FROM TIMESUNION.COM -
The former chief financial officer for the Brighter Choice Foundation, which provides funding and support to 10 public charter schools in Albany, has been charged with embezzling $202,837 from the organization.
The arrest Wednesday of Ronald A. Racela marks the second time in four years that Racela has been charged with grand larceny. Two years ago, Racela admitted stealing $53,931 from KeyBank in Albany, where he was employed as a manager in the Community Development Lending Group, court records show.
M. Christian Bender, executive director of Brighter Choice Foundation, said Brighter Choice officials were not aware of Racela's criminal history when he was hired as financial director of Brighter Choice Charter Schools in June 2010. Bender said Racela described his separation from KeyBank as "tense" but did not disclose he had been arrested for embezzlement eight months before he was hired by Brighter Choice.
"I knew that it had not been a smooth separation, but obviously I had no idea that it involved criminal activity on his part," Bender said Friday.
Still, a state Education Department spokesman said the agency sent written notice of Racela's criminal history to the charter school last March, when it denied the school's request to clear Racela for employment. The spokesman said the agency had first flagged an employment clearance request for Racela that was submitted by Brighter Choice in December 2011. By that time, Racela had already been working for Brighter Choice schools for about 18 months.
The Education Department conducts criminal background checks on public and charter schools employees. The agency's records indicate the request from Brighter Choice regarding Racela was immediately placed in "a hold status based on his known criminal record."
Bender said he never received the Education Department's letter last March denying Racela's employment clearance. He suggested Racela may have intercepted the documents, which are not in his personnel file.
Racela, who is on probation for his conviction in the KeyBank case, was released following his arrest this week after posting $25,000 bail. Racela's arrest by city detectives was not announced by either Albany police or the charter schools organization.
He's charged with felony counts of falsifying business records and grand larceny. Racela, paid $120,000 a year as CFO, is accused of making false payroll entries at the Brighter Choice Foundation that enabled him to get extra payroll checks over a roughly 15-month period starting September 2011, the complaint says.
Racela, 49, of Latham, was promoted from Brighter Choice Charter Schools director of finance to chief financial officer for the Brighter Choice Foundation in 2011, according to information that Racela posted on LinkedIn, a business networking website.
Bender said a new CFO hired by the foundation last fall discovered that Racela had continued collecting paychecks from Brighter Choice schools after taking a job with the foundation. Racela was allegedly using funds from the foundation to reimburse the school for the extra income, which he then pocketed, Bender said.
Racela was fired last month after he was confronted with the payroll discrepancies, Bender said.
Racela did not respond to a request for comment. His attorney, Brian W. Devane, also declined comment.
"As soon as we found out about the misappropriation of funds, we hired an outside fraud investigator to review our current financial statements and records," Bender said. "The moment the fraud investigator confirmed our suspicion, we contacted local law enforcement and filed criminal charges against the former employee."
In a Times Union interview two years ago, Racela described the "tremendous fiscal pressure" the charter schools were enduring due to what he said was the Albany school district's failure to pay millions of dollars in mandated tuition reimbursement fees. The district is mandated to pay the charter schools more than $14,000 for each city student enrolled in a charter school.
Racela, then director of finance for the Brighter Choice Charter Schools, wrote an email to employees stating: "no 'funny business' has occurred with the school's cash" as he explained why the school had been unable to pay employee retirement benefits. The schools' financial woes came to light after an earlier, unrelated state audit indicated Brighter Choice ended the 2009-10 school year $453,745 in the red, which was worse than the previous year, when its expenses exceeded its income by $311,638.
Court records in the KeyBank case indicate Racela increased loan amounts to four KeyBank clients and pocketed the additional funds. In a statement attributed to him in court records, Racela claimed he used the money for "personal expenses" after his wife had stopped working. In Racela's statement, obtained by KeyBank officials, he indicated stealing just $20,283 from the bank. But when he pleaded guilty to in January 2011, Racela admitted stealing more than $53,000. Racela wrote in the statement that his plan was to hide the thefts from KeyBank by using a portion of an unpaid $54,000 origination fee that he said the Albany Housing Authority owed for a line of credit on a Lark Drive property.
"No record of the fee being owed existed on Key's system," his statement reads. "Therefore, I thought that I could have a portion of the $54,000 pay for the $20,283 mentioned above."
Two years ago, Racela was sentenced to five years' probation and ordered to pay $56,627 in restitution to KeyBank, as well as $375 in court fees. It's unclear if Racela paid the restitution.
Bender said the school has tightened its financial controls.
"This is a sad episode and we have been working hand in hand with law enforcement to see that this matter is prosecuted to the fullest extent of the law," he said.
Timeline of the case
October 2009: Ronald Racela arrested on a larceny charge from KeyBank
June 2010: Racela hired as finance director Brighter Choice Charter Schools
January 2011: Racela pleads guilty to grand larceny
August 2011: Racela named chief operating officer Brighter Choice Foundation
March 2012: State Education Department denies employment clearance for Racela
January 2013: Racela charged with stealing $202,837 from Brighter Choice Foundation
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