17-003898SP Pam Stewart, As Commissioner Of Education vs. Silva Of South Florida, Inc., D/B/A New Horizons (7502), And Yudit Silva Status: Closed Recommended Order on Monday, December 11, 2017.

Summary: Because Respondents committed fraud while operating their private school, Petitioner may revoke Respondents' participation in several scholarship programs that provide financial assistance to students of private schools.

STATE OF FLORIDA

DIVISION OF ADMINISTRATIVE HEARINGS

PAM STEWART, AS COMMISSIONER OF

EDUCATION ,

Petitioner,

Case No. 17 - 3898SP

vs.

SILVA OF SOUTH FLORIDA , INC.,

d/b/a NEW HORIZONS (7502), AND

YUDIT SILVA

Respondent s .

_______________________________/

RECOMMENDED ORDE R

This case came before Administrative Law Judge John G.

Van Laningham for final hearing on August 10 , 20 17 , in

Lauderdale Lakes , Florida.

APPEARANCES

For Petitioner: Riley Michelle Landy, Esquire

Jason Dou glas Borntregor, Esquire

Department of Education

Turlington Building, Suite 1244

325 West Gaines Street

Tallahassee , Florida 3 2399 - 0400

For Respondent s : Christopher Norwood , J.D. ,

Qualified Representative

The Governance Institute for

School Accountability

14844 Breckness Place, Suite 100

Miami Lakes , Florida 33016

STATEMENT OF THE ISSUE S

The issues in this case are whether Respondent s, as the

owner and operator of a charter school or a private school, or

both, engaged in fraudulent activity or otherwise ran the

school(s) in a manner contrary to the health, safety, or welfare

of students or the public; and, if so, whether Petitioner should

revoke Respondent s' participation in several scholarship

programs that provide financ ial assistance to eligible students

who choose to attend private schools .

PRELIMINARY STATEMENT

On March 30 , 20 17 , Petitioner Pam Stewart , as Commissioner

of Education, issued an A dministrative Complaint against

Respondent s Silva of South Florida, Inc., d/b/a New Horizons

(7502) , and Yudit Silva, which gave notice of Petitioner's

intent to revoke Respondent s ' participation in the Gardiner

Scholarship Program, the J ohn M. McKay Scholarships for Students

with Disabilities Program, and the Florida Tax Credit

Scholarship Program. As factual grounds for this intended

decision, Petitioner alleged as follows:

The Department of State, Division of

Corporations indicates Silva of South

Florida, Inc. managed Pathways Academy

Charter School (Pathways), a former c harter

school in Broward County. According to the

School Board of Broward County (the School

Board), Silva of South Florida, Inc.

violated Pathways' Charter School Agreement

by failing to comply with applicable law.

Specifically, Pathways committed vari ous

performance failures in the areas of

Reading, Exceptional Student Education

(ESE), English for Speakers of Other

Languages (ESOL), teacher records and

grading procedures, and fiscal management.

The violations included, but were not

limited to falsifyi ng documents, making

improper expenditures, failing to pay wages,

misrepresenting the school's enrollment to

receive FTE funds to which it was not

entitled, failing to secure signatures in

student files, improperly hiring a relative

of the principle, and f ailing to follow

state guidelines on children's vaccinations.

The complaint further informed Respondents that , not only were

they being accused of operat ing an educational institution in a

manner contrary to the health, safety, or welfare of the public ,

but also probable cause existed to believe that Respondents had

engaged in fraudulent activity, and therefore , Petitioner was

suspending all s c holarship payments to Respondent s , effective

immediately . Respondent s timely filed a request for hearing ,

which the Department of Education received on April 14, 2017 .

On May 2, 2017, before referring the matter to the Division

of Administrative Hearings ("DOAH"), Petitioner issued an

Amended Administrative Complaint , which added to the original

charges the followi ng allegations:

On March 29, 2017, the Broward County

School District (BCSD) relayed to the

Department that they had received faxes from

Yudit Silva that included letters from the

parents of at least eight McKay students.

The letters asked BCSD to change the

students' In dividualized Education Program

(IEP) Matrix Level within five business

days. Each letter requested BCSD contact

the parent through email only. To verify

the authenticity of the letter, BCSD

contacted one of the McKay parents. The

parent denied sending t he letter and

indicated that the email address given was

erroneous.

Additionally, one of the not - for - profit

scholarship funding organizations that

administer FTC, Step Up for Students (SUFS),

contacted the Department due to

discrepancies found during a review of FTC

applications. SUFS relayed that Yudit Silva

had completed at least 30 FTC applications.

Additionally, most of the associated emails

listed for the applications ended with

"@yandex.com," and all o f the applications

stated "no household incom e" and "live with

family/relatives" as the documented

explanation of no income. Due to these

discrepancies, SUFS contacted a parent of

one of the students whose application was

filed by Yudit Silva. The conversation

revealed that the parent had no knowle dge of

the application being submitted. The call

verified that the information submitted on

the application was not accurate. Attempts

to reach other applicants revealed the

telephone numbers on the applications were

not in service.

Respondents again ti mely requested a hearing to determine their

substantial interests.

On July 12 , 20 17 , Petitioner forwarded the dispute to DOAH

for further proceedings . The undersigned promptly scheduled the

final hearing for August 10 and 11, 20 1 7.

A t the final hearing, which took place as scheduled,

Petitioner called two witnesses to testify in person (Andrew

Ramjit and Yudit Silva) and presented the prior testimony of

five more witnesses: E.M., Monique Harvey, Tara Rodger, Laura

Mazyck, and Patrick Reilly. Petitioner's Exhibits 2A, 2B, 3A,

3B, 4A, 4B, 6A , 6B, 6C, 6D, 7, and 9 through 16 were received in

evidence as well. Ms. Silva retook the stand in Respondents'

case, and Respondents' Exhibits 2, 3, and 4 were admitted. At

Petitioner's request, the undersigned took official recognition

of the record in DOAH Case No. 16 - 2576.

The two - volume final hearing transcript was filed on

September 7, 2017. The original deadline for presenting

p roposed r ecommended o rder s, October 9, 2017, was twice extended

at Respondent's request , and the parties timely filed their

respective papers on October 3 0 , 2017.

Unless otherwise indicated, citations to the official

statute law of the s tate of Florid a refer to Florida Statutes

2017 .

FINDINGS OF FACT

1. Respondent Silva of South Florida , Inc. (" SSF ") , is a

Florida nonprofit corporation that, at all times relevant to

this case, operated a private school known as New Horizons (the

"School") . An employee of SSF, Yudit Silva ("Silva"), served as

the School's principal or administrator at all times relevant.

2. The Department of Education ("Department") administers

the Gardiner Scholarship Program and the J ohn M. McKay

Scholarships for Students with Disabilities Program . See

§§ 1002.385 & 1002.39, Fla. Stat. The Department has some

a dministrative responsibilities in connection with the operation

of the Florida Tax Credit ("FTC") Scholarship Program as well.

See § 1002.395, Fla. Stat. Gardiner, McKay, and FTC

scholarships defray tuition and other qualified ed ucational

expenses for eligible students who attend private schools in the

state of Florida.

3. It is not necessary to make detailed findings about

these scholarship programs. There is no dispute that, during

the relevant time, the School participated in the three programs

mentioned, and was therefore eligible to accept, and did

receive, scholarship funds paid on behalf of its students on

scholarships.

4. As will be discussed more thoroughly below, t he

Commissioner of Education possesses the authority to immediately

suspend payment of McKay and FTC scholarship funds to a private

school if he or she finds probable cause for believing that ,

inter alia, the school has engaged in "fraudulent activity." In

addition, or alternatively, the commissioner may suspend or

revoke a private school's continued participation in the McKay

and FTC programs for wrongful conduct , including the operation

of an "educational institution" by the priv ate school's owner or

operator "in a manner contrary to the health, safety, or welfare

of the public." Finally, t he commissioner may suspend or revoke

a private school's participation in the Gardiner Scholarship

Program "for a violation of . . . section" 1002.385, Florida

Statutes.

5. On March 30, 2017, Petitioner Pam Stewart, as

Commissioner of Education (the "Commissioner") , issued an

Administrative Complaint against Silva and SSF stating that she

had determined there was probable cause for believing that Silva

and SSF had engaged in fraudulent activity during the years 2013

through 2016 while operating a charter school known as Pathways

Academy K - 8 Center ("Pathways"). On May 2, 2017, the

Commissioner issued an Amended Administrative Co mplaint wherein

she expand ed the original charges with new all egations that, in

2017, Silva and SSF had engaged in fraudulent activity while

operating the School. Based on the alleged wrongdoing of Silva

and SSF, the Commissioner immediately suspended pay ment of all

scholarship funds to the School and gave notice of her intent to

revoke the School's participation in the Gardiner, McKay, and

FTC p rograms.

6. The Commissioner's immediate and intended actions

rest ed substantially on allegations of misconduct that the

Broward Cou nty School Board ("BCSB") had asserted previously as

grounds for terminating the charter school agreement between

BCSB and SSF under which SSF operated Pathways . BCSB had given

notice to SSF of its intent to terminate this agreement in

April 2016 , prompt ing SSF to request a formal administrative

hearing. SSF's request had led, in turn, to the initiation of

Broward County School Board v. Silva of South Florida, Inc. ,

DOAH Case No. 16 - 2576 ( " Pa thways ") . Over the course of several

days in July and August 2016, Judge Robert E. Meale had

conducted the Pathways hearing. In his Recommended Order dated

January 9, 2017, Judge Meale had recommended that BCSB terminate

SSF's charter.

7. SSF had submitted exceptions to the Recommended Order,

but on February 27, 2017, before BCSB had taken final agency

action , SSF filed a Notice of Voluntary Withdrawal of Petition

for Hearing , stating that SSF planned not to renew its charter

and would, instead, cl ose Pathways . BCSB evidently accepted

this notice as sufficient to conclude the Pathways litigation,

for it failed to issue a final order. The upshot is that Judge

Meale's findings of fact never ac hieved administrative

finality. 1 /

8. The relevant BCSB allegations, as the Commissioner

summarized them in the administrative complaints, were quoted

above in the Preliminary Statement. To prove them, the

Commissioner relied primarily on two witnesses: Andrew Ramjit

and Patrick Reilly. Nei ther provided evidence persuasive enough

to support findings confirming the BCSB allegations.

9. Mr. Ramjit is a former employee of SSF. He worked at

Pathways as an assistant principal for a few months in the

summer of 2015 , between school years. His b rief tenure at the

charter school was apparently an unhappy one for all concerned ,

and when Mr. Ramjit left this job, he took with him (i.e.,

stole) original files belonging to SSF , to use as evidence of

the wrongdoing he would accuse SSF of committing. He later

filed several complaints against SSF with the Department, which

in August 2015 referred the matter to BCSB to investigate, since

BCSB was Pathways' sponsor. BCSB assigned the task of

conducting the investigation to Mr. Reilly, a CPA who conducts

audits for the school district.

10. Mr. Reilly's months - long investigation resulted in

findings that were detailed in an Internal Audit Report

presented to the school board in March 2016. Mr. Reilly

concluded that Mr. Ramjit's allegations were "substanti ated" and

that BCSB had good cause to terminate Pathways' charter school

agreement. BCSB agreed and, as already noted, took steps to do

just that.

11. As a witness at hearing, Mr. Ramjit at times came

across as a disgruntled ex - employee anxious to settle some

scores. Despite the evident bias, however , the undersigned

finds Mr. Ramjit's testimony to be more or less believable, as

far as it goes . The problem is, Mr. Ramjit's testimony is

superficial or conclusory, or both . For example, he asserts

that he observed SSF employees "forging" teacher and parent

signatures on various document s , but none of these supposedly

falsified documents was produced, no forgery "victim" testified,

and no expert testimony about disputed sig natures was adduced.

Mr. Ramjit claims that Silva and another administrator directed

him to "artificially lower" teacher evaluation scores ÏÏ but ,

really, what does this mean? Mr. Ramjit , who worked at Pathways

during the summer months only , could not hims elf have evaluated

any teacher (for he had not been there to observe anyone teach

at the charter school), and therefore, he cannot truly have

known whether a particular score was "artificial" or not.

Mr. Ramjit accuses SSF personnel of spending public fun ds on

goods purchased for private use , but the items in question ,

insect repellant and plants , are not inherently personal in

nature and could reasonably have been purchased for the school,

as Silva testif i ed . 2 / This testimony, at bottom, does not amount

to much.

12. Mr. Reilly's testimony (which was presented in the

form of a transcript from the Pathways hearing) has more

substance but is deficient in a different way. Mr. Reilly

related the granular findings of his in vestigation, but he,

himself, poss esses no personal , firsthand knowledge of the facts

he had found. In other words, what he knows, he did not witness

or experience ; rather, he searched for proof , as an investigator

does , and reached conclusions based on the evidence obtained .

To be sure, i f Mr. Reilly's testimony had consisted in relevant

part of expert opinions based on hearsay, such opinions might

have been competent substantial evidence. Hi s testimony ,

however, concerned matters of historical fact that did not

require expertise to und erstand (or, at least, not expertise in

accounting). Mr. Reilly's testimony, in short, establishes

persuasively that he believes the BCSB allegation s to be true ,

but , consisting largely of hearsay, is in sufficient to prove to

the undersigned the truth of the allegations.

13. The Commissioner alleged that, while working at the

School in March 2017 , Silva sent a handful of suspicious faxes

to the Broward County School District's Office o f Exceptional

Student Education. These faxes transmitted eight letters , each

of which purport ed to be from the parent of a student receiving

a McKay scholarship . The letter s were identical (a form ,

obviously ) and unsigned . In them, the parent (or "parent")

complained that the district had "illegal[ly]" changed his or

her child's "IEP Matrix Level" from "level 4" to "level 1"

" without notifying [the parent] and without an IEP meeting."

The letter urged the district to "[p]lease change the IEP Matrix

Level back to its correct level within 5 business days " and

requested that all future communications be in writing "only

through email."

14. Without getting into unnecessary detail, the "IEP

Matrix Level" reflects the intensity of services provided to a

student with disabilities . The higher the level, the greater

the number of services required. There is a correlation between

the matrix level and the level of funding available under the

McKay s cholarship p rogram, so that a reduction in the matrix

level might affect a student's McKay scholarship. The requests

to increase the matrix level from 1 to 4 , therefore, might have

been prompted by a concern that , without such action, the

students in question would see their scholarships diminished.

15. There was nothing wrongful per se about the form

letters at issue ; sure, the contentions therein that the

district had acted illegally and was preventing students from

receiving necessary services might have been overblown or

mistaken , but ultimately the decision whether to change the

mat rix level back to 4, as rather politely, if firmly,

requested, was the district's alone to make. If there w ere a

wrongful act, it would have been that Silva sent the letters on

the parents ' behalf without their approval .

16. On this charge, the only nonhearsay evidence of record

is the deposition of E.M., a parent who supposedly sent one of

the form letters. E.M. disclaimed knowledge of the letter and

denied having authorized the School to write and send it for

him . At the same time, though, he professed to know nothing

a bout the scholarship programs and freely acknowledged that he

relied entirely upon the School to take care of all the

paperwork required "to get that money." E.M.'s testimony

persuades the undersigned that regardless of whether E.M. had

any involvement in the form letter, he certainly would have

expected the School to prepare and submit such "paperwork" if

the School believed it necessary to "get that money." Based on

this evidence, the undersigned cannot find that the School

committed fraud.

17. The remaining allegations against SSF and Silva

concern several dozen FTC scholarship applications submitted to

Step Up for Students ("SUFS"), a nonprofit scholarship funding

organization that helps administer the FTC and Gardiner

Scholarship Programs. FT C scholarships are intended to benefit

students who, without financial assistance, would be unable to

attend private school due to low household income. Because

household income is an important factor in determining an FTC

scholarship award, any knowingly false, misleading, or

incomplete representations made in an application that bear on

this material fact would constitute an act of fraud ÏÏ a point

that is stressed in the application forms . The Commissioner

argues that , in at least 39 applications, Silva falsely

represented facts regarding the household income of students of

the School.

18. The disputed applications were submitted, online, in

several tranches. Six were submitted between 8:28 p.m. and

9:55 p.m. on February 22, 2017. Five were sent on February 24,

2017, between 11:15 a.m. and 3:48 p.m. On the night of

March 12, 2017, from 7:20 p.m. through 11:59 p.m., 12 of these

applications were submitted, followed by 13 more on March 13,

2017, sent between 9:22 a.m. and 2:53 p.m. A fin al group of

three was submitted on the morning of March 14, 2017, between

11:29 a.m. and 11:52 a.m. Because it is unlikely that

39 parents acting independently would happen to file thei r

applications in bunches like this, the reasonable inference,

which t he undersigned draws, is that the School 's staff

coordinated these submissions. SSF and Silva admit, at any

rate, that the School 's staff assisted the parents with these

scholarship applications, providing them with email addresses

and computer access.

19. Other details about these applications , however,

suggest that the assistance provided by the School's staff was

more hands - on than SSF and Silva have admitted. The application

asks the parent completing the online form to identify his or

her "birth c ity" as the answer to a security question. Every

parent gave the same answer, "miami." While it is doubtful that

every parent was, in fact, born in Miami, the truth of this

assertion is immaterial. Still, t hat every applicant typed in

"miami" raises an eyebrow; that all of them failed,

idiosyncratically, to capitalize the proper name strongly

implies a common agency, the most likely being the School Ï Ï an

inference further reinforced by the probability that the

School's staff did not know the actual birthp lace of every

parent, and thus would have found it convenient simply to make

Miami the ubiquitous choice by default .

20. Another common denominator of the applications is that

every parent reported his or her marital status as, "Single. I

have never been mar ried." This emphatic statement of lifelong

singlehood seems peculiar, suggesting a common hand, but the

response might have been a selec tion from a dropdown menu, a

possibility which undermines the inference. Nevertheless, it

would be unusual if, in this group of 39 single parents of young

children, not one had ever been married ÏÏ so unusual , in fact,

that the undersigned deems that situation highly unlikely; some

of the se responses, it is inferred, were untrue. That being

said, the materiality of the representation that the parent had

never b een married is unknown, for the record is silent on this

point. Like the ubiquitous answer to the "birthplace" security

question, however, the shared response to the martial status

inquiry implies a common agency ÏÏ the most obvious candidate

being, again, the School.

21. The evidence reviewed so far supports the inference,

which the undersigned has drawn, that School personnel provided

assistance to the parents in completing applications for FTC

scholarships, incl uding supplying requested information. In so

doing, the School made each parent say he or she had never been

married, making a representation of fact that was probably false

in at least some instances. Because that fact was not shown to

be material, howe ver, it cannot be concluded, without more, that

the School committed fraud. Unfortunately, there is more.

22. Each parent claimed in the application to have "zero "

household income. This was a material representation.

Obviously, to be a single parent w ithout any income is to

experience extreme poverty. While it is theoretically possible

that all 39 of the subject parents were destitute, this is

highly improbable, 3 / and, not surprisingly, the number of zero -

income applications coming from the same private school caught

the attention of SUFS, which in due course launched an

investigation . 4 /

23. Meantime, however, SUFS sent the parents two forms , on

paper, to be compet ed and returned. One was called Verification

of Household Composition ("Verification Form"), and the other

was titled Statement of No Household Income ("Explanation

Form"). The Verification Form needed to be filled out by

someone neither related to nor l iving with the applicant, e.g.,

a friend or neighbor, who was capable of listing, as requested,

the names of all adults and children residing in the applicant's

household, together with their respective ages and relationships

to one another. On the Explan ation Form, the parent (applicant)

was required to "explain in the space provided how you are able

to pay for rent, food, and clothing, etc." with "a household

income of zero ($0.00)." Alternatively, if "the entry of a

household income of zero ($0.00) was a mistake," the applicant

was to "provide proof of the most recent 30 days of income for

each person receiving income in your household."

24. Silva completed, signed , and submitted to SUFS a

Verification Form for each of the 39 parents. Every form she

s igned was dated March 15 or March 17, 2017 , except for one

dated March 21, 2017 . The only adult listed on any of these

completed forms is the parent or guardian (applicant). The only

other members of the households at issue whom Silva listed are

minor ch ildren. In other words, to be clear, every household

Silva described in these 39 Verification Forms consisted of one

parent or guardian plus that adult's minor child or children ÏÏ

and no one else. Above Silva's signature on these forms is a

certificate, p rinted in boldface, which declares:

Under penalties of perjury, I certify that

the information presented is true and

accurate, the persons listed above are

personally known to me and the household as

shown above is accurate to the best of my

knowledge and belief. I understand that

providing false representations constitutes

an act of fraud. False, misleading or

incomplete information may result in the

denial of the scholarship application or

revocation of a scholarship award .

25. Each completed Explanation Form that SUSF received

bears a signature purporting to be that of the parent or

guardian and has the same date as the corresponding Verification

Form. On every form, except one, the parent states that he or

she is able to survive on zero inco me because "I live with

family members" or simi lar words to the same effect. 5 / Above

each signature on these forms is a certificate, printed in

boldface, which declares:

Under penalties of perjury, I certify that

the information presented is true and

accurate to the best of my knowledge and

belief. The undersigned further understands

that providing false representations herein

constitutes an act of fraud. False,

misleading or incomplete information may

result in the denial of the scholarship

applicat ion or revocation of a scholarship

award.

26. As an explanation for how one is able to get by with

zero household income, the statement that "I live with family

members" can only be read to mean that the income - less person

and his or her dependents are r esiding in (and thus belong to )

the household of generous relatives who have the wherewithal to

provide financial support for their impecunious kin; otherwise,

it would be nonresponsive to the question posed by the

Explanation Form. So understood, however , the statement ÏÏ if

true ÏÏ logically refutes the applicant's assertion that his or

her "household income" is zero because the family members

supporting him or her must have had an income, which should have

been reported and substantiated per the instruction s on the

Explanation Form. It seems im possible that no t o ne of the 39

applicants noticed that SUF S was interested in household income

as opposed to p arental income , and thus likely that some of them

(assuming any personally completed these forms ) would have been

aware that their responses (if true) were contradictory and

incomplete to the point of being, arguably, fraudulent . But

this inconsistency is of passing interest, as it does not

necessarily inculpate the SSF, Silva, or the School .

27. A dif ferent discrepancy implicates the School in

wrongdoing. The statements of household composition in the

Verification Forms that Silva signed , all of which describe a

household consisting of one adult (the applicant) and his or her

minor dependent(s), belie the statements in the Explanation

Forms claiming that the applicant lives with, and relies

financially upon, his or her relatives ÏÏ relatives wh o , in this

context, cannot plausibly be understood as being the applicant's

minor children . These statements, c learly, are mutually

exclusive and, therefore, cannot both be true.

28. If an applicant lived with family members who

supported the applicant's family , as represented in every

Explanation Form at issue, then Silva provided false information

to SUFS in eve ry Verification Form she executed. While a few

instances of inaccurate reporting on Silva's part might be

written off as honest mistakes, an error rate of 100 percent

would suggest that something else wa s going on. The other

possibility that must be considered , however, is that Silva

was truthful , and the applicants (unknown to her) were not. In

this scenario, the applicants ÏÏ operating individually or in

concert ÏÏ falsely claimed to be living with family mem bers

(presumably to maintain the "zero incom e" fiction ) without

informing Silva of this deception.

29. The undersigned regards this latter possibility as

incredible. There is no reasonable likelihood that 39

applicants separately decided to commit the exact same fraud

using essentially the very sa me language ; such a coincidence is

simply inconceivable. As a practical matter, the applicants

w ould have needed to conspire with one another. But to infer

such a conspiracy, one must assume that all 39 applicants ( not

only the one(s) who came up with the scheme) were sufficiently

dishonest to participate and disciplined enough to keep their

mouths shut about it. These assumptions defy credulity.

30. This is not to say that the statements in the

Explanation Form s were likely truthful. T o the contr ary, t he

undersigned infers that they were false or intended to mislead.

That is, i n all likelihood, the applicants' households were , in

fact, composed (for the most part) of the persons listed in the

Verification Forms , and the false statements of material fact

were that the applicants had no household income and were

financially dependent upon family members with whom they lived.

It is found, further , that Silva , not any applicant (s) , was the

driving force behind th is deception , because , in view o f all the

circumstances, no other reasonable inference can account for the

fact that 39 applicants happened to make the very same false

statements in their applications. Whether the parents, or any

of them , knowingly participated in Silva's fraudulent sch eme is

unclear ÏÏ but is ultimately immaterial for purposes of this

case. 6 /

Ultimate Factual Determinations

3 1 . The greater weight of the evidence establishes that,

to increase the chances that the School's students would receive

the maximum amount of FTC scholarship funding, Silva engaged in

fraudulent activity, to wit : Silva falsely represented to SUFS

that 39 FTC scholarship applicants had "zero household income"

and were forced , as a result, to live with family members .

Silva mad e these statements of material fact knowing they were

false or in reckless disregard of the truth or falsity of th e

representation s, which were in fact false .

CONCLUSIONS OF LAW

32 . DOAH has personal and subject matter jurisdiction in

this proceeding purs uant to s ections 1002.39(7), 1002.395(11),

120.569, and 120.57(1), Florida Statutes.

33 . The burden of establishing the grounds for suspending

or revoking a private school's participation in the scholarship

programs at issue falls on the Commissioner, who must prove h er

allegations by a preponderance of evidence. Comm'r v.

Muskateer 's Academy, Inc. , Case No. 06 - 5074 , 2007 Fla. Div.

Adm in . Hear. LEXIS 191 , * 20 - * 21 (Fla. DOAH Apr. 2, 2007 ) ;

2007 Fla. Div. Adm in . Hear. LEXIS 883 (Fla. DOE May 4, 2007);

s ee also Fla. Dep ' t of Transp . v. J.W.C. Co., Inc. , 396 So. 2d

778, 788 (Fla. 1st DCA 1981)(burden of proof is usually upon

party asserting the affirmative of the issue); cf. Fla . Dep ' t of

HR S v. Career Serv. Comm ' n , 289 So. 2d 412, 415 (Fla. 4th DCA

1974)(ag ency must carry burden of proving grounds for dismissal

of employee); cf. Southpointe Pharmacy v. Dep 't of HR S , 596 So.

2d 106, 109 (Fla. 1st DCA 1992)(party seeking to establish

Medicaid overpayment has burden of proof); see also

§ 120.57(1)(j), Fla. Stat. 7 /

34 . Pursuant to s ection 1002.39(7)(c), the c ommissioner is

authorized to

immediately suspend payment of [McKay]

scholarship funds if it is determined that

there is probable cause to believe that

there is:

1. An imminent threat to the health,

safety, or welfare of the students; or

2. Fraudulent activity on the part of the

private school.

The c ommissioner's order immediately suspending payments "may be

appealed" by timely filing a request for hearing pursuant to

sections 120.569 and 120.57 . § 1002.39(7)(c), Fla. Stat. 8 /

35. Section 1002.39(7)(a)2., Florida Statutes, authorizes

the commissioner to "deny, suspend, or revoke a private school ' s

participation in the [McKay] scholarship program if the

commissioner determines that an owner or ope rator of the private

school is operating or has operated an educational institution

in this state or in another state or jurisdiction in a manner

contrary to the health, safety, or welfare of the public ."

36. The commissioner's powers with regard to the

s uspension of FTC scholarship payments and revocation of

participation in that program are almost identical to those

conferred upon the commissioner vis - à - vis the McKay program.

See § 1002.395(11)(c) (immediate suspension of payments);

§ 1002.395(11)( a ) 2. (revocation of participation ).

37. The commissioner's authority to suspend or revoke a

private school's participation in the Gardiner Scholarship

Program , in contrast, is arguably narrower , for there is no

"immediate suspension" provision in s ection 1 002 .385 ( which

govern s the program), and the only stated ground upon which the

commissioner may suspend or revoke Gardiner program

participation is "a violation of this section," i.e., section

1002.385.

38. The essential elements of a fraud claim are: (1) a

false statement concerning a material fact; (2) made (i) with

knowledge that the representation is false and (ii) with the

intention of inducing another's reliance thereon; and

(3) consequent injury to the other party acting in reliance on

the false representation. See, e.g. , Cohen v. Kravit Estate

Buyers, Inc. , 843 So. 2d 989, 991 (Fla. 4th DCA 2003).

39. "[F]raudulent intent usually must be proved by

circumstantial evidence and such circumstances may, by their

number and joint consideration, be su fficient to constitute

proof." Nally v. Olsson , 134 So. 2d 265, 267 (Fla. 2d DCA

1961). Therefore, as proof of fraud, "one may show 'a series of

distinct acts, each of which may be a badge of fraud and when

taken together as a whole, constitute fraud.'" Dep ' t of Rev . v.

Rudd , 545 So. 2d 369, 372 (Fla. 1st DCA 1989) ( quoting Allen v.

Tatham , 56 So. 2d 337, 339 (Fla. 1952) ) . Further, "[s]cienter,

or guilty knowledge, [which] is an element of intentional

misconduct [such as fraud], . . . can be established by showing

actual knowledge, or that the defendant was reckless or careless

as to the truth of the matter asserted." Ocean Bank of Miami v.

INV - UNI Inv. Corp. , 599 So. 2d 694, 697 (Fla. 3d DCA 1992).

4 0 . The undersigned has found, as recited above, t hat the

Commissioner carried her burden of proof regarding some

allegations of fraudulent activity. Therefore, the Commissioner

is legally authorized to immediately (and indefinitely) suspend

payment of McKay and FTC scholarship funds to the School .

4 1 . It i s further concluded that the actions of SSF and

Silva in connection with the fraudulent applications for FTC

scholarships, which were designed to maximize the awards that

the School's students would receive (by falsely minimizing their

respective household incomes), constitute the operation of an

educational institution in a manner contrary to the welfare of

the public. Thus, the Commissioner may revoke Res p ondent s '

participation in the McKay and FTC scholarship p rograms.

42 . Whether the Commissioner may revoke Respondents'

participation in the Gardiner program is a bit less clear.

Surprisingly, section 1002.398 does not explicitly require a

private school not to engage in fraudulent activity or operate

in a manner contrary to the health, safety, or welfare of the

public . It could be argued (although Respondents have not) that

such misconduct does not violate section 1002.398. (Recall that

violation of the section is the only cause for revocation of

program participation.)

43 . The Commissioner , seizing on the definition of

"eligible private school" in section 1002.385(2)(g) ÏÏ which

conditions eligibility to participate in the Gardiner program on

meeting the requirements "of a scholarship program under

s. 1002.39 or s. 1002.395, as applicable, if the private school

participates in a scholarship program under s. 1002.39 or

s. 1002.395 " ÏÏ contends that the School surrendered its Gardiner

program eligibility when Respondents engaged in fraudulent

activity. This argument has some seams. To begin , section

1002.385(2)(g) is a curiously circular provision inasmuch as a

school that fail s to meet the requirements of the McKay or FTC

program is, for that reason, un able to participate (or continue

participating) in the program and hence would not need to

satisfy such program's requirements for purposes of section

1002.385. Putting that aside, it would seem that before a

private school can be found in eligible for Gardiner program

participation based on its failure to meet either McKay or FTC

program requirements, or both, the failure to meet the latter

requirements must be adjudicated with finality ; otherwise, the

intended revocation of Gardiner program participation looks a

lot like bootstrapping .

44 . Nevertheless, the undersign ed concludes, albeit with

some reservations, that a private school which knowingly

attempts to perpetrate a fraud to obtain FTC scholarship funds

while it is participating in that program cannot reasonably

consider itself an "eligible private school" under section

1002.385(2)(g) ; therefore , its simultaneous participation in the

Gardiner S cholarship P rogram constitutes a "violation" of

section 1002.385, which gives the C ommissioner legal cause to

revo ke the school's program participation.

45 . Accordingly, the Commissioner may revoke the School's

participation in the Gardiner Sc holarship P rogram.

RECOMMENDATION

Based on the foregoing Findings of Fact and Conclusions of

Law, it is RECOMMENDED that the Commissioner enter a final order

revoking Respondents' participation in the McKay, FTC, and

Gardiner s cholarship p rograms .

DONE AND ENTERED this 11 th day of December , 20 17 , in

Tallahassee, Leon County, Florida.

S

___________________________________

JOHN G. VAN LANINGHAM

Administrative Law Judge

Division of Administrative Hearings

The DeSoto Building

1230 Apalachee Parkway

Tallahassee, Florida 32399 - 3060

(850) 488 - 9675

Fax Filing (850) 921 - 6847

www.doah.state.fl.us

Filed with the Clerk of the

Division of Administrative Hearings

this 11 th day of December , 20 17 .

ENDNOTES

1 / BCSB should have disregarded SSF's belated attempt to

withdraw its petition. See Wiregrass Ranch v. Saddlebrook

Resorts , 645 So. 2d 374, 376 (Fla. 1994). Had BCSB adopted the

Recommended Order, which was consistent with BC SB's proposed

agency action, it is likely that the indisputable fact of a

formal decision terminating Pathways' charter for cause pursuant

to section 1002.33(8) would have given the Commissioner

sufficient grounds for revoking SSF and Silva's participation in

the scholarship programs, much the way that the fact of a prior

criminal conviction is often grounds for imposing discipline

upon a licensee without proof that the licensee actually

committed the crime. Because SSF was not "convicted" in

Pathways , how ever, the Commissioner needed to prove the

allegations underlying BCSB's Notice of Proposed Termination of

Charter School Agreement if she wanted to rely upon them as

grounds for the actions at issue.

2 / There was no persuasive proof, either, that the SSF employees

used public funds, as opposed to, say, their personal credit

cards, to purchase the subject items.

3 / As defined for purposes of the FTC scholarship, the term

"household income" "has the same meaning as the term 'income' as

defined in the Income Eligibility Guidelines for free and

reduced price meals under the National School Lunch Program in

7 C.F.R. part 210 as published in the Federal Register by the

United States Department of Agriculture. " § 1002.395(2)(h),

Fla. Stat. The federal government defines "income" broadly for

purposes of determining eligibility for free and reduced price

school meals so that it includes the following:

(1) Monetary compensation for services,

including wages, sa lary, commissions

or fees; (2) net income from nonfarm

self - employment; (3) net income from farm

self - employment; (4) Social Security;

(5) dividends or interest on savings or

bonds or income from estates or trusts;

(6) net rental income; (7) public assista nce

or welfare payments; (8) unemployment

compensation; (9) government civilian

employee or military retirement, or pensions

or veterans payments; (10) private pensions

or annuities; (11) alimony or child support

payments; (12) regular contributions from

p ersons not living in the household;

(13) net royalties; and (14) other cash

income.

82 Fed. Reg. 17182, 17182 - 83 (Apr. 10, 2017).

4 / An SUFS employee named Monique Harvey tried to call or email

the parents but was able to reach only one, M.B., whose con tact

information SUFS had on file from a previous year's application.

M.B. did not testify, and thus her statements to Ms. Harvey,

which Ms. Harvey recounted in her deposition, are merely hearsay

if offered as proof of the facts asserted. Although there is

competent documentary evidence in the record showing that M.B.

submitted a new application in July 2017, which reported her

income from regular employment with Walmart, the complete

original 2017 application filed under M.B.'s name was not

offered. Con sequently, the undersigned has not included M.B.'s

first 2017 application with the group of 39 applications under

consideration.

5 / The one exception is the application of S.A., whose signed

Explanation Form dated March 17, 2017, is otherwise blank. On a

second Explanation Form dated May 31, 2017, S.A. states: "I

live with my sister and my stepmom. She's paying rent and

helping me with food."

6 / There is reason to suspect that Silva or other SSF employees

forged the signatures of at least some of the parents on the

application documents, including the Explanation Form. Even to

the untrained eye, the signatures on many of the application

forms do not match the signatures (which the undersigned assumes

are genuine) on the passports and driver licenses submitted, as

photocopies, with the applications. In the absence of expert

testimony, however, or at least the original signatures to

examine, the undersigned lacks sufficient evidence to make a

finding that the suspicious signatures are, in fact, forgeri es.

7 / Respondents argue that the standard of proof should be clear

and convincing evidence because, they contend, this is a "penal"

proceeding. This argument is not without merit, for a

proceeding to revoke a private school's participation in a

scholar ship program has punitive overtones, to say the least.

But a school which is prohibited from receiving (through its

students ÏÏ the school's benefit is indirect) these scholarship

funds is not precluded from operating as a private school;

unlike a licensee whose license is revoked, the school may keep

its doors open. Further, a decision to revoke a private

school's participation in a scholarship program does not take

scholarship benefits away from any of its students (to whom the

scholarships are awarded); they are free to continue receiving

their scholarships, so long as they transfer to another school.

The undersigned concludes that participation by a private school

in the Gardiner, McKay, and FTC scholarship programs is not a

vested right or even an enti tlement, but a kind of privilege,

namely that of selling a product (education) to customers being

subsidized by the state to make the purchase. Deprivation of

participation, therefore, is not a sanction, but rather amounts

to a loss of eligibility to cont inue enjoying an exceptional

commercial advantage. Such deprivation determines the school's

substantial interests, but is not punitive in character.

Cf. Balino v. Dep't of HRS , 348 So. 2d 349, 350 (Fla. 1st

DCA 1977)(state has burden to prove by a prepon derance of

evidence grounds for discontinuing, suspending, or reducing

public assistance such as Medicaid benefits).

8 / That an aggrieved party can "appeal" the commissioner's order

does not mean that, in a proceeding such as this, the

administrative law judge sits in review of the commissioner's

probable cause determination or otherwise substitutes his

judgment for the c ommissioner's on the question of whether

probable cause exists. Clearly, the probable cause

determination ÏÏ which is investigative or prosecutorial, rather

than adjudicative, in nature ÏÏ is for the commissioner alone to

make, and he or she may make this dec ision without necessarily,

or even usually, first allowing the private school under

suspicion to attack the evidence of wrongdoing via adversarial

mechanisms such as cross - examination.

The commissioner's executive decision on probable cause is

a necessary condition of immediately suspending payment of

scholarship funds to a private school believed to be engaging in

fraudulent activity (or to pose an imminent threat to students).

However, probable cause is not a sufficient basis for entering a

final order suspending payment to such school if the school

requests a "substantial interests" hearing. If a formal

administrative proceeding is initiated, as here, then the final

order must be based, not on probable cause, but on findings of

fact supported by the gr eater weight of the competent

substantial evidence adduced at hearing.

COPIES FURNISHED :

Riley Michelle Landy, Esquire

Jason Douglas Borntregor, Esquire

Department of Education

Turlington Building, Suite 1244

325 West Gaines Street

Tallahassee, Florida 32399 - 0400

(eServed)

Christopher Norwood, J.D.

The Governance Institute for

School Accountability

14844 Breckness Place, Suite 100

Miami Lakes, Florida 33016

(eServed)

Honorable Pam Stewart

Commissioner of Education

Turlington Building, Suite 1514

32 5 West Gaines Street

Tallahassee, Florida 32399 - 0400

(eServed)

Matthew Mears, General Counsel

Department of Education

Turlington Building, Suite 1244

325 West Gaines Street

Tallahassee, Florida 32399 - 0400

(eServed)

Chris Emerson , Agency Clerk

Department of Education

Turlington Building, Suite 1520

325 West Gaines Street

Tallahassee, Florida 32399 - 0400

(eServed)

NOTICE OF RIGHT TO SUBMIT EXCEPTIONS

All parties have the right to submit written exceptions within

15 days from the date of this R ecommended Order. Any exceptions

to this Recommended Order should be filed with the agency that

will issue the Final Order in this case.