|
Getting your Trinity Audio player ready...
|
by WILL FOLKS
***
It’s been more than four years since our media outlet first reported on allegations of fraud and other reported misconduct at the prestigious Charleston Day School (CDS) – an elite private academy located in South Carolina’s oldest, wealthiest and most historic city.
This case – which has spawned several civil lawsuits – involves demonstrable dishonesty on the part of CDS leaders related to the school’s 2020 applications for state and federal coronavirus relief funds. It has also been alleged that the proceeds of these relief funds made their way into the school’s endowment thanks to “misrepresented financial need and manipulated budget reports.”
Charleston Day has steadfastly denied these allegations, noting in previous court filings (.pdf) that there was never “any misappropriation or misuse of any Covid relief funds received by the school.”
School leaders insist they “followed all laws and regulations for a recipient of these funds.” They have also maintained from the beginning that the school used federal Covid-19 relief funds “for payroll purposes only.”
Is that true, though?
***
To recap: Charleston Day – which caters to some of the Holy City’s most affluent families – allegedly lied to state and federal officials while obtaining stimulus money during the Covid-19 scare. Specifically, school leaders laughably claimed that more than half of Charleston Day’s student body – 50.78% of its students, to be precise – came from “low-income families.”
This categorically false assertion was accompanied by another ridiculous claim – that the institution (which was founded in 1937) was somehow a “new business” that had been in operation for just two years (or less).
Based in part on these representations, Charleston Day secured nearly $80,000 from the S.C. Department of Education (SCDE) as part of the federal government’s Emergency Assistance to Non-Public Schools (EANS) program. More significantly, it netted nearly $574,000 from the federal Paycheck Protection Program (PPP).
So, how did one of the Palmetto State’s most exclusive, expensive private academies – which had been teaching the sons and daughters of Charleston’s richest families for more than eight decades at the time it applied for these public funds – magically transform into a start-up serving mostly low-income children overnight?
CDS previously addressed criticism of its ludicrous low-income claim, stating the student population percentage it provided the government was “based on the low-income student ratio in the school attendance area in which the applicant school students reside.”
***
RELATED | LAWSUIT CLAIMS CHARLESTON DAY HID FINANCIAL INFO
***
That’s right… they used poor kids in surrounding areas to make this nonsensical claim stick.
Then they doubled down…
“The (school) was completely transparent in doing so as the form requires the respondent to indicate which option it has chosen in responding to the question,” CDS attorneys wrote in reference to this claim.
In fact, school officials stated they received “advice and counsel” on how to answer the question from the Palmetto Association of Independent Schools (PAIS).
As for the similarly absurd assertion that the school had been in operation for two or fewer years, school officials allegedly “segregated (PPP and EANS funds) in a separate bank account” – although it appears money was moving rather quickly at the time of the original disbursements.
“I put the operating account on the loan application so we will need to transfer the funds when they are disbursed,” the school’s business officer wrote in an April 30, 2020 email to the bank which extended the loan to CDS.
According to ProPublica records, whatever entity received the funding also registered as a daycare facility – not an academic nonprofit – which critics contend was yet another attempt to manipulate the application process. Curiously, schools similar to Charleston Day – which did operate two-year-old daycare centers – failed to make the same representation on their PPP applications.
***
***
There’s more, though. In a new federal filing (.pdf) submitted earlier this month, Charleston Day made another striking admission related to the ultimate destination of the Covid-19 relief monies it obtained. Referring to a June 2021 vote of the school’s trustees, CDS acknowledged transferring surplus funds from its operating budgets into its endowment.
Why does that matter?
“Those surplus funds were primarily the result of the PPP funding,” the filing admitted.
Wait… what?
While it may not constitute a smoking gun, how on earth is such a declaration even remotely consistent with CDS seeking forgiveness for a loan aimed at mitigating supposed immediate economic distress? And would the admission not call into question certain representations made by the school regarding its financial situation at the time?
CDS insisted its board “elected to transfer the operating surplus remaining at the end of the school’s fiscal year into the endowment… rather than to simply hold the funds as excess cash in a checking account earning a near zero percent return.”
Charleston Day has thus far prevailed in court against Matt Austin, a Holy City attorney who previously worked in the U.S. attorney’s office as a federal prosecutor. A former trustee of the school, Austin alleged he was terminated from CDS’ board (and his children removed from the school) after he began questioning this alleged fraud. Last spring, a federal district court judge determined Austin did not meet the threshold to file a retaliation claim against the school for terminating him – although his case is now before the U.S. fourth circuit court of appeals.
Also, in responding to Austin’s complaint Charleston Day seems to be boxing itself in, raising additional red flags regarding how it obtained these monies – and where the funds ultimately went.
***
ABOUT THE AUTHOR…
Will Folks is the founding editor of the news outlet you are currently reading. Prior to founding FITSNews, he served as press secretary to the governor of South Carolina. He lives in the Midlands region of the state with his wife and eight children.
***
WANNA SOUND OFF?
Got something you’d like to say in response to one of our articles? Or an issue you’d like to address proactively? We have an open microphone policy! Submit your letter to the editor (or guest column) via email HERE. Got a tip for a story? CLICK HERE. Got a technical question or a glitch to report? CLICK HERE.
2 comments
DOJ forensic audit will take are of the lies
Low country churches were even in on the Covid fund scams.
You are being too vague in referring to “Charleston Day School.” Obviously, the building itself didn’t sign off on the documents. The student body didn’t sign off on the documents. Who specifically made false representations and signed off on the fraudulent documents? And who were the attorneys who were guiding the boards decisions?