Audit: $154K In Questionable Disbursements At Concord School

CONCORD, NH — An audit of the bank records and grant expenses of a New Hampshire charter school has led to the surrendering of its charter and $129,000 in repayments requested by the state.

Stephanie Alicea of Boscawen, the founder of Capital City Public Charter School in Concord, surrendered the school's charter on Friday before being called before a revocation hearing on Tuesday after close to two years of requests by the state for more information concerning financial discrepancies concerning federal grant funds as well as an order to repay grant funds that were not reimbursable.

According to the New Hampshire Department of Education, charter schools, which are public schools, have access to several grants including federal startup money. The state has received tracts of money to help set up and run the schools.

The first round of funding started around 18 years ago and later, a large $10.8 million was given to the state in 2010 to start 20 schools. The schools were given around $600,000 to start, initially, but they also need to raise private money, too. Later, state adequacy grant money can be awarded to the schools.

ALSO READ:

• Concord School Surrenders Charter After Financial Audit Probed

A political battle between Democrats and Republicans has been ongoing for more than a year after the state secured another $46 million to create more charters, targeted for at-risk students in New Hampshire. The federal grant money for the new charter schools was approved last month.

Those grants will be about double the previous amount.

Did you like this story? Invite a friend to subscribe to Patch!

Interested parties devise education plans and school concepts and then, apply to the state and the state board of education for approval. After approval, the schools can apply for the funds.

The funds, however, can only be used for certain expenses and the federal grants are also limited, too — technology, equipment, supplies, books, and leases on property spaces, all have to be approved. State monies for educators and expenses also kick in after schools are up and running. Officials also provide training and administrative guidance to those interested in starting charge schools.

Currently, there are about 30 schools in the state operating within the state's 180 school districts.

After schools are up and running, state officials cover enforcement for the federal government. As with any school grant, they check for misspent funds, monitor for irregularities, and require receipts and information. Documentation is often requested upfront. The education department also now has compliance funding and oversight employees to assist schools with compliance.

In the case of the Capital City Public Charter School, problems were amiss right away, with delays in reporting financial information leading to the hiring of Plodzik & Sanderson, PA of Concord to audit the school's books.

What the auditors found was simply stunning and led to the school to give up its charter.

Overpayments To The Head Of School

According to documents received by Patch, auditors found numerous discrepancies totaling more than $150,000 from the time the school received its first grant funds through May 2020.

"We identified numerous instances where the activity recorded in QuickBooks did not match the bank record," a report from May 2020 stated. "We identified extensive cash withdrawals made via debit card, undocumented cash teller withdrawals, and transfers to non-(school) Bank of America account(s). We also identified numerous debit card transactions that were not supported beyond the charge on the bank statement."

After the school received $223,000 in funds from the first round of federal grants, the auditors found that only $66,000 in expenses and obligations complied with "allowable activity" as part of the reimbursement.

One identified issue was payments made to Stephanie Alicea above the allowed salary amount, according to auditors.

Stephanie Alicea was to be paid a total of $47,500, at $2,500 a month, between January 2018 and August 2019, both as start-up director at the school and later, head of school, when it became operational.

However, through a series of payments of between $3,100 to $7,000 between May 2018 and March 2019, and smaller payments after that, she received $89,297.97, the report said, or nearly $42,000 more than allowed.

During the audit, investigators found excess reimbursements of $26,950 for curriculum development, equipment, and other expenses that were "not accurately recorded" in the school's accounts.

When asked about the financial issues facing the school, Stephanie Alicea chose not to comment to Patch.

Loans, Repayments, Discrepancies — Without Documentation

The auditors also found repayment of "loans from officers" in the school's QuickBooks account issued to the vice chairwoman of the school's board of trustees, state Rep. Caroletta Alicea (D-Boscawen), Stephanie Alicea's mother, but without explanation.

Between May 2018 and June 2019, $14,550 was issued to the state representative without documentation on what the expenses were for, the auditor said.

She did not return an email for comment at post time about the loans or the audit.

In an audit report, Plodzik & Sanderson listed a number of "insufficient documentation to support transaction" notifications so they were unable to "evaluate allowability of activity or cost." Some of these payments included thousands of dollars for "paid fees, printing, and responders," reimbursement for a storage unit rental Stephanie Alicea owned before the school even opened, "multiple Facebook transactions" advertisements, money for an auctioneer, and $5,250 for website and design services.

An audit of the accounts found other expenses for food, printing, iTunes downloads and Best Buy purchases, shipping, and other items that were not reimbursable.

Other payments also had documentation problems: A $2,500 Venmo transfer to Sabrina Rando of Amherst who offers in-home support services for people with autism via Prime Lifetime Services LLC in Merrimack; a $4,500 disbursement to Stephanie Alicea in June 2018; and $6,000 in cash withdrawn in June 2018, the auditor said.

The auditor stated later in the report the $4,500 disbursement to Stephanie Alicea was for start-up contractor fees but it should have been only $1,120 since she was already paid most of the start-up consultant fees.

The $6,000 cash was used to pay a general contractor from Barnstead for school renovations. The contractor stated they "received these funds in whole or in part" but "did not provide an explanation of why these funds were paid in cash." The auditor also reported "conflicting contract prices" between the contractor and Stephanie Alicea — the contractor was supposed to receive a flat $14,052 payment but a contract price of $38,052 was noted in the documentation.

"There is no explanation of the $24,000 discrepancy in the contract price, and contract price is not itemized which could provide an indication of the proper contract amount," the auditor wrote.

The $2,500 transfer to Rando was listed as a "loan repayment" but "there is no evidence of a loan provided" to the school or other documentation supporting the transfer.

On July 3, 2018, there was another $31,000 cash withdrawal with insufficient documentation and other expenses, too, like food purchases and smaller cash withdrawals. Another $5,500 check was issued t00, to Stephanie Alicea, the report stated.

The auditor said the $31,000 was listed as a bank check to NamDar Realty, the parent company of the Steeplegate Mall, however, the auditor was unable to determine "the use or ultimate recipient of the funds based on the documentation provided," the report stated.

The $5,500 also represented "excess payment of start-up consultant fees," the auditor wrote.

During the next three months of transactions, the auditor also posted numerous discrepancies and payments to various entities and people without proper documentation.

Thousands For Training, Repayments Not Accounted For

In February 2019, Plodzik & Sanderson reported a $12,000 check issued to Rando for "improvement of instruction-training-continued education" but no support was provided for the disbursement.

A check image provided by Bank of America contained the reference "Biz Ln." The auditor though reported it as an "undocumented loan." Another check was issued for $3,000 on March 13, 2019, with the auditor stating it was an "unsupported payment."

Stephanie Alicea, the auditor said, claimed the expenses "were for training the never occurred" and that the fees were "refunded." A check deposited in April 2019 from the company was for $3,000. But the QuickBooks entry reported it as a loan from Caroletta Alicea.

"We were not provided with documentation verifying that this check was deposited into (the school's) account," the auditor said.

Stephanie Alicea said the money was used to pay a past due Unitil (electric) bill and that was confirmed later, the report stated. Another $5,000 repayment was made via wire transfer in June 2019 and Stephanie Alicea said all of the money was paid back, the auditor said.

Rando, according to the report, provided a letter later from 2019 about a potential collaboration between Prime Lifetime Services and the school but it did not contain references to training or continuing education. But the auditor could not find any documentation that the funds were completely paid back — with somewhere between $4,000 and more than $8,100 potentially missing.

"A more precise figure is not available due to conflicting information and a lack of source documents," the report stated. "No documentation has been provided showing any actual or potential training occurred."

Rando did not return an email for comment before post time.

Plane Tickets, Food, Overdraft Fees, And More

Personal expenses and other unallowable charges were littered throughout the audit — including numerous plane tickets, Amazon and Google Play downloads, Uber rides, food, and other items.

While some of the expenses were small, others were more brazen — potentially bordering on felony theft or misuse of funds charges from grant money that was supposed to be used to fund the education of children in the capital region.

As early as March 2018, auditors accused Stephanie Alicea of racking up thousands of dollars in personal expenses.

In March 2018, it was Chinese food, a cash war, and a cash disbursement. The next month, it was $15 for a fitness membership. By May 2018, the school's accounts began to be billed for overdraft fees due to lack of funds. Accumulatively, between March 2018 and July 2019, nearly $1,500 in overdraft and other fees were issued against the school's accounts, the report stated.

In June 2018, it was thousands more including a donation to the Rotary Club, FedEx expenses, and more food. The next month, U-haul costs, cash withdrawals, and other purchases including meals. In August 2018, it was hundreds of dollars of other purchases at stores like Target and Home Depot, more food orders, T-shirt printing, and parking fees, too.

In October 2018 alone, nearly $80 in iTunes downloads were audited as well as nearly $200 in Uber rides. Other expenses, like purchases at Starbucks, Netflix, and Amazon purchases were also recorded in 2018 and 2019.

Plodzik & Sanderson found more cash transfers in April 2019 as well as a $7,000 loan repayment to another family member without any identifying source of the deposit or the transaction information.

In May 2019, auditors also found that Monkey Trunks, a zipline park in Chocorua, was paid $735.

Auditors also attempted to trace all of the "loans from officers" stipulated in the accounts but were unable to "obtain adequate supporting documentation to verify the activity" in the accounts.

The amount accounted for more than $21,000 in expenses with limited-to-no documentation.

In May 2020, the auditors said no opinions or conclusions were expressed in the review and part of that procedure was established accounting standards and practices.

"Had we performed additional procedures, other matters might have come to our attention that would have been reported to you," the report stated.

Got a news tip? Send it to tony.schinella@patch.com. View videos on Tony Schinella's YouTube.com channel or Rumble.com channel.