Here is a summary of the
charges from the U.S. Attorney's Office (Virginia, Western district). What he was actually
convicted of was a subset of these.
Of course, what he was actually
guilty of is anybody's guess, and many a parent's private nightmare.
NEWS RELEASE
UNITED STATES ATTORNEY'S OFFICE
WESTERN DISTRICT OF VIRGINIAJohn L. Brownlee
United States Attorney
Heidi Coy
Public Affairs Specialist
BB&T Building
310 1st Street, S.W., Room 906
Roanoke, Virginia 24011
(540) 857-2250
FAX (540) 857-2180
August 4, 2006
FOUNDER OF WELLSPRING ACADEMY CHARGED WITH BANK, WIRE, AND MAIL FRAUDUnited States Attorney John L. Brownlee announced today that Robert Serge Gluhareff, age 61, of South Boston, Virginia, was indicted by a federal Grand Jury sitting in Roanoke, Virginia on July 25, 2006.
Gluhareff was charged in a 36 count indictment with bank fraud, assisting in the preparation of false tax returns, mail fraud, wire fraud, perjury, and money laundering.
"Mr. Gluhareff took advantage of parents who were desperate to help their children. He was dishonest in his dealings with parents, banks, and corporations. His deceptions hurt these families financially, and the manner in which the school suddenly closed scarred these families as well," said United States Attorney John Brownlee.
According to the indictment, Gluhareff was the founder and CEO of Wellspring Academy in Sutherlin, Virginia. Wellspring Academy opened in the late 1980's, and was a residential school that was promoted as providing counseling in a Christian setting to young people with academic and behavioral problems. Wellspring Academy operated under the corporate name "The Religious and Educational Institute of Raleigh, Inc."
For a time, Wellspring Academy admitted both girls and boys. By 1997, it was a school for boys only. From 2000 to 2003, approximately 60 to 100 boys attended Wellspring Academy at any one time. Tuition during this time ranged from $43,000 to $49,000 per student.
According to the indictment, Gluhareff's wife, two sons, daughter in law, and a girlfriend all lived on the Wellspring Academy Campus and received paychecks from Wellspring Academy.
The Grand Jury has alleged that from 1999 to 2003, Gluhareff and Wellspring Academy experienced serious financial problems and didn't have the money to meet expenses.
When parents brought their sons to Wellspring Academy, they were required to pay the initial $21,500 to $25,000 tuition payment that day. Many parents did not have the funds available and were forced to apply for loans. Gluhareff would convince students' parents to write tuition checks, but promised not to deposit the checks for an agreed upon period. Gluhareff would then deposit the checks in the Wellspring Academy account, knowing that the parents' accounts had insufficient funds to cover the check.
Gluhareff would write checks on his own credit card accounts and loan accounts and deposit them into the Wellspring Academy checking account, knowing they would be returned for insufficient funds. This enabled Gluhareff to create artificially higher account balances in the Wellspring Academy checking account.
The Grand Jury has also alleged that Gluhareff would tell parents that certain tuition payments were tax deductible as "scholarship donations" if they were paid in advance. Gluhareff also asked parents to have their employers donate matching gifts to Wellspring Academy, even though Gluhareff knew the "scholarship donations" were actually student tuition payments and not charitable contributions.
Gluhareff promised parents that each student would meet individually with a licensed counselor weekly, while knowing that none of the Wellspring Academy Counselors were licensed in Virginia. To increase the marketability of Wellspring Academy, Gluhareff made false statements about the license status of the Wellspring Academy "counselors."
In July 2002, Gluhareff obtained a business loan for "The Religious and Educational Institute of Raleigh, Inc." from BB&T. Gluhareff secured the loan with a Deed of Trust on all of his land. As part of the loan agreement, BB&T required that Gluhareff's credit card debt, which was in excess of $180,000, had to be paid in full, and all credit card accounts had to be closed except one. In addition, Gluhareff was not allowed to incur additional debt. Despite this restriction, In November, 2002, Gluhareff, without consent of BB&T, obtained a loan from Beneficial Finance for $35,000 in exchange for a Deed of Trust on a portion of the same land already pledged to BB&T for the July loan. In April, 2003, Gluhareff sold timber from land securing the BB&T loan.
Gluhareff called parents on Easter Sunday, April 20, 2003, informing them that Wellspring Academy was closing and that they should pick up their sons immediately.
On August 7, 2003, Gluhareff and his wife filed for personal bankruptcy and corporate bankruptcy.
On May 24, 2006, Gluhareff appeared in front of a Grand Jury in the Western District of Virginia sitting in Roanoke, Virginia. The Grand Jury has charged that Gluhareff knowingly made a false material declaration in regards to the licensing of the counselors that worked at Wellspring Academy.
If convicted on all counts, the maximum penalty faced by the defendant is 297 years imprisonment and/or a fine of $7,400,000.
The investigation of the case was conducted by the United States Postal Inspection Service, the Virginia State Police, and the IRS. Assistant United States Attorney Jennie L. M. Waering will prosecute the case.
A Grand Jury indictment is only a charge and not evidence of guilt. The defendant is entitled to a fair trial with the burden on the government to prove guilt beyond a reasonable doubt.
