Seth Andrew during a TEDx Talks
Source: TEDx Talks | YouTube
Seth Andrew, who served as an education advisor in the Obama White House, has been arrested Tuesday morning on charges of scheming to steal $218,005 from a charter school network that he founded, federal authorities said.
Andrew, 42, was arrested in New York City, and is due to appear in court later in the day in Manhattan federal court in the case.
He is accused of using more than half of the allegedly stolen money to maintain a bank account minimum that gave him a more favorable interest rate for his home mortgage.
Andrew, who is married to CBS News anchor Lana Zak, is charged with wire fraud, money laundering, and making false statements to a financial institution, according to the U.S. Attorney’s Office for the Southern District of New York, which is prosecuting the case.
He is the founder of Democracy Prep Public Schools, which has operated schools in Harlem and The Bronx in New York City, Camden, New Jersey, Las Vegas, San Antonio and Baton Rouge.
The current CEO of Democracy Prep, Natasha Trivers, in an email to the network’s families, alumni and scholars said that Andrew’s alleged theft was uncovered and authorities were tipped off after Trivers took over her post in 2019, and “instituted a series of financial safeguards that led directly to the discovery of Seth’s unauthorized withdrawals.”
“Seth left our network in 2013, Trivers wrote. “His alleged actions are 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 added: “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.”
Andrew currently is CEO of Democracy Builders, which bills itself as a “social sector studio that has launched more than $1b in enterprises that are changing the face of education, democracy, and technology around the world.”
U.S. Attorney Audrey Strauss in a statement said, “Seth Andrew abused his position as a founder of a charter school network to steal from the very same schools he helped create.”
“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,” Strauss said.
Andrew helped create Democracy Prep in 2005.
He accepted a job in the U.S. Department of Education in 2013, shortly after then-President Barack Obama took office, and then became a senior advisor in the Office of Educational Technology at the White House.
Andrew is accused in a complaint of ripping off the charter schools network in 2019 — two years after severing ties from the network — by drawing funds from escrow accounts he had set up for individual schools in the network years before, and depositing much of the money into a bank that he was looking to obtain a mortgage from.
He allegedly benefited from a lower interest rate on his $1.776 million mortgage as a result of having used stolen funds from the schools to maintain a large deposit in the bank that was loaning him the money to buy a $2.37 million home in New York.
Andrew and his wife, who is not charged in the scheme, obtained a mortgage rate of just 2.5%, or .5% less than they would have had to pay, as a result of having more than $1 million on deposit with the the lender.
“Without the $142,524 deposited stolen funds, ANDREW would have been eligible for only a 0.375% interest rate deduction,” the U.S. Attorney’s office noted.
FBI Assistant Director William F. Sweeney Jr. said in a statement, “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.”
“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,” he added. “Today Andrew himself is learning one of life’s most basic lessons – what doesn’t belong to you is not yours for the taking.”
This is breaking news. Check back for updates.
