Falsified records led to $1.4 million overpayment from state to now-closed St. Louis charter school, Auditor Galloway says

Audit of St. Louis College Prep Charter School also finds questionable credit card purchases; audit gives rating of "poor"

A report released today by State Auditor Nicole Galloway found falsified attendance records led to $1.4 million in overpayments to the St. Louis College Prep Charter School. The audit also found questionable credit card use, including the purchase of gift cards, alcohol and items from Amazon.

"The school improperly received over a million dollars in taxpayer funds based on fraudulent information. The former executive director attempted to cover-up the fact that the school was mismanaged and suffering financially," Auditor Galloway said. "Classroom funding across the state is already stretched so thin. Students and families deserved better."

The State Auditor's Office received notice from the Department of Elementary and Secondary Education (DESE) of allegations of financial impropriety concerning the St. Louis College Prep Charter School. DESE officials informed the Auditor's Office that Michael Malone, who was executive director of the school from its inception until he resigned on Nov. 1, 2018, admitted to intentionally misreporting the attendance for the 2017-2018 school year.

During the course of the audit, the Auditor's Office determined that attendance data reported to DESE was significantly overstated for at least three school years, and that the state paid at least $1.4 million in excess funding. For several years, the attendance reported was greater than the enrollment of the school.

In addition to the falsified attendance records, the audit also found that school personnel made unsupported and questionable credit card purchases. There was no supporting documentation for purchases of food, hotel stays, a vacation package and several Amazon purchases.

Thousands of dollars in questionable purchases included gift cards and alcohol, as well as approximately $200 in Amazon purchases shipped directly to the former executive director's residence.

The Auditor's Office issued a subpoena to Malone, the former executive director, to compel his testimony and to require him to produce records and documents. On the advice of his attorney, Malone pleaded the 5th amendment regarding questioning related to attendance data and procedures and credit card purchases. 

The State Auditor's Office is referring the audit findings to DESE and to the Attorney General's Office for review and coordination.

Charter schools are independent public schools organized as nonprofit corporations with a sponsor. A charter school that has declared itself as a local education authority receives funding from DESE based on school attendance.

The St. Louis College Prep Charter School began operating in 2011 and served students in grades 6 through 12 for the 2018-2019 school year. The school surrendered its charter earlier this year after losing its sponsorship from the University of Missouri-St. Louis.

The audit gave a rating of "poor," the lowest possible. The complete audit report can be found here.