The former leaders of a public charter school for disabled and at-risk teenagers have agreed to settle a District lawsuit alleging they sought to enrich themselves by diverting millions of dollars in taxpayer money meant for the school into private companies they created.
Donna Montgomery, David Cranford and Paul Dalton, all former managers at Options Public Charter School, agreed to a collective settlement of $575,000, which will be paid to the school that now operates under new leadership as Kingsman Academy. Jeremy Williams, a former chief financial officer of the D.C. Public Charter School Board, who allegedly aided the scheme, agreed to a settlement of $84,237 in a separate deal signed last week. The defendants agreed that they would not serve in a leadership role of any nonprofit corporation in the District until October 2020.
"This settlement ensures that more than $600,000 in misappropriated funds will now go to Kingsman Academy to serve disabled students in the District of Columbia, and will deter future wrongdoing," said Robert Marus, a spokesman for the Office of the Attorney General. "As the referees for the District's nonprofit laws, our office will continue to bring actions against any who would misuse funds meant for public or charitable purposes."
A statement issued by attorney S.F. Pierson, who represents Dalton, said all three former managers "continue to contest the District's claims and continue to maintain their position that they managed Options to the highest standards." Pierson said the former school leaders are "not personally paying" anything to settle the District's claims. It's common that insurance plans cover litigation-related costs for nonprofit directors or corporate officers.
Williams could not immediately be reached for comment.
In a civil case filed in 2013, the D.C. attorney general's office alleged that the former leaders of the school, as well as the senior staff member at the charter school board, created a scheme to divert $3 million in tax dollars to themselves and two for-profit companies they founded. The companies provided services including transportation and Medicaid billing to the school at a markup, with profits pocketed by the defendants, according to the complaint.
Williams, who had been in charge of financial oversight of the city's charter schools, allegedly helped facilitate the scheme, before he left his job at the charter school board to work at one of the for-profit companies.
After the lawsuit, the school went into court receivership. The two for-profit companies also went into court receivership and ultimately paid $200,000, most of which went to the school.
The city sued another charter school founder for a similar scheme in 2015. Court documents from that lawsuit, which was settled later that year, showed that Kent Amos, the founder of Community Academy Public Charter Schools, paid himself more than $1 million a year to lead the schools via a private management company he established.
Such allegations prompted the charter school board to strengthen its financial oversight procedures and its policy regarding disclosing conflicts of interest.
Scott Pearson, executive director of the board said in a statement that the board takes its oversight role "seriously" and that it has worked closely with the Office of the Attorney General throughout the Options litigation. "We thank the OAG for their persistence in seeing this to a resolution," he said.
The U.S. attorney conducted a multiyear investigation of the case that ultimately did not result in criminal charges.
J.C. Hayward, a longtime television news anchor at WUSA and former chairwoman of the board at Options Public Charter School was initially named as a defendant, but she was dismissed from the civil case a few months after it was filed. The station placed Hayward on leave when the lawsuit was filed in October 2013, and she retired not long afterward.
Shannon Hodge, co-founder and executive director at Kingsman Academy, said she was "grateful" that the settlement dollars would go to the school that replaced Options. "We will certainly make sure that the students benefit from that settlement," she said.
Kingsman opened in the summer of 2015. It operates in the same facility in Northeast Washington and serves a similar demographic that Options did, with a majority of students receiving special-education services. But it has its own leadership team and educational philosophy, Hodge said. "We are a very different school," she said.