FICAN

NEWS RELEASE
UNITED STATES ATTORNEY'S OFFICE
WESTERN DISTRICT OF VIRGINIA
John 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 FRAUD

Link is here http://www.usdoj.gov/usao/vaw/press_rel ... g2006.html

and just in case the link doesn't work at some point in the future, here is the text of that press release:

August 4, 2006

FOUNDER OF WELLSPRING ACADEMY CHARGED WITH BANK, WIRE, AND MAIL FRAUD

United 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.

Counselor charged with fraud
News & Observer, The (Raleigh, NC) - August 6, 2006
Author: Toby Coleman, Staff Writer
Federal prosecutors have charged a longtime Raleigh family counselor with bilking parents, the government and others in an effort to keep his faith-based school for troubled teens open.

Prosecutors claim Bob Gluhareff , 61, illegally padded Wellspring Academy accounts with more than $662,000 in bad checks -- including ones parents believed he would hold until they secured loans to cover them. Prosecutors also think he criminally misled parents into thinking they could claim some of the South Boston, Va., school's $49,000 tuition as a charitable donation.

Gluhareff called the 36-count federal indictment, unsealed Friday in Virginia, the result of a prosecutorial "witch hunt" stirred up by parents angered by his school's sudden closure three years ago. He is charged with tax, wire, mail and bank fraud; money laundering; and making false statements before a grand jury.

"The U.S. Attorney wanted somebody to pay," he said in an interview at his North Raleigh office Saturday. "They had to answer to those angry parents."

A few parents of former academy students have been calling for prosecutors and regulators to punish Gluhareff for more than three years.

"We're ecstatic," said Cindy Mitchell, a Youngsville woman who sent her son to the school and said she lost thousands of dollars when it closed. "Bob has a counseling service in North Raleigh, and I think that every parent that takes their child there should know about these charges."

Gluhareff opened Wellspring in 1986 on 510 acres outside South Boston, about an hour north of the Triangle. He started by recruiting troubled kids from the Raleigh area and eventually brought in children from across the country.

The school offered high school and two years of college instruction for boys ages 13 to 19. He promised parents their kids would be in a structured environment with Christian counseling and uniforms of khakis and polo shirts.

At its peak in 2002, the school had 90 students, 60 staff members and a nearly $3 million budget. "It was a very successful school," Gluhareff said.

Federal prosecutors claim that he struggled to keep his growing little school afloat for years. Gluhareff said the school did not start having budget woes until 2002.

Prosecutors believe that between 1999 and 2003, Gluhareff tried a series of financial maneuvers to keep his school chugging, including writing bad checks and cashing tuition checks that parents thought he would hold until they notified him that they had the money.

"Mr. Gluhareff took advantage of parents who were desperate to help their children," John L. Brownlee, the U.S. Attorney for western Virginia, said in a statement. "He was dishonest in his dealings with parents, banks and corporations."

Prosecutors claim, among other things, that none of the school's counselors were licensed in Virginia -- even though Gluhareff told parents that their kids would receive help from licensed counselors.

Gluhareff said the charges were ridiculous, in part because he says it would have been impossible for him to push enough bad checks through to hide significant financial problems in a multimillion-dollar organization.

He said it is possible that he could have cashed a parent's $25,000 nonrefundable tuition deposit check too fast. He also acknowledged that he told parents who paid his school's full $49,000 tuition that he would count $24,000 of their payment as a donation -- mainly because he figured that most of that money went to help pay for student scholarships.

He said that if he did anything wrong, it was "procedural" and that he never meant to break the law.

"What angers me more than anything else is that my wife and I gave everything to make this work," he said.

He talked about the federal charges against him Saturday afternoon, while sitting in the waiting room of his North Raleigh office. There was Christian art on the wall and a jar labeled "Warm Fuzzies" on the table to his left. He is free on $25,000 bond.

Gluhareff said he continues to blame a former school counselor, Lisa Grant, for Wellspring's collapse, and he has urged federal prosecutors to investigate her. Grant did not respond Saturday to an e-mail message.

Grant has said she quit the school in April 2003 amid budgetary problems: Staff pay had been cut and, according to court records, the school was not paying bills.

She took four students with her as she left, then called their parents and told them the school was going out of business. By the time Gluhareff had called the local sheriff's office to report that Grant had kidnapped the boys, the school phones were starting to buzz with angry parents. Word spread among the students, and soon some were refusing to wear their uniforms and threatening to start fires.

A few days later, Gluhareff closed the school. In a letter to parents, he blamed Grant, the economy and parents' failure to pay tuition on time.

He said he contemplated reopening the school, but never could come up with the money to pay off his creditors -- much less the parents who paid him tuition to help their troubled children.

"Sixty wonderful people lost their jobs, parents lost a half a million dollars of tuition," he said. "I cried for days."

He still lives near South Boston -- though he says he is too broke to own land. These days, he rents.

(The Associated Press contributed to this report.)

Haven for troubled boys has troubles of its own
The News & Observer - June 24, 2003
Author: Craig Jarvis, Staff Writer
Ted and Cindy Mitchell of Youngsville were desperate to find a place like Wellspring Academy, a private boarding school for troubled teenage boys in rural southern Virginia that offered a structured schedule and Christian counseling.

Like many other parents from the Triangle and throughout the country, the Mitchells paid the up-front tuition of $49,000 for a year and hoped for the best. But their hopes ended Easter weekend when the school closed amid a swirl of rumors and accusations.

The Mitchells -- who say they were out $63,500 after paying additional tuition to avoid a rate increase -- were livid after the school's owner, Bob Gluhareff of Raleigh, announced he would file for bankruptcy.

Now Virginia and federal investigators want to know whether Gluhareff defrauded parents by taking tens of thousands of dollars knowing he was about to go out of business.

Investigators also are looking at whether a counselor broke the law and triggered a panic that led to the school's closing when she sneaked four boys off campus and told their parents to come get them because Wellspring was collapsing.

Gluhareff blames the counselor for destroying his life's work.

Authorities are evaluating child-welfare conditions at the school and checking its tax records.

The disruption to teenagers in need of help is, for some parents, the most painful fallout of all.

"I don't want to ruin a man, but he's ruined a lot of families," Cindy Mitchell said. "He preyed on people that had nowhere else to go."

Gluhareff, 58, an ordained Baptist minister and longtime family counselor based in Raleigh, says it is ludicrous to suggest he intentionally went out of business.

"We are not embezzlers, we are not swindlers, we are not fraud people," Gluhareff says. "We gave and gave and gave. ... It's a sad, sad story if one family has lost $25,000, but I've lost everything I worked for all my life. Why would I tank my own school?"

Gluhareff started Wellspring in 1986 on 510 acres outside South Boston, about an hour north of the Triangle. It offered high school and two years of college instruction for at-risk boys ages 13 to 19, emphasizing a structured environment with Christian counseling.

Gluhareff initially recruited students from the Raleigh area and later from throughout the country. Students wore uniforms of khakis and polo shirts. They included teenagers ordered by judges to attend and boys whose parents thought they needed to be there.

Gluhareff made strong ties with Halifax County (Va.) authorities and the state Republican Party. Virginia's attorney general spoke at last year's commencement.

Gluhareff built the school to a peak enrollment of about 90 students and 60 staff members. Last year, its budget was nearly $3 million, with two-thirds coming from tuition and the rest from donations, tax records show.

A clash of styles

Lisa Grant was hired as a counselor in May 2002 fresh out of graduate school. Favoring thrift-shop attire, Grant tacked a poster of 1960s rock star Jim Morrison on her wall when she arrived. Her style didn't go over well, and she grew discontented.

She says that the youths at Wellspring were not counseled as often as parents were led to believe and that the daily schedule was not nearly as structured as claimed. Then, she says, she watched with alarm as financial problems grew.

Court records show that the school's food vendor claimed Wellspring failed to pay for goods for more than two months last year and later sued for $26,700. A local gas and fuel oil company sued for nearly $6,000 in unpaid bills, and an auto mechanic sued for $1,000 overdue for repairs.

Late last year, the staff took a 20 percent pay cut; this year, a security staff member quit. Grant's paycheck bounced at the end of March but was made good the next week. Her next paycheck, on April 18, was postponed for the weekend.

Grant, 40, a single mother of three, said she decided to quit that day and, on an impulse, piled four boys into her car and slipped them off campus. She began calling their parents and telling them to pick up their sons because the school was going out of business.

The school phones began ringing nonstop with calls from alarmed parents. Gluhareff called sheriff's deputies and reported that Grant had kidnapped the boys.

Word of Grant's escapade spread through the 30 or so boys who were not on spring break, Gluhareff said. They began to rebel, he said, refusing to wear the school uniform and threatening to burn the dorms down.

"The kids were electrified," he said. "... All of a sudden, the school looked like something out of 'Blackboard Jungle.' "

On Easter, operations were suspended and Grant's car mysteriously burned in her front yard.

On April 30, Gluhareff wrote parents that he would have to keep the school closed, blaming the economy, parents' failure to pay tuition on time and Grant's actions. Two weeks later, his attorney told parents in a letter that Gluhareff had no choice but to declare bankruptcy.

Parents react

About a dozen parents planned a response, including a campaign to draw news media attention, to complain to the North Carolina board that licenses counselors and to look into suing. They grew angrier as they shared their stories.

A divorced Virginia couple, whose son began at Wellspring in October, paid more than $54,000 because the school was collecting double tuition from them. Karen McCollum says Gluhareff and the school president separately told her and her former husband that the other one wasn't going to pay.

Gluhareff says that was because of a clerical error and miscommunication, but McCollum remains furious. She says she told him in a phone call that he had betrayed her trust.

"You devastated my family, you devastated my son, you forced us into a financial situation I don't know we'll ever recover from," McCollum says she told him. "I don't care how long it takes, how much money it costs, how hard it is -- my mission in life now is to see you never open another school or other type of facility as long as you live."

Gluhareff, in turn, began soliciting letters of support from parents and staff to send to investigators. He says he and his wife planned to retire at Wellspring and be buried on the grounds.

He says he had recently put a $10,000 down payment on a gym and had been expecting $135,000 in tuition and donations within the coming week. But he says that wouldn't have been enough to avoid bankruptcy because Wellspring survived month to month without a reserve, in large part because it gave scholarships to many families who couldn't afford tuition.

Most of the parents of the 70 or so boys who were enrolled at Wellspring when it closed have not complained publicly. Some, including Jenny Openshaw of Alabama, say they aren't angry at Gluhareff, even though they lost tuition, because Wellspring helped their son so much.

"I think he has the best intentions, and this was his dream," Openshaw says. "I just weep for him it's turned out this way."

This month, Gluhareff said Grant might have taken revenge after learning that she was going to be fired that weekend. However, his April 30 letter to parents described her as a "trusted counselor."

Under investigation

This is not the first time Gluhareff has been in a dispute with a former employee: In 1999, a female staffer sued him in Wake County, alleging he seduced her and coaxed her grandfather into paying more than $60,000 to counsel her, her sister and her mother. Gluhareff denied it and countersued for slander; both suits were settled out of court.

Investigators expect to take at least six months, and maybe a year, to sort out the accusations, said Lt. Ann Barber of the Virginia State Police. She said that the Internal Revenue Service and U.S. Postal Inspection Service are involved and that investigators are just gathering facts at this point.

"It's a very complex case," Barber said. "We'll just determine if a violation of law has occurred."

Gluhareff has returned to Raleigh and opened a counseling practice. He says he is contemplating reopening the school.

Son's case pits mom vs. judge - Family fight sets scene for teen's woes, lawyer 'feeding frenzy'
Chicago Sun-Times - June 3, 2003
Author: Abdon M. Pallasch

When June Speaker's son Matthew told her about abusive conditions at his Christian boarding school in Virginia, she drove down, brought him back and put him in a Catholic high school here.

Cook County Judge Allan Masters ordered her to send Matthew, 17, back to Wellspring Academy in Sutherlin, Va.

She refused. So Masters put her in jail, hired a private agency to haul Matthew down there, and sent Speaker the $5,000 bill.

"She is the person who picked Wellspring. We didn't pick it," Judge Masters said in court in January.

A month ago, as more students and parents reported harsh discipline, Wellspring abruptly closed. Speaker raced down again to retrieve Matthew. Virginia State Police are investigating.

Matthew never got a chance in court to describe "the box," a room he spent 20 days in at Wellspring: "It gets to your head. It's a 3-foot-by-5-foot room. You have to sit all day and after all the other kids are asleep in the trailers we sleep in, they bring you down and you sleep in a security room with a light on all night at the end of the bed.

"One day I said, 'I'm not going back in there.' They started trying to physically put me in the box. They slammed me on the rocks and I looked at them and started laughing. I said I was going to flip out every day until I could start talking to my parents. [The headmaster] told me, 'I'm not letting any of your letters through. I don't have to. You're not going to be in contact with your mom for a long time so stop writing your letters.' "

Headmaster Bob Gluhareff said Monday the investigation would show the school did nothing wrong.

Family law experts are puzzled why Masters, a paternity court judge, presumed authority to tell a mom where to send her son to school. Masters said he could not comment on a pending case.

Speaker was in Masters' court because four years ago she sought child support from Matthew's father, Roy Warner, who owns Roy's Furniture in Lincoln Park. The case has taken bizarre twists.

Speaker finds herself in a fight between her ex-boyfriend Warner, 74, and his eight older children from two other women. The older children tried to get him declared incompetent so his money could be put in trust. A court evaluator found him competent. Warner's daughter told Speaker to sue if she wanted formal child support for Matthew.

Speaker has gone through five lawyers who each quit when she couldn't pay them. All of them faced an army of attorneys for Warner and his children. One of her lawyers called it a "feeding frenzy for lawyers" because of Warner's money.

A judge appointed lawyer Ralla Klepak as a "child representative" for Matthew. Minors do not always know what is best for them, but family court lawyers said child representatives are expected to consult their clients.

Matthew said Klepak had only one meeting with him a year ago and since then court records show she has mainly sided with Warner's attorneys.

When Speaker tried to tell a judge that Wellspring closed, Klepak objected. In a motion to be heard this morning, Klepak wants Matthew declared "emancipated" and his child support cut off.

Klepak has billed more than $30,000, which Speaker and Warner must pay. She declined to comment for the story.

The "trouble" that initially convinced Speaker to send Matthew to Wellspring was his getting caught with an eighth of an ounce of marijuana; spending nights at his dad's Lincoln Park apartment, and driving a car his father gave him without a license.

When the state thinks a minor should be removed from a home, the case goes to Juvenile Court, not Paternity Court. Juvenile Court judges interviewed Monday said they would not have ordered a child sent out of state for minor problems like Matthew's.

After the incidents in which Warner gave his son a car and use of an apartment, Speaker asked a judge to prohibit the two from seeing each other. She now regrets that. Masters ordered Warner and Matthew not to see each other.

"This is ridiculous--I can't see my own son," Warner told a judge as he left court a month ago.

Matthew wants to live at home with his mom, finish his last year of high school at a local school, and spend time with his dad. He wants to be a police officer someday.

Speaker tried to withdraw her child support suit, saying she would walk away with no child support just to have her life back.

Klepak argued against letting Speaker drop the case, saying there are unresolved issues such as her unpaid legal bills. Masters refused to let Speaker drop it.

This morning, Cook County Public Guardian Patrick Murphy will ask Masters to appoint him as Matthew's new attorney.

Caption on the picture shown: In a strange child custody case, Matthew Speaker (shown with his mom, June Speaker) was sent to a Virginia school that disciplined him by shutting him in a 3-by-5-foot room, "the box." Jim Frost

Bob Gluhareff commits suicide in Jan 2008

link: http://www.wset.com/news/stories/0108/488613.html

Investigators say he killed himself, instead of reporting to prison. Deputies in Person County, North Carolina, found the body of Robert Gluhareff in the woods, dead from an apparently self-inflicted gunshot wound. Gluhareff founded the Wellspring Academy in Halifax County, a Christian school for troubled boys. Last year, he was convicted of bank, tax and mail fraud, for stealing money from the parents he promised to help.

Gluhareff was scheduled to report to prison last week, to serve a 212-year sentence.

AND http://www.wsls.com/sls/news/local/arti ... wsls/4393/

Wellspring Academy Founder Takes Own Life

SONNY RIDDLE / Danville Register and Bee
Published: January 16, 2008

The former head of a Halifax County school for troubled boys was found dead in Person County, N.C., this past weekend.

Person County Sheriff Dewey Jones said the body of Robert S. Gluhareff, 63, of South Boston, was discovered by deputies Sunday morning in a wooded area off Edwin Robertson Road.

Jones said deputies found the body at 7:37 a.m. while on patrol. The North Carolina State Medical Examiner was called to the scene and determined Gluhareff's death was the result of a single gunshot wound, the sheriff said.

The medical examiner said the wound was self-inflicted, Jones added.

The sheriff said witnesses told authorities that Gluhareff's vehicle was parked on Edwin Robertson Road from Friday night until the discovery of his body Sunday morning. It is believed Gluhareff died sometime Saturday.

Gluhareff, former head of Wellspring Academy, pleaded guilty in U.S. District Court last year to two charges related to bank fraud and one count each of mail and tax fraud. All other charges against him were dismissed.

Prosecutors said Gluhareff put the school in serious financial trouble, lied to parents about their tuition being tax deductible and obtained loans from multiple banks using the same piece of land as collateral.

He closed the school for troubled boys unexpectedly in April 2003, and told parents to pick their sons up immediately.

When parents asked for their tuition money back, which ran from $43,000 to $49,000 annually, Gluhareff filed for personal and business bankruptcy.

Gluhareff was sentenced in October to serve 30 months in a federal prison and pay more than $500,000 in restitution. He filed suit to vacate his sentence Dec. 26 in U.S. District Court in Roanoke, naming the federal government as defendant.

Gluhareff is survived by his wife, two sons, two grandchildren, his mother and two sisters.

Reprinted with permission of The Gazette-Virginian in South Boston.

I have been thinking alot lately about my 16 month stay at wellsprings academy back in Dec 2001- April 2003. I was there when it was shut down and all of us had to leave. I am now 23 and am still recovering from what I experienced there. I was sent there because when I was 16 a became involved in drugs and alcohol. My parents we told it would be the best place for me. They were misinformed. My parents were terrified about my problems and wanted to desperately help me. While at wellspring I was confined to a small room in issolation for weeks on end. It was punishment for not behaving. I attempted to reach out to my parents but they had already been subject to my stories so they did not believe me. Furthermore the staff at wellspring assured them I was not being mistreated. I was also forced to participate in religious practices. If I did not I would be punished by ISS( in school suspention). This is what we had to refer to the isolation. The "students" or as I say prisoners refered privately to this punishment as the box. What I endured at wellspring effected me greatly. When I was released I became a time bomb. I could not cope with this abuse. Even though I know now my actions were wrong and I take full responsibility for my actions I saught escape from what I felt. I turned to herion to do this. I lived in a downward spirl until I was 21 years old. I destroyed everything around me. I finally got sober at 21. I was able to start dealing with all the feelings I felt. I am now 23 years old. I have been sober for over 2 years. I am back in school and am living a great life. Today I was thinking alot about what happened and I hadn't heard anything about wellspring since I left back on that cold April day. I googled it and found this page. I can't say I was too upset to find that bob g. killed himself in 2008. I guess karma is working. I hope that we can just stop this "abuse" from happening to other families at other schools like wellsping.

Welcome Scott. My experience occurred almost 30 years ago, and through meeting others on line, the pain has decreased greatly, mainly because I know others now 'believe' me and know what I've been through. I started a few sites online and have been reinventing them constantly since 2000. I can get burned out after too much digging into the emotional crap and then I would take down the site, then put up another site when I would inadvertently find out new information about these programs still being in existence. My final site is at http://FICANetwork.net, but currently there is only a little bit of information compared to my last site. I am trying to pace myself this time and just add a little bit each week. You may or may not find the stuff on there right now interesting, but eventually you probably will. Check back occasionally. Also there are many people just like you all around the internet. I'm glad you decided to post. Take it slowly and take good care of yourself. ~Kathy~