Epic Charter Schools co-founders never reported millions on tax returns, auditor testifies

During the third day of the preliminary hearing in the massive racketeering and embezzlement case against Epic Charter Schools’ co-founders David Chaney, 44, and Ben Harris, 48, and longtime CFO Josh Brock, 42, prosecutors submitted as evidence several records showing transfers of the Epic Oklahoma charter school’s student Learning Fund monies to Epic’s California charter school, as well as Panola Public School in Oklahoma, which at the time, was being managed by Chaney and Harris’ private company, Epic Youth Services.

Salesha Wilken, with the Forensic Audit Division of the State Auditor and Inspector’s Office, testified that those were improper uses of Oklahoma taxpayer funds intended for the education of Oklahoma students.

She said it was her understanding that Epic Oklahoma’s student Learning Fund was only to be held in trust and that EYS was to serve only as the stewards of those Oklahoma taxpayer dollars.

“Those funds were dedicated for the Epic students, not the Panola students. They also weren’t there to allow Epic Youth Services to expand their business to other school districts, Wilken said.

Chaney, Harris and Brock were arrested and charged in Oklahoma County District Court in June 2022 under the Oklahoma Racketeer-Influenced and Corrupt Organizations, or RICO, Act.

The criminal case, now being prosecuted by the Oklahoma Attorney General’s Office, alleges 15 counts, including embezzlement, money laundering, computer crimes and conspiracy to defraud the state.

All week, Chaney’s and Harris’ defense attorneys have contended that much of the taxpayer money their clients are accused of misappropriating had actually become “private funds” once they were received into the bank account of EYS.

When asked by Harris’ defense attorney Joe White the reason “she holds that belief” — that Epic’s student Learning Fund monies remained public — Wilken offered a host explanations, chief among them that Chaney, Harris and their private company EYS had not reported the $144 million in student Learning Funds she said had been deposited into EYS bank accounts as income on their individual or business tax returns.

Before that, she said: “Those monies were specified for the use of the school for the students. In the agreement (between Epic’s school board and EYS), it says the money and the encumbrances of the monies can only be used for the school. Also, it was represented to me that in training for Learning Fund managers, there were specific rules for how the money could be spent, which is typical to have very specific rules for how government money is spent.”

White asked Wilken why the State Auditor’s Office never red-flagged annual audit reports “for not passing the smell test” in previous years.

Wilken responded that those annual audit reports, submitted to the Auditor’s Office by outside firms hired by each local public school, are a different type of audit than the investigative audits conducted by her and her division.

Earlier, a prosecutor had Wilken read an identical provision from all versions of the Epic school board’s operating agreement with EYS from the years 2014-19 — “EYS shall be responsible for managing the school’s student Learning Fund.”

On Wednesday, Chaney and Harris sat side by side at the defense table for the first time. During the first two days of the preliminary hearing, Chaney sat with his back to the rest of the courtroom, diagonally across the table from Harris.

Brock has already waived his right to a preliminary hearing, and his formal arraignment is set for April 3.

Oklahoma City attorney Chris Box, one of Brock’s legal representatives, told the Tulsa World his client is now expected to testify on Thursday.

A plea deal for Brock is in the works with prosecutors, and Box said he is hoping to receive probation only.

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