U.S.-appointed education overseer arrested for corruption

In the fall of 2018 a people’s wanted poster surfaced in Philadelphia, describing city native Julia Keleher as a “ruthless mercenary hired to kill public education; proven to be completely ignorant about the Puerto Rican values, culture, history, literature and language of the children under her mandate.” Keleher had been appointed Puerto Rico’s Education Secretary in January 2017 under the Puerto Rico Oversight, Management and Economic Stability Act (PROMESA). 

The wanted poster was prophetic. On July 10, Keleher and five others — including Angela Ávila-Marrero, the former head of Puerto Rico’s Health Insurance Administration (ASES); and Fernando Scherrer-Caillet, managing partner of the prominent accounting firm BDO — were arrested for conspiring to channel more than $15 million in federal funds to organizations with which they had personal ties.

BDO consultant Alberto Velázques Piñol was indicted for receiving a 10 percent commission on contracts he secured for the firm.  BDO has amassed over $63 million in government contracts since 2012, including $16 million linked to the Department of Education. (Latino Rebels, July 9)

Since Hurricane Maria devastated the island in September 2017, Puerto Rico has been under the thumb of the U.S. neocolonial Fiscal Control Board — established by PROMESA on behalf of Wall Street bondholders — to restructure $120 billion in bankruptcy debt. Island activists have rejected the FCB, calling it the “Junta,” and holding many protests against it.

The six named in the grand jury indictment face 32 counts, including money laundering and wire fraud. Keleher and Ávila-Marrero are accused of using their government positions to fraudulently award contracts involving federal funds, while depriving Puerto Ricans of education and health service. 

The indictments allege that Keleher and others schemed to direct $95,000 in education department funds through a contract to Colón & Ponce. The company was described by one education department official, who refused to okay the job, as “the only company not qualified for the contract, and the worst applicant.”

Keleher and two others were charged with conspiring to defraud more than $13 million in federal funds through education department contracts to BDO from January 2017 to April 2019.  The indictment charges that BDO then subcontracted with other companies to perform the services, in violation of the contracts and also inflating the costs.

Ávila-Marrero is charged with using her post as administrator of the health insurance administration to channel more than $2.5 million to BDO. Under PROMESA, health care on the island is already facing over $1 billion in debt, and residents are denied access to vital drugs usually covered by Medicaid. 

As news of the federal investigation began to surface in April, Keleher and Ávila-Marrero both resigned their posts. Keleher’s attempt, at the time, to portray herself as a “heroic fighter against the island’s anti-reform forces” was met with derision by opponents, who stormed her office and voiced opposition with the hashtag #JuliaGoHome.

‘Hired to break the system’

Despite her lack of education experience, Keleher was paid $250,000 annually to serve as Puerto Rico’s “Education Secretary.” Her monthly salary was 9 times that of the average teacher in Puerto Rico. She is in lock step with the destructive policies promoted by Trump-appointee Betsy DeVos, now U.S. Secretary of Education with a mission to privatize education.

In April 2018, Puerto Rico Gov. Ricardo Rosselló responded to a question by a reporter from the University of Pennsylvania’s Penn Gazette magazine asking why Keleher was hired: “Very bluntly, we asked her to break the system and rebuild it again.” (thepenngazette.com, April 23, 2018) 

During her tenure Keleher introduced an unpopular strategy of closing public schools. The local DoE budget was cut by half a billion dollars. In 2018 PROMESA demanded an additional $200 million in cuts, including $80 million from special education. Rosselló continues to champion Keleher and her push to devastate the island’s education system, leading to calls for his resignation. 

When Hurricane Maria struck, Keleher used the disaster to push for more privatization and charter schools. She followed a pattern established in 2005 in the aftermath of Hurricane Katrina, when New Orleans fired most teachers, closed almost all public schools and replaced them with charters.

Following Hurricane Maria, parents and teachers came together to repair schools and juggle classroom lineups as many families left for the mainland. Things were slowly moving back toward normal — until Keleher struck. Teachers were laid off, hundreds of schools were closed, and children, including those with special needs, were packed tightly into classrooms.  When they protested these “reforms” in street demonstrations, teachers and students were brutally attacked by police.

Without ever visiting them, Keleher closed and consolidated nearly 300 schools, many of which were in good shape despite Maria.  Several included classrooms to accommodate special needs students — over 40 percent of Puerto Rico’s student body.  

One top public school was sold for $1 to a for-profit private Christian foundation.

Why now?

A key question remains about why the indictments, first rumored in April, were delayed until now.  

The arrests appear to coincide with efforts by Puerto Rico to obtain more federal money for post-Hurricane Maria reconstruction. A congressional vote on an additional $12 billion in Medicaid funding over four years was originally scheduled for July 11 but has not taken place.

The Financial Control Board is also under a U.S. Appeals Court order from February 2019 to have its members reappointed or replaced after creditors challenged members’ appointments.  When appointed by then President Barack Obama in 2016, the process did not require Senate confirmation. The appeals court’s order set a July 15 deadline for that process to be completed.