Federal prosecutors charged former Obama White House adviser Seth Andrew on Tuesday, accusing him in a newly unsealed criminal complaint of stealing $218,005 from a charter school network that he founded.
“As alleged, Seth Andrew abused his position as a founder of a charter school network to steal from the very same schools he helped create,” Manhattan U.S. Attorney Audrey Strauss wrote in a statement. “Andrew is not only alleged to have stolen the schools’ money but also to have used the stolen funds to obtain a savings on a mortgage for a multimillion-dollar Manhattan apartment.”
In 2005, Andrew helped create the Harlem-based charter school network Democracy Prep, some eight years before he joined former President Barack Obama’s Department of Education in 2013. He rose to become a senior adviser in that agency from 2014 to 2016.
The alleged conspiracy post-dated that tenure: between March 2019 to May 2020.
Democracy Prep’s current CEO Natasha Trivers informed the network’s parents and alumni about Andrew’s arrest this morning in an email, calling his alleged actions “a profound betrayal of all that we stand for and to you and your children, the scholars and families that we serve.”
“To be clear, at no time did the alleged crimes pose any risk to our students, staff or operations in any way,” Trivers wrote in the email, which was obtained by Law&Crime.
Trivers told recipients that Democracy Prep instituted “a series of financial safeguards that led directly to the discovery of Seth’s unauthorized withdrawals,” after he tenure began in 2019.
“Upon learning of the unauthorized withdrawals, Democracy Prep alerted the appropriate authorities,” the email continues. “As the victim of this crime Democracy Prep has continued to assist the authorities as they investigate and prosecute this crime to the full extent of the law.”
The network’s finances remain strong, and at no time did any of the activity by Seth Andrew have any adverse effect on our scholars or the functioning of our schools. Our number one priority is to always ensure that our scholars have what they need to receive the highest quality education we can provide and to assist them to become responsible citizen scholars who will change the world. We are writing to let you know that we are steadfast in our mission for your children.
By 2017, Andrew was no longer affiliated with the White House and severed his ties to the network.
Prosecutors allege that this did not stop Andrew from falsely telling a bank employee that he was a “Key Executive with Control of” the network to open a fraudulent account and depositing $71,881.23 on behalf of that charter school network.
According to the complaint, surveillance footage showed him at the bank wearing his signature yellow hat, a symbol of his affiliation with the school and an accessory that prosecutors described as his “calling card.”
Prosecutors say that Andrew had been contemplating obtaining a mortgage from a second bank when he deposited two other checks in that account, and the bank had offered a promotion for customers to get favorable rates with every $250,000 on deposit, up to a total of $1 million.
“To take advantage of the interest rate deduction promotion Bank-2 requires that the funds a customer deposits, be funds owned by the customer or, in some instances, a business the customer owns, controls or is lawfully associated with,” the complaint states.
Prosecutors claim that Andrew supplemented his own deposits with $142,524 stolen from the schools to cross the million-dollar threshold and lock down the most favorable rate available, allowing him and his spouse to obtain a more than $1.7 million mortgage from that bank at an interest rate of 2.5-percent.
That allegation is at the heart of FBI Assistant Director William F. Sweeney Jr.’s statement on the case.
“Locking into the lowest interest rate when applying for a loan is certainly the objective of every home buyer, but when you don’t have the necessary funds to put down, and you steal the money from your former employer to make up the difference, saving money in interest is likely to be the least of your concerns,” Sweeney wrote. “We allege today that Andrew did just that, and since the employer he stole from was a charter school organization, the money he took belonged to an institution serving school-aged children. Today Andrew himself is learning one of life’s most basic lessons – what doesn’t belong to you is not yours for the taking.”
Andrew, 42, has been charged with wire fraud, money laundering and making a false statement to a bank. Prosecutors say he was arrested on Tuesday morning in Manhattan and will be presented before a federal judge later in the day.
Update—April 27 at 12:32 p.m. Central Time: This story has been updated to include an email that Democracy Prep’s CEO sent to families and alumni.
(Photo from Justice Department complaint)
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