Charter schools paying interest on loans that don't exist?

Newpoint Education Partners indicted in different county on similar claims

JACKSONVILLE, Fla. – Plan B is now Plan A for a local charter school after it discovered it's possibly been paying interest on $235,000 worth of apparently non-existent loans from its management company, Newpoint Education Partners.

Last month, the company was indicted in Escambia County on charges of grand theft, money laundering and aggravated white collar crime. The 21st Century Academy in Pensacola claimed the company and its vendors fraudulently billed them for "equipment, supplies and services."

Prosecutors said Newpoint was working with vendors to launder the stolen money through multiple bank accounts to conceal the criminal activity that has been going on since 2011.

The indictment caught the attention of other schools managed by the St. Petersburg-based company.

According to WFLA-TV, a million-dollar deficit was rung up at Windsor Prep Academy and East Windsor Middle Academy in Pinellas County. The Pinellas school district also claimed Windsor had $300,000 in unexplained consulting fees paid to the company. It also had to return a $75,000 grant because the company's managers couldn't tell them how the money was spent.

Two other schools in Pinellas County -- Newpoint Pinellas Academy and Newpoint Charter High School -- are in the same trouble.

Over the last six months, Newpoint has operated charter schools in six counties and has withdrawn from its contracts voluntarily or been terminated by the school districts in four of those counties. The only two schools left under Newpoint management are in Jacksonville -- San Jose Academy and San Jose Preparatory High School.

Last week, board members for the schools decided they would look into hiring a new management company if Newpoint was found guilty of the charges. They called it a "Plan B," because "they are doing an excellent job with us and we are proud of that," board chair Bonnie Arnold said.

But the decision to drop the company may be coming quicker than first anticipated.

Charter schools always have their own school board, but because they are receiving funds from the state government, public school districts oversee that the finances are being spent appropriately.

The Duval County School District told News4Jax it did an in-depth audit on both of the local schools and their finances after the indictment in Escambia County came down. The district said at the time that everything seemed to check out.

But that doesn't seem to be the case now.

After WFLA requested public records detailing the loans Newpoint Education Partners took out on the two Jacksonville schools, San Jose's attorney, Gary Wheeler, said there were none. He also confirmed the schools board of directors never approved any loans.

READ: San Jose Academy audit | San Jose Preparatory audit 
(Note: Loans in question on pages 21-22 of audits)

Despite that fact, the loans are listed in the 2015 independent auditor report done by CPA firm King and Walker. According to San Jose Academy's audit, "the school borrowed funds from its management company, a related party through contractual obligation. All long-term debt represents amounts to be repaid from governmental activities."

As of June 30, 2014, the company said the school had borrowed $10,000 dollars to cover costs of operations with a 5 percent annual interest.

The audit goes on to say that on June 30, 2015, the school borrowed $175,000 with a 6 percent annual interest.

For San Jose Preparatory, Newpoint stated that on June 30, 2014, the school borrowed $10,000 to "cover costs of operations" with a 5 percent annual interest rate.

On June 30, 2015, the company said the school borrowed $40,000 to "cover costs of operations" with a 6 percent annual interest rate.

Wheeler told News4Jax that King and Walker was in the process of revising the audit to reflect the corrections. Arnold said all of this comes as a surprise but assured parents that the school has no intention of closing its doors.

The school has a board meeting June 16. Wheeler said the future of the relationship with Newpoint will be discussed, as well as potential legal ramifications, but he said it's too soon to discuss what the school will officially do next.

Wheeler also confirmed that the school had been in touch with Newpoint since discovering the lack of loan documentation, but would not detail the conversation.