An adviser to former president Barack Obama was arrested on Tuesday for allegedly stealing hundreds of thousands of dollars from a New York City public charter school system he founded.
Seth Andrew, former senior adviser to the White House in the Office of Educational Technology, is charged with wire fraud, money laundering, and lying to a bank, according to the Justice Department. Andrew allegedly embezzled $218,005 from the Democracy Prep charter school network, which he founded in 2005.
Authorities say Andrew used the illegally obtained funds to finance his home mortgage. In August 2019, Andrew purchased a $2,368,000 residence with his wife, CBS News Anchor Lana Zak. Andrew is scheduled to appear in a Manhattan federal court in May.
In 2019, Andrew allegedly withdrew funds from escrow accounts he and other school officials had opened between 2009 and 2013. The funds in those accounts were set aside in case the school dissolved and were not meant to be touched by school officials. At the time he withdrew the funds, Andrew had already cut ties with Democracy Prep.
The same day he withdrew the funds, Andrew opened a business account under the name of a Democracy Prep school at a different bank. He deposited the funds into the account, which he used to obtain a home mortgage at a lower interest rate.
"When you don’t have the necessary funds to put down, and you steal the money from your former employer to make up the difference, saving money in interest is likely to be the least of your concerns," FBI assistant director William F. Sweeney Jr. said in a statement. "We allege today that Andrew did just that, and since the employer he stole from was a charter school organization, the money he took belonged to an institution serving school-aged children."
Andrew launched Democracy Prep Public Schools, a network of public charter schools, in 2005. He left the school system in 2013 to work for the Education Department and later as senior adviser at the White House, while still being paid by the network. He officially left the organization in January 2017.
Months after Andrew and Zak purchased their property, Andrew deposited more funds from Democracy Prep into a second fraudulent bank account. He made more than $2,000 in interest from those funds as of May 2020.