Online Public School Founder Admits $8 Million in Tax Fraud
The founder and former CEO of an online public school that educates thousands of Pennsylvania students pleaded guilty this week to federal tax fraud, recognizing that he siphoned more than $8 million from the Pennsylvania Cyber Charter School through for-profit and nonprofit companies he controlled.
In entering his plea, Nicholas Trombetta, 61, who headed the school, acknowledged using the money to purchase, among other things, a Bonita Springs, FL condominium for $933,000, pay $180,000 for houses for his mother and girlfriend in Ohio, and spend $990,00 more on groceries and other items.
The story was initially reported by the Associated Press and published in dozens of news outlets, including Education Week.
Trombetta manipulated companies he created and controlled to draw the money from the school, also spending it on a $300,000 plane, Assistant U.S. Attorney Stephen Kaufman said.
Trombetta was making $127,000 to $144,000 annually at PA Cyber when he ran the illegal tax evasion scheme from 2006 to 2012. He faces up to five years in prison when he’s sentenced Dec. 20.
By running the money through the companies or their “straw owners,” Trombetta avoided income taxes, though prosecutors haven’t said how much. Most of the siphoned money was squirreled away in Avanti Management Group, which functioned as Trombetta’s retirement savings account, Kaufman said.
“This case reflects the priority we’ve placed on protecting against fraud in education,” U.S. Attorney David Hickton said.
The school, founded in Midland in 2000, had more than 11,000 students across the state when Trombetta was charged three years ago and still has more than 9,000. As a public institution, it’s funded by federal, state and local taxes. Districts across the state pay the school to educate any students who opt to enroll in PA Cyber instead of a physical, bricks-and-mortar school.
Richard Chang is associate editor of THE Journal. He can be reached at [email protected].