By Jonathan Stempel
NEW YORK (Reuters) – A former White House education adviser under President Barack Obama was arrested on Tuesday and charged with stealing about $218,000 from a charter school network he founded in order to get a cheaper mortgage for a $2 million Manhattan apartment.
Seth Andrew, 42, who founded Democracy Prep Public Schools in Manhattan in 2005, was charged with wire fraud, money laundering and making a false statement to a bank.
Timothy Doherty, a lawyer for Andrew, said his client will plead not guilty. Bail was set at $500,000 at a brief hearing in Manhattan federal court.
Prosecutors alleged that in 2019, two years after severing ties with Democracy Prep, Andrew looted escrow accounts set up for schools within the network and deposited stolen money in an account he maintained in anticipation of buying the apartment.
The money gave Andrew a high enough balance to qualify for a $1.78 million mortgage with a 2.5% interest rate, a half-point reduction, which he and his wife used for the $2.37 million apartment, prosecutors said.
Andrew’s wife was not accused of wrongdoing.
“Seth Andrew abused his position as a founder of a charter school network to steal from the very same schools he helped create,” U.S. Attorney Audrey Strauss said in a statement.
Democracy Prep said it operates 21 schools in New York and four other U.S. states, with 6,500 students.
Its chief executive, Natasha Trivers, said in an email to its families that recently implemented financial safeguards “led directly to the discovery of Seth’s unauthorized withdrawals.”
She called Andrew’s alleged conduct “a profound betrayal.”
According to the criminal complaint, Andrew left his role as Democracy Prep’s superintendent in 2013 to work at the U.S. Department of Education, and was later a senior adviser in the White House’s Office of Educational Technology.
Andrew has also helped create Democracy Builders, which said its mission is to “engage disenfranchised communities in democracy by incubating and expanding innovative civic education, advocacy, infrastructure, and technology.”
(Reporting by Jonathan Stempel in New York; Editing by Dan Grebler)
