has never been accused of financial corruption, even by the same three editorial boards that endorsed his opponent.

Not coincidentally, all three papers are owned by men personally close to Bloomberg, and all three papers also supported the elimination of term limits as well as the renewal of mayoral control.

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