8 On Your Side uncovers more bogus charter school loans

San Jose Charter School

(WFLA) — A charter school management company we’ve been investigating for months now has to account for $235,000 in taxpayer-funded loans that a lawyer confirms do not exist.

For the second time, 8 on Your Side has uncovered bogus loans by Newpoint Education Partners LLC (NEP), a charter school management company recently indicted by a grand jury over for its alleged misuse of state taxpayer dollars for education.

We previously revealed NEP’s false claims of loans involving four charter schools it managed in Pinellas County. Last month, a grand jury in Escambia County indicted NEP for grand theft, money laundering and white collar crimes involving the misuse of school tax dollars in Pensacola.

Now, NEP has a new problem on its hands. According to public records, two charter schools in Jacksonville –San Jose Academy and San Jose Preparatory High School– list $235,000 in loans made by NEP in 2014 and 2015. But Gary Wheeler, A private lawyer in Jacksonville hired to represent the two charter schools, confirms those four loans do not exist.

Wheeler confirmed the non-existence of loans listed in two independent auditor’s reports after 8 On Your Side started raising questions.

We discovered that meeting minutes of the two Jacksonville charter schools did not reflect approval of any loans. After we requested copies of loan documents, Wheeler determined no such records exist.

RELATED: Pinellas schools could take over troubled Windsor Prep charter school

Wheeler says the Tampa-based CPA firm King & Walker that performed the audits is now correcting them. King & Walker did not respond to our requests for comment; neither did Eileen Quinlan, CEO of NEP.

The errors are significant for several reasons. When 8 On Your Side investigated similar discrepancies involving Windsor Prep, East Windsor Academy, Newpoint High and Newpoint Prep charter schools in Pinellas County, we discovered $1.8 million in taxpayer-funded charter school promissory notes allegedly owed to NEP that also did not exist.

NEP managed those Pinellas charter schools to the brink of financial failure by the time it decided to quit running them for a taxpayer-funded 22 percent fee back in March. NEP eventually signed agreements with those four schools “forgiving” the alleged $1.8 million debt as part of a deal to sever business relationships and quit its for-profit management of those schools.

After an Escambia County grand jury indicted NEP in May charter school board members who run the two San Jose schools in Jacksonville voted to maintain their relationship with the company.

The charter school board members insisted they had thoroughly reviewed their own finances and gave NEP an enthusiastic endorsement for the continuing management of their schools.

“We explored and we explored again and we didn’t find anything,” said charter board chairwoman Bonnie Arnold. “So it is a surprise and a disappointment to find that there is.”

For some reason neither the charter school board nor the Duval School District figured out there were $235,000 in bogus loans listed in their school audits, even though both entities are required by law to oversee the taxpayer-funded finances of those schools.

The “loans” listed in San Jose’s annual school audits also included interest due on the principal amounting to 5 or 6 percent of the principal and a payment schedule extending through 2018.

According to the audit it appears several thousand dollars has already been paid toward that debt with about $92,000 more due by the end of 2016 and the balance by 2018.

Arnold says the board has already been consid4ering a “Plan B” for alternative management because of the Grand Jury indictment. But she isn’t sure what course of action the schools will take in light of this information. “We’re trying to find out all of the information and do what’s the right thing to do,” Arnold said. “I’m sure we will make a decision in the best interest of our schools and our community.”

Duval School District spokeswoman Laureen Ricks said administrators are “looking into” the latest disclosures just weeks after giving Newpoint and San Jose a full review and approval of their finances. Ricks said the district will be issuing statement shortly.

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