An Illinois charter school operator did not inform investors in a $37.5 million bond offering about conflicts of interest surrounding state contracts for school construction projects, the U.S. Securities and Exchange Commission (SEC) said Monday in announcing the United Neighborhood Organization (UNO) has been charged with defrauding investors.
The SEC said UNO did not let investors know it brought on two companies owned by brothers of Miguel d’Escoto, a former top UNO executive, for school construction work as part of a state grant. Miguel d’Escoto quit eight days after the Chicago Sun-Times first reported the findings in February 2013 that two companies, Reflection Window Compay and d’Escoto Inc., were paid a combined $8.5 million from a $98 million school-construction state grant.
Gov. Pat Quinn's administration temporarily cut off UNO's grant funding in April 2013 as a result of the insider deals. The governor restored the funding last June, however, after UNO changed its board and vowed to reform the way it operates. UNO has received $83 million of the $98 million state grant, the newspaper reported.
UNO plans to settle the SEC charges by reforming its practices and allowing a federal monitor to look over its procedures, according to federal officials.
However, SEC official Peter Chan stressed that the probe into UNO is not over.
“We’re not done,” Chan told the newspaper. “We’re taking action right now, but with regard to other parties that may have contributed to UNO’s securities violations, the investigation continues. So charges against others, including individuals, are possible.”
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