Pennsylvania Cyber Charter School Founder Guilty of Tax Fraud
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The former CEO of Pennsylvania Cyber Charter School has pleaded guilty to charges of tax conspiracy after being accused of stealing around $ 8 million in school funds for his own personal use.
Nicholas Trombetta, 61, put together a number of connected for-profit and not-for-profit entities in order to take taxpayer funds away from PA Cyber in order to hide it from the IRS and avoid federal income tax liabilities.
Trombetta was indicted in 2013 on 11 counts including mail fraud, theft, and filing a false tax return, according to David J. Hickton, US Attorney for the Western District of Pennsylvania.
The accusations state he had falsified corporate books and records in an effort to hide over $ 8 million in income by moving the money to the tax returns of other people. Authorities say the scheme is thought to have gone on from 2006 until 2012.
It is thought that Trombetta spent a portion of the money on a corporate jet, a condo in Florida, and other real estate.
Trombetta faces up to five years in prison. Sentencing has been scheduled for December. He will be free until then.
Many believed he would not agree to plea as he had appeared to back out during the hearing after refusing to agree with the government’s summary of the evidence brought against him. However, in the end he did admit to US District Judge Joy Flowers Conti the he had defrauded the US by moving income in order to hide it from the IRS.
He pleaded to tax conspiracy dating from 2006 to 2013, admitting he had moved around $ 8 million into accounts owned by his sister as well as four of the straw owners of a related company he a created, called Avanti Management Group, in order to conceal his true income.
Avanti Management was originally created in 2008 by Trombetta as a nonprofit to manage the cyber school and create its curriculum. The four straw owners were put in place in order to eventually assume control of the school and receive $ 500,000 each for reduced ownership.
Two of the straw owners became witnesses for the government by agreeing to have their conversations with Trombetta recorded, writes Torsten Ove for The Pittsburgh Post-Gazette.
Co-defendant Neal Prence, an accountant, is set to go to trial. He requested a delay due to the Trombetta plea, but was denied.
Critics of Trombetta were happy to hear the news. Karen Beyer, a former state legislator from Lehigh County, said she was wary of cyber schools a number of years ago, adding that Trombetta previously threatened her after she brought into question the lack of financial review.
“I figured that justice would ultimately be served, that they would be found out — how he had defrauded the taxpayers of Pennsylvania,” she said. “We still have cybercharter schools that are unregulated. This plea should stand as a warning to the Legislature that they have got to do something about regulating these schools.”
The Pennsylvania Cyber Charter School, founded by Trombetta in 2000, is considered to be the largest and most successful cyber school in the state.
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