Monday, November 21, 2016
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Court Affirms Couple’s Convictions for Misusing Charter School Funds
By a MetNews Staff Writer
The Court of Appeal for this district has rejected an appeal by the founders of a San Fernando Valley charter school from their convictions of embezzling funds and related offenses.
Yevgeny “Eugene” Selivanov, 41, was sentenced to nearly five years in state prison, while his wife, Tatyana Berkovich, 36, was sentenced to serve 45 days in county jail, perform 320 hours of community service and five years of probation. Div. Four affirmed the convictions, but said Los Angeles Superior Court Judge Stephen Marcus erred by holding Selivanov jointly and severally liable for restitution of funds embezzled by Berkovich using a school credit card.
Selivanov, the school’s former executive director, was found guilty of 18 counts of embezzlement by a public officer, money laundering and tax fraud. Berkovich, the former school principal and later president, was found guilty of one count of embezzlement.
The school, Ivy Academia Charter School, which achieved high marks on its test scores and curriculum, continues to operate, with campuses in West Hills and Woodland Hills.
A news account of the sentencing said Marcus was particularly critical of Selivanov, saying the former Goldman Sachs employee “took advantage of these positions of trust,” created sham financial transactions between Ivy and his various companies,” and used the school “as an ATM machine.”
Witnesses testified that the couple used credit cards to purchase personal items, including diapers, a “tax secrets” seminar and meals at local restaurants. The defendants claimed that these expenses were for business meetings, although the charges were incurred at night or on weekends, and entered them into the school’s books under such line items as “utilities and housekeeping,” “school supplies,” and “dues and subscriptions.”
There was also testimony that Selivanov created an entity that owned the land on which the campuses were located, raised the school’s rent from $18,390 a month to more than $40,000 through a series of sham transactions, and schemed to take over a loan held by the school, resulting in an illegal transfer of $500,000 in school assets to another organization controlled by the couple.
The defendants argued on appeal that all of the transactions were legitimate and that prosecutors hadn’t proven otherwise.
Justice Audrey Collins of Div. Four disagreed, in an opinion filed Thursday.
With regard to the use of the American Express cards, for example, the justice said it was permissible for jurors to infer fraudulent intent from the nature of the charges and the way the expenses were entered on the books.
No such instruction was necessary, Collins said, because Marcus did instruct the jury on the meaning of good faith, which is an essential element of the claim-of-right defense.
Jurors, the justice said, were free to weigh the conflicts between the defense expert—who said the school’s books reflected substantial sums owed to Selivanov at all times—and the evidence pointing to a lack of good faith including the evidence that the payments were made to his company, rather than to himself, that the transfers were not properly documented in the school’s books, and that he did not prepare tax records showing the money as salary.
With regard to restitution, Collins rejected Selivanov’s argument that restitution should not have been ordered to the school because it made no claim for the money. The state Constitution, she said, mandates restitution to “all persons who suffer losses as a result of criminal activity,” and the statute implementing that provision makes no requirement that a victim make a claim for the money.
The justice did agree with Selivanov that he need not repay any of the $22,396.60 that was charged improperly by his wife.
She rejected the prosecution argument that Selivanov had “control of the finances” and “tried to hide the charges.” Such conduct was not the basis of the embezzlement conviction related to the defendants’ use of the American Express cards, Collins explained, there being no evidence that Selivanov “directed, aided, or endorsed Berkovich’s fraudulent use of her card,” or that he was even aware of her spending.
Selivanov remains responsible for more than $227,000 in restitution to the school, as well as more than $43,000 owed to the state as a result of the tax charges.
Attorneys on appeal were Nina Marino and Allen G. Weinberg of Kaplan Marino for Berkovich, Jeffrey H. Rutherford and Nimrod Haim Aviad of Crowell & Moring for Selivanov, and Deputy District Attorneys Roberta Schwartz, Serena R. Murillo—now a Los Angeles Superior Court judge—and Matthew Brown and Deputy Attorneys General Michael C. Keller and Eric J. Kohm for the prosecution.
The California Charter Schools Association filed an amicus brief supporting the defendants, arguing that the guidelines on how public money can be used are murky, and that school officials would be overly conservative in their spending, to the detriment of their students, if they feared prosecution over those decisions.
The case is People v. Selivanov, 16 S.O.S. 5780.
Copyright 2016, Metropolitan News Company