I-Team: School provision allowed officials and family to profit from tax money

Part 2 of our ongoing series "All in the family"

CINCINNATI - How could a school use tax money to employ multiple members of the superintendent's family? And why did the superintendent's husband get a $323,000 contract when his company was the high bidder?

It was all in the design of VLT Academy, one of Ohio's largest charter schools. The downtown campus received $7.4 million in tax money last year.

The charter school's articles of incorporation include a clause, "any trustee, officer or member of the corporation may deal or contract with the corporation as a vendor, purchaser, employee, agent or otherwise. No transaction shall be voidable or invalidated by reason of any relationship," with any party to the transaction, according to the filing with the Ohio Secretary of State.

The school's founding document goes on to require disclosure to the board, but adds that officials shall not be, "accountable to the corporation for any gains or profits realized in or by reason of any transaction with the corporation."

This special clause also says board members doing business with the school, "may vote on any such transaction with like force and effect as if he were not interested in such transaction."

State auditors recently cited VLT Academy for "noncompliance" for paying the superintendent's daughter $102,000 a year without disclosing the relationship, and for giving the superintendent's husband -- an employee of the academy -- the lucrative janitorial contract when his company's bid was three times higher than the low bid.

Valerie Lee was the superintendent and a member of the school board when her daughter and husband were first hired, and when his company was originally given the janitorial contract. In all cases she abstained from voting on the contracts, though she signed 10 of her daughter's 13 employment agreements.

In response to the state audit, the school board recently adopted a new anti-nepotism policy .  

There's no way of knowing why the founder would include clauses specifically allowing officials and their families to do business with the school, but before she created VLT Academy, Valerie Lee and her daughter did work for a charter school where such transactions were the norm.

AB Miree Fundamental Academy in Bond Hill closed its doors after a legal battle with a former board member over unpaid bills to companies he owned.

Pauline Olverson was founder and superintendent of AB Miree. Her husband, Alfred Olverson, served on the board while he owned the janitorial and insurance companies that had contracts with the school. Mr. Olverson was also the landlord for the school building.

AB Miree Fundamental Academy reported these relationships to auditors who took no issue with the superintendent's husband owning the janitorial company that serviced the charter school.

Valerie Lee, using her maiden name Valerie Dukes, served as principal of the school, according to state documents. The school reported to auditors that Dukes also contracted with AB Miree to train teachers for extra money. Her daughter, Echole Harris, worked full time at the same school for a summer.

Harris listed her experience at AB Miree on her application to work at VLT Academy, where she has advanced from a $45,000 a year administrative assistant, to her current $99,000 a year data director job.

Harris and her mother left AB Miree long before the school faced eviction proceedings brought by former board member Al Olverson.

But these aren't the only relatives working at VLT Academy today. Birth records show a current employee of VLT Academy is the father of Echole Harris' 1-year-old son. That means the father of the superintendent's grandson works for the school, and receives his salary from tax money as well.

VLT Academy has insisted there is no reporting relationship between the family members, but Clyde Lee's personnel file contains two written reprimands from his wife . In a letter to the building manager in 2010, Valerie Lee suspended her husband for two days after he broke up a fight between students.

"You can not put your hands on any child in this building," the superintendent wrote to her husband in the suspension letter.

Our initial investigation into employment of family members and the janitorial contract caused many current and former employees to contact the I-Team.

One former teacher had high praise for the Lee family and their commitment to children. She wrote , "the hearts of these individuals are present on a daily basis at the school. No one loves the students at VLT Academy more than Echole Harris and the Lees."

But the former teacher said nepotism is a real problem at the school, adding, "the problem has been ill-conceived...avenues for the family to benefit at the expense of Ohio taxpayers, and the education of the students."

Our investigation also prompted the school's lawyer, Phyllis Brown, to send a letter home to parents of VLT Academy students the next day. The letter indicated , "Mr. Keefe's job is to sensationalize the news.." Ms. Brown reassured VLT parents that, "there is absolutely

NO THREAT that it will close.'"

Brown reiterated the school's reasons for selecting the highest bid from the company owned by the superintendent's husband: Services CEED Janitorial offered that were not part of the bid request presented to competing bidders.

The attorney wrote, "every hire by VLT - from Superintendent on down - requires approval of the VLT Academy Board. Every contract, including CEED's contract for janitorial services, requires VLT Academy Board approval."

But VLT academy's board is not elected like a regular public school board.

We spent several days trying to figure out how the charter school originally selected its board, and how members are replaced when their terms expire.

We asked Phyllis Brown, the school's attorney, and she replied, "this is information you can research through both the Ohio Revised Code and the Ohio Administrative Code. The Academy should not expend public funds for me to educate you."

So we researched the law as she suggested. There were no concrete answers there.

Next, we read the articles of incorporation . We also asked the school's sponsor, ERCO .

The Sponsor Agreement indicated that the answer could be found in Attachment I. That section was not included in the school's response to our original public records request for the sponsor agreement. We asked Phyllis Brown for Attachment I, and she replied we could have it next week by mail.

Instead, we went to ERCO and looked at the original sponsor agreement in person. Attachment I has some irregularities, including a mostly-blank page followed by a clause starting mid-sentence on the next page. There's no mention of how the board is selected.

We finally found some answers in Attachment IV of the agreement . While the board's original selection process is not mentioned, the contract does indicate, "membership and terms shall be for five years.." then later suggests term limits with the clause, "as their terms expire, board members will be replaced."

The articles of incorporation also hint at some sort of term limit, "it is the intent that the Board of Trustees be elected or re-elected one to three years, and that each Trustee shall serve at least one, no more than one, unless changed through Contract with the Sponsor."

The current board president, Valerie Watson, is listed as a board member or president going back seven years on every document we can find related to the school.

We asked Ms. Watson how she could serve beyond the five-year term, and how she and the other board members were selected in the first place.

Attorney Phyllis Brown responded for her, "we have no obligation to assist you in your research."

Remember, VLT Academy receives $7.4 million per year in state and federal tax dollars.

There is no indication of how board members are replaced once their term expires under ordinary circumstances. There are procedures for a vote of the remaining board if someone leaves before their term is up, or if they need to be replaced for cause, but no mention of a standard succession plan.

These are important questions because the school's official response is that the board approved the contracts and all employment decisions. But who approved the board?

Valerie Lee was the founder of VLT Academy, and she was paid an additional $75,000 to draw up the articles of incorporation, according to the school's own report to state auditors for 2006 . In that same audit, the school also reported that its superintendent co-owned the janitorial company with her husband, something the school's attorney now insists was never the case.

State auditors took issue with the school paying Valerie Lee an additional $23,000 for writing grant applications, and another $303 an hour from a federal grant to train her own staff. VLT's response to that audit agreed that the superintendent's job description and salary included "applying" for grants, but not "writing" the grant applications, for which she received extra money.

As for the original board and its current president, sources in the charter school community tell us the founders usually recruit the first board.

It is likely Valerie Lee and any co-founders chose the first members of the board she is supposed to answer to as superintendent, but we can not confirm that because the school is not required to answer to the public who pays the bills.

The latest findings of the Ohio Auditor of State are now in the hands of the Ohio Ethics Commission.

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