Court documents: OK AG concerned Epic co-founders still have access to taxpayer dollars
OKLAHOMA CITY (KFOR) – The Oklahoma Attorney General’s Office claims the two co-founders charged with money laundering and embezzling state funds are still in possession of student funds.
Epic Charter Schools co-founders, Benjamin Harris and David Chaney along with former Chief Financial Officer, Joshua Brock were arrested in June 2022 on a multitude of charges, including:
Racketeering
Embezzlement of State Funds
Obtaining Money by False Pretense
Conspiracy to Commit a Felony
Violation of the Oklahoma Computer Crimes Act
Submitting False Documents to the State
Money laundering
Conspiracy to Defraud the State
Acquiring Unlawful Proceeds in Excess if $50,000
There are 15 felony counts in total as of Monday.
Oklahoma State Auditor, Cindy Byrd previously told KFOR that over the years the complicated financial scheme cost taxpayers more than $22 million dollars, following an October 2020 investigative audit into Epic Charter Schools.
Byrd said her office reviewed Epic Charter Schools’ finances from 2015 to 2020 and much of the report focused on the funds spent on Epic Youth Services, which the school’s contracted with.
More than a year after the trio’s arrest and the State Attorney General has brought into question whether the co-founders still have access to the money.
Why didn’t audits stop Epic before it got out of control?
As first reported by the Tulsa World, court records reveal Chaney and Harris used embezzled funds kept in a Bank of Oklahoma account in October 2022 to acquire over $5M in investments assets, primarily in the form of treasury bills.
The funds are in a bank account owned by Harris and Chaney’s school management company, Epic Youth Services.
Court documents obtained by News 4 also show Bank of Oklahoma has informed the state it plans to “sever its relationship with Epic Youth Services in the near future.” Public records have not shown a timeline of when that might be.
The State Attorney General’s Office has now filed a motion asking for those investments, and any remaining funds in the Epic Youth Services account be subject to criminal forfeiture because “they were derived from or realized through a violation of the Oklahoma Racketeer-Influenced Corrupt (or RICO) Act.”
News 4 reached out to an attorney of record who represents both Harris and Chaney for comment. Our inquiry was forwarded to an attorney who represents Epic Youth Services.
Elizabeth “Libby” Scott with Crowe and Dunlevy said the funds have “always been private.”
“Epic Youth Services and the School, Community Strategies [doing business as] Epic One-on-One and Epic Blended, entered into a Mutual Termination Agreement on May 26, 2021. Under this Agreement, both parties had many obligations. The Agreement was drafted by the School’s attorney, approved by the School Board in an open meeting, and signed by the Chairman of the School Board upon the advice of the School’s attorney,” stated Scott.
In this Agreement, Epic Charter Schools explicitly agreed with respect to the Learning Fund, “all payments received by [Epic Youth Services] have been and remain private funds,” according to Scott.
Under this same Agreement, Epic Youth Services agreed to “donate” the balance of these private funds back to the School after all Learning Fund expenses had been paid as noted below:
“Learning Fund Balance; Attestation; Representation; Reservation of Rights. All payments received by EYS have been and remain private funds, subject only to compliance with the terms of this Agreement. EYS shall donate to the Charter School the balance of funds in the EYS Learning Fund bank account after all the Learning Fund expenses, shipping, handling, enterprise-wide license costs, and liabilities incurred prior to July 1, 2021 are paid.”
Part of the Mutual Termination Agreement between Epic Youth Services and Epic Charter Schools provided by Elizabeth “Libby” Scott
State auditor releases findings on Epic Charter Schools audit
The Deputy Superintendent of Finance and Treasurer at Epic Charter School, Jeanise Wynn told the Tulsa World the school “has been engaged in efforts to recover the remaining balance in the Student Learning Fund from [Epic Youth Services] since the Fall of 2021.”
Since the Agreement was executed, there continues to be Learning Fund liabilities presented to Epic Youth Services for payment, said Scott.
“[Epic Youth Services] will continue to honor its obligation under the Agreement to pay Learning Fund expenses incurred prior to July 1, 2021 as presented by the School and outside vendors. In this Agreement, the School also agreed that it would pay [Epic Youth Services] to perform certain transition services through September 30, 2021,” explained Scott.
Scott added Epic Youth Services has performed the requested transition services and invoiced Epic Charter Schools in the amount of $6,840,275.78 as specifically provided under the parties’ contract, but Epic Charter Schools has allegedly refused to honor its obligation.
“The transition costs owed by the School to [Epic Youth Services] far exceed any of the private funds held in Learning Fund accounts to be donated by [Epic Youth Services] in the future,” stated Scott.
“[Epic Youth Services] has consistently declined to confirm the balance remaining in the fund and has refused to return the balance to the school, instead claiming that the school actually owes [Epic Youth Services] money for ‘transition services’ that [Epic Youth Services] allegedly provided following the termination of the relationship between the two entities,” Wynn said in response to the Tulsa World’s questions.
News 4 reached out to the AG’s Office for comment, but they declined due to pending litigation.
Chaney and Harris are due back in court December 8 at 9 a.m. for a hearing on the Attorney General’s motion to freeze the assets.
A preliminary hearing for all three defendants is set for January 22 at 9 a.m.
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