SEC hits charter operator on school deal

Tuesday, June 3, 2014

The powerful United Neighborhood Organization has agreed to have an outside monitor review its contracts for a year to settle a U.S. Securities and Exchange Commission complaint that the charter school group operator defrauded investors in a $37.5 million bond offering by misleading them about conflicts of interest in giving school construction contracts to companies run by relatives of an UNO official.

UNO will give Chicago attorney Patricia Brown Holmes authority to vet its contracts for 12 months, including vetoing any deal she “reasonably believes to be a conflicted transaction,” according to the federal court consent agreement the SEC released Monday. UNO will need to inform Holmes in writing before entering into various bigger ticket contracts, according to the agreement, and the organization will be required to pay Holmes up to $100,000 to cover her salary and costs.

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