A federal criminal trial got underway Tuesday for the former chief executive of Los Angeles-based charter school network Celerity Educational Group on charges of conspiracy to misappropriate and embezzle public funds.
Grace Canada is accused of participating in a scheme with Celerity’s founder, Vielka McFarlane, to siphon more than $2 million in public education funds intended for students and misspend the money on first-class travel, fine dining, custom bikes and upscale shopping.
McFarlane, 57, pleaded guilty and was sentenced in May to 2 1/2 years in federal prison. She was also ordered to pay $225,000 in restitution to the U.S. Department of Education and is expected to testify against Canada in the coming days.
Canada, who followed McFarlane as Celerity’s CEO in April 2015 and stepped down in October 2017, was indicted in January by a federal grand jury in downtown Los Angeles on nearly the same charges as McFarlane.
Canada said in a statement that she denies all charges.
Celerity Educational Group, now known as ISANA Academies, reached a non-prosecution agreement in 2017 and cooperated with the federal investigation. ISANA Academies runs six charter schools in L.A. and Compton.
Along with allegations that she caused the Celerity charter schools and Celerity Educational Group to falsely certify to federal, state and local authorities that they were complying with all rules and regulations governing the use of public funds, Canada is charged in a 23-count indictment with lying to the Internal Revenue Service.
Most of the funds, more than $2 million, were used without authorization to purchase and renovate an office building in Ohio for a new Celerity school, prosecutors allege.
McFarlane and Canada conspired to complete the sale, first by transferring more than $1.4 million intended for students to buy the building, the U.S. Attorney’s Office alleges.
The purchase emptied Celerity’s accounts, and the women then obtained a $1.5 million loan that was meant for the property but was instead used to cover payroll and other operating expenses, according to the indictment.