PA Cyber shells out half a million in legal fees

Founder could have to repay school amid investigation

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The Pennsylvania Cyber Charter School paid attorneys nearly half a million dollars to protect its interests and those of current and former employees during a federal grand jury probe of the online educator's subcontractors.

The school could eventually demand half of that money back from its founder, Nick Trombetta, according to documents the Pittsburgh Post-Gazette got through a right-to-know request.

Mr. Trombetta has pleaded not guilty to an 11-count indictment against him, but if he's convicted, he might have to repay the school for the money it fronted for his lawyers. The school's board voted last month to stop paying his lawyers but hasn't yet taken any action to get back the $234,458 spent covering his legal bills through September.

"I've never seen anything like this where [a school is] spending all of this money dealing with a federal grand jury investigation," said Ira Weiss, the solicitor for the Pittsburgh Public Schools and an education lawyer for 40 years, who has read the 41-page indictment.

He added that he's "not at all surprised at that kind of expense" given the complexity of the accusations against Mr. Trombetta.

Mr. Trombetta founded the online school and led it through June 2012.

After a July 12, 2012, search by Internal Revenue Service and Federal Bureau of Investigation agents of its Midland headquarters, PA Cyber began paying outside legal counsel.

The school hired attorney Robert Stewart to protect its interests, and he has billed $104,647, at $350 an hour.

Employees and former employees were allowed to pick their lawyers, and Mr. Trombetta chose J. Alan Johnson, a former U.S. attorney.

Mr. Johnson charged $375 an hour and later reduced that to $350. Two of his associates at Johnson Bruzzese & Temple billed $275 an hour for their help.

The firm's total bill of $234,458 included $24,036 for legwork by Monaca-based Corporate Security & Investigations and $1,139 for the work of forensic accountants The Nottingham Group.

Mr. Johnson's invoices, redacted to protect attorney-client privilege, show intensive research into the companies that did business with PA Cyber -- NNDS and Avanti -- and into issues surrounding schools and nonprofits.

Early this year through April, according to the bills, Mr. Johnson and his colleagues met repeatedly with assistant U.S. attorneys Robert Cessar, James Wilson and Steve Kaufman, who are prosecuting the case. Among other things, they talked about sentencing guidelines -- the factors that guide federal prison terms, based on a crime's seriousness and the history of the defendant.

Defense attorneys ask prosecutors about sentencing guidelines for a variety of reasons, including to weigh a plea bargain or get a sense of the scope of the case.

Reached Friday, Mr. Johnson would not detail his representation of Mr. Trombetta.

Last month Mr. Trombetta of East Liverpool replaced Mr. Johnson's firm with Washington, D.C.-based white-collar defense specialists Morrison & Foerster.

Mr. Trombetta faces charges of mail fraud, theft or bribery from a program receiving federal funds, tax conspiracy and filing a false tax return. All are related to alleged diversion of around $1 million from the school, through Avanti and into a web of other businesses.

His sister, Elaine Trombetta Neill, who was involved with several of the businesses, is scheduled to plead guilty to filing a false tax return today. She was not a PA Cyber employee, and the records don't reflect any payments to her attorney, James Ross.

The school paid lawyers amounts from $9,000 to $23,000 to represent Mr. Trombetta's former secretary, Brenda Starr Smith; its former director of finance Scott Antoline; former compliance officer Judy Shopp; supervisor of health Mike Bariski; and others.

The bills won't bankrupt PA Cyber. It has an annual budget of roughly $115 million to educate about 11,000 students statewide.

PA Cyber board president David Jaskiewicz said last month that the school would pay future legal bills of employees and former employees, except if they are charged with crimes, but he did not expect to spend much more. "To our understanding, basically, we're done," he said.

The school is on firm ground in paying the legal bills of employees who were called as witnesses before the grand jury, said Susan DeJarnatt, a Temple University law professor who researches cyber charter schools.

Its payment of lawyers to represent Mr. Trombetta -- who had just resigned when the FBI and IRS raided his office in July 2012 -- is more problematic, she said. "I'm disturbed by [the funds] being diverted away for legal fees for someone who may have abused the system," she said.

If there is a provision under which Mr. Trombetta would have to pay back the funds if he is convicted, Ms. DeJarnatt said, "that's definitely more kosher."

Ms. Shopp and Ms. Starr Smith signed agreements under which they could be compelled to repay the school for their lawyers' services under circumstances that are not detailed in the documents. Mr. Johnson's bills for representation of Mr. Trombetta also mention such an agreement.

Questions about the terms of the repayment agreements and requests for comment, posed to PA Cyber on Friday and Monday, were not answered by deadline.

Mr. Weiss said such a repayment requirement wouldn't be unusual, but doesn't make all of the legal spending right.

"This is the case of a publicly funded entity, a charter school, having to spend enormous amounts of tax money to defend what are essentially allegations of private misbehavior," he said. "All of these allegations deal with misuse of funds for personal gain. That is the part that I find most troubling."


Correction/Clarification: (Published Oct. 10, 2013) The Pennsylvania Cyber Charter School paid attorney Robert Stewart $104,647 to defend its interests in a federal grand jury probe, and paid a total of $445,339 to lawyers representing itself, its founder, employees, a board member and two vendors. Incorrect figures were given in a story Tuesday. education - legalnews - neigh_washington

Rich Lord: rlord@post-gazette.com, 412-263-1542 or on Twitter @richelord. First Published October 7, 2013 8:00 PM


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