Closed charters still owe millions: Harte Crossroads’ faulty accounting cited in state audit

7/24/08

Columbus Dispatch

Jennifer Smith Richards

Charters closed

Since 1999, when charter schools first came to Franklin County, 11 schools have closed. Most closed because of financial difficulties. This fall, 63 charter schools are expected to be operating here.

The schools that have closed are:

  • Columbus Youth Entrepreneurship Academy
  • Excel Institute
  • Gifted Hands Preparatory
  • Harte Crossroads Academy
  • Harte Crossroads High School
  • High Life Community School
  • High Life Youth Development Center
  • Riser Military Academy
  • ScholArts Career Center for Children
  • Teresa A. Dowd School for Homeless Children
  • W.C. Handy Community Middle School for the Performing Arts

Source: Ohio Department of Education

The defunct charter schools that operated in a Downtown shopping mall owe the state $3.3 million plus interest, a judge has ruled.

It is the largest repayment sought from a closed charter-school operation.

The two Harte Crossroads schools abruptly shut in March 2007, leaving students scrambling to find new schools, teachers without jobs and spotty paperwork about where the money went.

Financial records didn’t prove that state and federal money was spent to educate children, and the Ohio Department of Education believed that the schools were collecting state per-student funds for more children than they had enrolled.

That money must be repaid, Franklin County Common Pleas Judge Julie M. Lynch ruled July 9.

“Had they been able to account for it, they might not even owe it,” said Lucas Ward, who prosecuted the case for the Ohio attorney general’s office.

How the state will be paid back is the $3.3 million question, though.

The schools, which had been operating in Columbus City Center since fall 2004, were left with little but debt when they closed. Dozens of computers were presumed stolen in the schools’ final hours. A few pieces of furniture and the remaining equipment were auctioned off for less than $8,000.

The schools’ minimal assets were placed in receivership, and a forensic accountant is seeking to collect an unspecified amount through insurance policies. That money would go first to employees’ retirement funds and their unpaid salaries, according to state law.

A state audit should answer whether there was wrongdoing by founder and director Anita Nelam or other employees of Harte Crossroads Academy or Harte Crossroads High School. It is expected to be completed in January.

If the audit shows wrongdoing, “Ms. Nelam is pretty high on the list” of people to prosecute, said Todd Marti, principal assistant attorney general for the state.

A Cuyahoga County judge ruled July 11 that the people who ran another closed charter, International Preparatory School in Cleveland, were personally liable for $1.4 million in public funds, plus interest.

Nelam, who moved to South Carolina to work on Illinois Sen. Barack Obama’s presidential campaign, did not respond to a request for comment. Officials could cite only one other example in which the state sought repayment from a closed charter. The attorney general’s office is seeking about $142,000 from High Life Community School in Columbus, which closed in 2001.

The Harte Crossroads schools are believed to owe more than just the roughly $3.3 million in public funds. More than 180 creditors have come forward.

In a ruling July 2, Lynch gave the company that provided school lunches, Arlene’s Cuisine of Columbus, the go-ahead to try to recover money from the federal government. The school apparently never applied for federal lunch reimbursement for poor students.

Statewide, 59 charter schools have shut down since 1998. Many were left in financial ruin.

“A tragedy of this proportion I’m not aware of,” said William J. Sims, president and CEO of the Ohio Alliance for Public Charter Schools, an advocacy group.