Responding to critics questioning why it did not take action against ECOT founder Bill Lager years ago, the office of Ohio Attorney General Mike DeWine says its hands were legally tied until a lower court ruling in March.
In a case involved a defunct Cincinnati charter school. A Hamilton County judge upheld the standing and authority of the attorney general’s office to pursue claims of a pattern of corrupt practices and unlawful interest in a public contract in a civil case to recover public money from self-dealing school officials.
Trial-court rulings generally carry little statewide precedent. But attorney general’s office spokesman Dan Tierney says the Cincinnati decision has some legal value that can be applied to other cases. The cited case now is on appeal to the First District Ohio Court of Appeals. The Ohio Supreme Court ultimately may make the final call.
"The case law that supports a (potential) lawsuit against Lager has only been on the books since March," Tierney said.
Other court rulings, meanwhile, have restricted the ability of the attorney general to pursue civil actions against still-open charter schools with much the same problematic setup as ECOT, since their operations and finances are regulated by the Ohio Department of Education, Tierney said.
The for-profit Electronic Classroom of Tomorrow, the state’s largest online charter school, was closed by its sponsor in January as it ran out of money amid state findings that it falsely inflated its student enrollment to improperly pocket about $80 million in tax money.
On Tuesday, in the Franklin County court action in which ECOT is being dissolved, DeWine’s office outlined its claim seeking to recover hundreds of millions of dollars ECOT paid to Lager-operated businesses — Altair Learning Management and IQ Innovations — that provided management and software services to the school.
DeWine’s attempt to recover public dollars from Lager, which must be approved by a judge, alleges Lager breached his duty to look after ECOT’s financial interests, held an illegal interest in public contracts and repeatedly violated laws to form a pattern of corrupt activity essentially since the school began.
Democrats and other critics have painted the Republican DeWine as slow to act, saying he only moved as ECOT became a political liability amid his run for governor against Democrat Richard Cordray.
"This set of facts has been painfully clear for years," Ohio Democratic Chairman David Pepper told reporters Monday. "The truth is Mike DeWine should have acted before ECOT stole additional millions from Ohio taxpayers ... it’s a mere baby step, one that could have and should have been taken long ago ... Certainly he could have figured out a way to crack down on this far long ago."
Tierney said of Pepper, who ran against DeWine four years ago: "His assertion that the AG’s office can simply file whatever action it wants without following Ohio law is patently absurd ... what’s their point other than trying to throw mud at us?"
Pepper and Democrats also portray DeWine as beholden to Lager as a major contributor to Republican candidates, including running mate Jon Husted, a former speaker of the House. Lager contributed more than $2 million to GOP candidates and causes over the years, including $12,533 to DeWine and $36,000 to Husted. DeWine gave his Lager money to charitable causes. Husted said his campaign committees that received the Lager money no longer exist, so he has no money to give to charitable causes. Cordray gave $600 he received from Lager in 2006 to a public school foundation.
Tierney said DeWine’s office has a limited role with charter schools, generally restricted to pursuing the recovery of misspent funds by schools that have closed. "The agency with primary authority and responsibility to ensure all charter schools are following the law is the Department of Education," he said.
Asked if charges of unlawful interest in a public contract could be pursued against other for-profit charter school operators, some of whom are GOP political donors, in the wake of the Cincinnati ruling, Tierney said such an eventual court ruling would be "very fact specific."
Not all charter schools have operating contracts, organizational hierarchies and "fact patterns" identical to ECOT, Tierney said. "The conflict is much more egregious and deliberate in the ECOT context," he said.
Democrats also have chastised DeWine for not pursuing a criminal case in the ECOT matter, saying his office ignored calls for appointment of a special prosecutor. Republican Auditor Dave Yost has said that ECOT may have committed fraud in knowingly inflating its enrollment and referred the case to Franklin County Prosecutor Ron O’Brien and the U.S. attorney’s office for consideration of criminal charges.
DeWine says "he lacks jurisdiction, but countless times he has found jurisdiction" to bring a criminal case when truly interested, state Rep. Tavia Galonski, D-Akron, said during Pepper’s call with reporters.
The attorney general’s office counters that under state law — with exceptions such as a request from the governor and cases involving election fraud and Medicaid and workers’ compensation laws — that it has no authority to commence a criminal investigation without a referral or appointment.
Even DeWine’s Bureau of Criminal Investigation cannot dive into a case unless requested to do so by local authorities.
The Ohio Supreme Court ruled two years ago that the attorney general’s office does not have "inherent authority" to pursue criminal cases without a specific appointment.