Oklahoma AG worries Epic Charter Schools founders still have taxpayer money

The state’s attorneys filed a motion in Oklahoma County District Court earlier this month seeking to preserve the assets currently in a private business banking account “pending the criminal proceedings.”

A spokesman for the Attorney General’s Office said the state believes approximately $5.5 million of taxpayer dollars intended for Epic Charter Schools’ student Learning Fund is at stake, though he offered no explanation for why law enforcement hadn’t sought to secure the funds sooner.

According to publicly available court records, the funds are in a bank account owned by Epic co-founders Ben Harris and David Chaney’s school management company, Epic Youth Services, and the Bank of Oklahoma “has informed the State that it intends to sever its relationship with Epic Youth Services in the near future.”

In the new motion, prosecutors claim that more than a year ago now — and four months after the criminal charges were filed — Harris and Chaney “utilized the embezzled funds maintained in (the Bank of Oklahoma account) to acquire over $5 million in investment assets, primarily in the form of treasury bills, through BOK Financial Securities, Inc.”

Prosecutors want a court order that those investment funds, as well as any funds remaining in the account, are subject to criminal forfeiture because “they were derived from or realized through a violation of the Oklahoma Racketeer-Influenced Corrupt (or RICO) Act.”

After a yearslong law enforcement probe, Chaney, Harris and their longtime chief financial officer, Josh Brock, were arrested and charged in June 2022 in Oklahoma County District Court under the state’s RICO law.

The criminal case alleges 15 counts, including embezzlement, money laundering, computer crimes and conspiracy to defraud the state.

A hearing on the attorney general’s motion to freeze the assets has been set for early December, and the preliminary hearing for all three defendants, at which the court determines whether the prosecution has sufficient evidence to justify a trial, is scheduled for late January.

State Auditor and Inspector Cindy Byrd, whose office delivered damning findings in an October 2020 investigative audit of Epic, has called the case the “largest abuse of taxpayer funds in the history of this state.”

That audit report found that least $145 million in public money Epic’s governing board allocated for its student Learning Fund was taken into EYS’ private bank account and expended using personal credit cards between 2015 and 2020.

The revelation that Harris and Chaney still have Epic student learning funds in their private business bank account begs the question of why law enforcement didn’t act to secure those dollars sooner — and whether Epic Charter Schools tried to recoup them from its former contracted management firm on its own.

Phil Bacharach, director of communications for the Office of the Attorney General, declined to answer the first question or provide the date that state law enforcement officials were informed of the bank’s intent to close the EYS account.

“Unfortunately, our Criminal Division cannot address (those) questions,” Bacharach told the Tulsa World. “Ethical obligations restrict their ability to comment publicly on pending litigation.”

Jeanise Wynn, deputy superintendent of finance and treasurer at Epic Charter School, said the school “has been engaged in efforts to recover the remaining balance in the Student Learning Fund from EYS since the Fall of 2021.”

That timeframe would be about six months after Epic’s governing board divorced itself and the public charter school from outside management and influence by Epic Youth Services.

“EYS 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 EYS money for ‘transition services’ that EYS allegedly provided following the termination of the relationship between the two entities,” Wynn said in response to the Tulsa World’s questions.

“In December 2021, EYS filed a lawsuit against the school seeking a monetary judgment of nearly $7 million for the alleged transition services. The school responded by denying that EYS performed the services in question and filing counterclaims against EYS to seek recovery of the remaining balance in Student Learning Fund and other damages resulting from the misconduct of EYS. The case between the school and EYS has been delayed by the criminal indictments of EYS’s founders and CFO. The school will continue to use the legal process to diligently pursue the recovery of all outstanding funds on behalf Oklahoma public school students.”

The Tulsa World reached out for comment from an attorney of record for both Harris and Chaney in the criminal case, but the message was relayed to a different attorney representing Epic Youth Services.

Elizabeth “Libby” Scott with the firm Crowe and Dunlevy stated that Chaney and Harris continue to insist that the funds became their business’ own private funds upon receipt from the school and that EYS performed $6.8 million in “transition services” through September 2021, all under the terms of the Mutual Termination Agreement the school board entered into with EYS on May 26, 2021.

“The School has refused to honor its obligation under the agreement, thereby forcing EYS to bring an action in Oklahoma County District Court for breach of the agreement. The transition costs owed by the school to EYS far exceed any Learning Fund balance to be donated by EYS in the future,” Scott told the Tulsa World.

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