Former Obama Advisor Stole $218K From Charter Schools To Receive A Better Mortgage Rate, Feds Say

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A former Obama administration adviser was arrested in Manhattan Tuesday and accused of embezzling greater than $218,000 from a Harlem constitution faculty community he helped discovered.

Seth Andrew, 42, allegedly transferred funds from the Democracy Prep Public Colleges reserve financial institution accounts so as to inflate his account steadiness and to qualify for a particular mortgage deduction on his $2.4 million house, authorities mentioned.

Andrew was filmed carrying a particular yellow Democracy Prep baseball cap on the financial institution when he went to withdraw the funds, investigators famous.

“Locking into the bottom rate of interest when making use of for a mortgage is actually the target of each residence purchaser, however if you don’t have the required funds to place down, and also you steal the cash out of your former employer to make up the distinction, saving cash in curiosity is more likely to be the least of your considerations,” mentioned FBI Assistant Director William F. Sweeney Jr. in a launch Tuesday. “We allege right now that Andrew did simply that, and for the reason that employer he stole from was a constitution faculty group, the cash he took belonged to an establishment serving school-aged kids. As we speak Andrew himself is studying one in every of life’s most simple classes – what doesn’t belong to you will not be yours for the taking.”

CNBC reported that Andrew’s lawyer Michael Yaeger mentioned his shopper “will probably be getting into a plea of not responsible right now” in Manhattan federal courtroom.

In 2005, Andrew helped discovered the constitution faculty community – whereas the FBI didn’t launch the title of the college community, his LinkedIn web page mentioned he was a “founder, instructor, principal, and superintendent of Democracy Prep.” He left the college in 2013 to work within the White Home as a senior advisor to former President Barack Obama in addition to the Secretary of Schooling, the place he helped launch the Vote.gov initiative, his profile mentioned.

Earlier than leaving Democracy Prep, Andrew had established escrow accounts for the college as required by state legislation, and remained a signatory on the accounts, the FBI mentioned.

In March 2019, Andrew allegedly closed two of these escrow accounts with out authorization from the college and withdrew greater than $142,524 from these accounts. He allegedly finally deposited these checks into a 3rd account he opened by telling a financial institution worker that he was a “Key Government with Management of” the Democracy Prep faculty community although he hadn’t been a part of the group for 2 years.

Andrew allegedly used the funds to current an inflated checking account on his mortgage utility so as to snag a 2.5% mortgage rate of interest from his financial institution underneath a promotional deal in April 2019—as a result of the financial institution was providing 0.125% off the speed for each $250,000 clients maintained of their accounts, and Andrew had over $1,000,000 in his account, the FBI mentioned.

Andrew and his spouse Lana Zak, the CBS Information anchor, purchased a Manhattan residence for $2,368,000—with a mortgage of $1,776,000 on the 2.5% rate of interest—in August 2019.

In October 2019, Andrew allegedly focused a 3rd escrow account in Democracy Prep’s title and transferred $75,481.10 into a brand new checking account. He then, prosecutors say, mixed all of the transferred Democracy Prep funds right into a checking account he opened “within the title of a selected civic group that Andrew at the moment controls, thereby concealing the cash’s affiliation with (Democracy Prep) and depositing the stolen cash into an account underneath Andrew’s full management.”

CNBC reported that Andrew is the present chief government officer of Democracy Builders, a brand new education-technology-society enterprise, which “final 12 months bought for $1.725 million the previous campus of Marlboro School in Marlboro, Vermont, with the objective of organising a faculty there dubbed Levels of Freedom.”

In a word to the college communities Tuesday, Democracy Prep’s Chief Government Officer Natasha Trivers mentioned Andrew’s “alleged actions are a profound betrayal of all that we stand for and to you and your kids, the students and households that we serve.” She mentioned the college’s funds “stay sturdy” and that the college found the “unauthorized withdrawals” after monetary safeguards have been instituted.

Andrew is charged with wire fraud, cash laundering, and the highest cost of constructing a false assertion to a financial institution, which carries a most of 30 years in jail if convicted.

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