The Securities and Exchange Commission is charging United Neighborhood Organization of Chicago and UNO Charter School Network Inc. with bilking investors in a $37.5 million bond fraud offering. The SEC contends that the charter school operator made statements that were materially misleading about transactions where there was a conflict of interest.
The bond fraud offering involves school construction. According to the SEC, UNO did not disclose that it had a multi-million-dollar with a windows company that belonged to the brother of one of its senior officers. Investors also were not told that the conflict might impact the repayment of the bonds.
UNO had entered into grant agreements with the Illinois Department of Commerce and Economic Opportunity to construct three schools. Each agreement had provisions mandating that UNO certify that there were no conflicts. Breach of this provision could lead to grant payment suspension and recovery of money paid to UNO already.
Now, the SEC says that UNO breached the provision by contracting two companies whose owners are the siblings of its COO. UNO consented to pay one company about $11 million for windows and their installation. It said it would pay the other company around $1.9 million. Meantime, contends the regulator, UNO did give notice about these conflicts.
Without denying or admitting wrongdoing, UNO is settling and has consented to improve its training and internal procedures.
Our securities fraud lawyers represent institutional investors and high net worth individual investors in getting their losses back. Contact the SSEK Partners Group today.
Read the Complaint (PDF)
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