Photo: Chris Post
Islamic cleric Fethullah Gulen speaks to members of the media at his compound, Sunday, July 17, 2016, in Saylorsburg, Pa. Turkish officials have blamed a failed coup attempt on Gulen, who denies the accusation. (AP Photo/Chris Post)
Albany
From a guarded 25-acre compound in the Poconos, Fethullah Gulen preaches to millions of worldwide followers. The two main buildings at his compound reportedly resemble the architecture of Turkey, where Gulen remains an influential figure despite his 18-year exile.
Turkey's increasingly authoritarian president, Recep Tayyip Erdogan, blames Gulen for fomenting a bloody coup attempt in Turkey last year; the Turkish government wants to see him extradited. Gulen denies those allegations, and his supporters say he preaches messages of service, tolerance and education.
A public records search concerning Gulen's Golden Generation Worship and Retreat Center turns up potential dealings closer to home.
In 2013, the credit database service Experian opened a file on an entity listed as Apple Educational Ser. The address given for that firm is 1857 Mt. Eaton Road in Saylorsburg, Pa. — Gulen's compound.
Apple Educational Services is a New Jersey-based charity incorporated in New York in 2005 by a number of Turkish men living in the United States. New York Comptroller Tom DiNapoli has released three reports flagging contracts between Apple or related entities and Gulen-inspired charter schools in three upstate cities.
Photo: PAUL BUCKOWSKI
New York Comptroller Tom DiNapoli has released three reports flagging contracts between Apple or related entities and Gulen-inspired charter schools in three upstate cities. (Paul Buckowski / Times Union archive)
According to a March report by CBS News, the FBI is investigating whether money is being skimmed from taxpayer-funded, Gulen-inspired charter schools in America in order to support his movement in Turkey. About 140 schools in the United States are considered to be part of the Gulen movement, which in its schools in the United States focus on math and science education.
In New York, Gulen-inspired schools operate in Buffalo, Rochester, Syracuse and Utica. The schools are often staffed with Turkish men here on visas meant for highly skilled workers, and their boards of directors are also generally well-represented with Turkish men.
Photo: PAUL BUCKOWSKI
The Utica Academy Of Science Charter High School in Frankfort, N.Y. (Paul Buckowski / Times Union)
None of the leaders of the upstate New York charter school officials said they had any knowledge of any FBI probe in New York.
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But an extensive Times Union review of public records found a pattern of deals involving those New York schools and two charities that provide services to them: Apple Educational Services and Terra Science and Education.
Out of all the possible locations where the Gulen movement charter schools could locate in Utica, Syracuse or Rochester, all have selected Terra Science and Education as their landlord.
In several instances, Terra — founded in 2010 and based in Syracuse — has purchased land and then received rents from the schools in amounts that would quickly exceed the purchase prices. Some staffers at the schools or members of their boards of directors — the people who decide where to steer school contracts — also have been affiliated with Apple or Terra.
For instance, three people that have been board presidents for the schools in Buffalo, Rochester, Syracuse and Utica were also listed as the directors of Terra in its 2011 tax return. Unlike traditional public schools, there is no public vote to pick the boards of directors for charter schools.
In the school year that begins this fall, state taxpayers will provide more than $26.7 million to Gulen-inspired charter schools in New York, according to an analysis done by the New York State United Teachers union, which has warred with charter schools.
NYSUT spokesman Carl Korn said the State Education Department and lawmakers "should revoke these charters and reform the charter law to ensure real accountability and transparency for how public funds are spent and students are served."
Leaders of the schools strongly deny there are any fiscal irregularities, and insist their rental agreements are standard and represent good deals for taxpayers.
They also point to strong academic results: The Buffalo Academy of Science, also known as BuffSci, was named one of America's best high schools in 2017 by U.S. News & World Report. Ninety-five percent of students at the school are economically disadvantaged and 13 percent have special needs, according to Joseph Polat, the school's director, who said the school is "not motivated or governed by any political causes."
Photo: DANIEL ETTER
Students attend a biology class at a Fethullah Gulen school in Istanbul, March 16, 2012. (Daniel Etter/The New York Times)
Gulen-inspired schools around the world — there are estimated to be roughly 1,000 — are known for giving scholarships to the poor — a practice in keeping with what his supporters describe as his reading of Islam that emphasizes peaceful coexistence, tolerance and service. Some believe he is a force against Islamic extremism.
While the schools in the United States do not have a religious bent, the influence of Turkish culture can be seen. For instance, the schools in Buffalo and Utica have hired Turkish language teachers that came to the United States on work visas.
After the failed coup attempt in Turkey, Gulen schools there were shut down. The Turkish government has designated his network as a terrorist organization, and sought to purge its members from bureaucratic ranks. In April, Erdogan tightened his grip on power by winning a ballot referendum giving him sweeping new authority.
In the United States, the Turkish government has also sought to undermine the Gulen charter schools by funding lawyers and high-profile representatives to assail the movement and its affiliates. (A Times Union request for comment made through Gulen's website was not answered.)
If there has been another center of Gulen's movement in the northeast United States besides his Poconos compound, it may be a one-story brick building at 545 Interstate Place in Carlstadt, N.J.
In 2004, a nonprofit that would eventually be renamed the Peace Islands Institute — an organization inspired by Gulen that spreads his ideas — rented out the Carlstadt property. Other nonprofits tied to the Gulen movement have also listed the address.
Officials of a company called Zaman Ltd. listed the address when they were soliciting H1-B visa applicants to fill editorial positions at the company. Zaman was Turkey's largest, pro-Gulen newspaper, and has had an English-language edition. The Turkish government took the newspaper over during its crackdown on opposition.
Photo: RUTH FREMSON
Fethullah Gulen, a Turkish preacher who leads one of the most influential Islamic movements in the world, at his compound in Saylorsburg, Pa., in June 2010. Gulen has long advocated a moderate, tolerant brand of Islam, but critics say his movement is persecuting opponents and working toward a conservative Islamic Turkey. (Ruth Fremson/The New York Times)
Mixed in with these companies and nonprofits are the education nonprofits that have landed deals with charter schools in upstate New York.
Apple Educational Services has listed the same Carlstadt address both in its 2007 tax return and on an old version of its website, though it now lists a different New Jersey address. And a number of other companies that have received contracts from the upstate New York charter schools can also be linked to the Carlstadt address through public records.
One nonprofit also tied to the Carlstadt address is North East Turkish American Scholars Inc. Its board of directors has featured leaders of both of the charities that have landed the upstate New York contracts. The group's board has included Fehmi Damkaci, the president of Terra and the leader of the Syracuse charter school's board of directors, and Mesut Sahin, who has served as the president of Apple Educational Services.
Buffalo
A 2013 audit from DiNapoli's office examined a lease agreement BuffSci signed in 2006 with a New Jersey firm. Though the entity was unnamed in this audit and others from DiNapoli's team, the comptroller's office confirmed it was Apple Educational Services.
Apple Educational Services purchased the old Young Women's Christian Association building in Buffalo for $650,000 in 2006. The president of BuffSci told the comptroller's office it did not communicate with Apple before signing a lease at the property — but that assertion contradicted 2005 board minutes, DiNapoli's auditors found.
"We find it surprising that (Apple) — in business for less than a year with no apparent real estate experience and with limited financial resources — would have purchased the YWCA building without prior communication with (BuffSci) officials and without some form of commitment from the school to enter into a lease agreement," the audit found.
Auditors also questioned whether the transaction was done at the required "arm's length" to prevent self-dealing. And it flagged another arrangement: The school and not the landlord, Apple, was responsible for paying costs such as utilities, general maintenance and repairs.
The lease agreement appeared to benefit Apple more than BuffSci, the audit found, with the lease payments exceeding Apple's costs by more than $4.4 million — a return on investment of more than 200 percent.
In 2015, Apple sold the property back to BuffSci for $4.15 million, more than six times the amount Apple had paid for the property nine years earlier.
In buying the property, BuffSci also got $3.4 million in tax-exempt bond financing from the Eric County Industrial Development Agency.
"Public funds are managed carefully by the school as this can be confirmed by our independent auditors, review of our financial records, and meeting minutes," Polat said.
He said a search committee had considered 19 different sites before choosing Apple as a landlord in 2006.
Polat said that the $4.4 million property purchase from Apple in 2015 was at "appraised value" for a property in downtown Buffalo, which has experienced a real estate boom in recent years; it also reflected "major capacity improvements" such as a new heating and cooling system, a "tear-off" roof, new windows and additional classrooms. He also said the school had received a "rent credit" from Apple which dropped the purchase price to $3.7 million.
"We have no affiliation or relationship with Apple Educational Services," he said. "In purchasing the property from Apple, each party was represented by separate counsel and the terms of the deal were negotiated at arm's length."
But if officials at the school are not directly connected to Apple, there are notable second-degree connections. The president of BuffSci's board of directors has been Murat Demirbas, a University at Buffalo computer science and engineering professor. In a 2011 tax return, Demirbas is listed as the treasurer of Terra Science & Education, the other Gulen-affiliated education management nonprofit.
Polat said Demirbas left Terra's board in 2012, and noted that the Buffalo school has not done any business with the nonprofit.
Syracuse
In tax returns, Terra has listed the address of its Syracuse headquarters as 1001 Park Ave. — the same address as Syracuse Academy of Science's high school. (Terra used to rent cubicle space from the school for a half-time employee, according to Terra, but now has moved into a bigger office.)
That school is one of three locations in Syracuse that have paid rent to Terra in amounts that — as in the case of BuffSci — seem to total far more than the amount Terra paid for the land it's renting to the schools.
Terra says that rent analysis should not be done based on how much is getting paid, but by the square foot. It says rents at all Terra-owned schools are between $4.75 and $5.75, which it says can run as high as $8 to $10 for other non-Terra owned charter schools in similar markets.
In another seeming overlap, Terra's website has listed its address as 1409 W. Genesee St., where the Syracuse Academy of Science's "district office" — a property in addition to its three Terra-owned school locations — is based. Terra said it now operates out of a different location.
Those are not the only close ties between the schools and its landlord.
Fehmi Damkaci has served as president of the board of directors for the Syracuse Academy of Science schools; he is also the president of Terra.
Damkaci has "never been paid either by the schools or by Terra," Terra said in a statement, adding that he has "actually dedicated his life, as an educator, to both institutions to increase STEM awareness" in central New York.
Annual reports issued by the school state that Damkaci "abstains from voting matters affecting both the school and Terra."
Under the terms of three 15-year leases with Terra at its three locations, the Syracuse schools will pay $908,000 in total rent in 2017, according to Syracuse Academy's annual report. The amount increases annually by either 4 percent or the Consumer Price Index, whichever is greater.
Like all the Gulen-inspired schools that do business with Apple or Terra, Syracuse Academy is also responsible for paying utility bills and maintenance. Terra says that "almost all commercial leases" actually require the tenant to pay expenses like insurance and maintenance, not the landlord. That view was echoed by commercial real estate experts contacted by the Times Union.
Property records show that Syracuse Academy's high school was purchased in 2011 for $1.26 million, and that its elementary school for $375,000. Its middle school was purchased by Terra in 2014 for $350,000, records show.
In other words, based on those rents the payments to Terra would pay off the property purchase prices in about two years.
When Terra decided to construct its elementary school, it bypassed local contractors and hired Apple Educational Services, the New Jersey firm involved in the flagged Buffalo transactions, the Syracuse New Times reported.
Galip Bak, the director of the Syracuse Academy from 2013 to 2016, said in an interview that it was easier for Terra to get a loan from banks than it was for a charter school, which must have its charter renewed by state government every five years. Bak said he "kept pressing" for Terra to "do something for our school" because of the revenues it seemed to be making; Terra subsequently implemented a scholarship program for Syracuse students.
There are other close connections between Syracuse Academy and Apple, or companies closely tied to it.
From 2006 to 2008, Tolga Hayali was the "group science coordinator" for Apple, according to his LinkedIn profile. In August 2008, he took a job as director of the Syracuse Academy. Since 2013, he has been the superintendent of both the Syracuse charters and another set of Gulen-inspired schools in Utica.
A DiNapoli audit of Syracuse Academy covering July 2010 through 2012 — the period in which Hayali was director — found that the school purchased equipment and furnishings from a "limited group of four vendors that were affiliated with one another" as well as Apple and a sixth that were in "close proximity." All hailed from New Jersey.
When Syracuse Academy sought bids for various goods or services — from computers and furniture to clothing — it failed to solicit the required number of bids, the audit found. In some cases, quotes were sometimes dated after purchases were made.
Also, the six vendors that were picked did not always specialize in the items they were selling, and the audit questioned whether $383,000 in purchases could have been obtained at lower prices.
Apple received $308,000 to provide software support, testing and staff training. The school did not solicit other bids for the services during the audit period. (School officials did issue a request for proposal for 2012-13.)
The Syracuse Academy did not return request for comment. But in 2014, Damkaci dismissed the issues raised by DiNapoli's audit to the Syracuse New Times as "procedural problems." He said the school had been unaware that at least two of the vendors were related to one another.
Rochester
Four of the Apple-affiliated New Jersey companies flagged in DiNapoli's Syracuse audit came in for criticism in another audit of Gulen-inspired schools in and around Rochester.
A DiNapoli audit of Rochester Academy Charter School from July 2011 to March 2013 found that its procurement process was not competitive enough, and lacked proper documentation to support decisions. The school "used restrictive practices in some of their purchases, which undermine the intent of true competition."
It also stated that although the payments made to the four vendors appeared to be separate, the same person endorsed the checks. One of the purchases — from a company called Inspire Uniforms — was for tables and chairs, even there was no evidence the vendor sold those wares.
"The (school's) Business Manager told us that he believed the vendors in question were members of a partnership that had the same owner," the audit states.
Mehmet Demirtas, director of Rochester Academy, said in a statement that he had no knowledge of the reported FBI probe and the school has "never diverted funds to any person or entity."
He said the DiNapoli audit did "not find any evidence of a misuse of the charter school's funds" and noted that the state Board of Regents has approved a full, five-year extension of the school's charter.
Terra Science and Education plays a role in Rochester, as well: It is the landlord for at least one of the Rochester Academy schools, at 1757 Latte Road in the town of Greece. The property, a high school, was purchased by Terra in May 2016 for $700,000.
The Rochester Academy is paying $7.76 per square foot to Terra, according to Demirtas, which he said is below the average rate for acceptable commercial rental properties in the metro Rochester area. He provided an analysis of rental rates showing the rent to be in the mid-range as compared with other local charter schools.
Terra says it also put in $1.2 million in renovations.
The school's board of trustees has begun negotiations with Terra to purchase the building, which would result in an expected saving of $13,000, according to Demirtas. He said the school expected to close on the deal "within a few weeks."
As in Syracuse, there is a Rochester connection between the school board that makes contracting decisions and Terra, which landed a contract. Mahmut Gedemenli, who has been president of the board of directors at Rochester Academy, in 2011 was listed in tax filings as the secretary of the board of Terra. His volunteer work ended after one year.
Utica
As noted, Fehmi Damkaci has been chairman of the Syracuse schools' board and the president of Terra. He also has been the president of the board of the Utica Academy of Science Charter School. As in Syracuse, the school's reports say Damkaci refrains from voting on matters involving Terra.
Photo: PAUL BUCKOWSKI
The Utica Academy Of Science Charter High School in Frankfort, N.Y. (Paul Buckowski / Times Union)
And the Utica Academy superintendent is Tolga Hayali, the Syracuse superintendent who is a former official at Apple.
According to a June 2015 report, the school projected paying $222,000 in rent over the following year for its high school location at 160 School Lane in the nearby village of Frankfort, equating to more than $19,200 a month. The lease runs through 2030 and will increase each year by either 4 percent or the Consumer Price Index.
The property was purchased by Terra in April 2015 for $425,000, which means that at just the base rent Terra would recoup the cost of the land in less than two school years.
In 2015-2016, the school was in 2015-2016 to pay only $72,000, or $6,000 a month, at a location at 1214 Lincoln Ave. Notably, that property is not owned by Terra, but by Holy Trinity Church.
As in the other three upstate cities, under both leases, the school and not the landlord, is responsible for payment of utilities, maintenance, and real property taxes. The school paid a total of more than $111,000 in maintenance costs in the school year ending in June 2016. The school itself was also expected to pick up $15,000 in property taxes in 2015-2016, according to its 2015 annual report.
Unlike the schools in Buffalo, Syracuse or Rochester, a DiNapoli audit in 2015 of contracting at the Utica school returned an entirely clean bill of health. These audits "are not for the faint of heart," said Mustafa Ersoy, director of the Utica Academy of Science. "If the Comptroller's office gives an entity a clean bill of health, you can be sure it is very healthy."
Ersoy also suggested that he would sue the Times Union if there were a suggestion the school was engaged in fraudulent behavior.
He said DiNapoli's office had reviewed its transaction with Terra and found no issues. He said the Terra-owned Frankfort property — with the substantially higher rent — was not comparable to the less costly Holy Trinity school building, which was "substantially lower in grade and quality" and did not include a gym, a full-service kitchen and a functional cafeteria.
Ersoy said the Utica school asked Terra to purchase the property, renovate it and lease it on reasonable terms. Terra spent $400,000 renovating the new property and is charging $4.85 per square foot, he said, while the average commercial lease in Utica was about $10 per foot at that time.
"I do not believe you can find a banker or developer anywhere in the state that would provide better terms," Ersoy said.
The charities
Terra said in its statement that in all the properties it owns in Syracuse, Rochester and Utica, it not only had to pay the purchase price for land, it had to pay for financing costs, attorney fees and renovations to meet the needs of the charter schools. The renovation costs ranged from $300,000 to $1.2 million, according to Terra, and the charity often acted as the general contractor to reduce costs.
With its money, Terra Science and Education officials say it also funds academic fairs, trips for students to compete in competitions in other states, teacher development conferences, merit-based awards for teachers in Utica and a free four-week college readiness program for Syracuse students, among other endeavors.
Apple's executive director, John Durmaz, said he has been in the position for only three years. Changes in internal administration and management "makes it very difficult, if not impossible" to respond to many of the Times Union's questions about the charity's links to the larger Gulen movement, he said.
Durmaz said that during his time running Apple the organization has provided educational database services, professional development programs for teachers and administrators and supplemental educational and exam preparation services. He said Apple has no current service contracts with any of the upstate schools.
"Needless to say, AES has no ties or affiliation with any organization or schools," Durmaz said.
The schools emphasized that state education officials visit the schools annually to speak to parents, teachers and administrators, and they must file annual reports detailing the operations and finances.
The state Board of Regents, which charters and oversees the schools, seems pleased with their performance. At a mid-June meeting in of the K-12 committee in Albany, they recommended without controversy to allow the Buffalo Academy of Science to dramatically increase in size.
"This is one of the highest-performing schools in the Buffalo City School District," said David Frank, executive director of the Department of Education's charter schools office.
The Regents' committee also recommended the merger of the boards of directors at the Syracuse and Utica schools. Syracuse's academics were "strong," and the merger would allow Utica to get "more support from the Syracuse school," Frank said.
A spokeswoman for the Department of Education said it has "provided extensive oversight and monitoring to these schools," and that corrective action was taken after the audits raised issues.
Mehmet Demirtas, director of the Rochester Academy, said the schools were victims of a smear campaign.
"I understand that there are some powerful political forces that seek to denigrate charter schools and eliminate or constrict that charter school option and reduce its availability to students," Demirtas said. "These efforts are motivated by a myriad of interests, but I do not believe any of them center on the best interests of our community's children or their families."
http://www.timesunion.com/tuplus-local/article/New-York-schools-with-Turkish-ties-draw-notice-11259297.php
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