June 21, 2016

Former President of UNO Charter School Network Inc. and CEO of United Neighborhood Organization of Chicago, Juan Rangel, will pay $10,000 to settle charges related to his role in a misleading $37.5 million bond offering to build three charter schools.  The SEC alleged that Rangel negligently approved and signed a bond offering statement that omitted the charter schools’ multi-million-dollar contracts with two brothers of UNO’s COO – conflicted transactions that could have threatened UNO’s ability to repay bond investors.  According to the SEC’s complaint, in 2010 and 2011, UNO entered into grant agreement with the Illinois Department of Commerce and Economic Opportunity (IDCEO) to build three charter schools.  Rangel signed the agreements, which required UNO to certify that no conflict of interest existed and to immediately notify IDCEO in writing if any conflicts subsequently arose.  The complaint alleges that UNO breached the agreement when, at Rangel’s direction, it contracted with its COO’s brothers, agreeing to pay $11 million to one brother’s window company and $1.9 million to another brother for construction services.  UNO did not notify IDCEO in writing about either transaction and its offering statement disclosed only the smaller contract.  The offering statement also did not disclose that by breaching its agreement with IDCEO, the agency could seek to recover the grants, requiring UNO to liquidate its charter schools to repay them, losing the assets it depended on to repay bond investors.  SEC

Tagged in: Misrepresentations, Securities Fraud,