Former head of Livermore charter schools charged for misleading investors

Bill Batchelor, the former CEO of the Tri-Valley Learning Corporation which ran two Livermore charter schools, has been charged by the US Securities and Exchange Commission for allegedly misleading investors.

LIVERMORE —The U.S. Securities and Exchange Commission has charged former CEO of the Tri-Valley Learning Corporation, Bill Batchelor, for allegedly misleading investors when acquiring a $25 million bond for Livermore charter schools.

Batchelor and John Zukoski, the former director of finance, were charged with a violation of the antifraud provision the Securities Act of 1933. They were accused of helping to prepare and sign a bond offering document of $25.54 million to fund the purchase and renovation of a Livermore building to house two schools in May 2015. One was a charter school run by the Tri-Valley Learning Corporation (TVLC) and the other was a private school, which Batchelor also managed.

But according to the complaint by the Securities and Exchange Commission filed in the U.S. District Court of Northern California and made public Monday, both men were aware that TVLC was experiencing “serious cash flow problems” that would negatively affect the corporation’s ability to make payments on the bonds. The commission also alleges TVLC was delinquent on payments owed to vendors, and had other debt from a private loan that was overdue by a year, and had drawn a bank line of credit to its limit in a previous bond.

But, the bond document failed to disclose that TVLC was in “serious financial distress,” and both Batchelor and Zukoski signed documents stating the material had no misrepresentations or omissions.

Without admitting any wrongdoing, Batchelor and Zukoski agreed to not participate in any future municipal debt offerings. Batchelor agreed to pay a $20,000 penalty, and Zukoski a $15,000 penalty. Both settlements are subject to a court approval, according to the Securities and Exchange Commission.

TVLC and California Preparatory Academy, the private high school school, went before the Alameda County Board of Supervisors to seek approval for a $30 million municipal bond to finance the purchase of a new high school building at 3090 Independence Drive in May 2015.

The bond was approved, and the Livermore Valley Charter Prep high school and the private school ended up sharing the same space on Independence Drive in Livermore.

After the bonds were sold, TVLC was unable to make any payments because of the financial struggles, the complaint states. Instead, the payments were made by the private school, Cal Prep, acquired by funds Batchelor received “from foreign sources,” the complaint alleges.

At the time of the bond, Batchelor was the manager of Goldstone United Investments — the seller of the buildings and owner of the land purchased with public bonds. Batchelor was also the owner of California Preparatory Academy and San Francisco Bay Preparatory Academy, which were the co-tenants to the property at 3090 Independence Drive in Livermore.

A 2017 audit ordered by the Alameda County Office of Education found that there were conflicts of interests that Batchelor did not report at the time. The audit revealed “a significant lack of disclosure of numerous entities in which Batchelor represented both sides of contracts and lease agreements, which benefited him personally.”

The two charter schools run by TVLC, Livermore Valley Charter Preparatory and Livermore Valley Charter School, were eventually closed in 2017, months after the company filed for bankruptcy in November 2016. Batchelor had left as CEO of TVLC in September 2015, but parents and other community members blamed him for leaving the two charters to deal with his wrongdoings, including financial mismanagement and decreased enrollment. Batchelor went on to help facilitate the purchase of other private schools across the nation, including some in Nevada, Arizona and Florida.

The 2017 audit also found that the two charters misappropriated public funds, including a tax-exempt bond totaling $67 million, and mainly pointed the finger at Batchelor.

“The lack of internal controls coupled with financing schemes designed to divert millions of dollars by Batchelor and others through relationships fostered between board members, close associates and other professionals with his nonprofit public and private companies created an environment that made it possible for the essential elements of fraud to occur,” the 2017 report stated.