Court Ruling Stops Diversion of Funds Intended to Benefit DC Public Charter School

WASHINGTON, D. C. -- The District of Columbia has obtained a preliminary injunction stopping further payment of fees by Community Academy Public Charter School to a for-profit management company owned by the school's founder, Kent Amos, D.C. Attorney General Irvin B. Nathan announced today.  The preliminary injunction order, issued yesterday by Superior Court Judge Neil E. Kravitz, at the urging of the Office of the Attorney General, prevents any further payments to the for-profit company, but allows the school to seek court approval for limited additional payments, through the end of November for the actual costs of management company employees, other than Amos, continuing to work for the school.  In this interim period, the management company cannot be paid for any more work by Amos.

In this case, the District sought relief for the public under the District’s Nonprofit Corporation Act against the school's for-profit management company, Community Action Partners and Charter School Management LLC, and the company's CEO, Amos and the nonprofit school.  The District alleges that the school's arrangement with Amos's management company was a mechanism to divert public funds and enrich Amos, to the detriment of the school and contrary to its nonprofit purposes.  After an evidentiary hearing, Judge Kravitz ruled that the District is very likely to prevail in its case.

Judge Kravitz found that all of the management company's revenue came from the school, and was therefore derived from public funds intended for the school's use in connection with its nonprofit purpose.  Tax returns introduced as evidence in the District's case show that Amos and his wife had combined income from the company of $1,153,000 in 2012 and $1,378,623 in 2013.  Judge Kravitz found that the testimony at the hearing supported the inference that Amos's wife did not perform any services for the company on behalf of the school.  
Judge Kravitz found that Amos has functioned for the past decade as the CEO of the school, but was for the last several years paid "three to five times" the accepted salary range for a CEO of a nonprofit organization comparable in size.   Judge Kravitz found that "such payouts" with "public funds" were unjustified and had resulted from "abdication" by the school's board, which had "not acted with reasonable diligence."  He noted that the approximately $1 million in funds being improperly diverted to Amos per year represented about $600 per student of the school, money that could have been spent on additional resources for students.

Describing the facts of the case as "egregious," Judge Kravitz denied a motion by the school, the company, and Amos to stay the injunction pending an appeal.

Attorney General Nathan said: "This case sends a strong message to those charged with stewardship of D.C. nonprofit organizations that they must take care to ensure that nonprofit funds, particularly public taxpayer dollars, are used for their intended public purposes, and not to enrich insiders."  

The Attorney General also commended Assistant Attorney Generals Jimmy Rock and Catherine Jackson, who are handling the case under the supervision of Public Advocacy Section Chief Bennett Rushkoff and Deputy Attorney General Ellen Efros, and he expressed appreciation to the District's Public Charter School Board for cooperating fully with the Office of the Attorney General in this matter.