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Oklahoma Says 3-Year-Old Probe Into Virtual School Continues

Nearly three years ago, Gov. Mary Fallin requested an investigation into allegations of fraud against the state’s largest virtual charter school.

State agents launched the probe of Epic Charter Schools and, about a year later, turned their findings over to the Attorney General’s Office.

Since then, no charges have been filed against Epic or its employees, and no announcement has been made about the case.

But after recent inquiries about its status by Oklahoma Watch, an Oklahoma State Bureau of Investigation spokeswoman revealed agents are now “re-interviewing” people in connection with the investigation.

“It’s nothing unusual,” OSBI spokeswoman Jessica Brown said.

Will Gattenby, a spokesman for the Attorney General’s Office, declined to comment on the investigation.

Epic officials have denied accusations of fraud and said this week they were unaware of a new round of interviews.


David Chaney
David Chaney

“We obviously cooperated fully back a couple years ago during the investigation,” said David Chaney, co-founder and superintendent of Epic Charter Schools. “I haven’t been contacted myself to be re-interviewed. To my knowledge, nobody that I know of in our organization has been contacted to be re-interviewed.

“The last we knew … we’ve answered all their questions. No further information requested. No further activity.”

Michael McNutt, a spokesman for Fallin, said the governor requested the OSBI inquiry because of the seriousness of the allegations. Few details of those have been disclosed.

“Our office doesn’t comment on active investigations,” McNutt said.

Epic is the largest of five virtual charter schools in the state, and like brick-and-mortar schools, receives state aid based on enrollment. In the most recent school year, the school received $27.3 million based on its reported 6,037 students. The school is expecting to have more than 8,000 students this fall.

As part of its investigation, the OSBI collected signed affidavits from 39 employees and administrators, including Chaney and board members Liberty Mitchell, Mike Cantrell and Doug Scott, law enforcement records show.

Each affidavit asked whether the individual knowingly or intentionally committed or knew of anyone who committed a fraudulent act working for Epic Charter Schools or Epic Youth Services LLC, the for-profit company that operates the school. Each replied “no.”

The agent also examined minutes from Epic’s board of directors’ meetings from July 2010, when the board was first formed, to August 2014. Epic Charter Schools is the business name for a nonprofit 501(c)3 organization called Community Strategies Inc.

Chaney is both superintendent of the school and chief executive officer of Epic Youth Services. Audit records show Epic Youth Services contracts with the school to receive 10 percent of the school’s gross revenue for operating the school.

In 2013, accusations came to the state’s attention that Epic Charter Schools was using falsified records to obtain fraudulent payments from the Department of Education. Agents began investigating, and in October 2014 turned over their findings to the state Attorney General’s Office, said Brown of the OSBI.

The school had publicly tussled with the department under former state Superintendent Janet Barresi.

Oklahoma Watch is a nonprofit organization that produces in-depth and investigative journalism on important public-policy issues facing the state. More Oklahoma Watch content can be found at www.oklahomawatch.org.
Oklahoma Watch
Oklahoma Watch is a nonprofit organization that produces in-depth and investigative journalism on important public-policy issues facing the state. More Oklahoma Watch content can be found at www.oklahomawatch.org

In 2013 Barresi withheld Epic’s A-F report card based on concerns that the assessment data on which the scores were based wasn’t valid. Epic sued the Education Department. The case was dismissed three months later, and the report card was released. The grades were D for third through fifth grade, C for middle school and B- for high school.

Epic’s two co-founders supported Joy Hofmeister in her successful 2014 bid to replace Barresi. Chaney and Ben Harris contributed a combined $9,000 to Hofmeister’s campaign and $5,000 each to Fallin’s campaign, campaign records show

Despite news coverage of the investigation, the school has continued to grow dramatically.

“We’re focused on serving kids and doing our jobs,” Chaney said.

“Our history and our track record of accountability speaks for itself. We’re very compliant with all the reporting requirements. There are several audits from the state Department of Ed. There’s an independent financial audit from a state approved auditor every year. I’ll stand behind those audits.”

Oklahoma Watch is a non-profit organization that produces in-depth and investigative journalism on important public-policy issues facing the state. Oklahoma Watch is non-partisan and strives to be balanced, fair, accurate and comprehensive. The reporting project collaborates on occasion with other news outlets. Topics of particular interest include poverty, education, health care, the young and the old, and the disadvantaged.
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