Damian Williams, the United States Attorney for the Southern District of New York, has informed the sentence of SETH ANDREW was sentenced to 366 consecutive days in prison in connection with the operation of a plan to fraud Democracy Prep Public Schools (“DPPS”), the charter school network founded by him in the year 2000, of over $218,000. United States District Judge John P. Cronan issued the sentence today.
U.S. Attorney Damian Williams declared: “Seth Andrew was sentenced today for stealing from the people who had once trusted him. Andrew was convicted of this crime to punish charter schools for refusing his plea to be their principal. Fortunately, the victim of Andrew’s crime overcame it, and the important action continues. Today’s sentence sends a message that those who commit scams and take advantage of others will be held accountable for their actions.”
In the past, according to documents filed in this case:
As of 2005, SETH ANDREW helped to create Democracy Prep Public Schools, a group of public charter schools located on New York City streets. In the spring of 2013, ANDREW left DPPS and was offered a position at the United States Department of Education and later was appointed an adviser to the Office of Educational Technology at the White House. In November of 2016, ANDREW left his role at the White House. In January of 2017, ANDREW officially severed his relationship with DPPS.
According to New York state regulations, the charter schools of DPPS’s New York-based school have to keep an “escrow account” that may be accessed only if the school ceases to exist. Three escrow accounts for three DPPS New York City-based schools were set up through ANDREW and other DPPS employees at Bank 1 (“Bank-1”) in 2009, 2011 and 2013 in 2011, 2011, 2013, in 2013, respectively. (“Escrow Account-1,”” “Escrow Account-2,” and “Escrow Account-3″, collectively they are known as”Escrow Accounts”) “Escrow Accounts”). ANDREW had signed the documents and could access the funds held in these Escrow Accounts. However, according to the charter agreement, the funds in Escrow accounts were held in the event that the schools were to dissolve and could not be transferred by ANDREW or anyone else without authorization.
In the early months of 2019, unhappy with the decisions made by DPPS and his failure to exert control over the company, ANDREW sought to rejoin DPPS. On March 10, 2019, ANDREW sent an email to various members of DPPS as well as its Chairman, requesting the opportunity to be reinstated as “President” in exchange for “$25k/month as [a] salaried employee and basic frugal expenses,” as well as an additional $250,000 if he meets the certain deadlines ANDREW explained. ANDREW also stated that “every day that passes by, this scenario becomes ever more challenging and pulling out of a tidal wave gets harder. In the next 24 hours, my monthly salary estimate will increase daily since a contract legally binds us.”
DPPS did not accept ANDREW’s proposal. The next day, March 28, March 28 in 2019, ANDREW was at a branch of Bank-1 within New York City and closed both Escrow Account 1 and Escrow Account 2. Bank-1 gave ANDREW the bank check for $71,881.23 payable to “Democracy Prep Charter School” (“Check-1”) as well as another bank check of $70,642.98 due at “Democracy Prep Harlem Charter” (“Check-2”).
On the same day ANDREW shut down Escrow Account 1 along with Escrow Account 2, ANDREW entered the Manhattan branch of an alternative Bank that was insured by FDIC (“Bank-2”), in which case he established an account at a commercial bank under the name of “Democracy Prep Charter School” (“Fraud Account 1”). To open the account, ANDREW falsely claimed to an employee of Bank-2 that the account was owned by a “Key Executive with Control of” DPPS and backed up this falsehood by sending emails to the Bank-2 employee via the DPPS mail account. ANDREW then transferred Check-1 to Fraud Account-1. Five days later, on April 2, 2019, ANDREW used an ATM in Baltimore, Maryland, to deposit Check-2 into Fraud Account-1.
On October 17, 2019, ANDREW closed out Escrow Account 3 and received an unpaid Check (“Check-3”) by “Democracy Prep Endurance” in the amount of $75,481.10. On October 21, 2019, ANDREW deposited Check-3 into an account he created at a different bank (“Fraud Account 2”).
A month after, ANDREW obtained a check from Bank-2 for $144,473.29, which was the stolen funds from Escrow Account 1 and Account 2. ANDREW then deposited the money into Fraud Account 2, combining all the stolen funds. Then, the account was valued at around $219,954. A few days later, ANDREW rolled the stolen funds from Fraud Account-2 onto a deposit certificate. The certificate of deposit was due to mature on May 20 2020, earning and paying $2,083.52 of interest. ANDREW later transferred money from the deposit certificate and also the money stolen from Escrow Accounts -to an account by Democracy Builders, another nonprofit over which ANDREW was then in control, thus disguising the money’s connection with DPPS and then transferring the money that was stolen into an account that was under his full control. The following morning, ANDREW made a payment of $225,000, which was believed to consist mostly of money from the Escrow Accounts, for a down payment for major property acquisition for Democracy Builders.
In all, DPPS lost $218,005 due to Andrew’s conduct.
* * *
Andrew, 43, had previously admitted guilt to one charge of fraud by wire on January 14 2022, in front of Judge Cronian. Alongside this sentence of imprisonment, ANDREW was sentenced to three years of supervised release. Before today’s sentencing, Andrew paid $218,005 restitution to DPPS and $22,537 in forfeiture.
He thanked Mr Williams and praised the outstanding investigative work done by the FBI.
The case is being taken care of by the office’s Complex Frauds and Cybercrime Unit. The Assistant United States Attorney Ryan B. Finkel is responsible for the prosecution.
