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Fraud activities investigated at Chico charter school

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CHICO, Calif. - An audit conducted by the California Fiscal Crisis & Management Assistance Team found fraud like behavior being conducted at the Blue Oak Charter School in Chico.

Findings of the audit pointed to gross mishandling of funds not related to the school, including alleged spending on alcohol, gun parts, beekeeping training and Disney Resort transactions.

According to the school's website, Blue Oak Charter School is a K-8 school that first opened its doors in 2001 and serves 380 children.

The type of audit that was requested by Superintendent of the Butte County Office of Education Timothy Taylor, is an AB 139 Extraordinary Audit. The audit team went through financial records and interviewed various staff to figure out if fraud was being conducted by members of the school.

In the findings of the audit, the audit team said that, "The charter school's culture has been to use charter school assets for purposes that appear to have a personal benefit and/or for the benefit of friends, family and community relations."

The majority of the problems were reported as coming from two ranking members of the school's staff.

"The charter school superintendent/executive director and business manager failed to demonstrate in practice an understanding of the foundational elements of fiscal management," reported the audit team.

The superintendent and the business manager at the time of these financial inconsistencies were Nathan Rose and Cyd Orneallas, respectively. Neither of whom still work at the school.

During the course of the audit, auditors interviewed past and current members of the school staff to get a better picture of the situation.

According to the report, "Several staff members reported being threatened with the loss of their jobs when they inquired about questionable practices."

The audit team also found that pattern of school credit card statements (seven of the eight which were assigned to the superintendent or the business manager) lacking sufficient documentation. This was seen with travel costs, meals, fuel, snacks, etc. Many expenses simply didn't have a logical purpose.

For example, the executive director "frequently" had fuel charges to his credit card even though he drove a hybrid car. Fuel charges were made on the same day in two different cities (the cities where the superintendent worked and the city where his wife worked).

Among the documentation reviewed, auditors identified questionable expenditures and charges such as:

Weapons, tactical gear and military radios Birchbox monthly beauty products "Cash advances" iTunes, Amazon OnDemand and IndieFlix downloads (with $650 in chargers to the ladder) Disney Resort transactions Liquor store transactions Beekeeping training and supplies Costco membership

Several of the credit card purchases were also shipped to home addresses are as followed:

Veterinary surgical set Folding knives Epson Home Cinema And more

In the AB 139 extraordinary audit report summary the authors stated that, "based on the findings in this report, sufficient evidence exists to demonstrate that fraud, misappropriation of funds and/or assets or other illegal activities may have occurred in the specific areas reviewed."

District Attorney Mike Ramsey confirmed that his office will be meeting with the Butte County Office of Education and the Chico Unified School District to determine if charges will be filed.

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