State senator vows deeper look into local charter school

State wants $2.2 million from superintendent and others; no audits of Richard Allen Schools filed in years.

The Richard Allen charter schools in Dayton and Hamilton are still being run by a person who was sued by the state attorney general 18 months ago for her role in misspending $2.2 million in school money.

A Dayton Daily News investigation also found that the schools are operating in buildings that have a bankruptcy case hanging over them, and Richard Allen has had no state financial audits released for the past three school years.

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

Superintendent Michelle Thomas faces pending legal action, as does the Institute of Management and Resources (IMR), which ran the school for years and listed a leased Maserati and Jaguar in its bankruptcy filing.

Asked last week about Thomas’ role running Richard Allen schools, a state attorney general’s spokesman claimed, “The schools are no longer under Ms. Thomas’ control.”

But both the schools’ website and Ohio Department of Education documents confirm that she is the superintendent, and it was Thomas who responded to questions about the schools after a reporter visited the Talbott Tower office for the schools’ management company.

Asked about the contradiction, attorney general’s spokesman Dominic Binkley said he would have to recheck information provided by the AG’s education division that Thomas was no longer running the schools.

Ohio Senate Education Committee Chair Peggy Lehner, who has led charter school reform efforts in recent years, said state officials will investigate.

“I find this information extremely troubling, and I, along with a number of other entities within the state, will continue to look into this,” Lehner said.

2017 STORY: Ratings rise for local charter school sponsors

Thomas declined an interview request, sending short emails instead.

“Richard Allen Schools has nothing to do with IMR,” Thomas wrote, adding, “The schools are working hard to respect its leases and to secure the property outside of the bankruptcy. The audits are proceeding and it is my understanding that they should be released soon.”

Until summer 2017, the three Richard Allen schools in Dayton and one in Hamilton were run by The Institute of Management and Resources, a company started by Thomas and her mother, Richard Allen Schools founder Jeanette Harris.

Earlier this decade, the state auditor’s office ruled that IMR misspent $2.2 million in public money running Richard Allen. The company denied wrongdoing and appealed in court, but lost in 2015.

Lingering issues

IMR filed for bankruptcy protection in March 2018. The Daily News pored through hundreds of pages of court records, state audits and school records, finding several lingering issues:

** The state attorney general's office sued IMR, Harris, Thomas and others in late 2017, seeking to turn those $2.2 million in audit findings into collectible court judgments. The case was stayed when IMR filed for bankruptcy protection months later.

“(In addition to IMR), we also sued Jeannette Harris, her daughter Michelle Thomas, and the schools’ former treasurer (Felix O’Aku),” Binkley said. “We seek to hold those individuals strictly liable for the improper payments that resulted in the findings for recovery.”

REPORT CARD: What grades did state give local charter schools?

** IMR's March 2018 bankruptcy filing says that at the time, the company was leasing four cars that were being paid for by IMR officials — a 2015 Maserati Ghibli for which Thomas is listed as co-lessee, a 2016 Mercedes C300 with deputy superintendent Aleta Benson listed as "guarantor," and both a 2016 Jaguar XJL and a 2016 Mercedes GL 450 SUV with Harris listed as "guarantor."

** The state auditor's office, which issues annual financial audits of each Ohio charter school, has not issued an audit of any of the four Richard Allen schools for 2015-16, 2016-17 or 2017-18. There had been a financial audit of each Richard Allen school for every year through 2014-15. The auditor's office would not say whether there is an ongoing investigation.

“We realize there is significant public interest in many of the audits and investigations that our office conducts, but it is our policy not to discuss any details of our work until it is completed and released by this office,” Auditor’s office spokeswoman Allison Dumski said.

** When IMR filed for bankruptcy, it listed its address as 118 W. First St. The new management company that Richard Allen's board hired in fall 2017 to operate the schools, Educational Management and Development Group (EMDG), is also run by Thomas, from the same 118 W. First St. address.

2015 STORY: Appeals court upholds findings against Richard Allen

“You can’t change hats and change names to comply with the law, and it appears that may have been going on here,” Lehner said.

Thomas had been a director and officer of IMR, according to her own legal filings, and previous state audits criticized the “cozy” relationship and lax oversight between the school and its management company.

EMDG was founded in April 2017, just months before Richard Allen separated from IMR. Incorporation documents held by the Secretary of State’s office do not list any officers of the company. According to Ohio Department of Education records, EMDG does not operate any Ohio schools other than Richard Allen.

Ohio law says, “No person shall … operate the community school (if) the person owes the state any money or is in a dispute over whether the person owes the state any money concerning the operation of a community school that has closed.” The law also says, “Each sponsor of a community school shall annually verify that a finding for recovery has not been issued (against) the operator, or any employee of each community school.”

The findings for recovery in Richard Allen’s history were against IMR, but Thomas was a founder and director of IMR.

As of late Thursday, Ohio Department of Education officials had not answered questions about Richard Allen Schools’ operations that were posed by this news organization late Monday.

School sites, grades, money

Dayton’s first Richard Allen Academy charter school opened in 1999. In recent years, Richard Allen has technically operated four schools, although they are located on only three sites — Richard Allen I, II and Prep at 184 Salem Ave. and 627 Salem Ave. in Dayton, plus Richard Allen III at 1206 Shuler Ave. in Hamilton.

The schools once had 964 students but now has 525, according to state data.

2015 STORY: Four local charter schools cited for attendance issues

The buildings that Richard Allen Schools operate in are still owned by IMR. A Montgomery County Judge approved foreclosure on the Richard Allen school building at 184 Salem Ave. in late 2017, but a planned sheriff’s sale of the property was halted in March 2018, when IMR filed for bankruptcy. It is unclear what will happen to the school buildings once the bankruptcy case is resolved.

Last year, ODE’s Office of School Sponsorship terminated its sponsorship contracts with all four Richard Allen Schools. The state first cited student performance, fiscal management and other good cause, but after an appeal, said the termination was only for the reason of “other good cause.”

For this school year, the Richard Allen schools signed on with a new sponsor, St. Aloysius Orphanage, and continued operating all three sites. But for state identification purposes, they are technically just two schools — Richard Allen Prep in Dayton and Richard Allen Academy in Hamilton.

All of the Dayton schools that received state report card grades in achievement the past three years got F’s. The schools’ performance index on state tests has been slightly higher than Dayton Public Schools’ score the past two years. Richard Allen Academy has received B’s in student progress the past two years, while Richard Allen II got F’s.

2013 STORY: Thomas, Richard Allen fire back at state audit findings

“Richard Allen Schools have been in existence for 20 years and … they have educated hundreds of urban students who have gone off to colleges and universities across the country and have made a significant impact in our community,” Thomas said in an email Thursday.

The five-year financial forecasts filed with the state showed the four Richard Allen Schools finishing both the 2015-16 school year and 2016-17 school year with a combined $4,000 in the bank, despite a combined annual budget of almost $6 million.

The Ohio Department of Education determined that the five-year forecasts filed for Richard Allen II and III in May 2018 were “insufficient.” ODE requested that the school revise the forecasts within 15 days, saying it would post the “corrected forecasts,” but that has not occurred. Since then, under the Richard Allen restructuring for this school year, schools II and III do not exist.

Bankruptcy case

IMR’s ongoing Chapter 11 bankruptcy case, filed March 21, 2018, listed the group with $1.54 million in assets, $1.4 million of which was the school real estate. The rest included $27,000 in furniture and kitchen equipment, a $12,588 truck and $88,000 in accounts receivable.

For the question, “does the debtor (IMR) own or lease any vehicles?” IMR said it owned one truck and listed the lease of the four luxury cars. In each case, there was a statement that “Debtor has made no payments on this lease. All payments made by …” and then the name of Thomas, Harris or Benson.

IMR listed $2.21 million in liabilities, including $1.05 million in mortgages. The rest includes dozens of creditors ranging from $53,449 in legal fees owed to Dinsmore and Shohl, $80,969 remaining on a judgment owed to textbook company Houghton Mifflin, and $325,341 owed to internet and phone company Level 3 Communications. The company did not list the $2.2 million in findings from the state in its liabilities.

2011 STORY: Oversight of Richard Allen schools questioned

The $2.2 million in findings were levied because years of annual contracts called for Richard Allen to pay IMR about 88 percent of its revenue for school expenses and management fees, but IMR actually got about 97 percent, according to state audit documents. School and IMR officials later called it a wording error in the contract.

Denis Blasius, the attorney representing IMR in the bankruptcy case, did not respond to requests for comment about the cars, or the likely disposition of the school buildings. Dave Cash, superintendent of St. Aloysius Orphanage, which is in its first year sponsoring the Richard Allen schools, did not respond to emails and calls seeking comment.

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