SEC Charges Chicago Charter School Operator in $3.75M Bond Offering Fraud
The Securities and Exchange Commission is charging United Neighborhood Organization of Chicago and UNO Charter School Network Inc. with bilking investors in a $37.5 million bond fraud offering. The SEC contends that the charter school operator made statements that were materially misleading about transactions where there was a conflict of interest.
The bond fraud offering involves school construction. According to the SEC, UNO did not disclose that it had a multi-million-dollar with a windows company that belonged to the brother of one of its senior officers. Investors also were not told that the conflict might impact the repayment of the bonds.
UNO had entered into grant agreements with the Illinois Department of Commerce and Economic Opportunity to construct three schools. Each agreement had provisions mandating that UNO certify that there were no conflicts. Breach of this provision could lead to grant payment suspension and recovery of money paid to UNO already.
Now, the SEC says that UNO breached the provision by contracting two companies whose owners are the siblings of its COO. UNO consented to pay one company about $11 million for windows and their installation. It said it would pay the other company around $1.9 million. Meantime, contends the regulator, UNO did give notice about these conflicts.
Without denying or admitting wrongdoing, UNO is settling and has consented to improve its training and internal procedures.
Our securities fraud lawyers represent institutional investors and high net worth individual investors in getting their losses back. Contact the SSEK Partners Group today.
SEC Charges Charter School Operator in Chicago With Defrauding Bond Investors, SEC, June 2, 2014
Read the Complaint (PDF)
More Blog Posts:
Stockbroker Fraud: Morgan Stanley Sues Convicted Ex-Broker, Former-Wells Fargo Broker Pleads Guilty, And Ex-John Thomas Financial Broker Evades Customer Complaints, Stockbroker Fraud Blog, May 29, 2014
FINRA Arbitration Panel Says Wells Fargo Must Repurchase $94M of Auction-Rate Securities from Investors, Stockbroker Fraud Blog, December 29, 2013
Fannie Mae Sues UBS, Bank of America, Credit Suisse, JPMorgan Chase, Citigroup, & Deutsche Bank, & Others for $800M Over Libor, Institutional Investor Securities Blog, December 14, 2013