When I was writing a profile of Bruce Rauner last summer, his friends and admirers gushed over his dedication to creating and nurturing charters and improving Chicago Public Schools. CPEF—the Chicago Public Education Fund—came up time again as the nonprofit that allowed Rauner, who joined CPEF’s board in 2001, served as CPEF chairman, and is now an emeritus member, to pursue his passion for education reform. CPEF board member Susan Crown told me that the future governor was “incredibly dedicated to CPEF. Put everything he had into it.”

Now CPEF has been drawn into the latest CPS controversy—one that goes straight to the top.

The focus in early reporting from the Chicago Tribune and Chicago Sun-Times was on Rahm Emanuel-appointed CPS CEO Barbara Byrd-Bennett, who is being investigated by the U.S. Attorney’s office regarding a no-bid $20.5 million contract awarded in June 2013 to a Wilmette-based for-profit company called SUPES Academy. Hardly a household name, SUPES was hired to provide training to CPS principals.

What made the story so damaging to “B-Three,” as Rahm calls Byrd-Bennett, is that until she joined CPS as a coach and a consultant in 2012, quickly becoming CPS’s Chief Education Officer and then CEO, BBB had worked for SUPES. According to Sarah Karp, who writes for Catalyst, an education watchdog, BBB was still listed as working as a senior associate for a superintendent search firm called PROACT Search—with the same ownership as SUPES—four months after joining CPS. (BBB denied at the time that she had ever workeded for PROACT.)

Issued so far are subpoenas for grand jury appearances to aides close to BBB—three of whom she had worked with previously in other cities and brought to Chicago for six-figure jobs—seeking records pertaining to “financial benefits, gifts, honoraria, meals and reimbursements” from SUPES.

Over the last few days came reports that CPEF—its board loaded with wealthy friends and donors to both Rahm Emanuel and Rauner, and also with advocates of charter schools and Teach For America, both targets of the Chicago Teachers Union—was also in the headlights. The feds demanded CPS records pertaining to CPEF, which according to the Tribune had provided the “seed money” to “launch” the SUPES training program for principals, called  Chicago Executive Leadership Academy (CELA).

Were there better options than SUPES?

Why CPEF funded SUPES is, at this point, anyone’s guess. True, one of CPEF’s published goals is to create better principals through training. “Everyone [at CPEF],” Susan Crown told me, “is interested in quality principals and how to get better leadership.” CPEF’s website describes its goal as “build[ing] a critical mass of great public schools in Chicago by investing in talented principals.”

But there should have been some warning flags about SUPES, not only BBB’s prior relationship with the company (which was no secret) but also the background of one of the company’s owners, Gary Solomon. A former dean and teacher at Niles West, Solomon, the Tribune reported in 2001, accepted a settlement with Niles Township High School District 219 after being “accused of sending sexually explicit e-mail messages to female students before he left his position in 1999.” The $50,000 settlement included the stipulation that Solomon could never again work in the District.

Solomon aside—he denied the allegations and was never criminally charged—why fund an obscure for-profit firm when the city is so rich in universities, several of which have programs to train principals?

Had anyone at CPS or CPEF ever heard of the University of Illinois or the University of Chicago? Catalyst’s Sarah Karp quotes UIC professor Steven Tozer as touting his school’s training program for urban principals, adding that the school might have bid on the contract had it known about it and that he had never heard of SUPES until the deal had already been done.

University of Chicago professor Timothy Knowles is a CPEF board member. His CPEF biography describes him as serving as chairman of the U of C’s Urban Education Institute, which “develop[s] urban teachers and leaders through its Urban Teacher Education Program.”

In fact, CPEF itself sponsors a program called the Chicago Principals Fellowship—in partnership with Northwestern University’s School for Education and Social Policy and its Kellogg School. CPEF’s website promises the program will, “by the end of the 2016–17 school year… serve the top 10 percent of CPS’s principals.” It currently serves 20–25 of CPS’s “most talented principals,” putting its fellows through “a rigorous executive leadership program… A large majority of the principals lead schools with a student population that is both predominantly low-income and minority.”

Sound more promising than SUPES?

The SUPES training program garnered consistently negative evaluations from participating CPS principals. Back in December 2013, Catalyst’s Sarah Karp wrote that “almost from the start, principals grumbled that the training was too elementary and a waste of their time.” She quotes from principal evaluations of the sessions: “One question asks what the principal found to be least useful about the session; one attendee wrote 'All of CELA.'”

Also, much of the coaching is done via e-mail and by SUPES trainers who have no experience working in poor, urban schools. (In CPEF’s own just-released report, it noted as “Takeaway 01” that principals want “tailored, streamlined professional development opportunities and tools that respond to their schools’ individual needs.”)

The feds reportedly searched BBB’s houses in Chicago and a Cleveland suburb. (She was CEO of the Cleveland schools from 1998 to 2006 and chief academic and accountability officer of the Detroit Public Schools from 2009 to 2011.)

It’s important to note that no one at CPS or at CPEF has been charged with any wrongdoing.

As I write, the story is starting to seep into the offices of the mayor of Chicago and the governor of Illinois. Rahm is now stuck not only with the stain of having appointed BBB but also with having to convince House Speaker Madigan and Senate President Cullerton to hand over more millions to CPS to help it meet, at least partway, its $9.5 billion pension obligation and its $1.1 billion deficit for the budget year starting July 1. Arguing for legislative relief from a General Assembly suspicious of all things Chicago, and especially its school system, is an exponentially tougher one to make in the wake of the news that CPS handed over $20.5 million for mediocre principal training to a company from which its chief once drew a paycheck.

A board of finance titans

This script could have been written by CTU President Karen Lewis, or her acting replacement, Jesse Sharkey, or by Rahm’s opponent in the second round of the mayor’s race, Jesus “Chuy” Garcia.

Remember all the talk during the April 7 mayoral runoff of the 1 percent vs. the 99 percent? It would be difficult to assemble a board that screams 1 percent louder than CPEF’s—from the schools its members attended to jobs held to marriages made.

Among CPEF’s board members:

• Ken Griffin, CEO of Citadel, hedge fund genius, and widely reported to be “the richest man in Illinois.”
• Penny Pritzker, billionaire heir to the Pritizker fortune, former member of the CPS board, now an emeritus member of the CPEF board, which she once headed as chair.
• Susan Crown, principal of the family business Henry Crown and Company and chairman of the Susan Crown Exchange, “a social investment organization” with a focus on education.
• Mellody Hobson, president, Ariel Investments and wife of billionaire George Lucas.
• Helen Zell, philanthropist, executive director, Zell Family Foundation, and wife of real estate billionaire Sam Zell.
• Jana R. Schreuder, Northern Trust Company COO—the first woman in that position—and a past Teach for American advisory board member.

There are educators on CPEF’s board. They include:

• Tony Smith, Rauner’s just-appointed superintendent of Illinois schools, formerly head of the school district in Oakland, California, although never a classroom teacher and a long-time advocate of charter schools.
• Timothy Knowles, Director of the University of Chicago’s Urban Labs, chairman of the Urban Education Institute. Knowles is also a former deputy superintendent of the Boston Public Schools and the “founding director of Teach for America in New York City.
• Laura Bilicic, former classroom teacher, the co-founder and former head of a New York City private school for children with “significant learning challenges.”
• Penny Bender Sebring, a former high school teacher and current senior Research Associate at the University of Chicago and co-director of the Consortium on Chicago School Research.

That CPEF’s board is much heavier with finance titans than educators shouldn’t surprise anyone. CPEF is designed to mimic a private equity or a venture capital firm in the way it raises money—its funds range from $10-25 million—and spends it. CPEF’s current board chairman, Brian Simmons, a managing partner at Shorehill Capital, told me when I interviewed him about his friendship with Bruce Rauner (their sons were classmates at the Latin School), “many elements of CPEF are like private equity. But CPEF is not-for-profit…. [We invest] in organizations that help improve educational outcomes.” He mentioned specifically CPEF’s role in raising money to bring Teach for America to Chicago. (CPEF’s President and CEO, Heather Anichini, is a TFA alum.)

Of the seven members of the CPS board, two—David Vitale and Deborah Quazzo—have served on CPEF’s board. Those happen to be the two who have been most raked over CTU’s coals for alleged poor judgment and conflicts of interest. Vitale, named board chairman by Rahm Emanuel in 2011, is the former vice chairman of First Chicago, NBD Corporation and president of the First National Bank of Chicago and CEO of the Chicago Board of Trade. Complaints about him, as reported in the Tribune, note his risky, money-losing use of “auction-rate securities, nearly all of it paired with complex derivative contracts called interest rate swaps in a bid to lower borrowing costs.” Quazzo, a former investment banker turned venture capitalist, now partner of GSV Advisors, has been harshly criticized for investing in companies that do business with CPS. She has staunchly defended herself as not personally making a dime off her CPS service, but calls for her to resign have persisted.

The aforementioned subpoenas are dated April 13 and 14, a week after Rahm won reelection. Had the scandal hit pre-April 7, Garcia might be measuring curtains for his Fifth Floor office.

It’s surprising that Garcia didn’t bone up on the subject and raise it during the campaign. Catalyst first reported the story in July 2013—for going on two years, Catalyst has been mostly alone in chasing this story—at which point the city’s Inspector General launched an investigation.

In a report dated June 11, 2014, Catalyst noted that “CPS officials seem to be forging ahead with the second year of a principal professional development contract with the SUPES Academy, despite lingering questions about the quality of the training and the relationship between CEO Barbara Byrd-Bennett and the founders of the for-profit business, for whom she previously worked as a consultant.”

And what about BBB’s interim replacement, Board VP Jesse Ruiz, an attorney who has no classroom experience, but has served on the U.S. Department of Education Equity and Excellence Commission and as Chairman of the Illinois State Board of Education? Ruiz was part of the unanimous vote to approve the $20.5 million no-bid contract. And so was board chairman Vitale. (Ruiz was quoted in the Sun-Times as saying he voted yes because “I thought it would be a prudent action to make.”)

Ruiz, named CPS vice chairman by Rahm in 2011, said Saturday that he’ll kill the SUPES contract “if any wrongdoing is found” by the feds and that he is stopping all no-bid or “sole-source” contracts pending a review of the system’s contract practices.

What’s next?

This might be a good time for the mayor to consider some new CPS board members and a new CPS CEO. How about, say, Wendy Katten, the mother of a CPS sixth-grader who heads the group Raise Your Hand? She told the Sun-Times’ Lauren FitzPatrick on Saturday, “We brought this to the current board’s attention over and over at multiple meetings over the past two years. We don’t want to wait for the feds to have to get involved for CPS to do the right thing, to act ethically.”

Ruiz’s children attend the private University of Chicago Lab School, where Rahm also sends his children. At a City Club speech in June 2013, Karen Lewis observed that the “elites” know “what good education looks like because they have secured it for their own children.”

Once this mess gets sorted through, two arguments are more likely, I think, to gain traction: One is the call for an elected school board, adamantly opposed by both Rahm and Rauner—voters in 37 wards by upwards of 83 percent called for one on an advisory referendum during the February election. The other is Gov. Rauner’s alarming suggestion just last week that perhaps the best path for CPS is bankruptcy, a plan that Rahm adamantly opposes.

Then there’s that matter of negotiating a new teachers’ contract. The current one expires this June. BBB’s $250,000-a-year contract also expires in June. Despite implementing the closing of 50 schools, mostly on the west and south sides, Byrd-Bennett forged a friendship with CTU head Karen Lewis. And it was BBB who stepped in and negotiated with Lewis to stop the teachers strike in 2012.

On vacation in Mexico when the story broke, Rahm hasn’t had much to say so far.

SUPES rhymes with dupes; whether innocent dupes or guilty dupes remains to be seen. Stay tuned.

Update: The Chicago Public Education Fund released this statement from CEO Heather Anichini on Tuesday morning.

The Chicago Public Education Fund is a nonprofit organization that has made more than $50 million in grants over the past 15 years, primarily to organizations working with teachers and principals in Chicago’s public schools. In 2011, our organization made a $380,000 grant to SUPES Academy for a one-year pilot program to train CPS network chiefs and their deputies. Network chiefs are the CPS employees who supervise and manage school principals.

In 2012, following the completion of that pilot program, we declined a request by CPS leadership to provide a second year of funding for SUPES Academy’s training of principals. The Chicago Public Education Fund, its directors, and its staff have had no involvement with SUPES Academy since 2012.

We have been advised that our participation in the recent investigation regarding CPS and SUPES Academy is solely as a witness. We continue to cooperate in the ongoing federal investigation. Throughout this process, we remain focused on our commitment to the education of all of Chicago’s students and to the educators in our schools.”