Blackwell aide close to charter

Posted on Wed, Mar. 29, 2006

By Dennis J. Willard and Doug Oplinger, Beacon Journal staff writers

COLUMBUS - Secretary of State J. Kenneth Blackwell's chief of staff has had an ongoing relationship with the state's largest charter school, receiving income and gifts from the Electronic Classroom of Tomorrow while the school at times overcharged the state millions of dollars. Sherri Dembinski is third in charge in Blackwell's office, which oversees the chartering of nonprofit organizations. ECOT is a nonprofit organization.

Blackwell also oversees reporting of campaign contributions. Managers of ECOT -- including Dembinski -- collectively have contributed about $330,000 to Ohio Republicans since the founding of the school.

ECOT has been embroiled in controversy since the fall of 2000 as it attempted to start a publicly funded online school that would educate children in their homes on computers.

In 2002, the school was found by Department of Education auditors to have overcharged the state as much as$7 million for children it could not verify as on the rolls.

And three times, state auditors have questioned expenses by the school and its close relationship with the for-profit management company that oversees ECOT -- both of which were founded by Columbus businessman William Lager.

Lager and Dembinski's husband have been friends since high school.

Dembinski was on ECOT's board from its inception until March 2004, when she resigned and moved into a new role as vice president of a foundation related to ECOT -- a foundation whose beneficiaries include students and organizations affiliated with ECOT.

Dembinski said Tuesday that she checked to make sure there was no conflict of interest to serve on the board.

``I actually had the conversation with general counsel at the time I got on the board to make sure there was no conflict of interest,'' she said.

Dembinski said she resigned from the board because the school hired her son, Christopher.

``I felt that was a conflict of interest,'' she said.

Ethics question

A review of ethics disclosure records by the Akron Beacon Journal shows that she does have a problem.

She reported her relationship with ECOT to the Ohio Ethics Commission for 2000-2003, but failed to do so for 2004. A review of ECOT records shows that in that year, she received $3,000 as board president and $2,000 as a parting gift to buy a computer.

She also did not report in previous years that the school provided her with the use of a personal computer.

``It was definitely an oversight, and I will be filing a report with the Ethics Commission trying to explain that to them,'' Dembinski said of the 2004 omission.

She said the filing occurred while she was off work taking care of her husband, who had been diagnosed with cancer. An aide filled out the disclosure statement, ``brought it out to me and I signed it.''

She also said she didn't view the computers as gifts. Initially, all board members received computers so they could e-mail each other about school business, she said.

The second computer, she said, was a bonus.

Ohio Ethics Commission Executive Director David Freel said he could not comment specifically about Dembinski, but said that a person in her position is required to report sources of income, gifts, creditors, debtors and real estate.

If the commission were to investigate, it would ask whether this was an oversight or an effort to conceal her relationship, he said.

He also said that the investigation would have to determine whether the computers should be considered gifts.

Brian Hicks case

In July 2005, Brian Hicks, Gov. Bob Taft's former chief of staff, came under investigation for not reporting gifts that he received from Toledo coin dealer and Republican fundraiser Thomas Noe.

Hicks agreed with prosecutors to plead no contest to charges that he knowingly filed a false financial disclosure statement with the Ethics Commission.

In 2001 and 2002, Hicks did not report that he stayed at Noe's Florida vacation home. Hicks was fined the maximum $1,000. He avoided a maximum six-month jail sentence and was not placed on probation.

In all, Dembinski received $30,000 in board pay, $2,000 to buy a computer and the use of a computer of unknown value for her tenure with ECOT, according to records.

When she resigned from the ECOT board, she was making $92,000 in the Secretary of State's Office.

This year, ECOT enrolls about 6,500 students who study at home via computer, for which the school will receive about $39 million transferred from school districts that the students would otherwise attend.

Dembinski said that there was no conflict for her regarding the secretary of state's role in granting nonprofit status to ECOT.

Nonprofit status

Groups wanting to create a nonprofit organization submit their applications to Blackwell's office. The secretary of state has no legal obligation to test the legitimacy of an application, said spokesman James Lee. The office merely handles paperwork, and it's up to other agencies to enforce laws regarding nonprofits, he said.

ECOT has twice received nonprofit status from Blackwell's office. Nonprofits can use that status to be exempt from Ohio taxes.

However, the Ohio Department of Education encourages charter schools to also qualify for federal tax exemption under tougher Internal Revenue Service regulations. The IRS prohibits for-profit management companies from having influence over charter school boards and prohibits tax-exempt charter schools from political activity and lobbying.

Of the more than 250 publicly funded charter schools in Ohio, ECOT was one of a dozen last year that did not receive the federal tax-exempt status.

In three state audits, auditors raised questions about ECOT's relationship with the for-profit management company, Altair Learning Management, run by ECOT founder William Lager. And an e-mail between two state auditors quotes a former board member as saying it's understood that payments to Altair include political contributions and lobbying expense.

``I have no idea about that. My affiliation was with ECOT. The big expenditures for ECOT were the (computer) servers, PCs, delivery (of computers), teachers and software,'' Dembinski said. ``My focus was on the ECOT side. That sounds like a very incorrect statement to me.''

Records show that Dembinski attended meetings and communicated with ECOT's lawyer when they discussed the school's ability to meet the tougher federal requirements. She also was on the board committee that negotiated Altair's management contract.

As for political contributions, Dembinski said there was no concerted effort by her and three other ECOT-related individuals to donate in the same week to state Rep. Jon Husted, the legislature's strongest advocate for charter schools.

According to records kept by the secretary of state, Dembinski's $250 donation occurred within days of three other contributions totaling $4,000. She said she made the donation after talking to a friend.

On Husted's campaign report, she is identified as a ``self-employed consultant.''