PITTSBURGH — An accountant has pleaded guilty to helping the founder and former CEO of Pennsylvania’s largest online charter school avoid federal income taxes on more than $8 million that man siphoned from the school.
Neal Prence, 61, pleaded guilty to one count of tax conspiracy even though prosecutors and Prence disagree on the extent of his misdeeds.
Federal prosecutors contend Prence conspired with Nicholas Trombetta, 61, who pleaded guilty to the fraud last month involving The Pennsylvania Cyber Charter School.
Trombetta acknowledged using the school’s money to fund a lavish lifestyle, including buying a Florida condominium, homes for his girlfriend and mother and a jet airplane, while socking most of the money away for retirement.
Assistant U.S. Attorney Stephen Kaufman said Trombetta used Avanti Management Group, the National Network of Digital Schools and other companies Trombetta also created to perpetrate the scheme.
The Network of Digital Schools markets a curriculum developed in conjunction with PA Cyber and sold it back to the school, while Avanti provided unspecified management services, the prosecutor said. Avanti had four owners who pretended to be equal 25 percent partners when, in reality, Trombetta owned 80 percent of the firm, Kaufman said.
According to Kaufman, Prence helped file bogus tax returns on behalf of the Avanti straw owners to make it appear they “earned” income that actually went to Trombetta as part of the scheme, as well as other bogus personal and corporate tax returns.
But Prence called the government’s description of the scheme “mostly inaccurate” when he appeared in court Wednesday, prompting U.S. District Judge Joy Flowers Conti to discuss the plea agreement with both sides at a sidebar discussion that wasn’t disclosed.
After that discussion, Prence acknowledged helping Trombetta file a false 2011 federal tax return that didn’t disclose Trombetta’s income that had been funneled through the other companies.
Defense attorney Stanton Levenson told The Associated Press on Thursday the confusion stemmed from the law governing criminal conspiracies, which make participants, like Prence, responsible for all of the actions of others involved in the conspiracy.
“Most lawyers don’t understand conspiracy law, let alone clients,” Levenson said of Prence. “So he hears all the stuff that other people are doing and disputes that.”
“Basically, he acknowledges he assisted Dr. Trombetta in filing a return during the period in question that was illegal” but nothing more, Levenson said. Still, that’s enough to make Prence a part of the broader conspiracy, he said.
Trombetta will be sentenced Dec. 20 and Prence will be sentenced Jan. 6.
Levenson said he’ll argue for probation. The government has agreed to seek no more than a two-year prison sentence for Prence as part of a plea agreement, Levenson said.
The charter school, founded in Midland in 2000, had more than 11,000 students across the state when Trombetta was charged three years ago and still has more than 9,000. As a public institution, it’s funded by federal, state and local taxes. Districts across the state pay the school to educate any students who opt to enroll in PA Cyber instead of a bricks-and-mortar school.