Kent Amos, founder of one of the oldest and largest D.C. charter school networks, allegedly funneled millions of school dollars to a for-profit management company he owns, according to a legal complaint filed Monday by D.C. Attorney General Irvin B. Nathan.
Amos founded Dorothy I. Height Community Academy Public Charter School, or CAPCS, as a nonprofit organization in 1998. About four years later, Amos and two colleagues founded a for-profit management company that was, according to the complaint, “a chimera created by Amos to effect distributions” of the school’s operating profits.
The company received millions of dollars in fees for work that “could have been performed, and in many cases was actually performed, by direct employees of the school,” according to the complaint, which was filed in D.C. Superior Court.
D.C. charter schools are legally allowed to contract with for-profit management companies, including companies with which school leaders have financial ties. But the District’s complaint alleges that Amos violated the law by using a shell company to divert tax dollars meant for students to himself and his co-owners.
“Under the District’s Nonprofit Corporation Act, a public charter school may not distribute millions of dollars of operating revenues — in this case derived from District tax dollars — to benefit private persons,” Nathan said in a statement, vowing to “fight manipulation and abuse of the Charter school system that cheats the District and federal taxpayers.”
Nathan is seeking to impose a constructive trust over all money that was “improperly distributed.” The District also seeks to end the management agreement between Amos’s company and his school. An initial hearing has been scheduled for Sept. 5.
Amos’s attorney, Frederick D. Cooke Jr., said that his client is a leader in the charter school community whose business agreements are legal.
“Our position is that the claims made by the attorney general are without merit,” Cooke said, adding that city regulators have long known of the contracts between Amos’s company and the school. “We believe that there is a significant and philosophical difference of opinion between the Office of the Attorney General and Mr. Amos and his lawyers about the interpretation of the public charter school law and the District’s not-for-profit act.”
Community Academy serves more than 1,600 elementary students at four campuses and one online-only school. One of the schools is rated Tier 3, or low-performing, while the others are rated Tier 2, or mid-performing.
This is the second D.C. charter school in the past year to come under scrutiny for allegedly funneling tax dollars to a management company with ties to school leaders. The District sued Options Public Charter School in October alleging that its three former leaders diverted millions of tax dollars to for-profit companies they owned.
Defendants in the Options case have said that while city officials might not have liked their business agreements, the contracts did not violate any law.
Amos’s company — Community Action Partners and Charter School Management LLC — has received $13 million in school funds since 2004, including $4.4 million in 2011-12 and 2012-13, according to the complaint. The company is “on track” to receive another $2 million this school year, court documents say.
Community Academy first contracted with Amos’s company in 2004, according to the complaint, and the following year, the company employed 12 people and received $784,349 in fees to run the school.
Over the years, annual fees paid to the management company have more than doubled but the number of company employees has decreased. By 2012, when the company received more than $2 million from the school, both of Amos’s co-owners had left the company and there were only four remaining employees, according to the complaint: Amos, his wife, his longtime secretary and one other person.
Cooke said that the company lived up to the terms of the contract, which does not specify how many people the company must employ.
The complaint says that in 2011 and 2012, the management company used its fee from the charter school to lend $70,000 and $39,000 to one of its co-owners, who used the money to make payments to creditors, according to the complaint, which did not identify the co-owner.
The management company also used its fees to make monthly loan payments of $1,148 on a 2010 Lexus CX 460 sport-utility vehicle, according to the complaint, which says that the vehicle was registered to Amos and assigned the specialty license plate “KIDS.”
The school is not named in the lawsuit. The board of directors is cooperating with city lawyers and has hired a law firm to conduct its own investigation, according to a statement released late Monday.
The D.C. Public Charter School Board gave Community Academy a clean bill of financial health for 2012, finding “no patterns of financial mismanagement.”
But by the following year, the charter board was asking questions about the contract with Amos’s company, specifically asking the school to provide information about the salaries of its management company’s officials. The school would not provide that information, according to the complaint.
The charter board does not have the legal authority to require schools to provide information about how tax dollars are used once they are transferred to a for-profit management company.
Charter board officials identified that as a loophole in their oversight power earlier this year, and D.C. Council Education Committee Chairman David A. Catania (I-At Large) said he was open to helping push through legislation that would give the board the power it said it needed. Since then there has been no public movement on the issue.
The charter board also raised concerns about the school’s decision to award a new contract to Amos’s company in 2013 even though company’s proposal did not contain a budget, a list of personnel or a salary scale, according to a letter obtained by The Washington Post through a Freedom of Information Act request.
Despite those concerns, the charter board renewed Community Academy’s charter for another 15 years. Scott Pearson, executive director of the charter board, said in a statement Monday that the board will “evaluate these allegations over the coming days.”
“No action concerning the school will be taken over the summer, so CAPCS families and students should be confident school will operate as planned next year,” Pearson said.