Ivy Academia founders sentenced in fraud case in California

The founders of Ivy Academia Charter School were sentenced Friday morning in a downtown courtroom for their roles in an embezzlement scam that netted more than $200,000 in public funding.

Yevgeny “Eugene” Selivanov, 41, was sentenced to nearly five years in state prison, while his wife, Tatyana Berkovich, 36, was sentenced to serve 45 days in county jail, perform 320 hours of community service and five years of probation.

Selivanov, the school’s former executive director, was found guilty in April of 18 counts of embezzlement by a public officer, money laundering and tax fraud. Berkovich, the former school principal and later president, was found guilty of one count of embezzlement relating to personal charges on a school American Express card.

Ivy Academia has three campuses in the San Fernando Valley, in Winnetka, West Hills and Woodland Hills. The school was known for its high test scores and rigorous curriculum.

Los Angeles County Superior Court Judge Stephen Marcus had harsh words for both defendants, but said he found Selivanov, who has a financial industry background and previously worked at Goldman Sachs, was the primary architect of what he called a “sophisticated” scam.

“He took advantage of these positions of trust,” Marcus said. “He created sham financial transactions between Ivy (Academia) and his various companies. Essentially, he’s using this school as an ATM machine.”

According to testimony during the trial, the couple used school credit cards to purchase personal items, including diapers, a “tax secrets” seminar and meals at local restaurants. They also began charging the school $32,000 a month in rent in 2008, up from $18,390 a month, because they owned the land on which the schools sit through another entity, and attempted to collect three year’s worth of past rent at the increased rate. Additionally, a plan to take over a loan held by the school resulted in an illegal transfer of nearly half a million dollars in school assets to another organization controlled by the couple, according to prosecutors.

The rent agreement and the loan arrangement were rubber stamped by a board of directors that was stacked with friends of the couple, the judge said.

“They have cast a dark shadow over charter schools,” Marcus said.

Prosecutors said they hope the convictions will be noticed in the charter school community, and bring a new set of accountability to the management of those schools.

“These were serious charges and we hope the result will be greater responsibility by the operators of charter schools to protect public funds,” said Deputy District Attorney Dana Aratani

The case attracted the attention of the California Charter Schools Association, which filed a brief in support of the couple Thursday.

“This unprecedented prosecution has sent shock waves throughout the charter school community and has stifled charter school operational freedoms. With no guidelines or set of rules on what is an “allowed” or “disallowed” expenditure, no recognition of the rules and regulations applicable to nonprofit corporations, and district attorneys and courts second guessing nonprofit corporate board’s spending decisions years after the fact, charter schools are now forced to forgo their operational flexibility and make only the basic expenditures (e.g., books, salaries etc.) out of fear of future prosecution,” the brief argued.

Berkovich and Selivanov were placed on paid administrative leave in 2010 and voluntarily resigned in 2011. The schools have continued to operate.

Despite the convictions, the court was crowded with supporters of the couple, who called them excellent educators and education supporters. Several spoke to the judge before the sentence, asking for leniency for the pair.

James Thomas, whose son attended Ivy Academia, told the judge he has since transferred his son to another school because the quality of education has declined since they resigned.

“In spite of whatever was put forward, we know that their priority was top-notch education,” he said.

Others spoke of how the couple poured in their own money in the early years just to make sure employees were getting paid and deferring their own salary. The judge said he had received dozens of letters of support.

The observers in the courtroom gallery burst into applause when the judge said he was granting requests for Berkovitch to avoid prison time.

The judge did grant a motion for a new trial on several counts involving incorrect jury instructions. Prosecutors said they are considering their options for refiling those charges, but have not yet decided.

Selivanov was taken into custody at the end of the hearing, and Berkovich was ordered to surrender for her 45 days of jail time within the next four months.

Their lawyers said they will appeal both the verdicts and the sentencing, and repeatedly said the accounting anomalies were mistakes and not intentional, and reflected the difference between charter schools — which are supposed to operate with more freedom that traditional public schools.

Berkovitch and Selivanov will return to court Nov. 15 for a restitution hearing.