Updated at 7:37 p.m.
Seth Andrew, the former Obama White House official behind a fledgling project that promised to remake higher education at the former site of Marlboro College, has been accused of stealing more than $200,000 from a charter school network he founded.
Andrew, 42, was charged Tuesday with wire fraud, money laundering and making false statements to a financial institution, according to the U.S. Attorney’s Office for the Southern District of New York, which is prosecuting the case.
“Seth Andrew abused his position as a founder of a charter school network to steal from the very same schools he helped create,” U.S. Attorney Audrey Strauss said in a statement. “Andrew is not only alleged to have stolen the schools’ money but also to have used the stolen funds to obtain a savings on a mortgage for a multimillion-dollar Manhattan apartment.”
Federal prosecutors allege in a 14-page complaint unsealed Tuesday that in 2019 Andrew took a total of $218,000 from escrow accounts belonging to Democracy Prep Public Schools, a charter network he founded in 2005 but cut ties with in 2017. Some of that money was used to secure a more favorable mortgage on a $2.4 million apartment he purchased that same year, according to prosecutors. The investigation was conducted by the Federal Bureau of Investigation.
“Locking into the lowest interest rate when applying for a loan is certainly the objective of every home buyer, but 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,” William F. Sweeney Jr., assistant director of the FBI’s New York office, said in a statement.
“Today Andrew himself is learning one of life’s most basic lessons — what doesn’t belong to you is not yours for the taking,” Sweeney said.
Natasha Trivers, the current CEO of Democracy Prep, sent an email to parents and alumni Tuesday morning calling Andrew’s alleged actions “a profound betrayal of all that we stand for.” She also wrote that financial safeguards put in place after she took over in 2019 led directly to the discovery of Andrew’s misdeeds.
“Upon learning of the unauthorized withdrawals, Democracy Prep alerted the appropriate authorities,” Trivers wrote. “As the victim of this crime, Democracy Prep has continued to assist the authorities as they investigate and prosecute this crime to the full extent of the law.”
Andrew was arrested Tuesday morning in New York City and was set to appear before U.S. Magistrate Judge Gabriel W. Gorenstein. His criminal defense attorney, Michael Yaeger, said Andrew would plead not guilty.
“We’re reviewing the papers that were just unsealed this morning,” Yaeger wrote in an email.
In their complaint, prosecutors allege that Andrew misrepresented himself as a current executive with Democracy Prep schools to close out three escrow accounts held by the network in March and October of 2019. The funds were eventually all rolled into a bank account held by a nonprofit civic organization which he “currently appears to control,” according to prosecutors.
The name of the civic organization referred to by prosecutors is partially redacted and referred to only as “(Civic Network-1) Fund Inc.” But prosecutors also said the organization’s name shared the same first word as the charter network’s name and was legally intertwined with the network until 2014.
Andrew arrived on the scene in Vermont in May 2020, announcing with much fanfare that Democracy Builders Fund, a nonprofit he helmed, would purchase the campus of the now-defunct Marlboro College and create a new kind of higher education experience, tailored specifically to the needs of low-income students. The sale went through that July, with Democracy Builders agreeing to pay $225,000 in cash and take on a $1.5 million debt the college owed to the Marlboro Music Festival.
The details of the project, called “Degrees of Freedom,” remained vague and never secured the regulatory approval necessary to actually confer degrees.
The ownership of the 500-acre property on Potash Hill is also apparently now in dispute. Democracy Builders announced in February that it had brokered a sale-leaseback agreement with Type 1 Civilization Academy, a Canadian corporation, to take over the former Marlboro College campus. The $9.4 million deal was supposed to help fund the project’s educational venture and allow Democracy Builders to lease the property for at least 5 years.
But that deal apparently fell apart in March, with Andrew announcing in a community-wide Zoom that Democracy Builders had taken back control of the property. “We were engaged, not married,” the Bennington Banner quoted him as saying. Adrian Stein, the Toronto man behind Type 1, responded that he would likely be seeing Democracy Builders in court.
“I am reasonably certain that we will prevail and that we will retain our full and legitimately conveyed ownership rights to this magnificent property,” Stein told the paper.
Whoever owns the property, Christopher Serkin, trustee chair for the Marlboro Music Festival, said that the festival would be back this summer.
“We are surprised by today’s news. Our focus remains entirely on welcoming our musical community back to the campus this summer. And we are going forward as planned,” he said. Serkin said his understanding was that the ownership of the property was still “contested” but said the festival retained “rock solid” rights to use the property, which has been the festival’s summer home for 70 years.
Chandell Stone, the current CEO of Degrees of Freedom, did not respond to a request for comment.
The status of the project and whether Andrew currently has a relationship with it is unclear. Andrew was once listed as an “advisor” on its website and was commenting to press on behalf of the project as recently as March. By Tuesday, his name had been scrubbed from the website’s “Team” section.
But on the project’s “Donate” page, Andrew was still listed as the main contact. Potential donors are still advised to send checks to his attention or to email him directly to discuss “more substantial investment, ACH/Wire information, stock donations, or to connect us with your Donor Advised Fund.”
“Help us expand to 10 campuses across the country. Donate Today!” the website states.
