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Dayton Daily News investigation finds millions in misspent taxpayer funds won’t be paid back
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Dayton Daily News investigation finds millions in misspent taxpayer funds won’t be paid back

A Dayton Daily News investigation published November 30 reported that the state has collected only a small percentage of the $84.6 million in taxpayer money singled out by watchdogs as misspent or mishandled by public agencies since 2001.

The findings were made in financial audits of public schools, cities, counties and government agencies. To date, about $13.9 million has been collected. Approximately $32.1 million has reached a six-year statute of limitations on collections without repayment. The Ohio Attorney General’s Office considers another $24.7 million — owed from audits of charter schools — “virtually uncollectible.”

According to the Dayton Daily report, that leaves only about $10.4 million of these so-called “findings for recovery” — orders that the money be repaid — that the Attorney General is actively working to collect.

The need for increased oversight of charter schools is of concern for representatives with both the liberal-leaning Progress Ohio and the conservative-leaning Buckeye Institute.

In the article, Greg Lawson, policy director for the Buckeye Institute and a supporter of charter schools, said the findings “show all the reasons why we need to be vigorous on the front end (in monitoring charter schools).”

Progress Ohio Executive Director Brian Rothenberg said, “Often a lot of elected officials spend an inordinate amount of time picking on the little guy and ignoring or winking at bigger problems that happen with some of these findings for recovery. If the government and the elected officials had the will to do it they would probably do much more for the taxpayers by collecting on those.”

The Ohio Auditor’s office examines the books of 5,600 cities, counties, government boards, schools and agencies across the state each year and issues findings for recovery against specific people when auditors believe money was misspent, misappropriated, stolen or when cash just simply disappeared. Individuals whose names are on the findings for recovery list are barred from getting public contracts — even after the statute of limitations — but are not prohibited from being public employees or elected officials. They can be removed from the list by paying the finding or successfully appealing it.

Since the state began tracking them in 2001, the auditor’s office has issued $84.6 million in findings for recovery in 1,957 audits. The findings include recent audits that demanded some area township trustees repay money paid to them to cover some of the costs of their pensions. Other audits found undocumented expenditures at some local governments and evidence of theft in some charter schools.

The largest findings on record include $7.5 million owed by a Cleveland day-care operation that a 2008 audit concluded had padded enrollment figures with phantom children. Toledo businessman Tom Noe and others owe $13.7 million is to the Ohio Bureau of Workers Compensation for a fraudulent investment scandal, detailed in a 2006 audit. Noe is serving an 18-year prison sentence.

Only $13.9 million of the total amount of findings statewide has been collected. This is nearly $2 million more than had been collected when the Dayton Daily first reported the low collection rate in 2012. Since that time, the amount of findings has grown by more than $12 million.

Last year, Ohio had a policy of not attempting to collect findings under $3,000 because it didn’t make economic sense. Both newly-elected Auditor Dave Yost and Attorney General Mike DeWine said the process needed to be improved.

The same Attorney General’s office team that handles all state debt collection — 13 attorneys, paralegals and secretaries — now handle the findings at least part time. This has allowed the state to begin taking findings out of state income tax refunds and filing for court judgments ordering repayment. Those steps also eliminate the statute of limitations.

The Attorney General’s office has collected $612,899 since this change and is working to improve on the process by seeking more court judgments and working closer with state auditors to build court cases.

The Dayton Daily reported that none of the funds collected by the attorney general are from charter schools.

“If we receive a charter school finding for recovery, it’s virtually uncollectible,” said Attorney General Spokesman Dan Tierney. “These are charter schools that are no longer in operation, they have no income, they have no assets, many times the findings are issued because they spent money they shouldn’t have.”

“By nature the attorney general’s office has the toughest of these to collect,” he said. The public entity that was audited, then each county prosecutor, are first tasked with collecting findings for recovery. The attorney general gets it last.

The article noted that some charter school findings have been converted into criminal penalties. Charter school treasurer Carl Shye, who worked with schools here and across the state, agreed to repay much of the $800,000 in findings against him when he pleaded guilty last year to embezzlement in federal court. Area charter school CEO William Peterson agreed to pay $275,000 of the $857,963 in findings against him when he pleaded guilty this month in Cuyahoga County court to unlawful interest in a public contract.

Officials with the Auditor of State’s office said they are working together to do better.

“Of course we want to see as much as can be collected recovered,” said Carrie Bartunek, spokeswoman for the state auditor’s office.

Among the findings issued in 2013:

Richard Allen Academy
Issued: Nov. 6 and Feb. 28
Finding amount: $2.2 million

The most recent audits of the chain of charter schools with locations in Dayton and Hamilton have brought the total amount of findings against the group to $2.2 million. The schools are challenging the findings in court, arguing the state auditor is misreading the school’s contract with its management company, which the audits say was over-paid.

General Chappie James Leadership Academy
Released: Aug. 29
Finding amount: $4,335

A finding for recovery was issued for $4,335 against school founder Kecia Williams and Tracy Jarvis for undocumented debit card purchases.

Cincinnati College and Preparatory Academy
Release date: June 18
Finding amount: $520,000

Professional football season tickets, trips to the theater, travel expenses and cocktails are just a few of the nearly $520,000 in items for which taxpayers picked up the tab, according to the special audit of the Cincinnati College Preparatory Academy (CCPA). The findings in this audit led to the indictments of former Superintendent Lisa Hamm and former Treasurer Stephanie Millard.

Cleveland Academy of Scholarship Technology and Leadership Enterprise
Release date: April 23
Finding amount: $1.3 million

Employees’ allegedly illegal relationships with vendors and shoddy bookkeeping led to more than $1.3 million in findings for recovery issued in the special audit of the Cleveland Academy of Scholarship, Technology, and Leadership Enterprise (CASTLE). The school was managed by William Peterson of Dayton, who pleaded guilty last week to having in unlawful interest in a public contract.

By the numbers

  • Total amount of findings issued since 2001: $84,568,474
  • Amount uncollected: $70,669,366
  • Amount uncollectible but to statute of limitations: $32,059,920
  • Amount ‘virtually uncollectible’ owed by charter schools: $24,733,164.51
  • Amount actively being collected by Ohio Attorney General: $10,380,740.02


Source: Ohio Auditor of State, Ohio Attorney General

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