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Feds say East Liverpool man siphoned $8 million from cyber charter school

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PITTSBURGH (AP) - The founder and former CEO of a cyber-charter school that educates more than 11,000 Pennsylvania students has been indicted by a federal grand jury.

Fifty-eight-year-old Nicholas Trombetta is accused of siphoning more than $8 million from the school through a network of profit and non-profit companies he controlled.

Trombetta surrendered to authorities Thursday night on the charges announced Friday by federal authorities.

Trombetta allegedly bought a $1 million Florida condominium and houses for his girlfriend and mother, along with nearly $1 million on personal expenses, including groceries.

Trombetta and his lawyer did not immediately return calls seeking comment about the charges.

Prosecutors allege Trombetta tucked most of the money in a shell company for his retirement.

Federal officials have called a news conference to announce unspecified charges against the founder and former chief executive officer of the Pennsylvania Cyber Charter School, which has more than 11,000 students statewide.

U.S. Attorney David Hickton's announcement said the charges were returned under seal by a federal grand jury Wednesday and will be disclosed at the Friday morning news conference.

The announcement said the charges pertain to Nicholas Trombetta, of East Liverpool, Ohio, the school's founder, and his accountant, Neal Prence. The school, based in Midland in Beaver County, is not targeted and has been cooperating with investigators, school officials said.

Trombetta and Prence surrendered to the FBI on Thursday. They appeared before a federal magistrate and were released pending their arraignment next week.

Federal authorities haven't commented about the investigation since seizing records from the school, its management firm and a for-profit consulting firm, all founded by Trombetta, last year. Trombetta also resigned from the school in June 2012 and has refused several requests to comment since.

Trombetta could not immediately be located for comment and his attorney, J. Alan Johnson, a former federal prosecutor, did not immediately return an email and calls to his office before business hours. Prence could not immediately be reached.

The school has had its own woes. Four top administrators were fired last September. The solicitor of the charter school, Robert Masters, said last year that the firings had "absolutely nothing" to do with the investigation of the school's finances and those of the National Network of Digital Schools, a nonprofit Trombetta created that performs services for the cyber charter school, including managing the school and providing its curriculum. The nonprofit derives most of its income from the school.

A spokeswoman for the school and NNDS, Christina Zarek, has said neither organization is targeted and both have cooperated with investigators.

Trombetta's sister, Elaine Trombetta Neill, of Aliquippa, was charged this month with filing a 2010 federal tax return that included "income that was properly attributed to a relative," who was not identified in court documents. Neill filed the return as the registered owner of a business called One 2 One. According to court documents, Neill told investigators that business had deductible expenses of more than $90,000 even though federal prosecutors contend the business had "almost no legitimate business expenses."

Neill and her attorney have declined to comment.

(Copyright 2013 The Associated Press. All rights reserved. This material may not be published, broadcast, rewritten or redistributed.)

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