Dive Brief:

• Charter school operator Imagine Schools was ordered by U.S. District Judge Nanette K. Laughrey in Missouri to pay $1 million for its role in a profitable real estate scheme described in a 29-page ruling as "self-dealing."
• In this particular case, Imagine Schools, which has more than 30,000 students nationwide, negotiated a lease contract between a school it managed and a property it owned, benefiting from state taxpayer dollars received by the school and used for rent.
• The story is the latest among a growing number of similar allegations against charter school operators, according to Buzzfeed.

Dive Insight:

Founded in 2004 by Dennis and Eileen Bakke, who bought a struggling for-profit management company, Imagine is today made up of three entities: a non-profit called Imagine Schools Non-Profit, a for-profit management company called Imagine Schools, and a real estate development company called Schoolhouse Finance LLC. The triad allows the company to, hypothetically, legally engage in the various — and lucrative — stages of charter development.

Through Schoolhouse Finance, Imagine Schools is able to profit by leasing physical space to the charter schools it operates. One of the saddest examples of this cycle is in Florida, where an Imagine school was paying such exorbitant rents that it went into debt. The kicker? Debt leads to closure and closure means the schools remain on the hook to the for-profit entity for exorbitant amounts.

While this is obviously atrocious behavior, Buzzfeed points out that ProPublica found that a different nonprofit charter school had placed $20 million in taxpayer dollars into multiple for-profit companies owned by the founder of the school. It's a problem that extends beyond just Imagine.