State audit cites major misspending, conflict of interest at Richard Allen schools

A new state audit of the Richard Allen charter schools includes multiple findings of improperly spent money in 2016-17, and allegations of ethics violations and conflicts of interest that have triggered an ongoing special investigation.

The audit comes 15 months after the Dayton Daily News published an investigation into lack of oversight at Richard Allen, which operated four schools in 2016-17 and now has buildings on Salem Avenue in Dayton and Shuler Avenue in Hamilton.

INVESTIGATION: Oversight lacking at Richard Allen schools

Last year, the state attorney general’s office did not know that Michelle Thomas — whom the state sued, alleging $2.2 million in misspending — was still running the schools.

Thomas, who is still the Richard Allen superintendent, on Tuesday called the audit process “a complete farce.” School leadership “strongly objected” to the state auditor’s findings in their official response.

Auditor of State Keith Faber’s office said Tuesday that it stands by its work. The documents released Tuesday cover the 2016-17 school year, as multiple years of Richard Allen audits have been delayed.

The audit’s findings include:

• The schools overpaid their former management company (the Institute of Management and Resources, which was also run by Thomas) by $852,618 in 2016-17 — $139,277 for Richard Allen Academy, $613,870 for Richard Allen II, $15,686 for Richard Allen III in Hamilton and $83,785 for Richard Allen Prep.

FEBRUARY: Bank buys Richard Allen school property on Salem

A finding for recovery seeking repayment of those funds was issued against IMR, which filed for bankruptcy protection more than two years ago, and against former treasurer Brian Adams and eight school board members: Alphonse Allen, Michael Brown, Gerald Cooper, Laquetta Cortner, Wanda Mills, Lonnie Norwood, Rhonda Ragland and Kelli Vaughn.

• The school also overpaid those eight board members by $1,110 to $1,375 each for attending meetings. The state filed findings for recovery against those eight and Adams for a total of $10,725 on that charge.

• Thomas improperly served as the superintendent of Richard Allen schools while serving as director of IMR, the school’s management company.

As the Dayton Daily News reported last year, the audit shows IMR leased a 2015 Maserati for Thomas, while claiming that Thomas made the lease payments. But elsewhere in the audit, the state makes clear that IMR “failed to provide a detailed accounting” of the services it provided to the school, bringing into question how its management fees were spent.

“Dr. Thomas may have violated (Ohio law) because her acceptance of the compensation and benefits from IMR may have impaired her ability to objectively and independently exercise judgment in matters concerning IMR in her role as the superintendent for the Richard Allen Schools,” the audit says.

2018 STORY: Richard Allen schools seek new sponsor to stay open

• On March 9, 2016, IMR transferred ownership of the Richard Allen school properties in the 600 block of Salem Avenue to Cash Money Properties at no cost, with Thomas signing the quitclaim deed. Cash Money Properties is owned by Adams, the former school treasurer. The school then leased the properties back from Cash Money Properties.

“The Auditor of State’s Special Investigation Unit is conducting an investigation of Brian Adams’ conduct related to this series of transactions,” the audit says. “As of the date of this report, the investigation is ongoing.”

School fires back

Thomas attacked the audit Tuesday, saying Richard Allen has made numerous requests for itemized statements from the auditor’s office “to justify the allegations of the now published findings.”

“The auditor has chosen to rely on false allegations and incorrect legal analysis in order to attack the school’s great work in the community at the expense of the public interest and the legitimacy of the auditor’s own office, through a process that has been a complete farce,” Thomas said. “There has never been misspending or mismanagement of the public dollars received by Richard Allen.”

Auditor’s spokeswoman Allison Dumski said Tuesday that the office stands by its work, which includes four 60-page audit documents, as the process for repaying the financial findings takes place.

“The law is straightforward — Richard Allen Schools chose to ignore their legal obligations and instead improperly spend hundreds of thousands of dollars intended for the education of our children,” said Faber, the state auditor. “We will continue to audit to the law and call out those that choose to manipulate for personal gain.”

The audit documents include the schools’ official responses to some of the findings, and rebuttal from the auditors.

Richard Allen officials argue Thomas’ continuing positions as superintendent and director of the management company are not a conflict under Ohio law. After IMR filed for bankruptcy, Thomas has continued running the schools out of the same building under the newly created Educational Management and Development Group.

The auditor’s office says that position is not in accordance with Ohio law.

2015 STORY: Appeals court upholds findings against Richard Allen

School officials argue in the audit that the $139,277 overpayment to IMR was forgiven as part of a school agreement to terminate IMR’s contract. But the auditor’s office says no documents have been presented showing any formal school board action to forgive the debt.

On the overpayment of school board members, the school argues that its board meetings were actually four separate board meetings, as there were four Richard Allen schools at the time. The state argues that’s not true, adding that the meeting minutes for each school “were identical in content, with only the header of each school name changed.”

Staying with the story

The Dayton Daily News published an investigation last year into lack of oversight at Richard Allen schools and will continue to dig into how your tax dollars are spent.

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