Businessman Alleges Charter School Bias in Legislature Sparked Criminal Charges

A consultant, Steven Nielsen, has initiated a lawsuit alleging that favoritism towards charter schools resulted in improper criminal charges against him. This lawsuit claims damages exceeding $79 million due to malicious prosecution and reputational harm.

Nielsen and his associated businesses are challenging the state, including current and former attorneys general, and the Maricopa County Attorney’s Office after felony charges for fraud and conspiracy were dismissed with prejudice.

According to Nielsen’s attorney, David Black, this situation has severely damaged Nielsen’s reputation and business. “He’s a brilliant man who made it possible to fund public schools during difficult financial times,” Black stated.

Nielsen’s background includes positions with both the city of Tempe and Arizona State University, where he gained expertise in leveraging private funds for public infrastructure. This experience led him and his business partner, Gary Aller, to form Education Facilities Development Services, focusing on public-private partnerships to finance education projects.

In 2012, the Higley Unified School District engaged Nielsen to develop a funding model for new middle schools amidst increasing student numbers. This led to a lease-purchase agreement, allowing successful contract acquisition despite scrutiny following the schools’ opening.

Nielsen’s complaint highlights that support for charter schools influenced investigations that eventually targeted him and his associates, as public-private partnerships were perceived as a threat to charter school growth. Black characterized this prosecution as an attempt to undermine Nielsen’s successful funding model.

The controversy escalated with vocal opposition from public figures such as then-Sen. Andy Biggs and Attorney General Mark Brnovich, which initiated a state-level investigation. The legislative changes that followed aimed to restrict similar public-private partnerships in the future.

In 2021, an auditor general’s report accused Nielsen of procurement fraud, leading to his indictment alongside Aller and Superintendent Denise Birdwell. They faced multiple felony charges related to conspiracy and fraudulent practices.

A trial court’s decision to remand the original indictment was based on prosecutorial errors regarding the procurement code. Although a second indictment followed, it was ultimately dismissed after a new prosecutor reviewed the case.

Nielsen has described the situation as a damaging struggle, asserting that he lost contracts and suffered emotional distress as a result of the charges. The recent lawsuit addresses multiple claims, including malicious prosecution and defamation.

As of now, the Attorney General’s Office and the Maricopa County Attorney’s Office have declined to comment on the lawsuit, while the auditor general’s counsel has not provided a response.