A clout-heavy charter-school firm that operates four taxpayer-funded schools in Chicago is suspected of defrauding the government by funneling more than $5 million in federal grants to insiders and “away from the charter schools,” according to court records obtained by the Chicago Sun-Times.

No criminal charges have been filed in the ongoing investigation of Des Plaines-based Concept Schools, which has built a network of powerful supporters, including Illinois House Speaker Michael Madigan, D-Chicago.

According to the newly obtained court documents filed by law-enforcement authorities, the company, its contractors and “many” of its privately run, taxpayer-financed charter schools across the Midwest “engaged in a scheme to defraud a federal program.”

The misconduct dates to “at least 2007” and involves a program to extend Internet access to schools with low-income students, a U.S. Department of Education investigator wrote last year to get approval for search warrants from a judge in Chicago.

A spokeswoman for the FBI’s office in Cleveland, which is leading the probe, declined to comment because “the investigation is ongoing.”

Through a spokesman, Concept officials also would not comment.

Concept has 30 schools in Illinois and five other states, including four Chicago Public Schools-funded campuses with a total of about 2,200 students. CPS funds them under school-choice laws that provide for government funding of certain privately operated schools.

In June 2014, the FBI raided Concept’s northwest suburban headquarters and 18 other sites in Illinois, Indiana and Ohio, seizing records regarding top Concept officials and the company’s participation in the federal “E-Rate” program, the Sun-Times reported last year. At the time, authorities would say only that they were investigating a “white-collar-crime matter.”

The newly obtained search-warrant applications provide the first glimpse of what investigators suspected — that Concept violated the E-Rate program’s “fair and open competitive bidding” rules. The documents also identify Concept executives and contractors who have come under scrutiny.

Concept Schools' headquarters in Des Plaines,. | Tim Boyle / Sun-Times file photo

Concept Schools’ headquarters in Des Plaines. | Tim Boyle / Sun-Times file photo

Concept president Sedat Duman signed E-Rate certification forms for schools, court records show. They also show Stephen Draviam, a computer consultant in Ohio, told investigators he was picked to do grant-funded work for Concept’s schools without having to submit written bids.

Huseyin “Shane” Ulker, as Concept’s chief information officer, “established an invoicing scheme” involving Draviam’s company, passing along E-Rate funds to three businesses found to be “affiliated with” Ulker, according to the court records.

Ulker deposited money into the account of one of the three companies before “a wire transfer of $20,000 was made to a bank account at the Bank of Asya in Turkey,” wrote Geoffrey Wood, the special agent from the federal Education Department’s inspector general’s office who filed the search-warrant affidavit.

Founded in 1999 by Turkish immigrants, Concept has ties to the influential Muslim cleric Fethullah Gulen, who now lives in Pennsylvania and is wanted in his native Turkey after falling out with that country’s leader.

According to Turkish news reports, Gulen’s followers founded Bank of Asya and controlled it at the time Ulker allegedly wired the money in December 2008.

Federal agents raided Ulker’s apartment in Schaumburg last year, records show. He no longer lives there, and his name does not appear on a recent Concept payroll.

Draviam confirmed he cooperated with investigators but declined to comment further.

Concept cut ties with Draviam in 2009 and replaced him with vendors who have extensive ties to the charter operator, the feds say. The charter company paid more than $5 million in E-Rate funds to companies Wood described as “related entities.”

“By giving work to related vendors, Concept was able to direct large portions of E-Rate program money away from the charter schools and the E-Rate program and enrich those particular vendors,” Wood wrote.

The biggest beneficiary was Core Group Inc., which got more than $2.8 million in E-Rate funding, according to court records. At one point, Core Group relied on Concept for more than 92 percent of its business, the feds said.

Agents raided Core Group’s offices in Mount Prospect and the Elk Grove Village home of the company’s owner, Ertugrul Gurbuz. His lawyer, Patrick Cotter, declined to comment.

Over the past few years, the charter schools have employed former Concept executive Ozgur Balsoy as an E-Rate consultant, authorities said in the court records.

Ozgur Balsoy

Ozgur Balsoy

Balsoy told the Sun-Times that Concept “followed whatever were the requirements” of the grant program. His home in Mount Prospect was raided by the FBI, as were the Schaumburg offices of his company, Advanced Solutions for Education.

“We submitted all the documents they requested,” Balsoy said. “I don’t know if they are satisfied.”

Balsoy said he hasn’t heard recently from Ulker and thinks he’s “not in town.”

Authorities received a much different account from another former Concept official, Mustafa Emanet. He told them the charter operator’s leaders wanted to use companies that “had a close relationship” to them for E-Rate work even though the insiders “would charge more than an unrelated contractor,” according to the court documents.

Emanet gave investigators an internal email, in Turkish, that they believe represents a discussion of how Concept could profit from rigging E-Rate contracts for companies they would set up.

In an interview from his home in Ohio, Emanet said Concept has routinely used taxpayer money to hire contractors who are involved in Gulen’s worldwide movement, as are the charter chain’s executives.

“That’s how they work,” Emanet said. “They want to open their own companies so they make money out of it.”

A native of Turkey, Emanet told the feds he suffered for severing ties with Concept when he visited his homeland six years ago.

“Emanet has no criminal history in the United States, but in September of 2009, right after his resignation, Emanet was arrested in Turkey for possession of heroin,” the feds said in the warrant application.

Authorities said Emanet told them the charges in Turkey were “in retaliation for his ideological differences, and dealings with, Concept Schools.”

Emanet said he was jailed in Istanbul before being acquitted. “They framed me,” he said.

Emanet also said he and other Concept teachers and staff visited Gulen’s compound in Pennsylvania in 2007 or 2008, before he split with the movement.

The Chicago-based Niagara Foundation, a nonprofit group that lists Gulen as its honorary president, has hosted Madigan and other state legislators on junkets to Turkey in recent years, records show.

Madigan and his son Andrew Madigan also have visited Concept’s Chicago Math and Science Academy in Rogers Park, filming testimonial videos for the 600-student school. And Andrew Madigan’s employer, Mesirow Insurance Services Inc., has done business with Concept schools in Chicago.

Concept and other U.S. charter operators linked with Gulen have downplayed their connections to him. Gulen’s lawyers boasted of his worldwide school network, though, in federal court papers in 2008.

“In his position as Founder and Head of The Gulen Movement, Mr. Gulen has overseen the establishment of a conglomeration of schools throughout the world, in Europe, central Asia and the United States,” according to the court filing by attorneys for Gulen, who was successfully suing at the time to overturn the denial of his bid for permanent U.S. residency.

That statement was the result of a “misunderstanding between Mr. Gulen and his lawyers,” according to Alp Aslandogan, executive director of the New York-based Alliance for Shared Values. The group is an umbrella body for U.S. organizations affiliated with Gulen, including the’s Niagara Foundation.

Aslandogan said Gulen plays an “inspirational role” for schools but plays no direct part in them, adding that Gulen would disapprove of any unethical behavior.

After Gulen fell out a couple of years ago with Turkish leader Recep Tayyip Erdogan, Turkey has asked Washington to send Gulen there to face charges he and his followers have plotted to overthrow the government. A court in Istanbul issued an arrest warrant for Gulen, accusing him of leading an “armed terrorist organization.”

The charges in Turkey are “laughable” and politically motivated, Aslandogan said.

Aslandogan once lived in the Chicago area and headed the effort to build a Turkish cultural center in Mount Prospect, according to records from the suburb. He got help in that effort from Salim Ucan — now Concept’s vice president — and two businessmen, Galip Kuyuk and Ergun “Eric” Koyuncu, records show.

The FBI has searched the northwest suburban homes and businesses of Koyuncu and Kuyuk. Koyuncu declined to comment, and Kuyuk could not be reached.

Concept’s Chicago campuses

Des Plaines-based Concept Schools, which is under federal investigation for suspected grant fraud, runs four taxpayer-financed charter schools in Chicago:

• Chicago Math and Science Academy, 7212 N. Clark.

• Horizon Science Academy Belmont Charter School, 5035 W. North.

• Horizon Science Academy McKinley Park Charter School, 2245 W. Pershing.

• Horizon Science Academy-Southwest Chicago, 5401 S. Western.

Concept Schools search-warrant application