Grand jury to probe financial records in Montgomery school case

A Montgomery County grand jury is expected to examine bank records for potential financial improprieties at Rock Terrace, a public school in Rockville for special-education students, according to documents in the case.

The action comes amid an investigation by the Montgomery County state’s attorney’s office of complaints that school officials opened bank accounts in students’ names and deposited and withdrew work-study wages without their parents knowing the accounts existed.

More news about education

College Board releases preview of new SAT exam questions

Dreaded college admission test will debut in 2016 with less tricky vocabulary, focus on achievement.

A few ‘SAT words,’ defined

So, we knew you were wondering. What are the definitions of those “SAT words”?

Virginia Intermont College loses merger opportunity

Questions are raised about what happens next for struggling private school in southwestern part of state.

Read more

Rock Terrace families allege that administrators at the school managed the work-study money for years without telling parents that students were earning wages or what was being done with the money. The matter came to light in May after a parent was told of a student’s income while applying for public assistance benefits.

Letters from Montgomery County State’s Attorney John J. McCarthy, dated Nov. 11, were sent to at least two families indicating that investigators are examining how school employees dealt with money deposited into student accounts. The letters do not offer any details. A spokesman for McCarthy’s office would neither confirm nor deny that an inquiry is underway.

A representative of the Educational Systems Federal Credit Union is being summoned to testify on Dec. 12 as part of a grand jury investigation, the records show. The credit union merged last year with the financially distressed Montgomery County Teachers Federal Credit Union, where the accounts were opened. “We had been anticipating this for the last several months, and we’re ready to cooperate fully,” said Chris Conway, president and chief executive.

The records list a broad collection of financial documents being subpoenaed: signature cards, account applications, monthly statements, canceled checks, deposit tickets, electronic fund transfers, ATM transactions, e-mails and other correspondence.

“I think it’s great,” said Tamara Clark, whose son attended the school until June. “I’m hoping the state will do something to make [school officials] accountable for what happened.”

Clark said she thinks that any children who lost money should receive restitution. “This is a special-needs school, taking advantage of special-needs kids,” she said.

Montgomery schools officials estimate that 110 students were affected by the financial irregularities at Rock Terrace. They say they asked the state’s attorney’s office to get involved because prosecutors are able to subpoena bank records that are not available to school investigators.

Schools spokesman Dana Tofig said he did not know of school officials having been called to testify in the case.

Lyda Astrove, a lawyer who has advocated on behalf of Rock Terrace families, said that she was heartened about the subpoenas and that she hopes interviews with school officials and families will come next.

“It’s real good news,” Astrove said. “It’s taken almost six months to get to this point.”

Rock Terrace, with a current enrollment of 86, serves students ages 12 to 21, including those with learning disabilities, autism spectrum disorders, speech and language disorders, and emotional impairment.

The school system has conducted its own investigation of problems at Rock Terrace. A report, dated July 18, concluded that money from student work-study programs was poorly managed and that the students’ money was inappropriately used for educational programs at the school. But the report said “there appears to have been no attempt by Rock Terrace School staff to intentionally defraud students and their families of funds.”

The school’s principal was placed on administrative leave last school year and retired in August. School officials say they have changed financial practices to prevent future problems.

Astrove has been urging school officials to hire an independent auditor to assess how much money individual students may be owed. She also has urged the school system to notify as many former students as possible.

Larry A. Bowers, Montgomery’s chief operating officer, told Rock Terrace parents in July that the school system’s interest “is to give back the money.”

 
Read what others are saying