Search Warrant Alleges Embezzlement, Use of ‘Ghost Students’ by Epic Schools

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Whitney Bryen/Oklahoma Watch

A sign is seen outside of 50 Penn Place in Oklahoma City, where Epic Charter Schools leases 40,000 square feet for administrative use.

A state investigator’s search warrant filed in court Tuesday seeks evidence of alleged embezzlement of state funds and obtaining money under false pretenses at Epic Charter Schools, including through the use of “ghost students” who receive no actual instruction at the school.

Epic and and its two co-founders, David Chaney and Ben Harris, are the subject of a state law enforcement investigation, according to the seven-page affidavit and warrant filed in Oklahoma County District Court.

Read the OSBI Search Warrant, Affidavit

The agent reviewed bank statements and found Chaney and Harris split school profits of at least $10 million between 2013 and 2018, the affidavit states. Epic is a publicly funded charter school that is managed by a for-profit company, Epic Youth Services, which is owned by Chaney and Harris. The filing of the warrant was first reported by The Oklahoman.

David Chaney

On June 28, OSBI agents visited the Oklahoma City home of an Epic teacher, the affidavit states. Her computer, cellphone and files, including notes, letters, text messages with Epic parents, Chaney and Harris, is what agents sought in the search warrant.

Epic is accused of receiving state funding for “ghost students” as early as 2014. Those students were homeschooled and attended private and sectarian schools and enrolled in Epic to receive an $800 “learning fund” without receiving instruction from Epic, the affidavit states. Epic teachers dubbed those students “members of the $800.00 club.” The learning fund is provided to all Epic students and can be spent on curriculum, technology and extracurricular activities.

Shelly Hickman, a spokeswoman for Epic Charter Schools, responded to media reports describing the allegations on Tuesday.

“We are audited by the Department of Education and state-approved auditors each school year and are supremely confident that we operate our public school system within the boundaries of state and federal law,” her statement reads. “Since our inception in 2011 we have time after time proven ourselves innocent of all allegations. We will again.

“This latest attack comes at a time when our growth makes status quo education lobbying groups uncomfortable. We are considering legal action to combat what we believe is a coordinated effort to damage our school, our co-founders and our staff.”

Superintendent Joy Hofmeister, in a statement, called the allegations “extremely serious and disturbing.

“The state Department of Education stands ready to work with any criminal investigation to determine if public education and countless Oklahoma taxpayers have been defrauded of millions of dollars. In the meantime, it is important to let the legal system do its work.”

When asked whether the allegations would affect the handling of Epic’s 2019-20 funding, Education Department spokeswoman Steffie Corcoran said they will consult with law enforcement to determine the next appropriate steps. Epic’s state funding for next year is estimated at $120 million.