Epic Charter Schools paid co-founder's personal credit card charges, forensic auditor testifies

During the fourth 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, the director of forensic audits for the Office of the State Auditor and Inspector said she and her team analyzed credit card statements for two personal credit cards used for all purchases for the school’s student learning needs.

Brenda Holt said credit card purchases identified by Epic’s own attorneys as the personal expenses of David Chaney added up to $817,000, but $377,000 of that was paid from the Epic student Learning Fund rather than by Chaney himself.

The personal expenses included charges at the clothing store Men’s Warehouse, StubHub ticket exchange and resale company, Southwest Airlines, Starbucks, AT&T, Uber, and political campaign donations to former state superintendent and gubernatorial candidate Joy Hofmeister.

Chaney, Harris and Brock were arrested and charged in June 2022 in Oklahoma County District Court 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.

Yet to testify is Brock, who has already waived his right to a preliminary hearing and whose formal arraignment is set for April 3. His attorneys have told the Tulsa World he is expected to testify in hopes of obtaining a plea deal with prosecutors that would result in his receiving a sentence of probation only.

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

But state law enforcement contends that Epic’s student Learning Fund was Oklahoma taxpayer funding intended only for the education of public school students enrolled in Epic Charter Schools in Oklahoma.

Holt said she and her team zeroed in on the student Learning Fund in their year-long process of conducting a forensic audit on Epic because of multiple questions and concerns they encountered.

But she said Epic resisted all State Auditor and Inspector’s Office requests to review the student Learning Fund. In October or November 2019, she said, Harris asked auditors to meet with him and his attorneys.

Holt said that at that meeting, Harris told her that “my review of that would impose on his business model, and some other discussion was made. We wanted to inquire about the number of employees EYS had and how they managed the Learning Fund. Mr. Harris would not give us that answer. He told us: ‘If we told you how many employees we have, the Legislature would bludgeon us about our fees.’

“Another statement Mr. Harris made was, ‘Something you will find is EYS has not ever profited from the Learning Fund’ and (that) they have taken no payments from the Learning Fund.”

Holt said that ultimately the auditor’s office was able to assist in the analysis of student Learning Fund records and credit card statements in coordination with the Oklahoma State Bureau of Investigation.

Holt said her team later discovered that EYS, which was receiving 10% of all state and federal revenue to the school as compensation, had only three people — Chaney, Harris and Brock — managing the school, and she said that seemed insufficient.

“They were to manage and administer the school,” Holt said, referring to EYS. “We determined that the Learning Fund was a process of purchasing and handling student transactions, purchasing curriculum. We became concerned the school was hiring the employees to handle the Learning Fund. The contract was for EYS to manage the school, manage the Learning Fund. Why are state employees doing that with state computers, state facilities? So that became a concern.”

Holt also testified that under EYS’ management, Epic’s charter school in Oklahoma was improperly bearing the costs of administrative duties EYS was contracted and compensated to carry out, as well as improperly bearing the administrative costs of an Epic-affiliated charter school in California with Oklahoma taxpayer-funded school employees.

“All salaries and benefits were paid by the state of Oklahoma, and they were members of the Oklahoma Teachers Retirement System. It’s further proof that they are full state employees,” Holt said. “We determined that $2 million had been paid by the state of Oklahoma to manage the Learning Fund.”

The new Tulsa World app offers personalized features. Download it today.