Butler Area School District v. Einstein Academy

60 Pa. D. & C.4th 207, 2001 Pa. Dist. & Cnty. Dec. LEXIS 321
CourtPennsylvania Court of Common Pleas, Butler County
DecidedSeptember 10, 2001
Docketno. 2001-50031
StatusPublished

This text of 60 Pa. D. & C.4th 207 (Butler Area School District v. Einstein Academy) is published on Counsel Stack Legal Research, covering Pennsylvania Court of Common Pleas, Butler County primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook
Butler Area School District v. Einstein Academy, 60 Pa. D. & C.4th 207, 2001 Pa. Dist. & Cnty. Dec. LEXIS 321 (Pa. Super. Ct. 2001).

Opinion

SHAFFER, L,

PROCEDURAL HISTORY

The present action was commenced by the Butler Area School District (BASD) on July 24, 2001 when a complaint in equity was filed to prevent defendant Einstein from operating a “cyber” charter school.

On August 9, 2001 a petition for special relief was filed and presented in motion court. Einstein appeared through local counsel. On that date, a preliminary injunction was granted which enjoined Einstein from soliciting or enrolling students who would otherwise attend BASD, and further enjoined Einstein from attempting to collect bills for instruction sent to BASD in early July 2001 and continuing. A hearing on the injunction was scheduled for August 15, 2001. At the request of new counsel for Einstein, a hearing on the injunction was [209]*209continued to September 7, 2001. On August 24, 2001, the Kams City Area, Mars Area and South Butler School Districts of Butler County filed petitions to intervene in this legal action and the petition for special relief. A hearing and argument on the issue of intervention was scheduled with the injunction hearing of September 7, 2001. A hearing on the injunction was held September 7,2001 and September 8, 2001.

BACKGROUND FACTS

Einstein holds a charter pursuant to the Charter School Law, 24 RS. §16-1701 et seq. as aresult of an agreement and charter dated March 20,2001 between the Morrisville Borough School District and The E-Academy Charter School (TEACH). Einstein’s founders are Mimi Rothchild and her husband, Howard Mandel. Einstein purports to be a fictitious name for a corporation named The National Organization for Children Inc., which prior to June of 2000 was called The Andrew Foundation Inc. In documents filed with the Internal Revenue Service, Miriam Mandel a/k/a Mimi Rothchild has been identified as the CEO of the National Organization for Children Inc.

In November of2000, TEACH, The E-Academy Charter School, filed an application with the Morrisville School District to become a chartered “cyber school” delivering schooling through the Internet. It is undisputed that a hearing was not held on the application within the time frame contemplated by 24 P.S. §17-1717-A. It is also noted that the fictitious name for Einstein, filed March 30, 2001, did not exist at the time of the application for charter status. The application does not reveal [210]*210that the non-profit entity required by the Charter School Law is actually the National Organization for Children Inc.

On January 17,2001, at a special meeting of the board of the Morrisville School District, Ms. Rothchild presented her application. William Thompson, solicitor for the district testified that his recollection of that meeting led him to believe that Einstein had very little chance of being granted a charter.

No decision on the application was made and a second board meeting was scheduled for March 20, 2001. In the interim, the superintendent of Morrisville, Dr. John Gould, communicated on several occasions with Ms. Rothchild to refine her application to insure approval. Test demonstrations of Einstein’s software were arranged for the benefit of the Morrisville School Board members. These demonstrations were not done at public meetings.

Prior to the March 20,2001 public meeting, Dr. Gould, without board authorization, entered into negotiations with representatives from Einstein to draft a charter school agreement. Testimony established that the negotiations were only completed and the agreement finally drafted one hour before the meeting of March 20, 2001. Thus, no members of the board of directors could have reviewed the agreement prior to the meeting of March 20, 2001. The document executed on March 20, 2001 is styled “charter school agreement” rather than simply “charter.” That is presumably because, in addition to the requirements for term and form of charter enumerated in 24 P.S. § 17-1720-A, the document also contains an agreement that Einstein will pay Morrisville, in return for “ser[211]*211vices,” $200 for each student enrolled at Einstein. Using Einstein’s figures for enrollment, Morrisville stands to receive $600,000 for the school year 2001-2002 from Einstein. Additionally, in the charter agreement, Einstein has agreed to lease space and custodial services from Morrisville for $35,000 per year. To guarantee this cash stream, Einstein agreed not to seek a charter from any other school district.

Following the grant of the charter on March 20,2001, defendant finally registered its fictitious name with the Department of State (March 30, 2001). The actual fictitious name registered to the organization which was granted the charter is “TEACH (The E-Academy Charter School).” 1 As previously stated, TEACH is the fictitious name for the National Organization for Children Inc. Again, this fact was not disclosed in the charter school agreement. Further, the “Einstein Academy Charter School” is not a registered fictitious name for any existing entity, nor is it a registered non-profit organization with the Department of State. As Einstein existed at this time period only as an idea of Howard Mandel and Mimi Rothchild, Einstein’s address is noted on the Department of State Records as the Mandel residence.

Einstein is to be run by a corporation called Tutorbots Inc. incorporated in June of 2001, as a for profit corporation and having an address at Mailbox’s, Etc., a maildrop in Jenkinstown, PA. According to the Department of State Records, Mimi Rothchild is the CEO, secretary and treasurer of Tutorbots. On August 24, 2001 [212]*212Einstein and Tutorbots entered into a management contract for Tutorbots Inc. to operate the charter school. Rothchild is the sole owner of Tutorbots and her husband, Howard Mandel is the executive director.

Einstein, as fictitious name for the National Organization for Children Inc. and Tutorbots Inc. are. capitalized by personal loans for the Mandel’s relatives. Einstein had approximately $31,000 on deposit on July 31,2001. Einstein had apparently anticipated receiving $825,000 from the education department as seed money that was not forthcoming. To begin cash flow, Einstein charged an $87.00 registration fee to some students who have enrolled which may violate 24 RS. §17-1725-A. Einstein has also billed school districts, including plaintiff and intervenors herein, for June and July of2001 even though Einstein has not provided any instruction. Approximately $20,000 has been received from school districts.

On August 24, 2001 Einstein ordered $2,407,492 in computer equipment from Compaq Computers. On August 31,2001, Einstein received $506,000 from the education department. The record clearly establishes that Einstein is undercapitalized.

Einstein presently claims to have 3,000 students enrolled. Einstein also claims to have hired between 20-30 teachers, although signed contracts for only 13 were produced. Only seven teachers have been determined to be certified. The Charter School Law requires 75 percent certification. Teachers are to receive salaries ranging from $31,000 to $55,000.

Einstein also appears to be in breach of its charter agreement with Morrisville. By letter dated September 6, 2001, the solicitor for Morrisville was requesting the [213]

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Bluebook (online)
60 Pa. D. & C.4th 207, 2001 Pa. Dist. & Cnty. Dec. LEXIS 321, Counsel Stack Legal Research, https://law.counselstack.com/opinion/butler-area-school-district-v-einstein-academy-pactcomplbutler-2001.