Fenenbock disputes fraud allegations, but doesn’t address specifics
In an email to friends on Saturday, former El Paso Independent School District board President Dori Fenenbock defended herself against allegations that she engaged in fraud in a California investment deal for her online charter school.
She accused a court-appointed receiver who filed the civil lawsuit in San Diego County Superior Court of using the media to pressure her and EPISD Superintendent Juan Cabrera.
“The false and defamatory allegations against me are a far-fetched attempt to collect money from me that I do not owe and cross an ethical boundary,” she wrote. “Juan and I are public figures. Circulating their fabricated charges to the local media is a vicious tactic to coerce a settlement and I will do everything I legally can to stop this deliberate and shameful abuse.”
Her email was provided to El Paso Matters by a person who asked not to be identified. Fenenbock and Cabrera have not responded to requests for comment from El Paso Matters about the lawsuit. Fenenbock did respond to a call for comment Saturday.
The lawsuit alleges that Fenenbock and Cabrera defrauded charter school owners Sean McManus and Jason Schrock of nearly $4.5 million of the $5 million investment McManus and Scrock made in a virtual school company. Fenenbock’s company opened a Texas-based online public school last August called eSchool Prep.
Fenenbock’s email leaves out many of the specifics of the lawsuit, including the amounts of money involved. The lawsuit alleges she and Cabrera traveled to California multiple times in early 2019 to solicit the $5 million investment to help launch eSchool Prep. The investment was made in March 2019, according to the lawsuit.
McManus, Schrock and nine others were indicted in May 2019 on more than 60 criminal charges for stealing $50 million in California state education funds via a charter school scheme involving their company, A3.
The Sept. 15 lawsuit against Fenenbock and Cabrera was brought by Richard Kipperman, who was appointed by a judge as a receiver in 2019 to “take control over the schools previously managed by A3, as well as control and possession of certain assets of the various defendants and non-parties in the criminal action,” the suit said.
The lawsuit alleges that Fenenbock and Cabrera demanded that McManus resign from the eSchool board in June 2019. When he did not agree, removed him from the board and ended all communications with him and Schrock, according to the suit.
They paid McManus $483,000 in January 2020, which the lawsuit alleges defrauded him of most of the $5 million initial investment.
In her email, Fenenbock wrote that she bought McManus and Schrock “out at the appraised value of their investment” after they “would not relinquish their seat on my board.” She does not explain in the email how their investment was worth less than 10 cents on the dollar in a matter of months.
Cabrera was “inappropriately” named in the suit, Fenenbock wrote. “He is among many advisors and has no official role, has received no compensation, and has no ownership in my business,” she wrote.
The email makes no mention of an allegation in the lawsuit that Cabrera said he would resign as EPISD superintendent if McManus and Schrock made the $5 million investment “and devote all of his efforts to assisting them in operating e-School Prep.”
Cabrera has not responded to requests for comment about the lawsuit.
The ownership of eSchool is difficult to determine, as it is managed by two trusts. The lawsuit alleges the structure is meant to shield Fenenbock and Cabrera.
“Plaintiff (the receiver) is informed and believes that Cabrera and Fenenbock designated the trusts as managers of the LLC to hide their involvement in the eSchool enterprise, and because, contrary to their promise to McManus and Schrock, Cabrera had no intention of stepping down as Superintendent of El Paso I.S.D.,” the lawsuit states.
Cabrera told El Paso Times in October 2019 that he was informally advising Fenenbock’s business venture. Emails the newspaper obtained between Fenenbock, Cabrera and Texarkana Independent School District officials revealed Cabrera described Fenenbock as his “partner” in the company and referred to eSchool Prep as “our school.”
Texarkana ISD let Fenenbock’s company, eSchool LLC, use its state license to operate eSchool Prep for a five-year period. Texarkana ISD is one of five public school districts in Texas licensed to operate an online school. Two charter school chains are also licensed to run these schools, which enroll students from across the state.
In her email, Fenenbock said she approached McManus and Schrock about investing in her company because they “were highly regarded and operated 17 virtual schools in 3 states with over 60,000 students. They were attracted by my vision for high quality virtual learning and expansion in Texas.”
The civil lawsuit filed against Fenebock and Cabrera alleges they “represented that the eSchool enterprise had a base valuation of $15 million and this would increase to $17 million if A3, Schrock and McManus provided their proprietary operational protocols and procedures, and if they agreed, at cost, to develop and operate the programs as part of their eSchool enterprise.”
McManus and Scrock were to own 30% of eSchool LLC in exchange for their $5 million investment, the suit states.
“This is a civil shareholder dispute, not a criminal charge,” Fenenbock wrote. “I have not heard from either investor since the buyout and I have continued to build and operate a high quality virtual school.”
She vowed to continue with her charter school.
“My passion is to change education forever,” she wrote. “Amidst the pandemic, more than ever, there is a need for innovative, virtual learning that is flexible, adaptive, engaging, and dedicated to meeting every child where they are.”