OREANDA-NEWS. June 22, 2016. The Securities and Exchange Commission today announced a settlement with Juan Rangel, the former President of UNO Charter School Network Inc. and former CEO of United Neighborhood Organization of Chicago, for his role in a misleading \\$37.5 million bond offering to build three charter schools.

The SECs complaint alleges that Rangel negligently approved and signed a bond offering statement that omitted the charter schools multi-million-dollar contracts with two brothers of UNOs chief operating officer conflicted transactions that could have threatened UNOs ability to repay bond investors. 

We allege that Juan Rangel signed off on the offering document without even reading it, said David Glockner, Regional Director of the SECs Chicago Regional Office.  This kind of negligent behavior is unacceptable in the securities markets.

According to the SECs complaint filed in U.S. District Court for the Northern District of Illinois, in 2010 and 2011, UNO entered into grant agreements with the Illinois Department of Commerce and Economic Opportunity (IDCEO) to build three charter schools.  Rangel signed the agreements, which required UNO to certify that no conflict of interest existed and to immediately notify IDCEO in writing if any conflicts subsequently arose.  If UNO breached the requirements, IDCEO could suspend the grant payments and recover grant funds already paid to UNO.

The complaint alleges that UNO breached the agreement when, at Rangels direction, it contracted with its COOs brothers, agreeing to pay approximately \\$11 million to one brothers window company and approximately \\$1.9 million to another brother for services during construction.  According to the complaint, UNO did not notify IDCEO in writing about either transaction and its offering statement disclosed only the \\$1.9 million contract, not the larger \\$11 million contract.  In addition, the offering document did not disclose that by breaching its agreement, IDCEO could seek to recover the grants, requiring UNO to liquidate its charter schools to repay them, losing the assets it depended on to repay bond investors.

The SECs complaint charges Rangel with violations of Section 17(a)(2) of the Securities Act.  Rangel settled without admitting or denying the SECs charges.  He agreed to pay a \\$10,000 civil penalty, to be permanently enjoined from future violations of Section 17(a) (2) and to be barred from participating in municipal bond offerings, other than for his personal account.  The settlement is subject to court approval.

The SECs investigation was conducted by Michael Mueller of the Chicago Regional Office and Eric Celauro and Brian Fagel of the Public Finance Abuse Unit.