Unapproved bonuses, personal spending: Charter school superintendent allegedly misused taxpayer dollars

The superintendent of a defunct Oklahoma City charter school misused more than $250,000 intended for at-risk students while the school board, including an appeals court judge and a state senator, ignored warnings, state auditors say.

The Oklahoma State Auditor and Inspector’s Office released a searing report Tuesday from its investigation of Justice Alma Wilson Seeworth Academy, a charter school serving students with academic and behavioral struggles that closed June 30, 2019.

Auditors said the school’s superintendent, Janet Grigg, freely gave herself and staff more than $210,000 in bonuses with no board approval and spent more than $41,000 on personal expenses from a school bank account.

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Personal expenses include nearly $10,000 charged to a school debit card to buy clothing, jewelry, cosmetics and home decor from retailers QVC, HSN and Evine, auditors said. Records show Grigg withdrew $2,200 from a school account at a Newcastle casino ATM and thousands more at other locations, the report states.

Grigg couldn't be reached for comment.

State Auditor and Inspector Cindy Byrd said the superintendent's alleged actions were an “incredible disservice” to taxpayers and Seeworth students.

“School choice is important for students in Oklahoma and should be protected,” Byrd said in a statement. “However, the criminality of this cannot be ignored.”

Oklahoma County District Attorney David Prater said he will open a criminal investigation based on the audit findings.

“The theft or misappropriation of money that was intended to benefit our state’s children is a serious matter to me,” Prater said in a statement. “When completed, if credible and admissible evidence of criminal conduct is identified, a charging decision will be made. It is important to note that, at this point, all persons named in the Auditor’s report are presumed innocent of criminal conduct.”

The Oklahoma State Board of Education requested the audit in August 2019 as allegations of financial and legal impropriety surfaced at the school.

State officials warned Seeworth earlier that year that they had reviewed evidence demonstrating the school “failed to properly account for taxpayer funds” and fell short of federal requirements to serve students with disabilities, according to a 2019 letter from Oklahoma State Department of Education general counsel Brad Clark.

Tuesday’s audit report found Grigg regularly underreported her true earnings to the state Department of Education.

State schools Superintendent Joy Hofmeister said the “apparent fraud” at Seeworth resulted from a lack of accountability and structure in state law for the boards governing charter schools.

"We thank Auditor Byrd for her diligent work initiated at our request,” Hofmeister said in a statement. “This is yet another example where parents, students and Oklahoma taxpayers are failed by a less-than-fully-engaged school board and loose state laws regarding charter schools.

“We continue to call for the legislature to strengthen oversight of charters.”

The audit report also urged for a stronger legal framework to guide charter school authorizers, which are meant to hold to account the charter schools they oversee.

Related coverage: Oklahoma Gov. Kevin Stitt requests audit of state Education Department

Annual audits as early as 2009 alerted Seeworth’s governing board, which by 2019 included Oklahoma Court of Civil Appeals Judge Barbara Swinton and Senate Minority Leader Kay Floyd, to possible law violations and a troubling lack of internal controls meant to prevent fraud.

A 2012 lawsuit, a 2019 whistleblower report, and letters from auditors in 2017 and 2019 also communicated concerns of potential abuse of school funds.

The school board dismissed and disregarded these red flags, according to the report.

“The overarching lack of oversight by the Board created an environment ripe for financial mismanagement and the misappropriation of funds,” auditors wrote.

Swinton and Floyd didn't immediately return requests for comment Tuesday.

Audit shows Seeworth Academy superintendent gave herself bonuses

Grigg essentially had free financial rein during her tenure at Seeworth, auditors said.

“She was effectively the superintendent, the chief financial officer and human resources rolled into one,” the auditors wrote.

The school’s accountant reportedly told investigators he took Grigg’s requests for staff bonuses and stipends “as gospel” and didn’t verify that the school board approved them.

For example, Grigg ordered the accountant to give her checks of $7,500 and $12,500 a month apart in September and October 2018, the audit report shows. The only documentation for these bonuses were two emails in which Grigg, with no explanation, instructed the accountant to issue the checks.

Grigg ordered $255,751 worth of bonuses and stipends from 2014 to 2019, but the board approved only $40,000, the report states.

On top of the bonuses she requested for herself, the superintendent oversaw extra payments for other staff members and, in some cases, reportedly kept her colleagues’ bonus money.

“In one instance, Grigg took 80% of the staff bonus for herself,” auditors wrote.

Superintendent underreported her annual income

Grigg underreported her income to the Oklahoma State Department of Education by an average of $49,000 a year, auditors found. By June 30, 2018, she received $201,294 in total compensation but told the state she earned $159,841.

Her total income exceeded the amount established in her contract by an average of more than $33,000 a year, according to the audit.

Grigg’s handling of other school funds also came into question.

Former Seeworth Principal Mongo Allen alleged in a 2012 discrimination lawsuit that Grigg used the school’s federal funds for personal use. The lawsuit, filed in Oklahoma City federal court against the superintendent and the entire school board, was ultimately dismissed and settled out of court.

The school’s corporate account, from which Grigg reportedly spent more than $41,000 on personal expenses, was amended in 2017 to ensure the superintendent was the only authorized signer.

The corporate account, which auditors say contained money donated to the school and funds raised at school events, wasn’t audited annually with the rest of Seeworth’s finances, according to the report.

A longtime Seeworth contractor sounded the alarm over Grigg’s cash-handling procedures and Corporate Account spending in a 2019 whistleblower letter to Swinton, the school board president at the time.

Auditors found an email in which Swinton appeared to dismiss the allegations.

“Thank you for your concerns about the financial health of Seeworth,” she wrote to the whistleblower in a March 10, 2019, email. “These concerns were addressed by our board with our accountants and you should not have any concerns that the funds are being mishandled.”

The board then voted off one of its members, Greg Dewey, in April 2019 who auditors said was “actively questioning” Seeworth’s finances in light of the whistleblower report.

Swinton and board member Lee Ann Wilson told auditors Dewey was removed because the board feared he was sharing confidential information with Paycom CEO Chad Richison.

Richison had offered to make a $1 million donation to Seeworth on condition that the school’s finances undergo an audit. Under Swinton and Wilson’s recommendation, the board refused the $1 million offer.

“Swinton and Richison stated the Richison offer was turned down because they felt he would exert too much influence over the school and they did not wish to comply with his audit request,” state auditors wrote.

Issues persisted after Seeworth closed

Potential illegality continued after the school shut down, auditors said. Seeworth officially ceased to exist on June 30, 2019, after the board voted to relinquish the school’s charter and students were transferred to Oklahoma City Public Schools.

But, the Seeworth board authorized the school to spend $135,713 after it closed, which auditors said could be a violation of state law.

The Oklahoma City school district had to take the school to court before it would turn over student records, school property and the money left in Seeworth’s bank accounts.

Former Seeworth students were “unfairly impacted by unnecessary delays and conflicts” from the charter school as Oklahoma City quickly established a new alternative school for them at Putnam Heights Academy, the district said in a 2019 statement.

“While today’s findings are unfortunate, they are yet another stark reminder of the many challenges that districts like OKCPS face as charter school sponsors under current state law when it comes to our ability to develop and enforce accountability,” Oklahoma City schools said in a statement Tuesday. “We were pleased to welcome the students and families who once called Seeworth 'home' to OKCPS in 2019, and they continue to be our priority as we support and care for them at Putnam Heights Academy."

Grigg reportedly kept one of Seeworth’s vehicles, a GMC Yukon, for 10 months after the school shut down, forcing the Oklahoma City district to legally repossess the SUV, the audit report states. Refrigerators, freezers and seven TV sets, collectively worth more than $10,000, from Seeworth facilities were never turned over to the public school district.

Multiple school computers, including Grigg’s personal laptop, were never recovered, auditors said. Auditors found “haphazard” inventory lists and said electronic records were “extremely limited and the file server containing all e-mails was inadvertently disposed of.”

Several records all but disappeared, auditors said. Former Seeworth employees reportedly told the state auditor’s office that the school purposefully destroyed documents.

“Despite spending approximately 100 hours reviewing and categorizing records, it was impossible to ascertain whether documents were merely missing, had been intentionally destroyed, or if they simply never existed,” auditors wrote.

Reporter Nolan Clay contributed to this report.

Reporter Nuria Martinez-Keel covers K-12 and higher education throughout the state of Oklahoma. Have a story idea for Nuria? She can be reached at nmartinez-keel@oklahoman.com or on Twitter at @NuriaMKeel. Support Nuria’s work and that of other Oklahoman journalists by purchasing a digital subscription today at subscribe.oklahoman.com.

This article originally appeared on Oklahoman: Oklahoma auditors: Seeworth Acadamy misused taxpayer money